Rambus shares nosedive on court news

It's been rather interesting to follow Rambus stock market fortunes over the past few months (a chart is available over at Yahoo Finance here). Much of the movement over the past few weeks has been based on IP related issues.

We've already reported here earlier issues surrounding Rambus numerous disputes. Rambus has now received a further setback in its various legal cases, as reported by Reuters.

It must be very frustrating for Rambus that the latest delay in resolving their case against Hynix and Micron relates to the retirement of a Federal judge in May of this year, just before a decision was due to be issued in the Appeal procedure about whether Rambus destroyed key documents. Instead of a decision relating to damages payable to Rambus, the court ordered a rehearing in October of this year. The continued uncertainty about whether will be entitled to damages certainly does not help confidence in the company whose share price dropped from USD 21.90 to USD 18.19 on the decision.

The case really highlights the impact that decisions in IP matters have on the value of a company - as measured by the stock price. If Rambus win the case then their business will be backed by a solid base of patent rights and their revenues buoyed up by licence income. Should they lose, then much of their business model could be destroyed. The short term nature of the stock markets does not match with the current leisurely pace of the courts in deciding matters that can effect the long term health of a company. Rambus is probably healthy enough to survive and has had success in other cases not tainted by allegations of deliberate destruction of documents. There are other companies whose fate is decided in court after months of uncertainty.

It's not surprising that Reuters reported that the Rambus CEO spends much of his time dealing with lawyers. Apparently the company spent half of its 2009 USD 115 Million of revenues on legal fees (adding to its corporate running total to its lawyers since founding of USD 300 Million.

Technorati Tags:
Semiconductor, Patent Infringement, Rambus

Qimonda's Patent Sale

It's intriguing to follow the fate of bankrupt German semiconductor Qimonda and its intellectual property. The administrator, Michael Jaffe, proudly notes on its website that Qimonda has over 11,000 patents and 4,000 individual patent families. This would seem to suggest a massive value being held in intellectual property. Once you start actually understanding the technology and marketplace, it's not so clear that the patents have much value at all.

The DRAM space has been dogged over the years by a number of patent infringement suits. At issue is the fact that most of the DRAM companies require access to other company's intellectual property in order to be able to make DRAMs. The semiconductor industry has traditionally cross-licensed its patents and much of the dispute has in effect been to work out the value of the balancing payments that need to be made. Thus the main value of the patent rights to a company like Qimonda is not so much the value from licensing in the patents, but rather access to other company's technologies and relief from royalty payments. Now it might seem that if you no longer have a manufacturing company, there would be no need to have cross-licensing arrangement. However, Qimonda presumably concluded its licensing agreements on the basis that it was not going to go bankrupt and many of these agreements are still no doubt in force and might bind potential purchasers of the patent assets (although what the effect a change-of-control has on the agreement is unknown).

Added to that many of the most valuable patent rights in the Qimonda portfolio probably came from the joint development with IBM and later with Toshiba on various DRAM architectures. Many of these patent rights are (were) jointly held which meant that IBM has also presumably been able to license them to other players in the market place.

So what are we left with? Any potential purchaser will have in essence a large portfolio of patents (and patent applications) which it needs to maintain. The potential licensors would be limited, since many of the big players no doubt already have licenses to the technology. This might leave a number of smaller fish, but the revenues are likely to be limited.

There's no doubt one or two juicy bits around the place as the announcement that a licensing company was to be set up indicates. And the rest? Well probably not worth much more than the paper that they are written on - at least for a non-operational company. It's of course possible that a DRAM company wanting to acquire IP to strengthen its own position might be interested - but then many of the potential deals will have already been done by Qimonda. It's hardly surprising that no sale has been made and that the administrator is having difficulties finding a potential purchaser.

Technorati Tags:
DRAM, Semiconductor, Qimonda, Patent Sale

Rambus Shares Jump 39% on news of Patent Win

It's always interesting to see how the stock market reacts to patent news. Pharmaceutical shares commonly yo-yo on the news of patent grants, wins against generic companies and expiry of major patents. However, until yesterday, I had not see any major share price movement in the semiconductor field.

Rambus has been fighting a patent battle with a number of companies concerning technology used in memory chips. Rambus had previously been accussed of misleading standards bodies (the Joint Electron Device Engineering Council) about their patented technology. A jury in the US has now decided that this was not the case as the New York Times reports. There was no misleading of the other participants.

Rambus share price jumped $7.25, or 39 percent, to close at $25.86 on the news.

The major loser is bound to be Hynix Semiconductor which was found to infringe Rambus patents in 2006 and had damages of $133.6M awarded against it. Another one of the companies involved, Micron Technology announced that it would be appealing the decision as announced in a press release.

How this affects the EU's case against Rambus anti-competitive behaviour (reported here) is not yet recorded.