Rambus Loses Suit Against Tech Rivals

A business model based on litigation is risky – Rambus loses more than half its stock value

Rambus has lost its $4 billion antitrust lawsuit against Micron Technology and Hynix Semiconductor.

The case, originally filed in 2004, asserted that that Micron and Hynix colluded in the 1990s to “Constrain availability of Rambus’ RDRAM and keep its prices unnaturally high relative to its competition, while holding competitive DDR pricing low, in an effort to eliminate Rambus’ RDRAM memory technology from the marketplace. Upon succeeding in eliminating RDRAM as a competitor in the main memory market, the defendants raised the prices of DDR by as much as 500 percent,” said the technology licensing company in a statement.

Battling it out

The companies, however, have been battling back and forth in the courts for over a decade, with Hynix and Micron having filed suits against Rambus in 2000. While the company prevailed against Hynix , this case marks its second loss against Micron, this year.

Rambus, which generates revenue through licensing its patents, rather than manufacturing, has spent more than $300 million on infringement suits over its more than 1,000 patents, since its inception in 1990, according to reports, including suits against IBM and Nvidia in 2010.

“We are disappointed with this verdict as we believe strongly in our case. We thank our legal team and everyone who has supported Rambus in this case over the past seven years. We do not agree with several rulings that affected how this case was presented to the jury and we are reviewing our options for appeal,” said Harold Hughes, president and chief executive officer of Rambus. “Regardless of this outcome, we remain steadfastly committed to innovation as Rambus engineers and scientists continue to advance the frontiers of technology for the benefit of our customers and consumers worldwide.”

Patent litigation, once rarely reported in the wider media has received unprecedented attention this year, particularly in the mobile market with Apple, Samsung and Google making headlines, while Microsoft has been involved in patent litigation for years.

Reports reveal that Rambus not only suffered in the court room, but on the stock market as well, where it lost almost two thirds of its stock value before rallying slightly, to half its pre-suit value.

According to a Reuters report, Colleen Chien, a professor at Santa Clara Law believes companies that focus on patents rather than products face significant risks to their business model since each important case could have devastating consequences, noting that this case reflects that a business model built on litigation and licensing is “anything but a sure thing.”