Toshiba Signs Patent License Agreement With Rambus for SDRAM & DDR SDRAM Memory and Controllers.http://biz.yahoo.com/bw/000615/ca_rambus_2.htmlSnippets:...Toshiba Corporation and Rambus Inc. (Nasdaq:RMBS - news) today signed a new patent license agreement for SDRAM, Double Data Rate (DDR) SDRAM, DDR FCRAM memory and Controllers that directly interface with these types of memory......Under the licensing agreement, the royalty rates for DDR SDRAM and the controllers, which directly interface with DDR SDRAM, are greater than the RDRAM compatible rates. The agreement also includes royalties for SDRAM and for controllers that directly interface with SDRAM, as well as a license fee for the entire agreement...
I mostly lurk on this board but this news raises some questions for me. I don't if they are even reporting this right yet but this seems to be a bigger deal. If I understand this right Toshiba is basically buying rights to sell all kinds of DRAM products that RMBS has a patent on including SDRAM. ie: they are paying for some stuff that they even used to use for free(not pay royalties for). Why do that if you believe RMBS patents aren't valid? Does this basically say that they believe RMBS' patents are valid in all kinds of DRAM chips and they are willing to pay royalties. If so Other Co.'s may follow. Others will still fight it out until the bitter end in court with RMBS but these kind of deals won't bode well for them.
Oops hit submit by accident. Here is the whole post.I mostly lurk on this board but this news raises some questions for me. I don't if they are even reporting this right yet but this seems to be a bigger deal.If I understand this right Toshiba is basically buying rights to sell all kinds of DRAM products that RMBS has a patent on including SDRAM. ie: they are paying for some stuff that they even used to use for free(not pay royalties for). Why do that if you believe RMBS patents aren't valid? Does this basically say that they believe RMBS' patents are valid in all kinds of DRAM chips and they are willing to pay royalties. If so Other Co.'s may follow. Others will still fight it out until the bitter end in court with RMBS but these kind of deals won't bode well for them.Would any of the more informed posters on this board care to give us their take on this? I want to know if I'm way off base with my interpretation. I get the feeling that the news media's not a great place to get an opinion on something like this. ThanksDrag
longvanilla,I'll try you- would you recommend a screen for stocks $5-$10 dollars.Bulldog
No I wouldn't, but I don't see the relevance to my question. I'm just curious as to how the more experienced gg posters interpret this news on RMBS. I just read it on several sites and was interested to know if I'm reading too much into this. Thanks Drag
longvanilla,Let me see if I can provide a little insight as to what this agreement means. First a little history.In November 1999 Rambus was granted patents on memory and chip to chip communications technology. These patents were applied for as early as 1990. Rambus maintains that the current technology used in SDRAM and DDR Ram infringes on many of their patents.Apparently, late last year Rambus began negotiations with a number of memory manufactures regarding payment for use of their technology in SDRAM and DDR ram. Hitachi was the only one to break off negotiations. In January of 2000 Rambus sued Hitachi for patent infringement. In addition Rambus requested the ITC to ban the import of certain Hitachi products including the Sega Dreamcast. Althouth there is a great deal of information regarding the lawsuit one point relevant to this discussion is that Hitachi requested that the Rambus complaint be expanded to include all memory manufacturers. The manufacturers responded indicating that they had no desire to join the suit.The announcement late Thursday of the agreement between Toshiba and Rambus is apparently the results of negotiations that must have begun 6 months ago. Although Toshiba already has a Rambus license it is for RDRAM, the new agreement allows for Toshiba to pay royalties to Rambus for all SDRAM and DDR ram produced beginning April 1 2000.Rambus has indicated that Toshiba currently has only 5% of the SDRAM market, so the additional income to rambus from Toshiba is not huge. So what's the big deal? Well if you've been following this soap opera you would know that there has been much resistance for adopting RDRAM as the next memory standard for PC's. Intel has selected it and is trying to lead the industry toward it. RDRAM is apparently more difficult to build and test. New equiptment and processes are needed and yields are rumored to be low but improving. Supply is short. It's much more expensive than SDRAM and unless you're running the right applications in your PC, you probably won't see much of a difference in performance. AMD has not embraced it (yet), and has indicated that it will be supporting a different memory type DDR.DDR is basically a faster SDRAM with a peak bandwidth just below RDRAM (RDRAM has a higher sustained bandwith however). DDR probably won't cost anywhere near as much to produce as RDRAM and can provide similar performance for today's processors and applications. So DDR has been viewed by some as serious competition to RDRAM. DDR systems are supposed to ship this year but none have been seen yet. A possible sceneraio might be that DDR becomes more dominant than RDRAM which would have cut into Rambus revenues. It will also take some time before RDRAM enters into the very low priced PC market displacing SDRAM. Supplies of RDRAM are currently tight keeping prices high.Soooooo, being a Rambus bull (i'm long on the company), I'm looking beyond the small amount of revenue gained from Toshiba, and more toward the implacations of the agreement. You gotta believe that Rambus laid out their patents and case as to why they deserve royalties for SDRAM and DDR. You gotta believe that Toshiba's legal and technical staff took a lot of time to look carefully at the situation before signing the agreement. So it doesn't look good for Hitachi. In the conference call yesterday, Rambus's CEO indicated that they are currently at various stages of negotiations with other memory mfgrs. I read into that that there will be other agreements beginning in the next few months. This will place additional pressure on Hitachi to settle the suit. And here's the really good part. Rambus has indicated all along that their goal in the suit has been to prevent Hitachi from manufacturing anything with Rambus Technology. If Hitachi doesn't settle, they'll be betting the farm. The whole enchalida! That's a big risk. Personally I don't think they'll take it.Therefore, it's beginning to look like Rambus will get royalties on 100% of the memory market. Regardless of the type of memory produced. They have indicated in the past that they expcet the PC memory market to be only 35% of future revenues. The other 65% coming from chip to chip communications. That aspect of the business is beginning to ramp up and in a year or two will probably be contributing much to the bottom line.Oh and one other thing. Yesterday, they announced their next generation of Rambus technology which simply stated doubles the effective bandwith of the current RDRAM!Sorry for rambling on so long. I hope I've painted a clear picture of a rather complex situation. I've left out a lot of detail. Now I gotta go cut the grass. Yuuck!bj
Good summary. A couple of additional comments....Although Toshiba already has a Rambus license it is for RDRAM, the new agreement allows for Toshiba to pay royalties to Rambus for all SDRAM and DDR ram produced beginning April 1 2000...Also any device that comminicates directly to the DRAM. i.e. controllers, chipsets, etc. This is the big kicker that has been largely ignored....Rambus's CEO indicated that they are currently at various stages of negotiations with other memory mfgrs...It's much larger than that. Tate (the CEO) actually used the term "hundreds of companies" that they potentially had to negotiate with.I'm not sure if anyone has a good idea of what the potential market is. DRAM is not too hard to get an estimate on, but the chip-to-chip interface market is made up of a bunch of different things.
BJyour post is a good summary of what's happening.However, there are contrary points to be made:1. Apparently toshiba pay because they dont think they can win in court. Either that, or the court cost maybe more for them, or their lawyer think they will lose.2. Hitachi brokeoff negotiation: You can draw the same kind of conclusions. That hitachi's lawyers dont think they (rambus) have a case on their industry standard patents. Now which lawyers are more accurate? The jury is still out. if Hitachi wins, then Toshiba's legal/management team will look rather bad. If Hitachi lose, or settle, then toshiba's team look good.I don't have any clue about those patents involve, consequently are totally unqualified to comment as to who may win. But.....the fact that most dram makers are still in "negotiation", may mean:1. they are really waiting to see whats going to happen with Hitachi. 2. They dont see a clearcut as to the validity or invalidity of the patents, and they don't want to take side yet.3. the fact that toshiba only has 5% of the market means there is really still question as to whether anyone else will follow. Toshiba's contract is significant, and a clear victory for rambus. But.....is rambus winning the battle or the war? i think the jury is still out. If you see a bigger dram maker jumping on board, then you can probably safely say that they are in very good shape. don't forget this also create precedence in a lot of things. The fact that industry standards can (after 9 years) become patented is really a scarely thing. I don't know how the juries/judges are going to look at this matters...considering the huge implication it can have on everything (besides rambus).In the near term, look for rambus to be still very volatile both ways, pending news and analyst comments
Thank you bobj33,Your post was very informative giving us a clearer overall picture. I was aware of some of the history but your post filled in some big gaps.I had a feeling the press wasn't quite getting the greater significance of this deal and you helped putting it perspective. Thanks to you and everyone else on this board for the great help and informative knowledgeable posts. Drag
BeReal,Yes that is certainly another way to look at the situation and of course it could play out as you described. But, when I was listening to the conference call and heard Geof Tate say that they were negotiating with others... Well, I just got a feeling that there was a lot more backing up what he was saying than we realize. "The fact that industry standards can (after 9 years) become patented is really a scarely thing."Ya know, I said something similar to a friend back in January when the lawsuit was filed. It just didn't seem right that someone could apply for a patent and when it was granted make others who knew nothing about the patent pay for it. Well he said that it's happened before. I think he even mentioned an example. One thing I can say about this situation is that Rambus is being quite fair about SDRAM royalties. Less than 1% and only beginning this past April.bj
RMBS quote from p. 135 of GG:"In 1998, for example, a company called Rambus took on a gorilla position in the emerging market for next-generation memories."
2. Hitachi brokeoff negotiation: You can draw the same kind of conclusions. That hitachi's lawyers dont think they (rambus) have a case on their industry standard patents.Or Hitachi did not think that RMBS would bet their entire business on a single lawsuit; i.e., they were bluffing and got called. I am not an IP litigator, but from what I have read of Hitachi's position in this litigation, it is pretty dumb. Somebody on the RMBS board posted a link to the order regarding Hitachi's effort to bring in the other manufacturers as parties in order to protect their interests even though the other manufacturers each filed briefs saying they did not want to be parties. The order slamming Hitachi was pretty much making fun of this stupid argument. If the other parties did not perceive a need to have their interests protected, why should the court listen to Hitachi and do it for them? In my experience, good lawyers don't make really dumb arguments like the one made by Hitachi because it kills credibility (lots of lawyers from good firms make stupid argument like this, but I don't consider them to be good lawyers by virtue of making really dumb arguments). Credibility would seem to be especially important in IP where almost nobody can understand the merits; if I were the judge and Hitachi made a stupid argument on an issue I could easily understand, I would assume that their arguments on the technical patent issues were equally stupid. Either Hitachi's lawyers are idiots or Hitachi's position on the merits is weak. I would prefer idiot lawyers because most lawsuits are not won or lost on the merits. I will take the better lawyers every time. With lots of money at stake, however, the merits become more important because both sides are sophisticated enough to hire the best. Assuming Hitachi's position is weak on the merits, RMBS should be okay, but even if it isn't, Hitachi's lawyers have not impressed me with the "save our competitors from themselves" argument.
A discussion of the patents can be found onwww.dramreview.comCase looks strong to me.Aparently case looks stron to Toshiba as well.Hitachi filed a countersuit in an attempt to draw everyone else into the lawsuit at once. THIS WAS DENIED! Hitachi's sole claims revolve around standards committee which RAMBUS left, and monopoly complaints.GIVE ME A BREAK. Patents are to protect the little guy from the likes of thieves like Hitachi IMHO. Hitachi is on their own. I bet SEGA (using Hitachi products) breaks first. Samsung will be first big one, but this will be carefully timed (no doubt after a selloff or after earnings which may be weak based upon RDRAM only). Hitachi risks its entire memory line betting that Rambus would not bet their entire company on such a lawsuit. Well RAMBUS did bet the entire company. Based upon what you have seen, and a review of the patents above, WHO DO YOU BELIEVE?Very long on the bus!
Hitachi brokeoff negotiation: You can draw the same kind of conclusions. That hitachi's lawyers dont think they (rambus) have a case on their industry standard patents. Now which lawyers are more accurate? The jury is still out. if Hitachi wins, then Toshiba's legal/management team will look rather bad. If Hitachi lose, or settle, then toshiba's team look good.I believe you have your answer to this now. :) Toshiba knew what they were doing when they settled. I'm surprised how quickly Hitachi threw in the towel, as they were the squeakiest of wheels. This says something for the strength of Rambus IP.DP
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