Rambus Stock up as Supreme Court Rejects Infineon Appeal
By Mark H. Anderson
Dow Jones Newswires
WASHINGTON -- Infineon Technologies AG's(NYSE:IFX) (IFX) legal attempt to block Rambus Inc.(NASDAQ-NMS:RMBS) (RMBS) from collecting patent royalties on a high-speed computer memory technology ended Monday when the U.S. Supreme Court turned away the company's appeal.
The high court's rejection of the Infineon petition clears a major hurdle for Rambus to collect royalties from computer chip companies that use a high-speed memory standard from the Joint Electron Device Engineering Council, or JEDEC, a standard-setting body for the industry. Use of the standard chip memory technologies covered by Rambus patent claims has developed into a $15 billion industry.
At about 11:25 a.m. EDT on the Nasdaq Stock Market, shares of Rambus were up $ 6.77, or 36%, at $35.50.
Wall Street analysts have been watching the outcome of the Supreme Court appeal closely. One analyst, Erach Desai of American Technology Research in Boston, said the company could collect as much as $45 million annually in royalties from Infineon alone. Some other companies, including Intel Corp.(NASDAQ-NMS:INTC) ( INTC) and the South Korean conglomerate Samsung Corp. already pay royalties.
But additional companies might soon have to pay royalties that could, with Infineon's share, add up to $420 million annually for Rambus, estimates a research report by B. Riley & Co. in Los Angeles. Micron Technology Inc.(NYSE:MU) (MU) and Hynix Semiconductor America Inc., a unit of South Korea's Hynix Semiconductor Inc., are two that could end up paying royalties.
Still pending against Rambus is a lawsuit brought by the Federal Trade Commission. Other companies have also sued.
At issue are allegations that Rambus, a Los Altos, Calif., chip engineering company, participated in JEDEC high-memory standard setting negotiations from 1991 to 1995, then turned around and tried to collect royalties on patents it held once the standard was set.
Litigation in the matter began in 2000 when Rambus sued Infineon for royalty payments. Infineon, a German chip maker, cried fowl, saying Rambus was required to disclose the patent claims during the JEDEC proceedings. A 2001 trial in the Richmond, Va., U.S. District Court resulted in a jury verdict that favored Infineon, awarding about $10 million in damages and litigation costs to the company.
The U.S. Circuit Court of Appeals for the Federal Circuit, which handles patent lawsuit appeals, reversed the trial court ruling in early 2003, however.
Infineon hired former Independent Counsel Kenneth Starr for its appeal to the Supreme Court. In the appeal, Mr. Starr attacks the appeals court decision. "The Federal Circuit has struck again," Mr. Starr said, adding it had "violated the most basic norms of appellate procedure" when it overturned the jury verdict. " The decision below thus threatens to crown Rambus' fraudulent scheme with success," Mr. Starr concluded.
Rambus, for its part, urged the Supreme Court to let the lower court decision stand. Rambus has recently won separate litigation brought against it. A lawsuit brought by the Federal Trade Commission is still pending.
The case is Infineon Technologies v. Rambus, 03-37.
-By Mark H. Anderson, Dow Jones Newswires, 202 862-9230; mark.anderson@ dowjones.com
Dow Jones Newswires
10-06-031151ET
Copyright (C) 2003 Dow Jones & Company, Inc. All Rights Reserved.
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