Rambus Steams Ahead 29 comments
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Why all the interest in Rambus (RMBS) lately? In a previous piece I mentioned several "streams" of activity spurring the investment world to take another look at this small company with such large disruptive technology. Today's article concerns the recently finalized Hynix vs. Rambus case (00-20905) from the Northern District of California. The Rambus story involves huge back damage payments, as well as, significant forward reaching licenses. These realities make the stock somewhat recession proof. This is one of the reasons for current interest in the company. Another primary reason is the impeccable work of Judge Ronald Whyte in his court in San Jose. Critics often point to Rambus as a litigious patent company, but this chapter of the saga begins in the year 2000 with a conspiracy pincer litigation move by two of Rambus' antagonists, Hynix and Micron (MU). Here's what Judge Whyte wrote: Finally, after almost a decade, the Hynix/Micron litigate-to-death strategy has backfired in California. Judge Whyte's recent final judgment has issued. The three part trial was a shutout in favor of Rambus. In Phase 1 Hynix sued Rambus claiming their patent infringement claims were barred by the doctrine of unclean hands; the court ruled entirely for Rambus. Phase 2 was a jury trial where Rambus alleged that Hynix infringed many of its patents. On April 24th, 2006, after very short deliberations, the jury unanimously ruled Hynix was guilty of infringing 37 patents. Phase 3 was another jury trial, this one concerned Rambus' conduct (issues of spoliation, so-called deception at JEDEC, among other issues were considered). Once again Rambus triumphed thoroughly. Judge Whyte was meticulous throughout giving Hynix a wide berth to attempt to prove their charges, but to no avail. The rulings in all three phases are crafted eloquently and buttressed with numerous findings of fact. Judge Whyte, widely considered the preeminent patent judge in the U.S. is almost never overturned on appeal due to his attention to minute detail, and his precise language in written summations. Rambus was awarded 397 million in past damages and Hynix was ordered to start paying 4.25% on most varieties of DRAM going forward. Hynix has indicated they will appeal, but they will have to scrape the bottom of the barrel to find any grounds. They have until approximately March 27th to make good on this threat. Should they appeal, they will have to put in place a bond in at least the amount owed to Rambus, nearly 400 million dollars. Hynix claims to not have that kind of money. They also stated that under current credit conditions they will not be able to raise it. So, what will happen? Back to the boiling pot. In addition to an approching blockbuster antitrust case, Rambus has reached final judgment of infringement against one of the major Memory Manufacturers (MMs). Hynix must pay 400 million, or guarantee that amount to Rambus with bond. Within the next week or so we will know if perhaps Rambus has come to settlement terms with Hynix. The least painful path for them maybe an amortized payment scheduled granted by Rambus. Such an arrangement would not only pad the Rambus bottom line for years to come, but might bring the other infringers to heel. This domino effect occurs when litigants know they are doomed to lose, when prior court rulings preclude victory due to collateral estoppel or other precedential features. Complex litigation, such as the cases Rambus has been involved in, can seem to go on forever. The only realistic conclusion is settlement between the parties. This transpires because of a "business solution". Early in the Hynix case Judge Whyte stated that this case cries out for a business solution. Unfortunately, extension of the litigation process has been part of the strategy of one of the parties (ie. the MMs). Nonetheless, there is always a point at which continuing to litigate becomes more expensive than settlement. Hynix seems to have reached that point. What other parallel streams favor Rambus ascendency? Stay tuned.
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Prufrock makes reference to Rambus's disruptive memory designs. Hmmm, ya' think enabling computers to perfect stem cell research, HDTV, and I-phone magic might be disruptive? Just ask the memory manufacturers who have risked everything for the past 15 years in an attempt to stall Rambus's march to greatness.
But who is this modern Melville this Post 2000 Poe, this TS Rambiot? He writes with such clarity about such a fog shrouded enigma of a patent litigation case, it clears the mind and refreshes the soul........
What makes no sense to me is how the stealing can continue to go on after a jury of our peers, the ALJ, and the Appeals courts and the current judges all continue to say Rambus is a victim..
Toasty "I'm just steaming from my head" 54
Here a company solves the memory bottleneck that applies to any device that uses dynamic memory and then gets ripped off left, right and center.
Why pay when you can litigate, this was exactly the stand taken by Micron, Hynix, Siemens/Infeneon, Samsung, Nvidia and hundreds of others. They sue Rambus on two different coasts in the US one day apart in their effort to "litigate Rambus to death". The get negative articles written to influence public opinion and they even use their political muscle to get the FTC to launch the largest, most costly case in its history.
A couple of judges (Payne and Robinson) rule against Rambus with decisions that has an entire legal community baffled and made many Rambus shareholders wonder if something was not quite on the up-and-up.
BUT the little company that could survived and then started winning landslide victories in state and federal courts. The FTC's own Administrative Law Judge even said that the FTC was going after the wrong party. The DOJ sues the same companies and they PLEAD GUILTY to price collusion. Executives even went to jail on top of close to $ 1 billion in fines.
It is all coming down the wire with the Antitrust case looming and where the very memory manufacturers are facing charges of price collusion and a strategy to "kill Rambus" - something they all have already pleaded guilty to. Who was the ringleader, who used the most political clout here in the US? According to many and other trials all fingers seem to point at Micron led by Appleton who actually went to the DOJ and got a plea agreement (claiming they were not the ringleader).
They almost succeeded but IF the AT trial actually happens the world will see a VERY different picture of these memory manufacturers. They will see how they colluded, how articles got written, how former FTC employees, judges and law clerks all connect with prestigious law firms representing the memory manufacturers in a huge web with one target: Kill Rambus. The evidence already in the public domain is astonishing, emails between manufacturers that plain and simply outline the collusion, even with one saying "visit me in jail if someone finds out what we're up to" (paraphrased).
Finally the tide is turning and the articles written are taking a turn and the public at large start to see the complete picture of this massive effort to drive a small innovative company out of business.
There will be more coming so stay tuned!
Nice job of explaining some complex events!
Keep up the great work; I want to know MORE!
I have some more questions, hopefully you can answer them in future articles.
Why is Rambus labeled 'litigious' or 'a litigation company' when they were sued twice by the manufacturers of DRAM? Didn't Rambus also get sued by Samsung? What happened in that case?
How can these same manufacturers that were found guilty of price fixing by the U.S. Dept. of Justice defend themselves against Rambus in that big trial you mentioned? Didn't they admit they are guilty already?
Aren't these DRAM makers going under? I read Micron and Hynix were both reporting record losses nad bleeding cash. Isn't the industry under pressure to consolidate? What happens then?
Why do you think the market hasn't seen the potential here? Seems like there should be more interest.
Rambus market cap is about $1 billion.
What is the weighted average expected back damage payments? How do you calculate that? From whom? On what?
What is the weighted average of expected forward reaching licenses to be earned in 2009, 2010, 2011, 2012? From whom on what? What are the prospects of licenses on new IP?
The memory cartel--it's grand! Look at all the extorsion they extract--they haven't made profits in years. Could it be that this is an example of a market so competitive that it cuts its own throat repeatedly? Mostly owing to government-based competition?
No--they definitely are evil--producing products at a higher cost than they receive for them. We definitely need to bleed even more money from them by giving it to Rambus and it's passle of lawyers.
The posters here all agree: that's the future of America.
Sue the manufacturing world. Produce nothing ourselves but ideas.
I for one hope for a better America. And I'm ashamed of many of Rambus' patents that are in play for SDRAM/DDR.
so, the companies that "Produce nothing ourselves but ideas" should just have those ideas taken from them? Did Einstein produce anything? Did his ideas contribute to society? The fact that these companies today have a hard time making money does not mean they have a license to steal, there's no difference between intellectual and physical property when it comes to theft. They STOLE the blueprints, just as bad as robbing a store. Architects don't build buildings so I guess their drawings should be free, especially if the contractor loses money, right?
Get a grip and start discussion based on FACTS please.
The version of events above is going to change slightly depending upon your point of view--but it can't seriously be put forth that Rambus played 100% ethically--and I'd add that they didn't play wisely either.
Let's take a case in point from a hyper-respected peer of both Rambus and Micron: Intel--Titan of High Tech. For the longest while there in the late 90's, Intel claimed that they'd only support RDRAM on their newest processors--and that the roadmap would lead entirely to Rambus. They thought they could use their clout to move the market, and Rambus was the best way to go, they said. But even Intel abandoned Rambus eventually--did you notice that? I wonder why. They learned the hard way that you can't go with the company that's trying to pull patent-troll extortion on the entire industry.
I believe that ideas of a fairly involved nature that have gone on to be demonstrated in physical format should be patentable--by someone who intends to manufacture them and needs monopoly protection for the same. But trying to take hostage an entire industry standards group--a group trying to produce open standards to insure value to consumers at the lowest price--that shouldn't be sold as the American way. Open standards in technology are a good thing--and they are here to stay.
If Rambus had succeeded with their original plan, every computer in the world would have been more expensive, and it'd be lining the pockets of a select few. I don't think the computers would have been any better today as a result. (I hope Rambus' new technology is as good as claimed...but we're not talking about that here.)
Even if the DRAM market were a sane market, and the livelihoods of hundreds of thousands weren't now potentially in the offing as a result of Rambus' ploy--it's not a good thing to grant a monopoly to Rambus, if it's idea is just to be a troll. (I use this in the sense that it's going to strictly be an IP company--as Rambus freely admits as its business model.)
In the crazy DRAM market, where foreign governments inject capital and over-expand to try to increase their populace's standard of living--memory is so undervalued compared to the immense IP poured into producing it competitively that it's almost unbelievably ironic how lame the patents are by comparison, which Rambus is trying to get rich on.
It'll be a miracle if Micron can survive the foreign-government competition--it's been a miracle this entire past decade. It's not certain that they can--but Rambus is not helping anything.
And it's still quite likely that the Rambus patents governing SDRAM/DDR will be ultimately thrown out for one or more of the above basic reasons. Sure, you've got a seasoned judge in Cali that is soundly ruling in favor of Rambus all of the time. But it's not over. I don't have supreme faith that the courts will get it right--but they just may. Ironically, the European courts seem to have a handle on this situation better than the American.
If your hope for America is to play patent law against Korea, Taiwan, and China, once they manufacture everything, and we nothing--good luck. I think I'll learn Chinese, in that case.
(Hint: If that's our only business model, they'll stop paying us for the IP.)
"The ideas included in the patents in play on SDRAM/DDR were incorporated by JEDEC naturally, as they are obvious improvements--I could have come up with them."
Are you real sure you could have come up with:
1.duel-edge clocking
2.phase-locked loop
3.variable burst length
4.programmable latency
You must be one bright dude. In fact I wonder why you didn't just go ahead and take credit for these wondrous, but "obvious" discoveries yourself.
Prufrock
Besides, it was standard practice that JEDEC members did not have to reveal their patents (but that those patents that get adopted would charge reasonable rates), but Rambus revealed all of theirs (pending patents) anyways.
Is Rambus the next Qualcomm? beanieville.blogspot.c...