Rambus suffers a legal setback in Hynix and Micron cases

PATENT COMPANY Rambus has suffered a major setback in its lawsuits against Hynix and Micron after an appellate court ruled that the cases should go back to a lower court since Rambus destroyed potentially vital documents.

The Federal Circuit Court of Appeals ruled that Rambus spoliated evidentiary documents and therefore the cases should be remanded for further consideration by the US District Court in Delaware.

The Court of Appeals could have dismissed the cases outright, but chose not to, so there is still a sliver of hope for Rambus that it could get a favourable result, but the fact that it destroyed evidence will probably weigh heavily against it.

The problem for Rambus is that the Court of Appeals does not believe Rambus destroyed the documents in bad faith, which explains its reluctance to dismiss the case, but the Delaware Court, where the cases go to next, is not so sure. It accused Rambus of destroying the information when it reasonably foresaw litigation.

"We are very disappointed with the decisions in these cases," said Thomas Lavelle, SVP and general counsel at Rambus. "We are hopeful when the district courts reconsider these decisions, they will find, as we believe, there was no bad faith and no prejudice."

Both of the lawsuits against Hynix and Micron were filed in August 2000, resulting in over a decade of litigation. Rambus accused the companies of infringing its patents relating to memory products and wanted them to sign licensing agreements and pay damages.

During the course of the litigation the courts have predominantly favoured Rambus, both in its lawsuits against Hynix and Micron and in the counterlawsuits filed against it on grounds of anticompetitive and fraudulent actions. That looks set to change.

Rambus has gained a negative reputation in the industry for its lawsuits against many companies, including Nvidia, IBM, Broadcom, Freescale, Samsung, LSI and dozens of others. The company has amassed a large collection of patents, both through its own development and by buying other companies, such as its recent acquisition of Cryptography Research.

Rambus' share price fell dramatically as a result of this ruling. At time of writing its shares were down $3.44 to $15.83, a massive drop of 17.85 per cent. µ