Empiricum - A shotgun marriage? - Guest editorial

The recently announced litigation settlement between Rambus and Infineon may be comparable to a "shotgun marriage." Like every agreement where one party is under threat or compulsion, such type of marriage is voidable due to vitiated consent. The threat or compulsion was provided by the impending negative written ruling of Judge Robert E. Payne validating the "shotgun defense" of Infineon. Obviously, Rambus was compelled to settle due to its fear and apprehension that such ruling will infect its other pending cases, most especially the Hynix case where it expects to win on the perception that Judge Whyte can render a fair and more acceptable decision. It should be noted, parenthetically, that Judge Whyte had already determined that a good number of Rambus' patents were infringed by Hynix. The matters that he is yet to decide are patent and non-patent defenses and deal on the ENFORCEABILITY of these patents.

Since the settlement announcement last Monday, several commentators and "analysts" have said their piece. But none of them highlighted and dealt with the lack of mention of payment of back royalties in Rambus' press release. Were back royalties specifically waived by Rambus in the settlement agreement? If so, such waiver can be interpreted to mean that Rambus has tacitly agreed to Infineon's contentions that there was no patent infringement on Infineon's part. Arguably, like in every settlement agreement there is no admission of liability by either party. However, Rambus should have insisted in allocating even a token $1 for past royalties to avoid being put on waiver or estoppel.

Also, these "noted" commentators and "analysts" --- (like Rich Duprey, Rick Currin, Erach Desai, Tom Krazit, et. al.) --- failed to discuss and question why the payments will not start until November 15, 2005. Why did Rambus not require payments to start by the end of the next quarter? And why did Rambus agree to the conditional nature of the $100M maximum payout? Reading carefully the salient points of the settlement agreement as announced in the press release, it seems that Infineon is still entertaining high hopes that Hynix will win and that there will be no additional licensees for Rambus and that, therefore, Infineon will not be required to pay the $100M.

In addition to the above, the grant by Rambus to Infineon of a "most favored customer" status all the more make the "shotgun marriage" much more than a "sweetheart deal" if one considers how Infineon dealt with Rambus in the VA case.

It seems that Rambus is putting all its eggs in Judge Whyte's basket. Does Rambus believe that Judge Whyte will eventually serve the "Ramboids" another serving of his now famous "omellete"? If so, Rambus must do its best in dealing with the JRA documents and effectively rebut the charge of "unclean hands." Otherwise, Rambus will once again find itself entering into another "shotgun marriage" !

Empiricum

~oo0oo~

[DISCLAIMER and DISCLOSURES: The discussions contained above are NOT intended as investment and/or legal advice. Rather, they are for the evaluation and analysis of self-confessed Rambus, Inc., shareholders. The reader is strongly advised to conduct his / her own "due diligence" and / or consult a financial or legal advisor before acting on matters herein discussed. I am a Rambus shareholder since the year 2000 with a long term view on the company. This Forum is created solely on my own initiative and discretion and is NOT being pursued on behalf of Rambus, Inc., or any of its officers or directors, or for anyone for that matter.]