August 14, 2000 6:00 PM PDT

Rambus sues Siemens spinoff in royalty dispute

Rambus has sued Infineon to collect royalty payments on memory produced by the Siemens spinoff, although the two sides are in negotiation to resolve the matter.

The lawsuit, filed in U.S. District Court in Virginia, is similar to legal action taken by Rambus in recent months against Toshiba, Hitachi and other companies. In all these matters, Rambus alleges that patents it filed in April 1990 give it a legitimate claim to royalty payments over SDRAM, the standard form of memory found in computers today, and DDR DRAM, a high-speed form of memory that competes against memory based around designs from Rambus.

In other matters, executives confirmed that Subodh Toprani, the senior vice president of Rambus' venture unit, has left the company.

Rambus is not alleging that Infineon intentionally infringed its patents, said Avo Kanadjian, senior vice president for Rambus. Infineon is a licensee of Rambus, and the company is making RDRAM memory chips based on Rambus' design.

Rather, the suit is based on the premise that the open design specifications SDRAM and DDR DRAM necessarily impinge on the company's patents. Any chipmaker that has or will produce either type of memory, therefore, needs to pay Rambus royalties for their output, according to the company.

The royalties per chip Rambus is seeking on SDRAM are relatively low, but the royalties sought on DDR DRAM are higher than what Rambus charges for licensing RDRAM, Kanadjian said.

The companies are already trying to resolve the suit. "Negotiations have resumed," Kanadjian said. "As we have stated, Rambus prefers to negotiate and come to an amicable agreement."

The potential for royalty payments is quite broad, considering that nearly every computer sold in the past few years contained SDRAM, while both SDRAM and DDR DRAM are expected to be found inside a majority of the world's servers and PCs in the future.

Morgan Stanley analyst Mark Edelstone, who has been bullish on Rambus, estimated in June that total royalties could hit $1 billion in a few years, as the company could end up receiving a 1 to 2 percent royalty on all memory produced.

Kanadjian even characterized the pursuit of SDRAM and DDR DRAM royalties as a "second part of the business."

 

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