Rambus Inc, battling to protect its patents for high-speed memory chips, won dismissal of some fraud claims. Shares of the semiconductor designer rose 11 percent on Friday.
US District Judge Robert Payne threw out a jury finding that Rambus committed fraud when seeking patents for a chip known as double-data rate random access memory, or DDR SDRAM, that is becoming the industry standard. At the same time, the judge let stand a fraud finding against Rambus related to the most common type of memory chip, called SDRAM.
It was the final major issue before Payne, and Rambus now can ask an appeals court to overturn the judge's earlier decision that Infineon Technologies AG didn't infringe Rambus's patents. Those patents are a main source of revenue for Rambus, which licenses its technology to chipmakers such as Samsung Electronics Co, the world's No. 1 memory-chip maker.
"It's really the first piece of good news from the company since March," said Charles Krause, managing director at Fairfield Research Corp. The New Canaan, Connecticut, firm owns about 100,000 Rambus shares.
The stock rose US$0.88 to US$8.88 on Friday. Earlier in the day it touched US$9.89.
Rambus has lost about three-quarters of its value this year.
Infineon American depositary receipts, each representing one share, fell US$0.45 to US$21.97.
The ruling wasn't all good news for Rambus. Payne ordered the company to pay US$7.12 million in legal fees to Infineon, equaling almost 10 percent of Rambus's 2000 revenue of US$72.3 million.
Rambus Chief Financial Officer Bob Eulau said the company won't need to pay those fees until after the appeal is heard.
The company also must pay a US$350,000 punitive-damage award to Infineon, said Infineon lawyer Brian Riopelle. The judge also issued an order, effective Aug. 14 unless either side requests a hearing, that would block Rambus from filing any patent-infringement suits in the US against Infineon for SDRAM products that comply with industry standards.
In May, a jury had ruled that Rambus defrauded rivals by seeking patents on microchip designs being developed by an industry-wide group.
"We are pleased that the record has been set straight on DDR SDRAM," Rambus Chief Executive Geoff Tate said in a statement.
Rambus had sued Infineon, a unit of Germany's Siemens AG, accusing it of infringing patents for the high-speed memory chips.
Payne dismissed those claims before the trial, and Rambus was left to defend itself against Infineon's counterclaims of fraud and racketeering.
The jury ruled against the racketeering claim, although it awarded Infineon US$3.5 million in punitive damages on the fraud charges. That award later was reduced to US$350,000. Rambus patents on RDRAM, another type of high-speed memory chip, were not in dispute. Rambus said it plans to appeal the fraud finding, as well as Payne's ruling that Infineon didn't infringe its patents.
``We aim to conclusively prove that Infineon is violating Rambus's patent rights and that Rambus must be justly compensated by Infineon for the use of our patents,'' Tate said.
Rambus claimed that Siemens -- the German electronics company that owns 51 percent of Munich-based Infineon and spun off the chipmaker last year -- and other companies were told of Rambus's technology between 1989 and 1991, before the standards committee started working on the type of DRAM chips under dispute.
Rambus doesn't make chips itself. Instead, it licenses its technology to companies such as No. 1 chipmaker Intel Corp, which uses Rambus designs in Pentium4 microprocessors, and Sony Corp, maker of the PlayStation video-game console. At least eight companies that make almost half of the world's memory chips bought licenses from Rambus and pay royalties as a percentage of sales.
Analysts have said Rambus could gain up to US$1 billion in royalties and licensing fees from the US$30 billion-a-year memory- chip market if it won the infringement suit. Losing the fraud claims could lead other chipmakers to stop paying royalties, analysts have said.
The partial victory from Payne may "help them when they negotiate with companies that have not signed licensing agreements," said Krause, of Fairfield Research.
Infineon was one of three companies that refused to pay, opting instead to litigate. The other two are Micron Technology Inc. and Hyundai Electronics Industries Co, which recently changed its name to Hynix Semiconductor Inc.
Rambus sued Micron, and Hynix sued Rambus seeking a court ruling of non-infringement. Both of those cases, as well as cases involving the three in Europe, are pending.
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