Rambus hit by class-action suit

Investors accuse chip company of misleading them about the status of valuable patents

Following a complex ruling in the legal battle between chip companies Rambus and Infineon, a group of Rambus investors has filed a class-action lawsuit against the company, alleging violations of federal securities laws.

The case was filed on Friday in the US District Court for the Northern District of California on behalf of shareholders who purchased Rambus stock between 11 February, 2000 and 9 May, 2001, and alleges that Rambus misled investors about the royalties it could reap based on a series of patents related to computer memory.

The class-action lawsuit alleges that, during the case of the battle between Infineon and Rambus, it became clear that Rambus' patents were fraudulently obtained, causing Rambus stock to plunge from $450 per share to below $10.

Also last week, a US District Court set aside an earlier verdict that had found Rambus liable for fraud related to its patents. However, the same ruling ordered Rambus to pay the $7.1m (£5m) legal fees of defendant Infineon, and Rambus has not been able to prove that Infineon violated Rambus patents. Rambus is appealing the ruling.

Rambus claims that its patents entitle it to receive royalties for all manufacture of SDRAM, the standard memory format used in PCs. Infineon and the class action lawsuit allege, however, that Rambus' patents were obtained fraudulently, by patenting technologies discussed by an industry consortium for inclusion in the SDRAM standard.

The class-action lawsuit was filed by Beatie And Osborn, a New York City law firm.

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