DDR2 Held Up By Rambus’ Legal Woes

Computer memory maker Rambus is getting the short end
of the stick when it comes to its next generation dynamic random access
memory (DRAM), according to a report published this week.

Analysts with American Technology Research said they are concerned that
the company is not getting its fair share of licensing fees for all of its
DDR2 patents.


Though DDR2 is a standard faster bandwidth memory technology, Rambus owns several of the key patents involved. The four-page
brief cites Rambus’ legal battle with Infineon Technologies
as the main culprit for creating such a loophole.

“The fact that Rambus’ own partners have not signed a license with Rambus
suggests a potential for a protracted legal standoff,” American Technology
Research analyst Erach Desai said in a newsletter to investors. “This, to
us, is emerging to be one of the biggest concerns about Rambus’ future
royalty prospects from the DRAM market.”

Samsung and Toshiba — both Rambus partners — have started limited trials of
DDR2, which is expected to replace SDRAM and first generation DDR as the
technology of choice for computer memory. Shipping could start as early as
October 2004. The crossover point from DDR to DDR2 is expected to happen in
2005 or even 2006, according to industry analysts.

“While Rambus’ management has saber-rattled about bringing civil antitrust
charges of their own against the holdouts for collusion, evidence that came
from the Federal Trade Commission’s case (last summer), we have increasingly
opined that this is unlikely,” Desai said. “Samsung and Toshiba, among the
top licensees of Rambus’ technology, do not want to be dragged into this
mess (even simply by association) in our assessment.”

Rambus General Counsel John Danforth told internetnews.com that
DDR2 uses some of the very same features currently being discussed in the
company’s suit with Infineon Technologies, , but denied that
any of its partners are getting a so-called free ride.

“We are confident enough with our patent position, that we believe that
those who have contracts with us will see the wisdom of extending those
licenses to cover new forms of synchronous DRAM including DDR2” he said.

Executives with Samsung and Toshiba were not immediately available for
comment.

The core legal battle is a back and forth battle between Los Altos,
Calif.-based Rambus and Munich-based Infineon. Rambus is seeking royalty
payments from Infineon for its patents relating to the next generation of
DDR memory. The technology is used in a variety of products
including PCs, servers, consumer electronics products, and
telecommunications routers and switches.

A retrial date for the Rambus v. Infineon case had been set for June 10
in Virginia, but earlier this week a Federal Judge Robert Payne said there
are a number of pretrial issues that must be resolved. The judge
delayed the proceedings until the fall.

Desai said with the legal delay, Samsung and Toshiba have effectively
become “holdouts” on DDR2 and there is really no incentive for Infineon to
settle.

“We suspect that the list of ‘holdouts’ on DDR2 grows beyond the current
litigants,” Desai said.

In related news, the FTC filed an appeal of its case against Rambus last
week. Court papers show the FTC remains firm in its accusations even after
Chief Administrative Law Judge (ALJ) Stephen McGuire dismissed the antitrust
lawsuit.

Meanwhile, sources close to the case say the Department of Justice is
expected to hand out indictments in the next two to three months as part of
its investigation into price collusion by the DRAM manufacturers like Micron
Technology, Infineon, Samsung, Hitachi, Hyundai, and Hynix.

While Rambus has said there is no direct link between the Infineon case
and the DoJ’s case, the company has said the investigation supports its
claims that it was getting squeezed out of the marketplace as a result of
its synchronous memory patents obtained during its membership on the Joint
Electron Devices Engineering Council (JEDEC).

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