By DON CLARK CONNECT
Updated Dec. 10, 2013 1:31 p.m. ET
Micron Technology Inc. MU and Rambus Inc. RMBS said they have ended a series of court battles that stretched for thirteen years, with Micron agreeing to pay up to $280 million to Rambus over seven years.
The deal announced late Monday gives Micron, one of the biggest makers of memory chips, rights to use Rambus patents in certain products. The companies said they agreed to drop all pending litigation.
Jerome Nadel, chief marketing officer of Rambus, said the royalty rate that Micron will pay amounts to about 0.6% of revenue from products that use the relevant patents. Rambus had originally sought royalty rates of closer to 3%, a level that provoked fierce opposition amid the narrow profit margins of the memory chip industry.
"This is fair and reasonable," Mr. Nadel said of the rate set in the settlement. "What we are looking for is to establish a collaborative framework for the industry."
A Micron spokesman declined comment beyond the joint news release.
The deal requires Micron to make quarterly royalty payments to Rambus that are capped at $10 million per quarter, the companies said. The cap over each 12 months is fixed at $40 million, with a total of $280 million possible over seven years, depending on Micron's sales volumes.
Rambus, of Sunnyvale, Calif., in the 1990s developed and sought to license technologies that accelerate the performance of chips known as DRAM, or dynamic random access memory. After those efforts failed, Rambus and chip makers squared off in series of court battles, with victories or losses contributing to sharp swings in Rambus shares.
Rambus accused Micron, Hynix Semiconductor Inc. 000660.SE +0.41% and others of patent infringement. Opponents fired back with charges that Rambus violating antitrust laws by the ways it handled patents, an argument at one point taken up by the Federal Trade Commission.
The Silicon Valley company reached settlements with some chip makers, including a pact with Samsung Electronics Co. in 2010 valued at up to $900 million.
But one of the biggest developments was a 2011 jury verdict in a California state court that rejected antitrust allegations by Rambus against Micron and Hynix. Rambus had sought nearly $4 billion in the case.
Since that time, Rambus has changed management teams and emphasized technology development over litigation.
Michael Cohen, an analyst with MDC Financial Research who has long tracked the company's litigation, noted that many investors who were betting on legal victories by Rambus no longer hold its stock.
"I think the majority of the shareholder base is focused on the other Rambus businesses at this point," he said. So the Micron settlement will be "an upside surprise that many shareholders hadn't really counted on," he said
Micron, Rambus End Long-Running Legal Battles - WSJ.com