|Rambus Was ‘Dethroned’ By Intel, Micron Lawyer Argues at TrialSeptember 20, 2011, 9:34 PM EDT|
By Joel Rosenblatt
Sept. 20 (Bloomberg) -- Rambus Inc.’s computer memory failed to become an industry standard because it was “dethroned” by Intel Corp., not as a result of a conspiracy by rivals, a lawyer for Micron Technology Inc. told a jury.
In closing arguments at a state-court trial in San Francisco, William Price, a lawyer for Micron, said today that Rambus was aware of technical problems with its version of dynamic random access memory, or DRAM, when it signed a 1996 contract to work with Santa Clara, California-based Intel Corp., the world’s largest chipmaker.
The relationship was “conceived in fraud,” Price told jurors. “Intel lived with Rambus” in an attempt to develop Rambus-designed memory, or RDRAM, into a product, he said.
“What Intel concluded at the end was RDRAM was not the product they thought it was, and that Rambus was not the company they thought it was,” Price said. Intel “selected Rambus to become king, and Intel dethroned Rambus.”
Rambus contends that Boise, Idaho-based Micron and Ichon, South Korea-based Hynix Semiconductor Inc. colluded to cut the prices of their own memory chips and deserted their commitment to produce RDRAM, relegating it to a niche role.
Rambus, which doesn’t make the chips it designs, said it would have made $3.95 billion in royalties without the alleged conspiracy. Under California law, a jury finding of damages in that amount would be automatically tripled to $11.9 billion.
Hynix lawyer Ken Nissly today described what he called Rambus’s “doomed” relationship with Intel.
Intel managers testified that the collaboration failed because RDRAM was flawed. They also cited a contract provision that allowed Rambus to block shipments of processors that relied on the chip designer’s technology if certain conditions requiring Intel to promote RDRAM weren’t met.
After arbitration, Intel offered in 2000 to develop an “RDRAM-compatible solution” for high-performance and mainstream segments of the computer memory market through 2002, and in the less expensive segment starting in 2001, Nissly said.
He cited the testimony of William Swope, a former Intel manager, who was asked about Rambus’s rejection of the offer.
“I thought the relationship was doomed,” Nissly quoted Swope as saying.
“Intel could make Rambus, and they could unmake Rambus. Rambus itself acknowledges that,” Nissly told jurors. “No Intel witness came and testified in a way that supported Rambus’s case.”
Sean Eskovitz, a lawyer for Sunnyvale, California-based Rambus, in his closing argument showed jurors a chart depicting the price decline of RDRAM in the summer of 2000, after its introduction a year earlier. He highlighted video testimony and e-mails between executives and sales people at Micron and Hynix that he said demonstrated how the chipmakers intensified their collusion to stall production of RDRAM.
The collusion drove RDRAM prices up, which in turn caused Intel to alter its memory “road map” to include Double Data Rate chips made by Hynix and Micron, and blocked RDRAM from becoming an industry standard, Eskovitz said.
The two chip manufacturers first fixed their prices below market value and “when they thought they had pushed RDRAM off to the side, they jacked up the prices,” he said.
“Why did they do this? Power and money,” Eskovitz said. “They knew RDRAM was a threat. They knew they needed to shoot it over and over and over again.”
The case is Rambus Inc. v. Micron Technology Inc., 04- 0431105, California Superior Court (San Francisco).
--Editors: Peter Blumberg, Mary Romano
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