Rambus, whose memory is used by the Pentium 4 and PlayStation 2, has been found guilty of fraud under the oddly named Racketeer Influenced and Corrupt Organisations Act. Originally Rambus had taken European memory manufacturer Infineon to court in the USA to force them to pay royalties on SDRAM and DDR memory, which uses technology apparently covered by patents held by Rambus. In a sensational change of fortunes, the judge threw out all 57 of the claims lodged by Rambus after evidence of foul play emerged, and instead allowed Infineon to go ahead with a counter-claim of fraud.
Yesterday the Virginia court found Rambus guilty, and ordered them to pay punitive damages of $3.5m, somewhat less than the $105m which Infineon had asked for, based on the royalty fees they would have had to pay if Rambus had won the case. The judge then reduced the damages still further to a measly $350,000 because of limitations in the local law. Still, this is just a drop in the ocean compared to the prospective royalty fees which Rambus looks set to lose as a result of this turn-around. Rambus chief executive Geoff Tate is reported as saying that "we are obviously disappointed in today's verdict and will immediately appeal".
Eight major memory manufacturers have already agreed to pay Rambus royalties of up to 3.5% after being bullied by the threat of legal action, while two other companies are still fighting Rambus in the courts. If Rambus lose their appeal against last night's shock defeat they could be in deep trouble - their own memory hasn't proven particularly popular, and losing the royalties they have allegedly been unfairly extorting from companies using rival technologies could put a serious hole in their finances. Shares in Rambus have tumbled over the last year from a high of just over $125 and are now worth barely a tenth of that, dropping another 7% yesterday to $12.80 on the news.