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Rambus Barred From Enforcing Chip Patents in Micron Case

Rambus Inc. (RMBS), the designer of high- speed memory chips, was barred by a judge from using 12 of its patents to demand royalties from Micron Technology Inc. because it improperly destroyed documents tied to intellectual-property litigation.

U.S. District Judge Sue Robinson in Wilmington, Delaware, said yesterday the patents are unenforceable as a sanction against Rambus officials who engaged in a document-destruction campaign designed to “gain a litigation advantage” in a patent-infringement lawsuit over technology for high-speed memory chips. Robinson made her ruling after an appeals court sent the case back for her consideration.

“Rambus’s destruction of evidence was of the worst type: intentional, widespread, advantage-seeking and concealed,” Robinson concluded in a 46-page ruling. The judge said the “only appropriate sanction” was to find the patents unenforceable.

The ruling comes after a California judge found in September that Rambus should be sanctioned for destroying documents in a patent case involving SK Hynix Inc. (000660), a South Korean company that is the world’s second-largest maker of computer memory chips.

“Despite this result, we remain confident in the strength of our technology and will move beyond this matter to reach reasonable agreements,” Carolyn Robinson, a Rambus spokeswoman, said in an e-mailed statement.

Rambus Falls

Rambus fell 34 cents, or 6.5 percent, to $4.90 today in Nasdaq Stock Market trading. The shares earlier dropped as much as 8.4 percent. Micron rose 27 cents, or 4.1 percent, to $6.90 in Nasdaq trading.

Daniel Francisco, a Micron spokesman, didn’t immediately respond to an e-mail seeking comment yesterday.

Rambus sells memory-chip designs and claims its patents cover the fundamentals of technology used by memory chipmakers such as South Korea-based Samsung Electronics Co. (005930) and Boise, Idaho-based Micron. Rambus has been involved in litigation spawned by its efforts to assert those patents against producers for a decade.

Micron sued Rambus in 2000, alleging it tried to control the market for dynamic random access memory chips. The Delaware case is one of a series in which Rambus demanded royalties on its patents and chipmakers claim the company wrongly obtained the patents on an industry standard for so-called DRAM chips.

Earlier in the case, Judge Robinson flagged Rambus’s document-destruction practices as a concern and sanctioned the chip designer by ruling the dozen patents unenforceable.

‘Bad Faith’

Rambus appealed that ruling and the appellate court sent it back to Robinson so she could more fully explain her conclusions that company officials acted “in bad faith” by moving to ditch documents and backup tapes.

The judge found Rambus officials set up “shredding days” during which employees destroyed as many as 400 boxes-worth of documents at a time, according to the decision.

Company lawyers also specifically “cleared out” more than 60 patent files and the company destroyed more than 1,200 backup tapes containing copies of documents, Robinson found.

Despite Rambus’s arguments that the document destruction was part of routine operations, Robinson found company officials “acted in bad faith and caused prejudice to Micron” by destroying the files.

Industry Standards

Rambus’s cases against Micron and SK Hynix are over the companies’ use of interfaces that are part of dynamic random access memory that acts as the main memory in computers. DRAM is built to industry standards and is interchangeable by product.

SK Hynix and Micro claimed Rambus destroyed records that would have proved Rambus misled the board that sets that standard, among other things.

The case is Micron Technology Inc. (MU) v. Rambus Inc., 00- cv-00792, U.S. District Court, District of Delaware (Wilmington).

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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