Judge orders Rambus to pick up $7M legal tab for Infineon

Judge orders Rambus to pick up $7M legal tab for Infineon
SAN MATEO, Calif. — A federal judge has upheld the majority of a jury ruling which determined that Infineon Technologies AG did not violate memory patents held by Rambus Inc. The judge further ruled that Rambus had acted in bad faith during the trial process and held the memory intellectual property vendor liable for all of the $7.1 million that Infineon was forced to spend on legal fees in order to defend itself against what the judge called a "baseless, unjustified and frivolous" suit. Rambus is already planning its appeal.

Judge Robert E. Payne of the U.S. Federal District Court in Virginia issued a ruling earlier this week in which he refused to set aside a jury verdict issued in May. That verdict held that Infineon did not infringe upon any Rambus patents and that Rambus had fraudulently deceived the memory standards body Jedec during the development of SDRAM technology. Judge Payne also granted a motion that would bar Rambus from taking further legal action against Infineon, although he set aside one part of the jury's decision, which cleared Rambus of allegations that it deceived Jedec during the standards-making process for double-data-rate (DDR) DRAM.

Los Altos, Calif.-based Rambus develops high-speed interfaces that are used primarily in Rambus DRAM devices, but the company has contended that its patented technology is also critical to standard SDRAM as well, and has sued several major memory vendors for royalties related to their production of SDRAM products. The Virginia case is the first to reach any kind of resolution, although a similar case against Micron Technologies Inc. is scheduled to begin in Delaware in October.

"The clear and convincing evidence shows that Rambus knew, or should have known, that its patent-infringement suit was baseless, unjustified and frivolous — one which reasonably intelligent people should have known would have no chance of success," wrote Payne is a ruling released Thursday (Aug. 9).

The court went through a lengthy process, known as a Markman hearing, to determine the exact scope of the patents in question, and whether they could be applied to SDRAM technology. "Rambus' view of the patents was completely untethered to the language of the patent claim or the written description, and in many cases, flatly contradicted the written description."

Munich, Germany-based Infineon was very pleased with the decision. "What happened here was a huge victory for Infineon," said John Desmaris, a partner with the New York law firm Kirkland & Ellis, which represented the German semiconductor giant. "It's very unusual for a judge to award lawyers' fees like this." Rambus is also responsible for paying interest on the huge legal bill.

This is in addition to the $350,000 the company was also ordered to pay as punitive damages, as previously ordered by the court. The jury originally awarded Infineon $3.5 million in damages, but the judge had to reduce the sum because a Virginia law caps such awards at $350,000.

In addition to the fines, Desmaris noted that the court's ruling has the net effect of prohibiting further suits by Rambus against Infineon regarding this issue. The judge did note that Rambus was not guilty of defrauding Jedec regarding the development of DDR DRAM, because the company was no longer participating in Jedec discussions at that time. However, Desmaris said that since Rambus can't sue Infineon for SDRAM technology, and DDR DRAM is directly tied to SDRAM patents, the result is still the same.

Rambus executives did not return calls seeking comment, but in a statement, chief executive officer Geoff Tate said, "We are pleased that the record has been set straight on DDR SDRAM. However, Rambus still intends to appeal the patent infringement case and the jury verdict on Rambus' behavior at Jedec with regard to SDRAM. We aim to conclusively prove that Infineon is violating Rambus' patent rights and that Rambus must be justly compensated by Infineon for the use of our patents."

While this case is not directly related to the action pending in Delaware, Desmaris said the judge in the Delaware case may evaluate these rulings. Under a doctrine known as collateral estoppel, the Delaware judge may decide that if the issues are the same, the results would also be the same and that there is no point in holding a second trial.

"The judge basically said that Rambus' conduct was egregious," said Desmaris.