Tech Industry

Rambus to continue royalty quest after ruling

The U.S. Supreme Court declines to hear Infineon Technologies' appeal against the memory chip maker, clearing the way for Rambus to prove that memory makers are violating its patents.

The U.S. Supreme Court on Monday declined to hear Infineon Technologies' appeal against memory chip maker Rambus, clearing the way for Rambus to prove that memory makers are violating its patents.

With the ruling, Rambus will now go back to trial court to try to demonstrate that its intellectual property is being infringed in memory chips made by Infineon. The industry is watching the case closely because it will have a large impact on similar suits Rambus has filed against other memory makers, such as Hynix and Micron Technology, and could lead to billions of dollars in royalty payments.

The Supreme Court's decision to opt out of hearing the case also effectively kills Infineon's fraud claims against Rambus.

"It's not over until the fat lady sings, and today, the fat lady sang," Rambus general counsel John Danforth said.

The decision means a federal appeals court ruling handed down in January now stands and will set the stage as Rambus' original patent infringement suit heads back to U.S. District Court in Virginia.

Initially, the district court threw out Rambus' patent claims and ruled that the company committed fraud when it joined a standards body without disclosing its patent activities. Infineon claimed that the lack of such a disclosure had misled memory makers into adopting technologies Rambus later said were its own. The jury also awarded Infineon attorney's fees.

The appeals court subsequently threw out the fraud verdict, eliminated the award of attorney's fees and ruled that the trial court should not have dismissed Rambus' patent claims--prompting Infineon to take matters to the Supreme Court.

In 2000, Rambus began filing patent-infringement lawsuits that shook the entire memory market. The company claimed that Hitachi, Hynix (formerly Hyundai), Infineon, Micron Technology and other memory makers were violating its patents by manufacturing SDRAM, the most common type of memory used in computers today, and DDR DRAM, its successor. Industry analysts previously estimated that royalty payments to Rambus could reach more than $1 billion.

Some manufacturers, such as Hitachi and Samsung, signed license agreements. Others, such as Infineon, decided to take legal action.

Representatives for Rambus and Infineon said a date has not yet been set for the district court in Virginia to rehear the case.

Danforth said Rambus is open to reaching a settlement, rather than making another trip to court. But Infineon spokesman Matthew Schmidt said his company believes there are no grounds for a settlement and referred to a statement issued by his company:

"It is regrettable that the court will not hear arguments in these matters, despite the evidence presented in the appeal and the separate briefs filed with the court by representatives of commercial organizations and 15 states...We intend to vigorously pursue a full and fair resolution," the Infineon statement says.

Rambus shares soared up $7.07, or about 38 percent, on the news, to end the regular trading session at $25.80. Infineon, meanwhile, gained 1 cent, or 0.07 percent, to close at $13.91 a share.