Rambus Awarded $306.5M in Hynix Patent Trial

By Ann Steffora Mutschler and Ed Sperling -- Electronic News, 4/24/2006

Following a month-long trial in the patent infringement case between Korea-based Hynix Semiconductor and Rambus Inc. the jury found that all ten Rambus patent claims at issue in the case are valid and infringed, and awarded Rambus damages totaling $306.5 million.

The award represents compensation only for the portion of Hynix’s SDRAM, DDR SDRAM and DDR2 memory products sold in the U.S. and covered Hynix sales between June 2000 and the end of 2005. The award does not yet include any pre-judgment interest, which is a typical element of damages that requires further consideration by the trial judge, Rambus noted.

Rambus said it also asked for permanent injunctive relief against Hynix to stop the manufacture, use, sale, or import of infringing Hynix memory products, that is to be addressed in future proceedings and will likely await resolution of a third phase of the Hynix case, currently expected to be tried this summer. The third phase addresses certain Hynix counterclaims including challenges to the enforceability of Rambus patents and allegations that Rambus defamed DDR SDRAM or otherwise impeded market adoption of DDR SDRAM.

This case was originally filed by Hynix against Rambus in August 2000 to seek declaratory judgments that 11 patents were invalid and not infringed.

Rambus countersued and eventually the case was expanded to include Hynix’s SDRAM, DDR and DDR2 memory products and 59 patent claims from 14 Rambus patents. In pre-trial proceedings, Judge Ronald Whyte, in the San Jose division of the U.S. District Court for the Northern District of California, judge granted summary judgment in favor of Rambus finding infringement as to 11 of the original 59 patent claims. Whyte subsequently permitted ten patent claims to be presented to the jury at trial, including two that were the subject of the favorable summary judgment motion.

The jury was asked to consider whether Hynix products infringed the remaining eight claims and to consider a variety of challenges by Hynix to the validity of all ten claims. The jury upheld Rambus' position on each of these issues.

In addition to the still pending Hynix case, Rambus has other patent cases pending against Micron, Samsung and Nanya that address similar patent claims against similar products, as well as other issues.

Rambus said it also has a pending patent case against Micron, Samsung and Nanya addressing, among other things, more advanced patented technologies as used in more advanced memory products such as DDR2, GDDR2 and GDDR3.

In addition, Rambus reminded it has a pending antitrust case against Micron, Hynix and Samsung addressing issues that include an alleged joint boycott and the alleged use of an admitted criminal price fixing conspiracy between 1999 and 2002 to further that joint boycott.

“We are very pleased with today’s result - and very thankful for the considered attention of the jury and the court in this lengthy trial,” said John Danforth, senior VP and general counsel at Rambus.

While intellectual property litigation is typical in industries such as EDA, it is rare among smaller hardware companies. Rambus, which turned in sales of $47.2 million in Q1. says it is now spending about $30 million a year on legal fees. Danforth says there is no end in sight to spending, either, with future pieces of this case still unresolved. “For budgeting purposes, we assume will be continue to spend in this range,” he said. Still, he said the value to Rambus and its shareholders far outstrips the cost of the legal fees.

When asked about the mixed success of intellectual property protection in countries such as China, Danforth added that the U.S. market remains critical for the success of all electronics companies. 

Hynix said in a statement to Electronic News, "While disappointed in the result, the focus of this phase of the trial was Rambus’s patents which were drafted to cover JEDEC standard SDR and DDR SDRAMs. The next phase will focus on Rambus’s  anticompetitive behavior in acquiring and enforcing these patents. In the next phase, scheduled for this summer, Hynix seeks to have all of Rambus’s patents in dispute held unenforceable."