Top Court Rejects Infineon Appeal in Rambus Fight

The Supreme Court on Monday cleared the way for Rambus Inc., a maker of computer chip interface technology, to proceed with its patent-infringement lawsuit against Infineon Technologies and take its case to a jury.

The justices rejected Infineon’s bid to end the suit and reinstate a jury finding that Rambus committed fraud while pursuing patents for high-speed chips that became an industry standard. Los Altos, Calif.-based Rambus now is free to resume its suit seeking as much as $840 million in patent royalties from semiconductor makers.

Investors, buoyed by the news, sent Rambus shares surging 38% in Nasdaq trading Monday. They closed at $25.80, up $7.07.

Rambus specializes in high-speed chips designed to speed up computer programs for databases, games and digital photography. The company doesn’t make chips itself but licenses its technology to manufacturers that use its designs, such as Intel Corp. and Samsung Electronics Co.

In 2000, Rambus sued Infineon and claimed the company infringed on its patents with technology that allows computer chips to communicate with each other.

Infineon denied the infringement claim. The German company countersued, accusing Rambus of fraud for hiding its patent applications from industry-group meetings where standards were being set for memory chips.

A federal court in Virginia ruled against Rambus in the summer of 2002, but an appeals court overturned that verdict in January and broadened the definition of Rambus’ patents.

Infineon asked the Supreme Court to overturn that ruling, but the justices declined.

Rambus has also filed suit against Micron Technology Inc. and Hynix Semiconductor Inc. after they refused to sign licensing agreements.

“While we welcome any opportunity to resolve matters amicably rather than through the courts ... we remain committed to taking the necessary steps to protect our intellectual property,” said John Danforth, senior vice president and general counsel for Rambus.

Rambus could receive as much as $450 million a year if the licensing fees were applied industrywide, said Michael Crawford, a technology analyst with B. Riley & Co. in Los Angeles.

The chip companies “took their chances,” said Crawford, who owns Rambus shares but doesn’t do business with the company.

“They didn’t think Rambus could patent all the technologies that it could,” he said. “I think it’s clear that Rambus will prevail.”

Bloomberg News was used in compiling this report.