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Micron lawsuits not new in tech field, experts say

By Julie Howard
The Idaho Statesman

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But industry analysts and financial experts aren't particularly concerned. And while Micron's legal expenses are climbing, the firm's top executive says it's a routine part of doing business in today's technology industry.

In fact, the Justice Department investigation and the class-action lawsuits that it prompted equally focus on Micron's top competitors: Samsung Electronics, Hynix Semiconductor and Infineon Technologies.

"Any litigation is a concern, and we have to take it seriously," Micron Chairman, President and Chief Executive Officer Steve Appleton said recently. "It's on our agenda as something we have to address. We don't have any more legal issues now than five years ago in aggregate."

Micron says losing just one of the current lawsuits — a claim that the company is improperly using someone else's technology — could cost it hundreds of millions of dollars. And three cases have prompted Micron to disclose to the Securities and Exchange Commission that a negative ruling could result in a "material adverse effect on our business, results of operations or financial condition."

Micron's legal battles Micron vs. Rambus; Rambus vs. Micron Claims of patent infringement and collusion Rambus, a California company, claims that several DRAM (dynamic random access memory) manufacturers, including Micron, are using its technology without paying proper royalties. This is a convoluted case that stretches back to mid-1998. Rambus and Micron accuse each other of fraud. U.S. Department of Justice investigation Possible price fixing and collusion The most precarious case, perhaps, is a U.S. Department of Justice investigation that has been quietly under way since June 2002. The Justice Department has subpoenaed information from Micron and competitors Samsung, Hynix and Infineon. It is generally accepted that the investigation is looking into price fixing among the top DRAM manufacturers, focusing on spring 2002 when DRAM prices rose suddenly. The Justice Department has declined to discuss the case, and there is no indication when this investigation will end. Class-action lawsuits vs. Micron and others Claims of price fixing and collusion More than 25 class-action lawsuits were filed against Micron and all of its major competitors after the Justice Department launched its investigation. The lawsuits have been consolidated into one case in U.S. District Court in San Francisco and are on behalf of individuals and businesses who purchased DRAM directly from the various DRAM suppliers. Source: The Idaho Statesman

Analysts who cover the semiconductor industry either declined to comment for this article or said Micron's legal issues weren't particularly troubling.

"I never care about legal issues of the industry," said Nam Hyung Kim, an iSupply senior analyst based in El Segundo, Calif. "They're always happening. None of the legal issues surrounding the DRAM market have impacted the market in DRAM history."

DRAM, or dynamic random access memory, is Micron's primary product and is used in personal computers and other electronic devices.

Lawsuits over patents are common. And Micron is one of the world's most prolific producers of U.S. patents. In 2003, Micron received more than 1,700 patents; in 2002, it received more than 1,800, ranking third in the nation for patents issued.

For three years, Micron has been ranked No. 1 in the semiconductor industry for its technological strength, which includes the ability to convert leading-edge technology into intellectual property.

"The semiconductor industry is perhaps more active than others in patent litigation," said Rod Lewis, Micron's corporate counsel and vice president of legal affairs. Lewis won't disclose Micron's legal costs or discuss specific, ongoing litigation. He acknowledged that legal issues can become burdensome to the point that they impact operations.

"There are some real concerns because there's an ever-increasing number of (patent) cases and there's a trend toward going after major manufacturers, particularly in the U.S.," Lewis said. "It makes it difficult to be a manufacturer here. We could be an IP (intellectual property) company and have someone in China manufacture for us."

While Micron isn't contemplating that scenario, Lewis says many companies have taken on that type of structure partly because of legal issues.

Copyright © 2004 The Seattle Times Company

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