Rambus has always represented a cornerstone of innovation. Over its twenty-six-year history, its inventions have been part of milestone products such as the Nintendo 64, Sony PlayStation, and PlayStation 3 gaming consoles. But for nearly fifteen years beginning in 2000, the company came to be perceived more as a litigant. That’s because Rambus became entrenched in protracted lawsuits against Samsung, Micron and Hynix, and the other major players in the dynamic random-access memory (DRAM) market.
What began as a declaratory judgment filed against Rambus evolved into high-stakes patent and antitrust litigation against the DRAM companies. Actions also included precedent-setting cases regarding document handling and trade practices regarding the assertion of patents and Standard Setting Organizations. According to Jae Kim, senior vice president and general counsel for Rambus, “We didn’t initiate legal action, but after having been in licensing discussions with the other companies for years, we were forced to use the courts to protect our IP portfolio and inventions.”
A settlement was reached with Samsung in 2010, but Rambus suffered a loss in the antitrust case the following year. This caused its stock to plummet and operations to go into triage mode to protect and maintain its employees and market value. In 2013, the board made substantial personnel changes, including promoting Kim from deputy general counsel to his current position.
The legal team has always played a vital role in Rambus’ operations. In addition to maintaining stability in the department as it contended with other pending litigation and ongoing licensing negotiations, Kim was also participating in operations, strategy, and its execution.
“We had to file patents on a continuous stream of inventions and review appeal and settlement options,” Kim recalls. “Simultaneously, there was a lot of decision-making directly impacting market capitalization, employees, overall performance and, quite literally, keeping the lights on.”
Once the smoke began to clear, Kim set out to restore relationships and potential partnerships within the industry. This included companies that Rambus had been litigating against and others that the company believed needed licenses for the use of its inventions.
Kim adopted a two-pronged approach. The first consisted of developing a commercial focus that took into account the lessons learned from all of the previous litigation.
That entailed revising royalty rates to accommodate a consolidated DRAM market. It also considered rates for systems-on-a-chip (SOC) users, such as Qualcomm, which presented a separate and growing market.
“We went from being embroiled in major lawsuits for almost fifteen years to actively collaborating with former legal adversaries and having them all under license. That’s a pretty big achievement.”
The second prong was personal engagement. Kim and many team members were new faces to outside companies, so their initial outreach efforts were usually accepted. However, there was still a perception that Rambus’ true intention was to extract as much money as possible. On more than one occasion, Kim recalls, he and his team were asked to refund money even prior to any new negotiations beginning.
“It was very difficult convincing the other parties that we weren’t there to tee up litigation,” Kim says. “We were actually trying to engender trust that may not have been there before, or that may have previously been violated.”
To help send the message that Rambus wanted to collaborate and not litigate, the company created fact-based presentations that demonstrated patent claims through volume analysis of products using the company’s inventions, along with market data, market rates, and other evidence. “Our presentations were transparent and direct,” Kim explains. “We also acknowledged concerns that we shared with the other parties like protecting shareholder value. It was a very balanced and unemotional approach that led to settling all of our lawsuits.” By March 2015, Rambus had no pending litigation—something that continues to this day.
As the company’s foundation became more solidified, Rambus pursued a growth strategy that benefited from significant acquisitions in 2016. Smart Card Software provided assets that complement its security offerings in both mobile payments and mobile ticketing. Semtech’s Snowbush offered synergies with its IP core portfolio in both of its DRAM and SOC memory divisions, and Inphi delivered additional value to the company’s buffer chip program.
Having been a transactional attorney for much of his career prior to Rambus, Kim was highly involved in the acquisitions. After successfully managing the company’s bridge-building efforts with outside partners, he observes, “the common thread between negotiating patent licenses, settlements, and the acquisitions is that they all require a significant level of trust and ongoing dialogue. Without them, the chances of success are very unlikely.”
Since its low point in the fall of 2011, Rambus’ market capitalization has tripled, which Kim is quick to point out is a trailing indicator of performance. As part of its turnaround, the company has more than 99 percent of the DRAM industry under long-term licenses that extend out to 2023. Morale has also dramatically improved as employees feel they are contributing to the overwhelmingly positive results.
“We went from being embroiled in major lawsuits for almost fifteen years to actively collaborating with former legal adversaries and having them all under license. That’s a pretty big achievement,” Kim says. Now that he no longer has to operate in “emergency mode,” Kim is directing Rambus’ HR functions and global facilities in addition to leading the legal department. He looks forward to the new challenges they present as part of his efforts to support the transformed company’s continued success.
Bird & Bird:
“It is both a great privilege and a pleasure to work with Jae. He is a real strategist and stretches the team to give their best.”
—Katharine Stephens, Partner