[Snowfun]

Hab mal ein aktuelles Fred Hager Update gefunden, leider nur auf Englisch.
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25 May 2002, 05:56 PM EDT Msg. 80697 of 80700

Rambus Update

Watch For German Ruling
Infineon Hires Big Gun, Kenneth Starr, For Appeal

By Bill Teel

Rambus (RMBS) and Infineon (IFX) are set to head to the federal appeals court in Washington, D.C. on June 3rd to argue over whether or not Rambus is deserving of the fraud ruling on SDRAM, as well as if the Markman definitions should be overturned.

We will have people attending the appeal who will be reporting on what happens in the courtroom.

The rumors circulating about a FTC lawsuit against Rambus are still just rumors, and while it wouldn’t surprise us if a case did proceed, it seems more logical that the FTC would wait until the appeal arguments are held, or even the appeals process is completed before they made any move. In our belief, the FTC investigation was likely at the urging of Micron, who has often sought out the FTC to help inhibit Korean firms from competing on pricing. While Micron often cries foul when Korean firms drop pricing, and accuse them of dumping, the truth is Micron effectively, through U.S. trade rules, undercuts all foreign manufacturers, and is somewhat price protected. But that’s another story.

While Rambus has hired big gun legal teams Munger, Tolles, and Olson, and Howrey, Simon, Arnold and White, to handle their appeal, not to mention bringing John Danforth on as company counsel, Infineon’s firm, Kirkland and Ellis, have brought in Kenneth Starr of Whitewater fame to handle their appeal arguments. Starr has been working with Infineon on the case for some time, but handling the appeal in June is interesting, as he is not a patent attorney.

For Rambus investors, or those interested in watching the company, the issuance of the technical expert’s opinion out of Germany, regarding infringement there in case against Infineon, will tell us a little more about whether or not the company will win or lose its patent battles over claims it has made on SDRAM and DDR DRAM memory in Europe. Before this calendar quarter ends, the expert hired by the German court will issue his decision on whether or not a patent filed by Rambus in 1990 in Europe contains technology adopted by Infineon to create SDRAM and DDR.

Additionally, the opinion will support claims of whether or not the company did commit fraud when it originally filed for claims to SDRAM and DDR in the U.S. The patent in suit in Germany contains the very same inventions contested in the U.S., although in the U.S. Rambus was asked to break the one original patent (like in Europe), into several patents, which the company did, and proceeded to add claims to over the course of several years.

If the expert determines there is infringement, one could assume that either the U.S. views patents differently than Europe (in the U.S., so far, infringement was not found, primarily based on a pre-trial Markman ruling, which limited the scope of Rambus’ patents), or the ruling out of Richmond, Virginia last year becomes even more vulnerable.

While the two courts and systems of determining patent validity do not share the same practices, it is hard to deny the fact that we are still talking about one invention that spans all borders, and the products that may infringe do not change from country to country.

If the German expert finds that Rambus’ patents aren’t being infringed, the case Rambus is making in Europe against all manufacturers could end, or suffer a lengthy appeal process (which it may anyway), considering the same expert will also offer his opinion regarding Micron and Hynix’s patents.



If Rambus really didn’t commit fraud in the U.S., the German expert’s opinion will help Rambus’ case indirectly, in that they had the same inventions that are being contested everywhere on the books, and available to everyone in 1990, and well before the company entered into the standardization body they were found to have defrauded later on.

Rambus did continue to amend their European patent throughout the course of the years it was in the process, so whether or not these changes were tainted by their involvement in JEDEC is questionable, although the Italian experts, as well as the Judge, determined Rambus’ patents, despite the amendments, were not the result of their involvement in JEDEC. Better put, it made no difference what Rambus did or did not do in JEDEC, because the invention was still the same.

Rambus was cleared on fraud charges relating to DDR in Richmond, because the company was not a part of the standards committee when the memory was being determined. However, the judge did impose an injunction that covered SDRAM and DDR. Infineon contests that DDR would not be possible without SDRAM (which it wouldn’t be), and therefore Rambus cannot claim ownership of DDR. At the same time, there are new innovations in DDR that make it run faster, and Rambus argues those concepts are claimed in their patents. While the court in Richmond concluded there was no infringement on either, the judge did impose an injunction on Rambus for both SDRAM and DDR, relative to the fraud. There is a chance Rambus could lose SDRAM, but win on DDR.

In Germany, if the designs of the original 1990 RDRAM memory (the patent was granted in 1999) contain truly novel concepts that are being used today in SDRAM and DDR, according to an expert who has spent the better part of his adult life studying the field, and not hired by either company to evaluate, then Rambus’ case is that much stronger against fraud, in my opinion, considering the argument in the U.S. centers on whether or not Rambus patented concepts it learned about at the JEDEC meetings years later.

In the most objective of eyes (the German expert’s) the patents do or do not infringe. In Italy last year, in the case of Rambus vs. Micron (MU), and the only other case where experts were hired by the court, infringement was found. The judge there subsequently deemed there was not enough evidence, and sent the case to a higher court for further review. Had Rambus won that case, either Micron would have had to stop producing SDRAM memory in Italy, or paid a royalty. It was a hot potato for a judge in a small community while elections were happening, and it didn’t go Rambus’ way. The ruling was shortly after Rambus lost in Richmond, and didn’t get the kind of attention the Richmond trial received. None-the-less, on the technical merits of the patents, as determined by experts that were both engineers, and patent lawyers, infringement was found.

The past and Italy aside, the upcoming German expert’s opinion will cause Rambus’ stock to move either way. Although some Rambus watchers believe the stock is already valued as if the company has lost their rights to collect royalties on all memory, they are still collecting revenue for their SDRAM and DDR patents from almost half of the memory makers. A pretty hefty amount, we assume, although Rambus does not break it up for us. If there is a chance they will lose that portion of their revenue, the company’s bottom line will suffer, and their growth prospects will turn to RDRAM in PCs, games, communications and consumer devices, where they are continuing to expand their presence, but having trouble gaining traction in PCs.

In recent weeks, more news about Rambus’ involvement in routers and switches have emerged, as Rambus’ RDRAM is being used in Cisco switches, and Juniper routers. Although such design wins are not major volume products, they are impressive, and certainly help support Rambus’ reputation as a performance leader, and not just the designer of a memory Intel wanted to use with their chips.

In the near-term, unless there are other big design wins, only the legal events will encourage investors to take action on Rambus. Those watching should consider the German expert’s opinion seriously. In the U.S., there are questionable aspects of the fraud verdict, and the Markman ruling, that are up to the appeals court to decide.

In our opinion, it comes down to the technology, and if the original concept is determined by an expert trained in the arts as being infringed, then Rambus’ battle increasingly becomes one against a standardization committee’s rules, and not necessarily infringement.

This is why, possibly, Infineon has hired Kenneth Starr for the appeal. The company’s best shot is convincing the court to keep the fraud verdict, which would make very hard for Rambus in the infringement case, not to mention, in general.

The best-case scenario for Rambus is if the German opinion is issued favorably, the fraud is thrown out, and the Markman is overturned. If the fraud sticks, all bets are off, and Rambus, and their investors will be in for some very tough going in the near-term, or until their existing and future technologies gain more market share.

It is estimated by some that the appeals court could issue their ruling before the end of the year.