Rambus’ $900M Pay Day

Early in 2010, Korean CE giant Samsung settled with US technology licensing company Rambus for $900M to resolve a range of disputes including anti-trust and patent infringement, bringing another twist in the up and down story of Rambus’ licensing ambitions.  Rambus has been through some difficult times, including an inquiry by the European Commission over an alleged “patent ambush” on memory chips, which was resolved late in 2009.

The kind of licensing program Rambus has run is known as “standards licensing”.  In essence it is a licensing program based on the use of IP, usually patents, which cannot be avoided when implementing a technical standard.  In this case, Rambus technology was put into memory chip standards.  So Rambus has so-called “essential” patents on memory chips which are a core component of everything from PCs to mobile phones, and are therefore produced in huge numbers, making an attractive market for IP licensing.  Many other technologies are standardised to create large markets and the economy of scale which brings prices down for manufacturers and consumers.  In fact most mass market electronics products, from DVDs to MP3 players have some form of standardisation, and many of these products have associated IP licensing.

Behind the user friendly, retail hyped, consumer electronics products which fill our daily lives, there is a world intellectual property disputes which accounts for billions of dollars a year. Global markets have turned IP licensing into big business, and licensing based on standardised technologies is an important part of that business.  Which is good news for Rambus and other companies that create the technologies which go into global products.