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Stockholders drop suit against Rambus

After reviewing a court ruling in a case with rival Infineon, shareholders drop a suit that claimed Rambus hurt stock value by withholding intellectual-property information.

A group of Rambus shareholders has dismissed its case against the memory designer, marking another legal milestone for the company.

Certain shareholders filed suit against Rambus in 2001, alleging that the company's actions while a member of a standards body known as the Joint Electron Device Engineering Council impaired the value of their shares. The plaintiffs alleged that Rambus withheld crucial information about its intellectual property while a member of JEDEC, between 1991 and 1995. Withholding the information subsequently led to a trial court victory against Rambus in favor of memory maker Infineon for millions in damages and attorney's fees.

The trial court's decision in the Infineon case, however, was largely reversed on appeal. After reviewing the appeal, the plaintiffs decided to dismiss their case.

"They took a look at the federal circuit ruling and decided not to go forward," said John Danforth, lead counsel for Rambus. "It is the lead plaintiffs that made the decision not to go forward."

The case was dismissed with prejudice, meaning that the same exact plaintiffs can't refile the suit or file an appeal, although other stockholders could bring a suit. Counsel for the plaintiffs could not immediately be reached for comment.

The dismissal is the latest turn in the high-stakes Rambus courtroom drama. In 2000, the Los Altos, Calif.-based company began to seek royalty payments from memory makers and others, alleging that SDRAM (Synchronous Dynamic RAM), the most common form of memory in computers, and DDR DRAM (Double Data Rate Dynamic RAM), a high-speed version of SDRAM, infringed on the company's patents.

Patent and semiconductor analysts said the claims, which dated back to April 1990, appeared to be legitimate and could be worth billions.

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Although some companies settled with Rambus, memory makers Infineon, Micron Technologies and Hynix (then Hyundai) decided to fight. Many members of the memory market vocally supported their effort. Lawsuits were filed in various courts in the United States and Europe.

At trial, Infineon won big, with the court throwing out Rambus' patent claims and awarding Infineon damages for fraud and attorney's fees. Infineon retained former Whitewater prosecutor Ken Starr to handle the appeal, but lost just as big.

In January, the United States Court of Appeals for the Federal District found that the trial court erred in ruling that Rambus did not have valid patent infringement claims against Infineon. The appeals court also set aside the following: a jury verdict that stated that Rambus committed fraud, an injunction against Rambus, and an order that Rambus pay Infineon millions in attorney's fees.

Still, Rambus remains embroiled in legal controversies. The Federal Trade Commission is currently conducting a trial into the company's actionsAnd Rambus' legal fees every quarter continue to substantially eat into the company's operating profit.