Rambus back in court

The litigation from Rambus is just getting started.

The Los Altos, California-based chip designer announced on Tuesday that it had filed suit against Hynix Semiconductor, Taiwan's Nanya Technology and Infineon Technologies, as well as the latter two companies' joint venture, Inotera Memories, for allegedly violating its intellectual property in producing DDR2 DRAM, which started to get incorporated into PCs last year. The suit, filed in the US District Court for the Northern District of California, alleges that the GDDR2 and GDDR3 memory found on graphics cards violates its patents.

The lawsuit will likely make memory executives shiver. Rambus has pending suits against Infineon, Hynix and Micron that allege that DDR DRAM -- the most common type of memory used in PCs for the last several years -- produced by these companies violates its intellectual property. These companies, in turn, have filed countersuits alleging that the patents are invalid and were obtained fraudulently.

Other companies, such as Samsung, have agreed to pay royalties to Rambus on DDR DRAM production on the condition that the patents are not later invalidated by a court.

After a series of early trial setbacks, Rambus has racked up some notable wins in court against Infineon and Hynix. If the patents are upheld, analysts believe that Rambus could be entitled to billions in royalties and licensing fees.

If claims for royalties on DDR2 memory are upheld, Rambus will be entitled to even more money. Several companies outside of the four identified defendants in the new lawsuit make DDR2, GDDR2 and GDDR3.

Royalty payments will make it even harder to compete in the memory market. Large memory manufacturers have to invest billions on production facilities, employees and design teams to stay in the market. While their annual revenues can soar into the billions of dollars, many memory manufacturers chronically post large financial losses.

By contrast, Rambus, founded by professors at Stanford University in 1990, has about 200 employees and does not need to build complex manufacturing facilities.

"With analyst firms projecting a rapid transition this year from DDR to DDR2 and GDDR, and with strong evidence of infringement of our patents already in the public record, we have taken this step today, filing our first new patent case in the US since August 2000," John Danforth, senior vice-president and general counsel at Rambus, said in a statement.