POST OF THE DAY
Rambus
Patent Debate - Potato or Potatoe?

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By trustplan
July 9, 2001

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Infringeon said:

The central issue has always been the theft of RAMBUS intellectual property by means of a conspiracy among a number of large companies in the industry. Conspiracy is difficult to prove but it may yet be possible.

RAMBUS defensive actions and inactions are perfectly comprehensible in view of what was actually going on in the industry at the time.

There is a lot more discovery that is going to have to take place.
Someone will talk eventually.


There are a bunch of new posters in the past couple of days, and my brain is getting mushed by the volume of information on law, technology and sales. It seemed a useful effort to try and summarize the current state of what is known about this stock and its litigation. Apologies if that seems an arrogation, but I am trying to reduce this monster down to something comprehensible.

Commentators put forth 2 views of the SDRAM patent debate:

1) The view--most consistently expressed by Nick--that Rambus lawyers performed poorly in the patent process and didn't make as many claims on their innovations as they might have done with more artful lawyering, whereupon they saw what JEDEC members were doing and sought to expand their claims, which was unfair, immoral and illegal, and why they should lose lawsuits related to SDRAM and DDRAM.

2) The view that the 3 Amigos learned everything about Rambus' patents and applications from materials supplied to them individually, during business negotiations, under Non-Disclosure Agreements (NDAs), then manipulated the JEDEC standards-setting process to "cherry-pick," "steal," or otherwise "work-around" the Rambus patents in order to avoid paying royalties. The best support for this is the damning memo, which turned up on a previously hidden IFX computer hard drive during the latter stages of the Richmond discovery.

Both of these views are plausible. And they may not, in fact, be mutually exclusive.

It is possible that patent counsel realized--with or without the information from JEDEC--that their filings contained a "loophole" and scrambled to cover it. If so, the USPTO apparently thought it was okay.

It is also possible that Micron, Siemens and Hyundai (nka Micron, IFX and Hynix) decided to put their enormous corporate resources to work on creating an alternative, based on existing RDRAM patents, and did so without the benefit of anything disclosed in the NDAs, and without "conspiring."

I suspect the truth is somewhere in between: Rambus didn't take advantage of the patent process to optimize the claims and therefore the value of its innovation; the 3 Amigos knew most everything Rambus knew about RDRAM and some clever engineer went "a-ha." Both sides played footsie for a while. Rambus resigned and expanded their claims.

Ideas are worth spit unless they are patented, produced, marketed and sold.

The patent process is imperfect.

Sub-optimal patents are not worth as much as optimal patents.

Rambus had--or has--sub-optimal patents, which has affected the value of their innovation.

They have been trying to optimize the patents, and therefore increase the value of their innovation.

Many, including Samsung, have said, "We recognize your innovation, we think your patents support your right to be paid for the innovation, where do we send the checks?"

Only 3 (MU, IFX, Hynix) have said, "Although we may not have invented it, we have something your patents don't cover, and we are not going to pay for it; further, we think your effort to expand your claims was fraudulent."

The Richmond court agreed with the latter position. Lots of trial issues messed this up: Inexperienced judge, poor trial performance by Rambus, Doctrine of Equivalents screwup, failure to prepare and qualify experts, fluffy Markman ruling, incomplete discovery...a nearly endless list of odd circumstances.

None of us knows how it will turn out. In the meantime, Rambus has received millions in SDRAM royalties, and in 18 months there will be no consequential market for SDRAM, as it will have been almost universally supplanted by RDRAM and some variant of DDR, and RDRAM will outsell DDR at least 2:1, perhaps 10:1.

By this time next year there will be no material price differential between RDRAM and DDR, so the litigation may not matter unless RDRAM's performance increase over some future variant of DDR turns out to so modest that even an immaterial price differential will seem unjustified.

I don't know if this is helpful, or how many errors it contains, but it is at least an effort to distill some of the past 6 months of developments.

Grace,
TrustPlan