Court Dismisses a Fraud Verdict Against Rambus

A federal appeals court dismissed a fraud verdict against memory-chip designer Rambus Inc. on Wednesday, saying a lower court had made mistakes and a jury’s decision was not supported by evidence.

In a 2-1 vote, the appeals court in Washington vacated a jury’s verdict that the California company had committed fraud while working with a standards-setting board. Rival chip company Infineon alleged that Rambus pushed for standards while holding or pursuing patents on the same technology.

Wednesday’s decision also revived Rambus’ claim that Infineon, based in Germany, infringed Rambus’ patents involving technology used in computer memory chips, called SDRAM.

Shares of the Los Altos, Calif.-based company surged on the news, rising $4.25, or more than 57%, to $11.69 on Nasdaq.

Early in the case, a judge dismissed Rambus’ complaints, leaving a New York jury to decide Infineon’s claims. In May 2001, the jurors determined Rambus engaged in fraud and awarded $3.5 million in punitive damages.

In August 2001, the judge set aside much of the award, but Rambus was ordered to pay $350,000 in punitive damages to Infineon as well as $7.1 million in legal fees. Rambus also was blocked from filing more patent lawsuits against Infineon.

Rambus general counsel John Danforth applauded the ruling.

“We’ve been confident in this all along, but it’s good to see our views [confirmed] in substantial part by the premier patent court in the country,” Danforth said.

Infineon spokesman Matthew Schmidte said the company was disappointed by the ruling. “The company does expect to request a rehearing by the court,” he said.