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SK Hynix Wins Sanction Against Rambus in Patent Lawsuit

Rambus Inc. was sanctioned by a judge for destruction of documents in a U.S. chip-patent case with SK Hynix Inc. Its shares rose more than 20 percent today on reports that the penalty will be limited to a fair royalty.

U.S. District Judge Ronald M. Whyte in San Jose, California, on Sept. 21 decided to strike from the record in the case any evidence supporting a Rambus royalty that is “in excess of a reasonable and non-discriminatory” amount, according to court documents. Whyte ordered both companies to file their proposals on the rate amount to the court.

“There is a possibility that Rambus did not destroy any evidence that would have been beneficial to SK Hynix’s litigation position,” Whyte wrote in his decision. “However, because Rambus is the party that destroyed documents by the box and bag without keeping any record of what was destroyed, Rambus must suffer the consequences of that uncertainty.”

Rambus rose 94 cents, or 19 percent, to $5.87 in trading in New York at 12:22 p.m. after earier trading as high as $6.10. It was the biggest percentage rise since Nov. 17, according to data compiled by Bloomberg.

Both Ichon, South Korea-based Hynix and Sunnyvale, California-based Rambus welcomed the decision.

The ruling “substantially limits any royalties on Rambus’s patents,” SK Hynix said in a statement.

Rambus is hopeful the decision “will lead to putting this matter behind us completely and allow us to reach reasonable agreements,” the company’s general counsel Thomas Lavelle said in a statement yesterday.

Appropriate Sanctions

The ruling follows an appeals court decision last year concluding that Rambus destroyed documents relevant to its case against the South Korean company. The appeals court ruling sent the case back to Whyte to determine appropriate sanctions.

SK Hynix shares fell 1.5 percent to 23,500 won in Seoul today. They have risen 7 percent this year, while shares of Rambus have fallen 23 percent this year.

SK Telecom Co. completed acquiring a 21 percent stake in Hynix Semiconductor Inc. in February, becoming the biggest shareholder, according to data compiled by Bloomberg.

The U.S. Court of Appeals for the Federal Circuit in Washington upheld Whyte’s denial of Hynix’s bid to throw out a 2006 verdict finding the company infringed Rambus patents or grant a new trial. It vacated the financial damages judgment, throwing out a $397 million judgment against Hynix, because of the document spoliation.

Rambus’s cases against Hynix, and another related case against Micron Technology Inc., 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. Hynix and Micron claimed Rambus got rid of papers that would have proved Rambus misled the board that sets that standard.

The case is Hynix Semiconductor Inc. v. Rambus Inc., 00-cv-20905, U.S. District Court, Northern District of California (San Jose).

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