Hynix Ordered to Pay Rambus $397 Million in Patent Dispute

Rambus still has some significant hurdles in its other patent cases

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Rambus has spent about $300 million on lawyers in its eight-year patent fight against a group of big memory chip makers. On Tuesday afternoon, the Los Altos, Calif., chip designer inched a little closer to getting some payoff.

Northern District of California Judge Ronald Whyte entered final judgment (.pdf) in one of Rambus' cases, against chip maker Hynix Semiconductor, ordering the Korean company to pay Rambus a total of $397 million in damages and interest. In the order, Whyte also finalized a court-ordered agreement recently reached between the two sides, under which Hynix will pay royalties to Rambus until sometime in 2010. A jury had found in 2006 that Hynix's chips infringed on Rambus patents.

Rambus' outside counsel, Munger, Tolles & Olson partner Gregory Stone, referred questions to the company, and Rambus general counsel Thomas Lavelle didn't respond to e-mails and calls seeking comment. Hynix's lead lawyer, O'Melveny & Myers partner Kenneth Nissly, referred questions to the company, which did not return an e-mail seeking comment. Previously, Nissly said that Hynix plans to appeal.

Rambus -- which gets about 90 percent of its revenue from licensing its patents -- still has a number of cases pending against other chip makers, like Samsung, Nanya Technology and Micron Technology, that are not as far along. In a Rambus earnings call in January, according to a transcript from Seeking Alpha, Lavelle told analysts that the company had spent "very close to $300 million" on litigation against the chip makers since 2000, when some of the cases were first filed.

The judgment is a good sign for Rambus, said James Hopenfeld, a Ropes & Gray partner who has been following the litigation. He predicted that the heavy investment in lawyers will pay off once all the cases are finished.

"It's clear that the remedies that they are going to get are going to be in excess and perhaps far in excess [of] what their legal investment was," Hopenfeld said.

Rambus still has some significant hurdles in its other cases. Delaware Federal Judge Sue Robinson tossed out its patent infringement claims against Micron Technology last month because Rambus shredded evidence leading up to the litigation. In San Jose, Calif., Whyte had previously ruled that the shredding did not render Rambus' patents unenforceable. The matter is now going up to the U.S. Court of Appeals for the Federal Circuit and the outcome could affect whether Rambus can pursue its claims.

Against Hynix, Rambus won all three phases of the drawn-out case in Whyte's courtroom. First, in 2005, there was Whyte's ruling on the shredding. Next, in April 2006, the jury found that Hynix was infringing. Finally, last spring, a jury rejected claims by Hynix, Micron Technology and Nanya Technology that Rambus set an illegal "patent trap" by stealing -- and then patenting -- ideas from industry meetings in the 1990s.

Rambus sought an injunction to bar Hynix from making chips after winning the third phase. But Whyte denied the injunction, instead ordering the sides to hammer out a licensing agreement that would allow Hynix to keep making chips.

The $397 million is the total of the $134 million award Rambus won after securing the patent infringement verdict in 2006; $215 million for Hynix's infringement between then and Jan. 31, 2009; and $48 million in prejudgment interest.