Rambus fined $3.5M for fraud

After losing the battle to eke money out of Infineon Technologies AG for alleged copyright infringement of its patented computer chip technology last week, memory chip designer Rambus Inc. was found guilty of fraud and fined US$3.5 million in punitive damages Wednesday as the judge closed the book on the case.

Rambus plans to appeal the ruling, which follows the same judge throwing out the final three of 57 infringement charges by the company on Friday.

U.S. District Judge Robert E. Payne ruled that Rambus had acted improperly when it obtained patents on chip designs which were being developed at the time by the JEDEC (Joint Electron Device Engineering Council), an industry group that sets standards for semiconductor products and technologies, Rambus said in a statement.

"This is fraud because JEDEC has specific rules saying you have to disclose patents and applications," John Desmarais, Infineon's trial attorney, said in an interview. "Rambus intentionally violated those rules" by not informing JEDEC that it had obtained patents for the standards being developed, he said.

The jury awarded the $3.5 million to Infineon because they were defrauded as a member of JEDEC, Desmarais said. He said the ruling may set a precedent allowing other members of JEDEC, which include Sun Microsystems Inc., Motorola Inc. and Mitsubishi Corp., to also file suit against Rambus. "I think it's a very important ruling for the industry," he added.

Rambus Chief Executive Officer Geoff Tate maintained that Infineon's charges were "completely baseless." Rules pertaining to JEDEC "have been shown to be confusing, conflicting, poorly communicated and generally not complied with by other JEDEC members," he said in the statement.

The Los Altos, California-based company sued Infineon claiming that it had fringed upon its design patents in manufacturing SDRAM (synchronous dynamic random access memory) and DDR SDRAM (double data-rate SDRAM). Rambus cut licensing deals with other chipmakers, while Infineon, Micron Technology Inc., of Boise, Idaho and South Korea's Hynix Semiconductor Inc. have held out on paying royalties to the company.

One analyst said the ruling is good for the industry. "I think it's good that SDRAM and DDR SDRAM can go ahead without any constraints by Rambus," said Kevin Krewell, a senior analyst with MicroDesign Resources Inc. "It hurts Rambus from a financial point of view, but it hasn't invalidated their patents on their own technology," he added. Rambus' proprietary RDRAM (Rambus dynamic RAM) technology was not involved in the suit.

The verdict is also a good sign for JEDEC, because it will help eradicate fears that they have become irrelevant in the industry, he added. "It's a good thing for JEDEC that they've been able to maintain their integrity."

He noted that with Rambus appealing, the case is likely far from over. "This could easily go on for another year or two," he said. Such cases typically end up going back and forth with suits, countersuits and appeals before one company is declared victorious, he noted.

The court indicated that the jury's award exceeds Virginia's punitive damages cap of $350,000, according to a report published in Wednesday's Richmond Times-Dispatch, implying that the amount could be reduced.

Rambus, in Los Altos, California, can be reached at +1-650-947-5000, or http://www.rambus.com/. Infineon, in Munich, can be reached at +49-89-234-0, or online at http://www.infineon.com/.

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