Rambus Inc. (RMBS)
Legal Update Conference
September 24, 2012 09:00 am ET
Executives
Satish Rishi - Senior Vice President and Chief Financial Officer
Tom Lavelle - Senior Vice President and General Counsel
Analysts
Paul Coster - JPMorgan
Mike Crawford - B. Riley & Company
Hamed Khorsand - BWS Financial
Presentation
Operator
Good day, ladies and gentlemen, and welcome to the Rambus Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded.
I would now like to turn the call over to your host, Satish Rishi. Please go ahead.
Satish Rishi
Thank you, operator, and thank you for joining us for the special conference call regarding the ruling from Judge White in the Hynix case. I am Satish Rishi, CFO, and with me on the call today is, Tom Lavelle, our General Counsel. Ron Black, our CEO, is on a plane and couldn't participate in this call.
A replay of this conference call will be available for the next two-week at 855-859-2056. You can hear the replay by dialing the toll-free number and then entering ID number 34575979 when you hear the prompt. In addition, we are simultaneously webcasting this call and replay can be accessed on our website beginning today at 5.00 pm Pacific Time.
I need to advise you that the discussion today will contain forward-looking statements regarding our financial prospects, pending and current litigation, and demand for our technologies among other things. These statements are subject to risks and uncertainties which are more fully described in the documents we file with the SEC including our 8-Ks, 10-Qs, and 10-Ks. These forward-looking statements may differ materially from our actual results and we are under no obligation to update these statements. We can find more information on our website at www.rambus.com on the Investor Relations' page.
Now, I'll turn the call over to Tom.
Tom Lavelle
Thanks, Satish, and good morning everyone. Late Friday, we received the decision from Judge Whyte. In the Northern district of California Court in the Hynix matter.
In the decision, Judge Whyte has reaffirmed the validity of our patents in this case, and reaffirmed jury's findings that Hynix infringed our patents. Judge Whyte further ruled that we are entitled to receive royalty payments based on that infringement, and that those payments will be limited to rates that are reasonable and non-discriminatory. The amount in royalty payments we are entitled to receive from Hynix under this decision will be determined through briefings that both sides will be submitting to the court in October.
The good news is that Judge Whyte, has determined we are definitely entitled to payment from Hynix. On the topic of documents spoliation and our document retention practices, Judge Whyte found that Rambus should have preserved documents at the time we reasonably anticipated litigation. He found out while the evidence does not show Rambus deliberately shredded documents it knew to be damaging, he did find that "Rambus quoting out from the ruling spoliated evidence in bad fate or at least willfully."
Importantly Judge Whyte found that our document retention program "did not render unavailable to Hynix any material documents from the files on the patents in the suite." Thus he found no prejudice to Hynix with respect to the patents or prior art that may have affected the patents, but based on his finding that Rambus may have destroyed some documents that could have SK Hynix in one of its defenses not related to the validity of the patents, he has imposed to section that damages will be recalculated, possibly different from those awarded by the jury. The recalculation will be based on reasonable and non-discriminatory or RAND rates. There is no set formula or calculation of what constitutes RAND, and it is precisely this question that will be briefed for Judge Whyte in October.
In summary, while we are disappointed with the fining of spoliation, we feel that this is a positive result as it clearly states there is value in our technology and we have a right to collect royalties for the use of our patented inventions. There is now no question whether Hynix owes us money for the wrong standing infringements of our patents. The only remaining question is how much. Again, we will be addressing the RAND rates in our briefing that is due to the court in October, but for now, we will open the line for questions.
Operator, could you please open the line for questions.
Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from Paul Coster from JPMorgan. Your line is open.
Paul Coster - JPMorgan
Yes. Thank you. Can you remind us, please, what the royalty is attached to in terms of unit ships product categories.
Satish Rishi
I am sorry. You are asking the rates, or the damages that were awarded?
Paul Coster - JPMorgan
No. I want to just first of all establish what the royalties will relate to in terms of units shipments, what product categories?
Satish Rishi
Yes. They relate the SDR, DRAM products and the DDR DRAM products of Hynix and that would have been those products from the year 2000 through 2010.
Paul Coster - JPMorgan
Do you have any proxies for what the royalty rate might be in a reasonable in non-discriminatory come fixed for these products?
Satish Rishi
No. As I said, there is no formula or calculation that's standard available for what is referred to as RAND or reasonable or non-discriminatory. It's a factual question that will be determined by the briefings and probably or arguments that will be made in front of Judge Whyte.
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