Rambus Chips Away at Lawsuits

A courtroom victory over Hynix on Mar. 26 has the chip designer hoping it can begin selling its technology to rivals, but more legal battles remain

For the better part of a decade, Rambus has been known more for its complicated legal battles with rival chipmakers than for the technology it has created and sought to sell.

Now, after an important courtroom victory over South Korea's Hynix on Mar. 26, Rambus hopes it won't be long before it can start working with the many chipmakers it has battled for so long. "We are hopeful that we can come to an understanding with Hynix," says Rambus Chief Executive Harold Hughes.

Beating Hynix in court, Hughes says, brings Rambus (RMBS) a step closer to doing what it's always wanted to do: sell its technology to chip companies that can use it to make better chips. But before that can happen, there's still an array of cases with rivals and the government that need to be resolved.

Patent Survival

The case Rambus has won against Hynix in a federal court in San Jose, Calif., was only the latest chapter in a complicated legal odyssey that stretches back to the early 1990s. From 1991 to 1996, Rambus was a member of an industry group called JEDEC, short for Joint Electron Device Engineering Committee. The committee's job is to set technical standards for chips to which all members, mostly chip manufacturers, agree to adhere.

Hynix is one of four chipmakers that have charged that several Rambus patents are invalid because they were filed during the period when Rambus was a member of JEDEC. Rambus, Hynix argued in the just-decided case, failed to disclose it had filed patent applications on several technical matters that were discussed at JEDEC meetings and were later included in chip standards. Since Rambus was privy to the discussions about what specifications were going to be adopted, Hynix and others have argued, the company effectively set a trap for its rivals on the committee, letting them unwittingly adopt standards they would have to pay royalties on to use. Such disclosure, Hynix had argued, was required. The jury disagreed.

When chips with specifications included in Rambus patents began hitting the market, Rambus sought to collect royalties and licensing fees—unleashing what was, to the chip industry, the equivalent of World War III. Since Rambus only designs chips but doesn't actually manufacture them, its very survival depends on enforcing its patents. But chip manufacturers, seeking to avoid what they saw as onerous royalty payments, have been arguing the patents should be invalidated.

Inconsistent Decisions?

Rambus' membership on the JEDEC committee has been under intense scrutiny over the years. The Federal Trade Commission found that Rambus had deliberately withheld information about its patent portfolio from other JEDEC members, violating not only committee rules, but violating federal antitrust laws. Rambus has appealed the FTC's rulings to the U.S. Federal Court of Appeals, and expects a decision later this year.

Not surprisingly, Hynix plans to appeal. And Micron Technology (MU), which is involved with lawsuits against Rambus in California and Delaware, issued a statement saying it "strongly disagrees" with the jury's decision, and called the Rambus patents in question "invalid, not infringed, and unenforceable." Micron officials "believe that the jury's decision is inconsistent with previous decisions by the FTC and the European Commission," the statement said.

Technological Challenges

Rambus General Counsel Thomas Lavelle acknowledges the legal battles aren't over. But if the company ever clears that thicket, Rambus hopes to capitalize on two technological challenges.

Having long specialized in designing ways for groups of semiconductors to communicate faster, the company is now working to improve on flash memory. Widely used in consumer electronics devices such as MP3 players and cameras to store songs and photos, and increasingly popular as a replacement for computer hard drives, flash chips suffer from two major problems: They move data slowly, and over time they lose their ability to store data. Rambus is working on technology to address both problems, Hughes says.

The company is also working on methods to help the chips in mobile phones share data at high speeds while sipping less power from batteries. "The requirements for managing video and other graphic intensive functions on phones have been going up rapidly, but batteries aren't really keeping up to supply the power they need," Hughes says. That means the chips have to be more efficient in how they use power. "It's a deliciously difficult problem for a company a like Rambus to try and solve."

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