Rambus and Infineon Technologies have called a truce in their five-year-long battle over the intellectual property rights to the memory technology used in most of the world's computers.
The two companies have agreed to settle their legal differences, ending separate cases related to Infineon's alleged use of patented Rambus technology and Infineon's alleged role in a conspiracy five years ago to thwart the adoption of a memory standard designed by Rambus and backed by Intel.
From 15 November, Infineon will pay Rambus US$5.85 million each quarter for a licence to existing and future Rambus patents. The payments will continue until 15 November, 2007 unless Rambus is able to sign licensing deals with the other SDRAM (synchronous dynamic RAM) vendors. If that occurs, Infineon will continue to pay $5.85 million a quarter up to a maximum of $100 million in payments after November 2007, capping the total amount of payments to Rambus at $150 million.
The companies did not specify the terms of any payments after November 2007 should Rambus fail to sign additional licensees, but Infineon was "the poster child" for the wide-ranging disputes between Rambus and the SDRAM industry, and agreements with the other vendors should fall into place now that financial terms have been laid out on the table, said Andrew Updegrove, an attorney with Gesmer Updegrove who works with standards-setting organizations and has followed the Rambus/Infineon case.
This deal was negotiated exclusively with Infineon and should not be interpreted as a framework for future deals with SDRAM vendors such as Hynix Semiconductor or Micron Technology, said Harold Hughes, chief executive officer at Rambus. Hynix and Micron representatives did not respond to requests for comment on the Infineon settlement.
However, Infineon has been granted "most-favored customer" status as a result of this settlement, said Bob Kramer, director of litigation at Rambus. That term can be interpreted a number of different ways, but it generally means those customers are receiving special consideration for their relationship, he said.
Given that Infineon is the first SDRAM vendor in the recent disputes to put an end to litigation with Rambus, it's safe to assume the company's rate is better than what other SDRAM vendors will be charged during any future settlements, Kramer said. "People who settle first or take a license first get better rates," he said.
Rambus designs and licenses memory and bus technologies to chip makers. The company and Infineon have been locked in legal wrangling since 2000, when Rambus first sued Infineon and other makers of SDRAM alleging that the SDRAM vendors were manufacturing chips using technology developed and patented by Rambus.
Some companies, such as Samsung Semiconductor and Hitachi, decided to sign licences with Rambus for SDRAM technology. However, the rest of the industry cried foul, given that Rambus had at one time participated in the standards-setting organization that developed the SDRAM technology and had contributed technology to the final standard. Attempting to extract royalties based on that standard constituted fraud and should invalidate Rambus' patent claims, the SDRAM vendors argued.
Infineon and most of its SDRAM counterparts countersued Rambus in 2000, claiming the company improperly used its influence with the standards body, the Joint Electron Devices Engineering Council, to purposefully design Rambus technology into the SDRAM standard. A Virginia jury sided with Infineon in 2001, convicting Rambus of fraud in 2001 and fining the company $3.5 million.
But on appeal, Rambus simply argued that a poorly worded patent disclosure policy did not require a participant in the discussions to reveal patents they currently held or were seeking. Two out of three appeals court judges agreed with Rambus, lifting the fraud judgement and breathing new life into Rambus's patent claims in 2003.
That appeals court sent the case back to the lower court in Virginia and Judge Robert Payne. In early March of this year, Infineon's new tack of focusing on claims of "litigation misconduct" on the part of Rambus' lawyers during the litigation found favour with Judge Payne, who dismissed Rambus' patent claims after allegations that Rambus lawyers destroyed documents and produced false testimony.
This ruling changed Rambus' strategy with Infineon, leading Rambus to approach Infineon with settlement terms rather than arguing yet another appeal, said Christoph Liedtke, an Infineon spokesman. Rambus's Kramer said he was unaware of which company approached the other first, but did not deny Liedtke's statement. With Judge Payne's latest ruling, Infineon was finally in a favorable position to accept licensing terms, Liedtke said.
"We put an end to litigation that would have been prolonged far into the future. This is a very moderate payment, a flat fee, not volume based. It gives us financial stability, and gives us access to (Rambus' technology) under favorable conditions," Liedtke said.
The settlement also absolves Infineon from another legal headache looming over the company. Last May Rambus filed an anti-trust lawsuit against Infineon, Micron, Hynix and Siemens AG alleging that the companies conspired to artificially inflate the price of RDRAM (Rambus DRAM), a memory technology backed by Intel that was set to compete with SDRAM in 1999 and 2000. Four Infineon executives and one Micron executive have already pleaded guilty to price-fixing charges as a result of a separate investigation by the US Department of Justice.
But with this settlement, Infineon and Siemens are absolved of all legal charges concerning the anti-trust case, Hughes said during the conference call. Siemens spun off its chip business in 1999 to create Infineon.
Rambus declined to comment on how the settlement with Infineon would affect the other cases it has pending with Hynix and Micron. It holds a strong position in the case against Hynix, having received a ruling of summary judgment validating most of its patent claims against Hynix's products. A trial is scheduled for June to decide the merits of the remaining claims. The Micron case is not scheduled to come to trial until February 2006.