Rambus and Infineon go head-to-head Monday

Memory systems designer Rambus Inc. is about to enter the first of several lawsuits that could eventually determine the livelihood of the company.

On Monday, Rambus and Infineon Technologies AG are scheduled to make opening remarks in a Virginia courtroom in the first of several patent infringement lawsuits filed by Rambus against computer memory manufacturers.

The lawsuits against Infineon and several other chip makers were sparked when the companies refused to pay licensing revenues to Rambus for patents the company holds relating to SDRAM (synchronous dynamic random access memory) – the most common type of computer memory used in desktop and notebook computers today. Rambus started demanding payment for the patents in early 2000, when chips based on its own, competing memory technology, Rambus DRAM (RDRAM), were not yet in production.

It initially faced strong resistance from many major semiconductor manufacturers which resented being asked to pay – not because they disputed the patents held by Rambus but because the SDRAM specification was developed under the auspices of JEDEC (Joint Electron Device Engineering Council), a group established in 1960 to create industry-wide technical standards for components to ensure products from different manufacturers work together.

Until it began demanding licensing revenues, Rambus’ patents were included in the DRAM patent pool and available royalty-free to any company wanting to produce DRAMs.

Despite the initial resistance, companies began signing licensing deals with Rambus, led by Toshiba Corp. which signed the first deal in June 200.

Among the major chip makers there are now three hold-outs, all on Rambus’s hit-list: Infineon, Micron Technology Inc., of Boise, Idaho and South Korea’s Hynix Semiconductor Inc., which was called Hyundai Electronics Industries Co. Ltd. until recently.

The ongoing legal challenges are having an adverse effect on the company’s bottom line. Last quarter its pro-forma net income was US$8.2 million, while its charges associated with litigation were $7.3 million.

Rambus originally anticipated that many of its lawsuits would be over by now, but as one gets postponed, the others get knocked back as well. The company is currently suing Infineon, Micron and Hynix in Germany, with the Infineon case scheduled to begin on May 18 and the Hynix and Micron cases expected to begin in late September.

The company also has a suit against Micron in Italy, which is expected to go to trial in a few weeks following expert testimony next month.

In the United States, Rambus expects the Virginia trial against Infineon to finish around the middle of next month, while its patent infringement case against Micron in Delaware is scheduled to begin in October. There is currently no date set for the company’s lawsuit against Hynix in California, but Rambus expects the trial to take place during the first half of next year.

At stake in the cases is not just Rambus’s future but also the pricing policy of a whole industry sector, according to market watchers. “If Rambus loses, it will be much more of a free market,” said Dean McCarron, principal analyst at Mercury Research Inc. “And if (Infineon) lose, it will mean higher prices for components,” which could eventually mean higher prices for consumers.

Rambus, in Los Altos, Calif., can be reached at http://www.rambus.com/.