June 9, 2010 / 7:12 PM / 9 years ago

UPDATE 2-Rambus to reargue Micron, Hynix case, stock tanks

*Arguments slated for Oct. 7

*Shares drop 17 percent after the order (Adds analyst’s comments, case details, previous NEW YORK)

SAN FRANCISCO, June 9 (Reuters) - Rambus (RMBS.O) will have to reargue its claims in a patent dispute with Hynix Semiconductor Inc (000660.KS) and Micron Technology Inc (MU.O) before a federal appeals court, the company said on Wednesday.

Shares in Rambus, which designs memory chips but gets the lion’s share of its revenue from patent litigation, sank 17 percent as Wall Street digested the company’s second legal setback in a month.

The court set an Oct 7 date for the rehearing of the case, which involves whether Rambus destroyed documents related to claims that Micron and Hynix violated patents, thereby voiding future collection of damages.

One of the judges who was on the original U.S. Court of Appeals for the Federal Circuit panel retired in May before a decision was issued.

The order for a second hearing comes after the U.S. International Trade Commission on May 26 put off until late July a final decision on a separate patent infringement case, against several technology companies. [ID:nN26232040]

Analysts said investors had been waiting for resolution in the long-running disputes dogging the company, which has seen its share price gyrate with each decision and delay.

“Investors, including myself and I think even Rambus management, were expecting a final decision in this matter, which probably would have decided one of the last issues in what’s been the better part of a decade of litigation,” said Capstone Investments analyst Jeff Schreiner.

“It removes the catalyst. It’s a short-term negative, and we’re certainly in a short-term world right now.”

Rambus has filed patent infringement lawsuits against a host of technology companies in the past decade.

“In spite of this delay, we remain confident in our position,” Thomas Lavelle, senior vice president and general counsel at Rambus, said in a statement. “We will vigorously argue our right to defend and be fairly compensated for use of our patented innovations borne of years of work by Rambus scientists and engineers.”

Rambus won against Hynix in a trial in San Jose, California, when a federal judge found that nine Rambus patents were valid and had been infringed. But Rambus lost to Micron in a Delaware court. Both cases are under a coordinated appeal.

The cases to be re-argued are: Hynix Semiconductor v Rambus, 09-1299 and Micron Technology v Rambus 09-1263 in the U.S. Court of Appeals for the Federal Circuit.

Shares of the memory chip designer dived nearly 17 percent to close at $18.19 on the Nasdaq. (Reporting by Paul Thomasch and Alexei Oreskovic, editing by Gerald E. McCormick, Leslie Gevirtz)

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