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Rambus (RMBS) On Patent-License Feud, Stock Could Go Up

 February 08, 2012 02:09 PM

It appears that designer and patented memory chip developer Rambus (RMBS) should be gaining from the agreement that it has struck with Nvidia (NVDA) thereby clearing the way to use the chip patented by Rambus.

The patent license deal entered by Rambus and Nvidia allows Nvidia to use Rambus patented products in a wider range of integrated circuit products provided by Nvidia. The two companies have also buried the hatchet to settle all pending disputes or claims be it use of patented innovations or otherwise.

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The deal also covers five years though financial details were kept confidential. The latest agreement assumes significance as it comes on the heels of a similar deal struck by Rambus on December 22 with another technology company Broadcom (BRCM).

Rambus has been getting revenues through royalties. The agreement with Nvidia and Broadcom ensures that they receive payments for their patented products.

Rambus has sued some of the chip makers, including Broadcom and Nvidia, on December 1, 2010. The company took the patent infringement issue with International Trade Commission for a solution.

But the agreement reached between the two major companies with Rambus somewhat indicates that Rambus seemed to have prevailed upon about its patents. The deal would also allow all companies to focus on their business, which is witnessing stronger growth than any other sector.

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Rather than fighting the case, settling the patent issue and moving ahead make sense for the three companies involved. The demands for ICs seem to be increasing with the growth of smart phones, e-readers and tablet PCs.

Rambus too has been forced to come to a settlement after it had lost an anti-trust case against Micron Technology and Hynix Semiconductor on November 17. The latest deal also comes on the heels of the unfavorable ruling from U.S. Patent and Trademark. The body ruled that three of Rambus' patents, which were part of Rambus violation claim against Nvidia, were not valid. Rambus shares, which took a beating after it lost its case in November, are retreating from the lows. Now with two deals under its wrap, there could be something more to cheer up the investors as the company's action clearly indicate one thing, i.e. It wants to settle the patents issue amicably and move forward. This means less litigation charges for the company and more royalty revenues.

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