Rambus shares nosedive on court news

It's been rather interesting to follow Rambus stock market fortunes over the past few months (a chart is available over at Yahoo Finance here). Much of the movement over the past few weeks has been based on IP related issues.

We've already reported here earlier issues surrounding Rambus numerous disputes. Rambus has now received a further setback in its various legal cases, as reported by Reuters.

It must be very frustrating for Rambus that the latest delay in resolving their case against Hynix and Micron relates to the retirement of a Federal judge in May of this year, just before a decision was due to be issued in the Appeal procedure about whether Rambus destroyed key documents. Instead of a decision relating to damages payable to Rambus, the court ordered a rehearing in October of this year. The continued uncertainty about whether will be entitled to damages certainly does not help confidence in the company whose share price dropped from USD 21.90 to USD 18.19 on the decision.

The case really highlights the impact that decisions in IP matters have on the value of a company - as measured by the stock price. If Rambus win the case then their business will be backed by a solid base of patent rights and their revenues buoyed up by licence income. Should they lose, then much of their business model could be destroyed. The short term nature of the stock markets does not match with the current leisurely pace of the courts in deciding matters that can effect the long term health of a company. Rambus is probably healthy enough to survive and has had success in other cases not tainted by allegations of deliberate destruction of documents. There are other companies whose fate is decided in court after months of uncertainty.

It's not surprising that Reuters reported that the Rambus CEO spends much of his time dealing with lawyers. Apparently the company spent half of its 2009 USD 115 Million of revenues on legal fees (adding to its corporate running total to its lawyers since founding of USD 300 Million.

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Semiconductor, Patent Infringement, Rambus

Rambus Shares Jump 39% on news of Patent Win

It's always interesting to see how the stock market reacts to patent news. Pharmaceutical shares commonly yo-yo on the news of patent grants, wins against generic companies and expiry of major patents. However, until yesterday, I had not see any major share price movement in the semiconductor field.

Rambus has been fighting a patent battle with a number of companies concerning technology used in memory chips. Rambus had previously been accussed of misleading standards bodies (the Joint Electron Device Engineering Council) about their patented technology. A jury in the US has now decided that this was not the case as the New York Times reports. There was no misleading of the other participants.

Rambus share price jumped $7.25, or 39 percent, to close at $25.86 on the news.

The major loser is bound to be Hynix Semiconductor which was found to infringe Rambus patents in 2006 and had damages of $133.6M awarded against it. Another one of the companies involved, Micron Technology announced that it would be appealing the decision as announced in a press release.

How this affects the EU's case against Rambus anti-competitive behaviour (reported here) is not yet recorded.