July 26, 2010 / 9:51 PM / 9 years ago

UPDATE 3-Rambus wins patent fight with Nvidia, others

* Trade panel bars imports of infringing chips

* Rambus share prices rise in after hours trading

* Nvidia share prices slide

* Nvidia says it will appeal

(Adds Nvidia will appeal, Rambus comment, updates share price)

WASHINGTON, July 26 (Reuters) - Chip designer Rambus (RMBS.O) won its fight with graphic chip maker Nvidia and other companies on Monday, as a trade panel ruled that Rambus patents had been infringed and ordered a halt to the import of infringing chips.

But Nvidia Corp (NVDA.O) said it would appeal the decision, extending an already lengthy legal battle.

Rambus share prices rose more than 7 percent to $21.06 in extended trading after the trade panel’s decision was announced. Nvidia share, which closed at $10.55 each, were trading at $10.36 within two hours of the ruling.

In its final decision, the International Trade Commission said Nvidia, Hewlett-Packard Co (HPQ.N) and other companies infringed Rambus chip patents and issued an order barring the importation of any chip made with the infringing technology.

Nvidia would appeal, said Nvidia spokesman Hector Marinez in an emailed statement.

“There will be no impact on our customers or our business as a result of this ruling,” he added. “We intend to take advantage of the mandatory European Commission License that is available. This will allow us and our partners to continue our business under the terms of that license and prevent the enforcement of any exclusion order.”

Nvidia argued the patents in question in this suit were covered by a 2009 agreement that Rambus made with the European Commission to resolve a standards-setting case.

Rambus said it was pleased with the win.

“The ITC’s decision is another demonstration of the value of our continued commitment to innovation,” said Thomas Lavelle, senior vice president and general counsel at Rambus.

The battle is a key one for Nvidia, whose core business relies on the sale of specialized graphics cards.

Patrick Wang, an analyst with Wedbush Securities, said he expected the lengthy battle to get even longer.

“I suspect it’s going to be a long and drawn out legal process,” he said. “There’s a lot of bad news priced into that (Nvidia) stock already. It (the ITC decision) doesn’t help. There’s a lot of skepticism around that stock as is.”

Other companies also found to infringe and subject to the import ban were ASUS Computer International Inc, Palit Multimedia Inc, MSI Computer Corp, EVGA Corp, DiabloTek Inc, Biostar Microtech Corp and BFG Technologies Inc.

An ITC judge ruled in January that three Rambus patents were violated. The patented technology controls and manages the flow of computer data to and from a chip’s memory. The entire commission largely upheld that preliminary decision on Monday.

Rambus licenses those and other patents for use in other companies’ products, such as the Sony Corp’s (6758.T) Playstation 3.

Two of these three patents have been affirmed as valid by the U.S. Patent and Trademark Office. [ID:nN04192068] One was found to be invalid.

The commission is a popular venue for patent litigation because it can bar the imports of products made with infringing technology into the United States.

The ITC is a popular venue for patent lawsuits because it can bar the importation of devices made with infringing technology. If the ITC orders an import ban, that order would go into full effect only after a standard 60-day executive branch review. The executive branch rarely overturns the ITC’s decisions.

During this review period, the banned goods can be imported but only if the importer posts a bond equal to 100 percent of the value of the imports.

South Korea’s Samsung Electronics Co Ltd (005930.KS) settled their long-running legal battle with Rambus in January, agreeing to a licensing and investment pact that could be worth $900 million over half a decade to the memory chip designer.

The U.S. Court of Appeals for the Federal Circuit is considering a related case. In October, it will again rehear arguments in a dispute between Rambus and Hynix Semiconductor (000660.KS) and Micron Technology Inc (MU.O).

It involves a fight over whether Rambus destroyed documents related to claims Micron and Hynix infringed patents.

The case against Nvidia and others that was before the International Trade Commission is number 337-661. (Reporting by Diane Bartz and Alexei Oreskovic; editing by Andre Grenon)

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