U.S. Markets closed

Another Legal Blow for Rambus

Zacks Equity Research

Technology licensing company Rambus Inc. (RMBS) received an untoward ruling by a U.S. District Judge in a long-drawn (almost 12 years) antitrust battle with Micron Technology Inc. (MU), reports Bloomberg. Per the decision, Rambus will be restricted from demanding royalties from Micron for the use of its 12 patented DRAM (Dynamic Random Access Memory) chip designing technologies.

It all began with an antitrust lawsuit that was filed by Micron against Rambus in the year 2000. Micron alleged that Rambus was dominating the DRAM market by obtaining patents wrongfully.

During trials, it was found that certain Rambus officials were engaged in destroying evidence that could prove the company guilty of unlawfully seeking patents for its technologies by misleading the patent-issuing authority.

In November 2011, Rambus faced another legal blow. A long time back, Rambus had dragged Micron and Hynix Semiconductor to court on antitrust charges including conspiracy to fix DRAM prices and prevent its RDRAM memory technology from gaining traction in the market. The company had sought damages from Micron and Hynix for an amount totaling approximately $3.9 billion.

After considering the case for two months post trial, the jury negated the claims and cleared the defendants of all liabilities.

Rambus and Micron have been embroiled in legal tiffs over a number of years. But the back-to-back losses will have a serious effect on Rambus’ revenues in the coming quarters.

Despite the legal blows, we find the company's growth story encouraging given the number of new customer wins and growing exposure to lighting and display technologies. The company recently announced the introduction of a portfolio of LED (Light Emitting Diode) bulbs. The company asserts that the bulbs are economical (due to lower cost of ownership), energy efficient and long lasting.

Currently, Rambus and Micron both have a Zacks Rank #3 (Hold).

Read the Full Research Report on RMBS

Read the Full Research Report on MU

Zacks Investment Research

More From Zacks.com