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Shareholder suit targets Rambus

A group of Rambus investors has filed a class-action lawsuit against the chip company, alleging violations of federal securities laws.

After a complex ruling in the legal battle between chip companies Rambus and Infineon, a group of Rambus investors has filed a class-action lawsuit against the company, alleging violations of federal securities laws.

The case was filed Friday in U.S. District Court for Northern California on behalf of shareholders who purchased Rambus stock between Feb. 11, 2000, and May 9, 2001. It alleges that chip designer Rambus misled investors about the royalties it could reap based on a series of patents related to computer memory.

The class-action lawsuit alleges that during the course of the battle between Rambus and German chipmaker Infineon, it became clear that Rambus' patents were fraudulently obtained, causing Rambus stock to plunge from $450 per share to below $10.

Another U.S. District Court last week set aside an earlier verdict that had found Rambus liable for fraud related to its patents. However, the same ruling ordered Rambus to pay $7.1 million in legal fees incurred by Infineon, and Rambus has not been able to prove that Infineon violated Rambus patents. Rambus is appealing the ruling.

Rambus claims that its patents entitle it to receive royalties for all manufacture of SDRAM, the standard memory format used in PCs, as well as for faster DDR DRAM. Infineon and the class-action lawsuit allege, however, that Rambus' patents were obtained fraudulently after the company patented technologies discussed by an industry consortium for inclusion in the SDRAM standard.

The class-action lawsuit was filed by Beatie and Osborn, a New York law firm.

Staff writer Matthew Broersma reported from London.