Back in January, the Fool's Tom Jacobswrote, "...The Supreme Court won't take the case." That's exactly what happened with Rambus
The stock is soaring 30% on the decision because it puts Rambus closer to possibly collecting tens of millions in royalties from Infineon and other memory-chip maker hold-outs.
Today's victory aside, Rambus is far from collecting more dough, and the case, which started in 2000, has been costly. (Tom Jacobs has followed this legal battle in more than a dozen related articles.) Additionally, today's Supreme Court action was not a decision on the legal merits of the case, but merely a move to let the Court of Appeals decision stand, so Infineon has vowed to fight on, and the case will likely return to a Virginia trial court.
Either side could still win the verdict. Initially in this case, a lower court awarded Infineon victory (it is claiming fraud at Rambus) and $10 million, until the Court of Appeals overturned it.
Meanwhile, the key Rambus patent lawsuit filed against Infineon has been upheld and returns to a Virginia court. Adding to the plot, Rambus faces other lawsuits. The big claim is that Rambus helped set the standards for the memory chip industry and then moved to collect royalties on its patents after setting self-beneficial standards.
With $2.4 billion in market value, Rambus had nearly $100 million in revenue last year and is expected to earn $0.17 per share this year, making the $25 stock look expensive. Investors are clearly hoping for more legal victories and some of that $400 million a year in payments to start rolling in. A waiting game on such an uncertain outcome is only for high risk investors who can sleep well at night despite all the unknowns.