Newsmaker: Rambus' main man in the memory war

(continued from previous page)

We started as a company when there was a significant problem: Intel's ability to increase the speed of a microprocessor far outstripped the ability or the desire, quite frankly, of the DRAM industry to keep up. This meant that Intel would spend a lot of money driving processors fast and simply lose that value by virtue of the fact that more and more DRAM had to go into the box.

Well, Mike (Horowitz) and Mark (Farmwald) solved that in a fairly spectacular fashion. This was a time when Rambus was the proverbial two guys and a dog. I suspect it was profoundly embarrassing to the very capable and proud DRAM companies to have a small upstart like (us).

Things never got off on a good footing and much of the acrimony and the legal dueling going on now goes back to that very fact.

Also, the royalties that we charge have an implicit cost that is not exactly that high. I mean, implicit in the sale of a piece of a software is a royalty probably of multiple of ours. You just don't think about it. They don't package it is an IP sale--they package it as a sale of software.

I want a business deal, I'm tired of going to court.

Does Rambus have ongoing negotiations with PC makers or the graphics card makers--companies that have incorporated DDR (double data rate RAM) or DRAM into their products? And will you be seeking royalty deals out of them?
Hughes: We always have discussions. We meet with Intel as often as we can and discuss our technology going forward and we do the same thing with graphics manufacturers.

So it doesn't sound like you'll be looking for royalty claims against Dell or Gateway for incorporating products from Samsung Electronics and Hynix into their products.
Hughes: There are...I wouldn't state it as broadly as that. At the end of the day, we're trying to act in a way that's in the best interest of Rambus and its shareholders, and obviously we see Intel and AMD as people who are or should be allies, and their PC customers as people who are or should be allies. Our goal is to get a Rambus part as the main memory in PCs.

Well then, because you have a duty to your shareholders, do you think there's a duty to actually sign royalty agreements for the memory they (PC makers) have used or to collect royalties for it?
Hughes: No. I think it's far better that we go directly to the source.

Looking toward the future for a second, XDR will be part of the PlayStation 3, but who else is looking at it?
Hughes: We came out with the second variation called DDR, excuse me XDR2, which is focused on the graphics market. As we negotiate with DRAM companies, including the ability to manufacture high-performance graphics memory at a higher margin, we have to speak to the graphics companies. It's a chicken-and-egg problem.

How about the PC market, where XDR would serve as main memory? I haven't seen XDR show up on product road maps yet.
Hughes: It's even a bigger chicken-and-an-egg problem. The demand, and the need for supply, is at least two to three (times) larger with the (PC) manufacturers. In the graphics market, by virtue of its smaller size, we think that is the easier way for us to (get) into the PC.

Another issue that's come up in some of the other big patent cases is that the defendants have tried to do an end-run around the court system by asking the patent office to invalidate the patents. It came up in the RIM case and the eBay-MercExchange case. Is there any danger of that occurring to you?
Hughes: I think they scoured the Earth for prior art, literally. And they do have a joint defense agreement. I would assume that if they found some prior art, they would have presented it at the trial or the patent office by now.

I think the patent office has seen everything, gone over everything.

Will it ever end?
Hughes: I don't know. I can only tell you that I suspect that in DDR3, amazingly enough, some new Rambus technology will pop up. It won't be new to us but they will have "discovered" it. I haven't seen it; the actual DDR3 spec is not out yet. But I'm willing to bet on it.

I've used the expression that people view Rambus memory technology as an unguarded cookie jar.

Not completely. Infineon settled for several million and you got $306 million this week.
Hughes: Yes, but remember. That's appealable. I want a business deal, I'm tired of going to court.  

More Newsmakers

[Pop4]

Opinion: > > > (I plan on enjoying this article later in the day.)

Personnally I am a huge fan of PNY and their combining a quality issue in the 2005 PNY 512mb pc2700/pc3200 DDR Dimm modules.
After the modest resolutions settled in the Rambus case this past month, I excited and curiously, visited the Rambus website(Google) and knew there were looming conclussions or advancments.
Less inportant was the 'SOHO" (?XDR) x64 "REV" Dimm displayed for the lead-in for the website. The current values in the transparency of computing covers (All) the memory option in their place and purpose; where there is a cross platform.

[kgofsb]

Primary example of patent abuse

Rambus attended meetings of the standards organization that created specification for memory chips, where they promoted their ideas for DRAM technology, and encouraged the standards organization to adopt their ideas. They did not tell the other members that they had filed patents on the technology they were hoping to get adopted as standard. The standards body (naively) trusted Rambus and incorporated many of their suggestions, and memory manufacturers invested billions of dollars designing new chips and setting up production lines. Once they started selling those chips, Rambus sued for patent infringement.

Now you have to ask yourself one question: Is that fraud?

The amount of money that Rambus invests in their "intellectual property" is dwarfed by what the memory chip companies have to spend to design and build chips. They are not innovators, they are parasites. The patent system that is supposed to reward inventors and risk-takers ends up doing the opposite.

But don't expect your government to do anything about this problem. They are too busy worrying about the 4% of the population that doesn't have the legal right to live here. OR maybe they want to invade another country that sits on top f anoil field.

[mortis9]

i wholeheartedly agree

and the sad part is that it would only take one high profile defeat in court for this to be turned against Rambus. This is a fundemental problem in US patent law, but you're right, it doesn't seem to be very important. I will point this out: those industry players that are getting sued and losing money to Rambus have for more influence on Capital Hill than does Rambus, so it stands to reason that these laws work in their favor as well, otherwise things would likely play out differently.

Another great example is the Blackberry suit. Those patents were overturned yet RIM still had to make a payout of nearly a third of a billion dollars. That doesn't make sense to me.

[CtrlFreak]

Beg to differ

The mem companies knew about the Rambus patent apps years before adopting the standard, under NDA, as they have now admitted in court. They adopted the standard, built and sold the chips anyway, assuming they could wipe Rambus out (note the recent anti-trust admissions and convictions). If that doesn't warrant a legal victory for Rambus, what then?

[rensanceman]

Rambus Insider selling after Hynix patent win??!!

As a shareholder in Rambus I am very angry at the duplicity shown by the insiders of the firm. After the Hynix win of over $300 million, the insiders, including notably Danforth, began selling their stock which is a terrible sign for Wall Street. They began selling in the $40-38 range. The stock now sits at around $31. What is different from what Ken Lay of Enron did and the insiders at Rambus. SEC and class action attorneys please take note.