Rambus guilty of fraud

May 9, 2001: 4:38 p.m. ET

Federal jury rules against chip specialist; company vows to appeal

NEW YORK (CNNfn) - A federal jury on Wednesday found computer-memory technology specialist Rambus Inc. guilty of fraud with regard to its participation in a technology standard-setting group.

The verdict, first reported by the electronics industry trade paper Electronic Buyers' News on its Web site, was the latest blast of bad news for Rambus from the U.S. District Court in Richmond, Va., where it has been slugging out a complex patent-dispute case against Infineon Technologies.

Rambus makes money by licensing chip designs that are used to speed up computer memory systems. It sued Infineon, claiming the German chipmaker infringed on certain Rambus patents in the design of some of its computer memory products.

Judge Robert Payne, who has been hearing the case since its outset, has dismissed all the patent infringement claims Rambus made against Infineon.

The jury verdict on Wednesday stemmed from a counterclaim Infineon made against Rambus, alleging the company failed to disclose to an industry committee, called JEDEC, that it had applied for patents on certain memory-chip design elements even while it was participating in drafting a standard that employed them, the Electronic Buyers' News report said.

JEDEC, short for the Joint Electron Devices Engineering Council, is a trade organization that develops semiconductor standards.

The jury on Wednesday ordered Rambus to pay Infineon $3.5 million in punitive damages, an amount Rambus said is likely to be reduced under Virginia law.

In a prepared statement, Geoff Tate, Rambus' chief executive, said Rambus will immediately appeal the jury's verdict.

"I attended the whole trial and continue to believe that Infineon's JEDEC charges are completely baseless," Tate said.

"Rambus abided by JEDEC's rules despite the fact that these rules have been shown to be confusing, conflicting, poorly communicated and generally not complied with by other JEDEC members," Tate added. "Today's verdict, if allowed to stand, poses a serious threat to all technology companies that try to protect their inventions through our intellectual property laws."

Tate also has said the company will appeal Payne's decision to toss out all of its patent claims against Infineon.

In addition to the patent claims Rambus has made against Infineon in Virginia, Rambus is currently embroiled in at least a dozen more patent claims against several companies including more against Infineon as well as memory chipmakers Micron Technology (MU: Research, Estimates) and Hyundai.

Shares of Rambus (RMBS: Research, Estimates) fell 90 cents to $12.80 on Nasdaq Wednesday, a 6.6 percent decline. Infineon (IFX: Research, Estimates) shares tumbled $1.90, or 4.5 percent, to $39.90.