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Sunday, July 10, 2011

Rambus Antitrust Trial Shows: Possible Verdict 1-14 billion!

Rambus - major win can equal 10 times current company value!

In a highly technical conspiracy trial slated to go on for five months in San Francisco Superior Court, Rambus attorneys have a challenge ahead of them: keeping jurors awake.

The Sunnyvale, Calif.-based technology licensing company is two weeks into its antitrust case against competitors Micron Technology and Hynix Semiconductor, alleging that the two companies colluded to force Rambus and its proprietary high-speed computer memory technology, RDRAM, out of the market in 2000. Rambus is seeking billions in damages; last year, Samsung agreed to pay $900 million to settle similar allegations.

The first witness, former Hynix Vice President Farhad Tabrizi, testified last month to the faltering of Rambus' projected market share after it lost an exclusive contract with chip giant Intel.

One juror appeared to be sleeping Wednesday when Tabrizi and Hynix counsel Kenneth Nissly, of O'Melveny & Myers, reviewed internal Hynix slide presentations that showed Rambus' market share sliding from 15 percent to 2 percent in one year. Munger, Tolles & Olson partner Bart Williams, who represents Rambus, peppered Tabrizi's testimony with objections, arguing that Tabrizi was frequently giving narrative answers to questions.

Observers say keeping jurors engaged in a highly technical trial requires a balance between providing detail and sticking to a theme. For Micron and Hynix, inundating the jury with information could be a key to keeping the award amount low.

"In general, the longer trial benefits the defendant, because from the plaintiff point of view, it's a very simple case," said Paul Riehle, chair of Sedgwick's antitrust group, who is not involved in the case. "The defendant is trying to put in a lot of detail to draw it out and make it much less of an emotional case."

Tabrizi, for his part, seemed bemused by Williams' objections to his chatty answers. In lighter moments, he joked repeatedly that because of Williams, he "couldn't say anything anymore."

The jury perked up during these jokes, and Judge James McBride's movie references, but seemed otherwise underwhelmed by the proceedings.

Micron and Hynix lawyers say Rambus' RDRAM technology was faulty and slow, and would have died on its own in the market. On the stand on Wednesday, Tabrizi said Intel dropped plans to use RDRAM in its PCs because the technology was too cumbersome and costly.

Idaho-based Micron General Counsel Rod Lewis says the suit is Rambus' latest attempt "to place blame on third parties for its failure to compete successfully in the marketplace."

Rambus GC Thomas Lavelle said the trial has already established that Hynix and Micron colluded to quash Rambus' business -- what's left is adding up the damages.

The $900 million settlement with Samsung has created high expectations among Rambus investors. Samsung took a $200 million stake in Rambus, so it too stands to gain from a big jury verdict.

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