RICHMOND, Va. — Rambus Inc. has taken a serious blow in its attempt to pursue patent infringement royalties from SDRAM vendors. In a pre-trial ruling, a judge has ruled that the Rambus bus architecture is new and different from that used in SDRAM. While the company still plans to proceed to trial, the decision seems to significantly undercut the strength of its case. In a separate development, just days before the trial was scheduled to begin, the court granted a postponement until next month.
Rambus has been asking for royalties on four key patents granted late in 1999. One of the main patents, No. 5,915,105, which lists Rambus co-founders Michael Farmwald and Mark Horowitz as the inventors, concerns integrated circuit I/O over a high-performance bus interface.
In an extensive ruling, U.S. District Court Judge Robert Payne evaluated whether this bus was a new invention, and if so, whether that would permit Rambus to pursue royalties from SDRAM companies. "The specification clearly and unambiguously describes the bus of the invention to be the new inventive, multiplex bus," wrote the judge. In its suit, Rambus had asserted that "bus" was a generic term, and that its technology would work with any bus, and therefore the specific bus architecture used within chip designs was irrelevant.
Judge Payne, however, rejected this argument, writing, "The inescapable conclusion that emerges from comparing the claims of the patents with the inventors' fulsome textual description of the invention is that the inventions include a new bus and new devices that work with the inventive bus." As a result, the Rambus patents are based upon the use of a new technology, this mulitiplexed bus, and therefore are not designed to be used with the same bus designs used in SDRAM chips.
Rambus executives could not be reached for comment. However, in a statement the company said its patents were valid, and they were ready to proceed to trial. "In this ruling, the court interpreted the scope of disputed terms in the four Rambus patents in suit. Based on this interpretation, Rambus maintains its allegation that Infineon has infringed these four patents. Rambus is prepared to protect its intellectual property from those who infringe and looks forward to presenting its case to the jury."
The case was previously scheduled to begin next week. But at the last minute, the trial was postponed until April 10. This decision was due to an eleventh-hour handover of documents from Infineon to Rambus regarding the case, some months after the close of the discovery period in which all litigants are required to turn over evidentiary documents to the other side. In this case, the delay is to give Infineon more time to search for other relevant documents and evidence, which it then must present to Rambus.
In the pre-trial hearing phase, the two sides held what is called a Markman hearing before Judge Payne to argue whether the patents applied to the bus architectures used in modern DRAMs, or whether the Rambus memory components use a different bus architecture.
"The judge is trying to define what a bus is, because it is a term that we tend to use quite loosely," said Bob Merritt, senior analyst for Semico Research Corp. (Phoenix). "If the specific bus architecture used is only the bus architecture related to direct RDRAM, then it will be difficult (for Rambus) to prove infringement, since SDRAM and DDR DRAM do not implement RDRAM architectures."
There has been speculation that Rambus may seek to settle out of court if the court ruling limits the definition of its patents, although the company's statement indicates the company prefers to go to trial.
If Judge Payne ruled that the Rambus patents are limited to the packet-type architectures used in RDRAMs, but not to a multiplexed bus, then the Rambus patents would lose much of their force. However, if a jury rules the Rambus patents invalid, that would destroy Rambus' ability to extract royalties from the five companies that have settled with Rambus. Those include Mitsubishi Electric, NEC, Toshiba, and Hitachi. Lawsuits are under way with Hyundai Electronics, Micron Technology and Infineon.
Rambus has infuriated much of the DRAM industry with its patent policy, which entails asking for higher royalties from companies which cooperate with Rambus and support the manufacturing of RDRAMs than from companies — such as Micron and Infineon — which have delayed mass production of the RDRAMs.
According to one source, who preferred to remain unnamed but is well-versed in DRAM litigation issues, "Rambus has been asking for 2.6 percent royalties on its synch DRAM patents, and that is for the companies that have cooperated. The memory business is so tight right now, people feel that Rambus is squeezing them too hard."
For companies that don't play along with Rambus, it is a bet-the-company situation. "Rambus sent out a memo saying that if you don't work with us, there is no law that says we have to license the synch DRAM patents to you. If a judge were to agree with Rambus and put a broad definition on what is meant by certain words in their claims, that could put them out of the DRAM business. So the companies opposing Rambus are really throwing the dice, and they must be ecstatic with a tight ruling by the judge."
Even a 2.6 percent rate would add more than a dollar to the cost of an SDRAM module, which costs about $40 dollars now. Some of the larger DRAM vendors turn out five million or more modules a month.
In a recent interview, Dave Mooring, the president and chief operating officer at Rambus, told EE Times that patent royalties from the synch DRAM patents now exceed revenues from RDRAM royalties.
Rambus share prices plunged this week as analysts issued sell orders, based on preliminary reports that indicated the judge had ruled against Rambus.
