Rambus California Patent Trial Against Chipmakers Is Postponed

The California trial of Rambus Inc.'s patent lawsuit against memory-chip makers will be delayed because of a Delaware ruling against the designer and licensor of chips, a federal judge ruled.

U.S. District Judge Ronald M. Whyte in San Jose, California, yesterday ordered Rambus’s case against Micron Technology Inc., Hynix Semiconductor Inc., Samsung Electronics Co. and Nanya Technology Corp. to be postponed.

The chipmakers argued for the delay because U.S. District Judge Sue L. Robinson in Wilmington, Delaware, ruled Jan. 9 that Rambus destroyed information knowing some of it would later be needed by companies to defend themselves against Rambus's patent suits. Robinson's decision, which rendered Rambus's patents unenforceable in that case, conflicts with Whyte's 2006 ruling over similar document-destruction arguments.

The "inconsistency" of the two decisions "persuades the court" that Rambus's case against Micron, Hynix, Samsung and Nanya should be delayed until an appeals court rules on the Delaware decision, Whyte wrote. He ordered the companies back to his court May 22 for arguments over whether the delay "should remain in place."

Infringement Win

The delay follows Los Altos, California-based Rambus's victory in a patent-infringement lawsuit last year before Whyte and against Ichon, South Korea-based Hynix over earlier generations of DRAM chips, or dynamic random access memory. The delayed trial was scheduled to cover infringement claims over DDR2, or double rate 2 memory chips, and a newer generation, DDR3, as well as graphics memory.

"While we are disappointed with the stay of the coordinated cases, it is our expectation that the conflicting opinions of the district courts regarding document spoliation will go up together on appeal," Rambus General Counsel Thomas Lavelle said in a statement. "We believe that our view will be vindicated."

Rambus will hold a conference call on the ruling today at 9 a.m. New York time, the company said in the statement.

Ken Nissly, a lawyer for Hynix, said in a phone interview that the company welcomed the delay. "We asked him to do this, so we're pleased."

In his ruling, Whyte added he "hopes to enter judgment soon" in the first Hynix case so an appeals court can hear Hynix's appeal alongside Rambus’s appeal of the Delaware decision. The final court proceedings in the first Hynix case "will continue to move forward as expeditiously as possible," Whyte wrote.

Ruling 'Unfortunate'

For Rambus, yesterday's ruling is "unfortunate because this is not what investors had been looking for in terms of a decision," Jeff Schreiner, an analyst at San Diego-based Capstone Investments, said in a phone interview. Judge Whyte "seems to believe this is the best course of action for resolution of the litigation between Rambus and the DRAM manufacturers."

Schreiner said Hynix remains the "big loser here" because Whyte’s final judgment of damages may exceed $300 million and result in an injunction blocking Hynix's U.S. sales or force Hynix to license Rambus technology - either of which may force a settlement.

Nissly declined to comment on Whyte's comments about the first Hynix case.

"This is a tremendous result for Micron," Jared Bobrow, a lawyer for Boise, Idaho-based Micron, said in an interview. "What Rambus was saying is the Delaware decision wouldn’t have an impact on the California proceedings, and it obviously did."

Nanya's Request

Robert Freitas, a Nanya lawyer, said Whyte didn't rule on that company's request to throw out Rambus's claims altogether. A delay was Taiwan-based Nanya's second preference. The Delaware order "is binding on Rambus in our case," Freitas said.

Matthew Powers, a lawyer for Suwon, South Korea-based Samsung, the largest memory-chip manufacturer, declined to immediately comment.

Rambus rose 40 cents, or 4.7 percent, to $8.95 in Nasdaq Stock Market trading yesterday before the ruling was issued. The stock fell as much as 24 percent to $6.83 in after-hours trading.

The case is Rambus Inc. v. Hynix, 05-00334, U.S. District Court, Northern District of California (San Jose).

(Published by Bloomberg - February 4, 2009)