The computer chip designer Rambus Inc. announced Tuesday that it’s wrested a $240 million settlement from rival SK Hynix Inc. The deal most likely leaves both sides a bit dissatisfied, but at least they can turn the page on a bruising court fight that’s generated fees for several Am Law 200 firms.
The fine was issued by U.S. District Judge Ronald Whyte in the “memory-chip technology” patent-infringement case that Rambus won in California seven years ago. The sanction will be applied against whatever sum Rambus ultimately keeps of the $349 million awarded it after a 2006 verdict finding that SK Hynix infringed Rambus patents, Whyte ruled.
The sanction applied as a credit against Rambus’s judgment against SK Hynix recognizes that Rambus’s conduct was “inexcusable but not so egregious as to justify dismissal of its infringement case“, wrote the Judge who also denied Hynix’s request for a new trial in the case.
Rambus’s cases against SK Hynix, and another related case against Micron Technology Inc. , are over the companies’ use of interfaces that are part of dynamic random access memory that acts as the main memory in computers.
SK Hynix and Micron have argued Rambus destroyed records that would have proved Rambus misled the board that sets that standard.
A little bit of History
Rambus designed computer chips during the 1990s but never sold its own products. It turned to patent litigation around the year 2000, after its technology failed to gain success in the semiconductor industry. According to Rambus, rivals like Hynix and Micron Technology ripped off its patented ideas, leaving it no choice but to go to court.
Rambus’s detractors say the once-innovative company is now just another “patent troll“. It’s also been battered by evidence that it destroyed evidence during company-wide “shred days.”
O’Melveny & Myers, which represented Hynix, sought to vacate the verdict on the grounds that Rambus had “unclean hands” from its alleged destruction of evidence. Micron has successfully employed that same argument in its own battle with Rambus. But the U.S. district judge in San Francisco that oversaw the Hynix case, Ronald Whyte, rejected the defense. At the time of the “shred days,” Whyte ruled 2006, Rambus could not have reasonably foreseen its impending storm of litigation.
Hynix appealed to the U.S. Court of Appeals for the Federal Circuit.
The Federal Circuit consolidated the two cases for appeal, setting the stage for a star-studded oral argument in 2010.
The Federal Circuit remanded the Hynix case in May 2011, ruling that Whyte used the wrong standard for determining whether Rambus improperly destroyed evidence. On remand, Whyte reconsidered his earlier ruling and accepted Hynix’s unclean hands defense. He refused to set aside the jury verdict, however, ruling that dismissal was too severe of a sanction. He also refused to order a new trial. After several months of debate, on May 9 Whyte imposed a $250 million sanction on Rambus to be applied as a credit against the 2006 jury verdict, which at that point had accumulated significant interest.
Hynix urged Whyte to reconsider his sanction, arguing that he was still going too easy on Rambus. But this week, rather than drag the case out any further, the companies laid down their arms and reached a licensing deal valued at $250 million over the next five years.