A saga stretching back to the spring of 2004 is gearing up for the big finale.
The antitrust lawsuit that Rambus (Nasdaq: RMBS) filed against Micron Technology (Nasdaq: MU) seven years ago has finally moved into a jury trial, with jury selection happening last week and the opening statements happening as we speak. Don't expect heavy media coverage -- one forlorn request to "photograph, record, or broadcast" the proceedings was summarily denied by Judge James McBride, so this drama will largely play out behind closed doors.
According to presumably hand-scrawled notes by Bloomberg and Reuters, there aren't any big surprises so far anyhow. "The defendants did not want to share the DRAM market with Rambus ... so the defendants cheated," Rambus attorney Bart Williams said in his opening statement. Micron and Hynix said in their own respective opening statement that the RDRAM technology at issue simply failed in the open market. This trial is part of Rambus' "continued attempts to place blame on third parties for its failure to compete successfully in the marketplace."
None of this is news to anyone watching the legal case, as both sides hold their long-defended positions. Rambus wants $4.3 billion in damages from its two opponents, which would then presumably triple under California law to $12.9 billion. That's a game-changing pile of cash for everyone involved.
If Rambus wins a large sum, I believe there'd be a huge special dividend coming up rather than reinvestment in running the business. Rambus has never paid a dividend, but then again, the largest settlement so far was a relatively tiny $700 million from Samsung, to be paid over a five-year period along with a further $200 million investment in Rambus stock. Rambus simply wouldn't have much else to do with a multibillion-dollar result, so a special dividend would make sense.
Mind you, the start of a jury trial doesn't necessarily mean the end of the case. For a recent example, consider how TiVo (Nasdaq: TIVO) and DISH Network (Nasdaq: DISH) danced through multiple trials, court decisions, and appeals before finally settling it all in the middle ground. Moreover, there will be plenty of conjecture from supporters of both sides, but we won't really know who's winning until McBride slams the gavel, setting the stage for appeals.
Rambus may very well win big, though I still think the company is exploiting a broken patent system. Wireless communications technologist VirnetX (NYSE: VHC) is treading the same path, also to a rabid following of fervent investors -- making money in the courtroom looks like a quick and easy way to instant riches, so the whole idea is easy to love. I just don't.
Love or hate Rambus' strategy, you can follow the company's trials and tribulations by adding it to My Watchlist. Then drop down to the comments box to tell me where this lawsuit is going; I'm sure you have a strong opinion.
