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Rambus jury shifted views as deliberations wore on

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CIOL Bureau
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SAN FRANCISCO, USA: When he walked into the jury room to start deliberating in Rambus Inc's $4 billion antitrust lawsuit against two rivals, one juror felt confident that the small microchip designer should prevail.

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But after weeks of discussion, he and several others were slowly swayed to the other side. When the last anonymous vote was taken on Wednesday morning, the jury dealt Rambus a stunning blow, deciding the company did not prove Micron Technology Inc and Hynix Semiconductor Inc colluded to fix memory-chip prices and discourage adoption of its technology.

"We didn't see the smoking gun," said the juror, speaking by telephone to Reuters after the verdict. The juror added that he was the first pro-Rambus member to defect and was "very comfortable" with the outcome.

Attempts to reach other jurors were not successful. The panel included people with a range of backgrounds, including a retired medical secretary and a software company employee who owns his own patent.

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After the verdict, Rambus said it was analyzing its options for appeal. A Micron attorney said the outcome sent a message to other companies trying to win in the courts instead of the market, while a Hynix lawyer said it banished claims of a price-fixing conspiracy.

Rambus lost over $1.2 billion, or 61 percent, of its market value on Wednesday after the verdict was read in a California state courtroom in San Francisco. The stock has bounced back slightly since then, but it still traded Friday at roughly half its pre-verdict level.

Investors had bid up Rambus' share price based on years of aggressive, and often successful, litigation.

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The Sunnyvale, California, company has attracted a loyal following of small investors who see it as a memory-chip David battling Goliaths. Many investors contribute to a vigorous online message board where they discuss Rambus and ongoing cases; some showed up in court to watch the recent trial.

'Big in our britches'

The juror who spoke to Reuters did not want his name revealed, citing angry online comments about the jury after the verdict. "This jury are a bunch lazy, morons, that took advantage of the system!" one commenter wrote.

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"I just don't see how this jury was not bought off," wrote another.

The juror dismissed the comments, saying the panel tried to be comprehensive and fair.

"I thought about it, thought seriously about the case, reviewed my own oath, and really had to come to terms with the fact that there was no evidence," he said.

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Rambus was founded by two professors in 1990. It has long tried to generate revenue by licensing its intellectual property to other companies rather than making chips itself, and has sued technology heavyweights for infringing its stable of patents.

The verdict surprised many Rambus investors, perhaps in part because the company had settled antitrust and IP claims against Samsung Electronics in 2010 for $900 million.

That may have led Rambus to believe its strategic position was better than it actually was, said James Hopenfeld, an IP attorney who was not involved in the case.

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"You can imagine Rambus is thinking, 'Gosh we're big in our britches, we've got $900 million from Samsung,'" said Hopenfeld, who has followed Rambus' myriad court battles.

Rambus' did not respond to questions about its calculus for taking the case to trial.

Sarcasm

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At trial, Rambus' attorneys hammered on an email sent by Micron executive Linda Turner. Turner said in the email that Micron had been requesting that Infineon, Samsung and Hynix lower their prices, which would help "drive Rambus' away completely."

Micron contended the email was meant to be sarcastic.

The juror told Reuters he did not think the email demonstrated a conspiracy on its own, as there were no corresponding emails from the other companies confirming an agreement to fix prices. Thus the defense explanation - that Turner was being sarcastic - could have been true, he said.

Rambus' also claimed its rivals disrupted its relationship with Intel. In the late 1990s, Intel agreed to use Rambus'' proprietary computer memory chip technology, rather than the industry standard memory chips. But the relationship between Rambus' and Intel soured a couple years before the contract ended in 2002.

A former Intel executive called by the defense described anger toward Rambus' among his colleagues when they learned of Rambus'' plans to sue rivals, instead of making their partnership with Intel a success. Because the evidence from Intel itself tilted against Rambus', the juror said it was difficult to credit Rambus'' allegations.

An Intel spokesman declined to comment on the case.

Mountain of information

The three-month trial ended in September, and the jury deliberated for more than eight weeks. Overall the juror described the discussions as occasionally heated but always respectful, and said the group talked of planning a party together sometime soon.

Going into the deliberations, seven of the 12 jurors sided with Rambus', this person said. Nine was the minimum number needed to deliver a verdict.

The jury deadlocked at 7-5 in Rambus'' favor for more than a month, and then, one by one, members began to change their minds.

John Danforth, a former general counsel at Rambus' who still owns company stock, said some important evidence was barred from being presented to the jury -- including facts about how a separate U.S. Department of Justice investigation into price fixing played out.

Several companies, including Hynix, pleaded guilty to price fixing in the DRAM computer memory market. During the Rambus' trial, an attorney for Hynix acknowledged the 2005 plea, saying Hynix cooperated and took responsibility for its actions.

Because the jury repeatedly was told it could only consider Hynix's guilty plea for limited purposes, the price fixing probe did not play a large role in the deliberations, the juror said.

Micron cut a deal with DOJ to avoid prosecution, and the juror said that had he known of the company's role in the probe, it may have made a difference in his deliberations.

Along with Samsung, Infineon also reached a civil settlement with Rambus' before trial, and the juror said he also learned of those details after the trial was over. Had he known, the juror said it would have mattered in deliberations.

After the verdict, Rambus' signaled that some of these issues might be part of its appeal. "We do not agree with several rulings that affected how this case was presented to the jury," Chief Executive Harold Hughes said in a statement.

Ultimately, the juror told Reuters, deliberations took so long because the panel had to sift through a mountain of information - and because they were so deadlocked.

"It wasn't the sandwiches," he said.

The case in Superior Court of the State of California, County of San Francisco is Rambus' Inc. v. Micron Technology Inc. et al, 04-431105.

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