Bloomberg News

Rambus Was ‘Dethroned’ By Intel, Micron Attorney Tells Jury

September 21, 2011

(Updates with Rambus rebuttal in seventh paragraph.)

Sept. 21 (Bloomberg) -- Rambus Inc.’s computer memory failed to become an industry standard because it was “dethroned” by Intel Corp., not as a result of collusion by rivals, a lawyer for Micron Technology Inc. told a jury.

In closing arguments at a state-court trial in San Francisco, William Price, a lawyer for Micron, said yesterday that Rambus was aware of technical problems with its version of dynamic random access memory, or DRAM, when it signed a 1996 contract to work with Santa Clara, California-based Intel Corp., the world’s largest chipmaker. The jury began deliberating today.

The relationship was “conceived in fraud,” Price told jurors. “Intel lived with Rambus” in an attempt to develop Rambus-designed memory, or RDRAM, into a product, he said.

“What Intel concluded at the end was RDRAM was not the product they thought it was, and that Rambus was not the company they thought it was,” Price said. Intel “selected Rambus to become king, and Intel dethroned Rambus.”

Rambus contends that Boise, Idaho-based Micron and Ichon, South Korea-based Hynix Semiconductor Inc. colluded to cut the prices of their own DDR, or double data rate, memory chips and deserted their commitment to produce RDRAM, relegating it to a niche role.

Rambus, which doesn’t make the chips it designs, said it would have made $3.95 billion in royalties without the alleged conspiracy. Under California law, a jury finding of damages in that amount would be automatically tripled to $11.9 billion.

‘Flatly Inconsistent’

Bart Williams, a lawyer for Rambus, today showed jurors internal Intel documents and e-mails that he said are “flatly inconsistent” with Hynix and Micron’s arguments that Intel determined by 1999 that RDRAM was “dead.” The date is important because Rambus must demonstrate it was harmed after May 2000 -- four years before it filed the case -- to avoid its claims being time-barred.

“The damages here were exactly what the defendants intended,” Williams said. “They intended for DDR to get the nod as main memory, they intended to drive Intel away from Rambus, they intended to interfere with that relationship.”

Hynix lawyer Ken Nissly yesterday described what he called Rambus’s “doomed” relationship with Intel.

Intel managers testified that the collaboration failed because RDRAM was flawed. They also cited a contract provision that allowed Rambus to block shipments of processors that relied on the chip designer’s technology if certain conditions requiring Intel to promote RDRAM weren’t met.

‘RDRAM-Compatible’

After arbitration, Intel offered in 2000 to develop an “RDRAM-compatible solution” through 2002 if Rambus agreed to withdraw the so-called guillotine provision, Nissly said. He cited the testimony of William Swope, a former Intel manager, who was asked about Rambus’s rejection of the offer.

“I thought the relationship was doomed,” Nissly quoted Swope as saying.

“Intel could make Rambus, and they could unmake Rambus. Rambus itself acknowledges that,” Nissly told jurors. “No Intel witness came and testified in a way that supported Rambus’s case.”

Williams countered that argument today by telling jurors that Rambus believed the offer from Intel was akin to a tenant agreeing to pay a landlord rent every month and then asking the landlord to “sign this thing that says if I don’t pay you, you won’t evict me.”

Rambus was confident it could stand up to Intel because it believed no company could duplicate the increased memory speeds RDRAM offered without stealing the underlying the technology, Williams said. He then told jurors about separate, pending patent lawsuits against both Micron and Hynix over that issue.

The case is Rambus Inc. v. Micron Technology Inc., 04- 0431105, California Superior Court (San Francisco).

--Editors: Peter Blumberg, Mary Romano

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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