Hynix Jury Verdict Conference Call 04-24-2006 Nicole Noutsios: Thank you operator, and welcome to this Rambus conference call for an update on events in the Hynix trial. I'm Nicole Noutsios, Rambus's Investor Relations. With me today are Harold Hughes, our President and CEO; John Danforth, our general counsel; and Satish Rishi, our CFO. A press release concerning today's verdict was issued earlier and is available at our web site at www.rambus.com. We have also filed with SEC on form 8K results to be discussed today. A replay of this conference call will be available for the next week at (888) 203-112 [incomplete number]. You can hear a replay by dialing this toll-free number and entering the ID number 4521955 when you hear the prompt. In addition, we are also webcasting this call, and a replay will be on our website beginning today at 5 o'clock Pacific Time. Before we begin, I need to advise you that the discussion today will contain forward-looking statements regarding our financial prospects, pending litigation, and demand for our products, among other things. These statements are subject to risks, uncertainties which are more fully described in the documents that we file with SEC, including our 8Ks, 10Qs and 10Ks, and these forward-looking statements may differ materially from actual results. Now, with that, I'll turn the call over to Harold. Harold Hughes: Thanks Nicole, a very good afternoon to everyone. Great news from Judge Whyte's courtroom in San Jose today. The jury in the Hynix patent trial found that all 10 of our claims at issue were both valid and infringed by Hynix's SDRAM, DDR, and DDR2 products. Further, the jury awarded Rambus damages totaling $306.9 million dollars. John is gonna take us through a detailed discussion of the verdict in a few minutes. Let me talk a bit about the business implications. The Hynix trial gave us, for the first time, the opportunity to present to a jury our positions regarding the validity and enforceability of our patents, an opportunity we've worked towards for many years. In this trial, we are allowed to argue 10 claims which span 6 patents. That's a very small subset of our portfolio of over 450 issued patents and 10,000+ claims. Nonetheless, the verdict we received today is extremely important. First, this result removes a great deal of uncertainty for ongoing and future licensing discussions. The clarity of this verdict should be very helpful in moving these negotiations forward. Further, it supports our goal of moving current litigants to customers. Some of the past focus in the press has been on damage rewards, but this misses the greater goal. We want to sign companies that are using our patented technologies to long-term license agreements. Litigation is always a last resort. However, as we've demonstrated in the Hynix tile -- trial, we will litigate, if needed, to obtain fair compensation for our patented inventions. It is very gratifying the jury found that all 10 of our claims at issue in this trial are both valid and infringed. So, with that, I'll turn it over to John, and I know you want to hear from John to provide more details on the trial and today's verdict. John. John Danforth: Thanks, Harold. I'm gonna talk briefly about the verdict. I'm gonna review briefly the damage award, and the variables that went into that award, and then I'm gonna touch briefly on some evidence that addresses one particular point that Hynix raised in its closing arguments and that they will turn to again if there is a third phase of this case. That's what now seems to be called the, "JEDEC made me do it," defense. Let me start with a couple of points about the verdict. I think they're self explanatory, but I want to emphasize -- couple of things. First of all, going into this trial, we had a -- a summary judgment of infringement. That is, the judge made a decision that there was infringement on 11 of our patent claims. Of the 10 patent claims we chose to present to the jury, and we were limited to 10, only 2 of those 10 were within -- were among the 11 where we had previously won a summary judgment of infringement. So, simple -- simple math, of course. That means that we now have a total of 19 patents which have been foun -- patent claims which have been found to have been infringed. Of those 19, again, 10 were before the jury, all 10 of the patent claims before the jury were found to be valid patents. That is to say, they were not anticipated, they weren't obvious, and they were supported by the patent specification which Rambus's founders filed in April of 1990. For this infringement of these 10 patent claims, the jury awarded Rambus damages of 306 thousand -- 306 million .9 million dollars -- 306.9 million dollars. This amount -- and this is important -- this amount only corresponds to the United States sales by Hynix of certain products, that is its SDRAM, DDR, and DDR2 memory products. Foreign sales by Hynix and sales of other memory types by Hynix, for example, GDDR2 and 3, are not included in the 309. -- 306.9 million dollars. Also, the only sales that were included were those in the United States that fell between June 2000 and December 31, 2005. We did not ask for a jury finding of willfulness in this particular trial, although, of course, we reserve the right to ask for willfulness finding both as to further sales by Hynix going forward, if they're unlicensed, and, also, we reserve the right, of course, to ask for willfulness findings in other trials of other -- with other defendants. In addition, a permanent injunction has been requested by Rambus and may issue against Hynix, although we think, frankly, that the issuance of a permativ -- permanent injunction is something that's likely to wait until the third phase of the case is either tried or until Hynix's third phase claims are dismissed. We do expect a trial of those third phase claims to occur this summer if such a trial remains necessary after our motion. All in all, let me say this is a great result for the company Rambus and for its inventions and for its inventors. I think today's event underscores the importance of intellectual property to the United States economy. We've seen a lot of commentary about that when the prime minister of China visited Seattle last week and then went to Washington. It's also vindication -- I think today's verdict is vindication of the idea that innovations matter, that innovations can be reasonably compensated, that innovations will be vindicated by the courts, and that companies could be built around innovation. I want to extend my great thanks to the legal teams who've worked diligently and tirelessly with us since this case was first brought in 2000. It's been a long road. Licensing patents by themselves was not what this company first set out to do in 1990, but it is where we find ourselves today after our complete solution, RDRAM, was -- as we think we can show -- was forced from the market by a criminal conspiracy. We hope to get back to a focus on the business of licensing complete solutions like RDRAM or our newest solution, XDRAM, but this focus on patents is where we have to have our focus now. I want to thank the board of directors of Rambus and the Rambus shareholders who have stuck with us for their patience and their support. Our employees and engineers have also been highly supportive, and I thank them, and many of us have had family members and other loved ones who've probably borne much of the brunt of Rambus's travails, and we all need to thank them for their patience with all of us. This victory is not, however, even close to the last step that we have ahead of us to achieve our goal of being fairly and fully compensated for our inventions, and that brings me to two points that I would like to make today about the damages that may be -- not be immediately obvious from today's verdict. The first point is this: We continue to hold out an olive branch [peace offering] to try to resolve these matters short of full-scale trial. We believe that by doing this, we can offer defendants and potential defendants a way to avoid significant additional exposure in our antitrust and patent cases. We can also, we think, facilitate coopera -- cooperative relationships with us that will allow our licensees to make use of our latest designs and avoid the commodity DRAM rot that has been so costly for them over the years. The second point relating to today's verdict, on the other hand, is simply this: patent defendants and potential patent defendants who think that it is a wise move to wait out a resolution with Rambus for as long as possible have, after today, another reason to revisit that approach. The jury instructions given to the Hynix jury stated that they were to award, "not less than," a reasonable royalty as it would have been negotiated at the time of first infringement. I believe defendants and potential defendants need to focus on that, "not less than," language. I also think that defendants and potential defendants need to focus on two other aspects of the damages case that we established in Hynix. First, in determining a reasonable royalty, the jury is instructed to assume that the negotiators at the time they set rates accepted the validity and infringement of our patents. Those issues were unclear in the past, when our historical .75[%] for SDRAM and 3.5[%] for DDR royalty rates were set. So, the jury is able to adjust those historical rates upwards. That's what you saw happen today. Second, there is another way a jury may adjust historical rates upwards, and that may have also happened today. Historical royalty rates were based -- were set, based on worldwide sales that can be adjusted upwards by a jury if it concludes that in negotiations for U.S.-only sales, which is the only sales that U.S. courts can -- can address, would reflect the smaller U.S. royalty base by using higher rates -- small -- applied to that smaller base. So, summing up these two points, our hope and strong expectations are that litigants and potential litigants will now see additional incentives to come to terms through settlement and will not let their fate be determined -- be determined by a jury in the next patent case, or, for that matter, in the San Francisco antitrust case which is moving forward now. The antitrust case, by the way, is the subject of numerous motions, and in 3 weeks, we may see some documents coming out in that case that I think will be of interest and will support our allegations in that over 10 billion dollar case. Now I turn to some of the evidence that came out in the trial with Hynix, and I do this for a couple of reasons. One is because, in their closing arguments, Hynix adopted a stance which I think was appropriately characterized by our lawyers as kind of the, "JEDEC made me do it," defense. So, I wanted to run through some documents, not just from Hynix, but from some other parties that -- that touch on that defense. I also think that by reviewing some very specific pieces of evidence, and I'll do this very quickly, those who are on the phone with us will realize that as Rambus has gone through these cases, first the federal circuit opinion, then the FTC trial, then the -- now this Hynix case, that we have gained more and more understanding about how it is that our patented features found their way into so many memory products u -- and other products used throughout the semiconductor industry today. So, first, I want to turn to a document that many people have known for quite some time. It's an Infineon document from March of '94, and this is a document that has been around and about for a while, but it simply shows that the memory manufacturers were studying Rambus and were evaluating Rambus and concluded as this one does that, "One day all computers will (have to) be built like this," and then they went on to say, "but hopefully without the royalties going to RAMBUS." That was in March of '94, twelve years ago. Hy -- Infineon was not the only company that did that kind of analysis. I turn to the next slide. During our trial, in the very last days, the jury saw a memo written by a Hynix employee named Kil, K-I-L. Mr. Kil was under a trial subpoena but didn't show up for trial. The jury did get this memo, however, and there's 4 pages of it that I'm gonna run through very quickly. This is a 1992 memo, showing a similar study of Rambus, and, very quickly, Mr. Kil recognizes there was a new architecture. He recognized that should the Rambus architecture become a standard, then there would be a demand for the kind of, "high speed," applications that Rambus supported, and then in the next box here you'll see that he recognizes that the competing idea that was then being discussed by the JEDEC committee, SDRAM, didn't get to the level of performance that the market would demand, and he concluded, maximum dat -- data access rates of 100 Mhz, there is expected -- I'm sorry -- "but with a maximum data access rate of 100 Mhz, there is expected to be a disparity in the target market in comparison to Rambus DRAM." So, even in 1992 -- this is 14 years ago -- Hynix recognized that Rambus solutions were needed above and beyond what they were then planning to use in SDRAM. The next page, 2 of 4, simply says that this summary of the Rambus inventions and this analysis of Rambus data was -- was being done, "in the hopes of aiding in the establishment of the [Company's] next generation product and the undertaking thereof." This is in 1992 from a Hynix email. The next page shows that Hynix was told in 1992 by Intel that, "Adoption of the Rambus architecture inevitable after 2-5 years." Finally, the 4th page of this same document, paragraph 6.6, again repeats that using the technologies they were then thinking about using, which is the SDRAM technology, "there is anticipated to be a large disparity within the target market in comparison to Rambus RDRAM." I'm moving quickly, because I want those on the call to see -- and you'll be able to get PDF versions of these slides later, so you'll be able to look at them -- but I want you to see part of what the jury has seen and what we will use in the future -- and, frankly, I think we'll have more and more material like this as we go through more and more memory companies -- to see why it is our inventions showed up in so many products. The next slide is the actual specifications in '96 that Hynix drew up internally to decide how they were going to achieve -- how they were going to overcome what they called that, "large disparity within the target market." So, they came up with this specification, and I've got 2 pages of it here. This is version 1.1, and you'll see on the second page, if we turn to that now -- you'll see that in their specification they called for 2 technologies which were actually among the technologies at issue in this last lawsuit. One is a DLL circuit, and the other is d -- use of double clock edges. What's interesting in this document, and what -- what the jury was shown, is that when the Hynix engineers talked about these technologies -- what did they do? They dropped a footnote E, and footnote E says, "Refer to Rambus DRAM." They were also aware of the patents that we had in process, and they made no bones about sharing their knowledge of those patents with other DRAM companies. So, if you look very quickly at the next slide, which is dated Hynix July 13, 1998, it's from a gentleman named Farhad Tabrizi at Hynix addressing a number of JEDEC members and other memory and semiconductor manufacturers, including the people who later became Infineon, and including Micron, and what he says here is, "I have a list of Rambus patents," and he circulates that list to all of them. Finally, I don't think it's fair to characterize this awareness of Rambus in -- innovation and awareness of potential Rambus IP [intellectual property] as limited simply to Hynix. I believe there was an awareness which was much broader than that. The documentation of JEDEC itself seems to support a more broad awareness. This is a document I've shown to people before, during conference calls, but I think it bears repeating. JEDEC council is the highest member -- is the highest governing body within JEDEC, the standards setting organization. They set about to establish a task force in '97 to evaluate why it was they were lagging behind market requirements in getting their standards out to market and what they were doing in response to that. And what they said was that because we're moving so slowly in our standards setting organization, you can see that other parallel groups like Rambus have been formed, and then they go onto say the recent result of that -- this -- is that the work of these competitive groups, i.e. including Rambus, has been taken and adopted by JEDEC as our standards. So, we don't expect the memory industry to not continue to assert every possible defense, but we do think it's time now for the memory industry and other potential defendants to take a hard, cold look at whether this strategy of delay at all costs really pays off in the end. That's all I had to say. I wanna hand the call back to Nicole for questions and answers. Nicole Noutsios: Thank you, John. Operator, we're ready for the Q&A. Operator: Thank you. Our question and answer session will be conducted electronically today. If you would like to signal for a question, please press the * key, followed by the digit 1 on your touch tone telephone. We will proceed in the order that you signal us and take as many questions as time permits. Once again, please press *1 to signal for a question. And we will take our first question from Daniel Amir of WR Hambrecht. Daniel Amir: Thanks a lot, and congratulations on the verdict here. It's been long -- Harold Hughes: Thanks, Daniel. Daniel Amir: -- it's been long awaiting. Harold Hughes: Congratulations on your new baby as well. Daniel Amir: Ha ha ha. Thanks. So, a couple of questions. First of all, on the -- I guess, as you look at this damages number of 300 million -- what -- what is -- It looks like the implied royalty rate is higher, and, I guess -- What is your thought process here on, you know, this royalty rate? How do you approach, you know, the future deliberations with Hynix of course with the phase 3, and maybe you can comment a bit about how this phase 3 is gonna look like, and what implications does this have, maybe, on your other ongoing cases right now? John Danforth: Sure, let me -- let me address that if I could. Your -- your voice broke up a little bit, but I think I got all the questions. First of all, if you -- if you look at the demand that -- the request that we made to the jury, what we told the jury was this: We said, look, if you take the U.S. sales of Hynix during the relevant period, which were about 4.5 -- 4.4 billion of the relevant product, and you apply the historic rates that the majority of the industry volume signed up to before these patents were kind of verified through trial and based on a -- on a much broader royalty base, you would end up with a number at those old historical rates, which were DDR with 3.5% -- you would end up with a number which was somewhere around a 108 million, and we said to the jury, we think that the range of royalties that's appropriate here is -- begins at a 108 million at the low end, and that you have within your discretion, jury, to raise that to a higher number to reflect the 2 things I just discussed. One is the narrower base, if you will, the U.S.-only sales, and the second is that the jury was required to assume that the patents are valid and that they are infringed, and back in 2000, when we set the 3 -- 3.5% rate, neither of those assumptions was clear. There was still some risk, and so there was an adjustment downward, and the jury was able to adjust upward to reflect the fact that now they're finding these are valid and infringed patents. So, that's how we got from the 108 at the low end of the rate to the 306.9 that we ended up with. In terms of what the impact is going forward, and what we foresee in phase 3, let me start with phase 3. We filed a series of very comprehensive motions addressing phase 3 that are currently pending before Judge Whyte. We hope that those motions will significantly narrow the scope of that case, maybe even obviate the need for a trial. We think, for example, it is now established as a matter of law that there was no duty at JEDEC that Rambus violated. And we also think that there are other issues that he can decide as a matter of law or because there's really no basis for a reasonable jury to decide otherwise. So, there are a number of motions pending that should narrow phase 3. If we have to litigate phase 3 again, of course, much of it goes over old ground. We have litigated JEDEC now before the federal circuit, and we've litigated JEDEC before the Federal Trade Commission in a 3 month trial, and we believe that we know how that issue should come out. In fact, since those cases were litigated, we've had the onerous task of having to go back through our backup tapes that we found, and we found other, a couple, not a lot, but a few other documents which we think help us, including one which is a Rambus-JEDEC meeting report where our JEDEC representative reports back to the company that he was told by the JEDEC chairman there is no disclosure duty. So, it shows, I think, that meeting report is further evidence that we were mindful of our -- of our duty or potential duty, that we tried to find out what it was, and we -- we conducted ourselves in accordance both with what they told us and, frankly, with the general understanding that patent applications are trade secrets, and you shouldn't talk about them broadly. So, that's -- that's how I think phase -- phase 3 goes, and then back to your second question. What's the implication for other cases? I think that a responsible -- and I think that we have sophisticated, responsible opposing parties here. I think a sophisticated and responsible board of directors at any of these other defendant companies have to step back and say, "Well, we know that we originally thought that we could continue to litigate this, continue to raise all these arguments, and the worst case is we'd end up paying what we would have paid anyway, and we bought all this time." And I think the message today, the most important message today, is: Hynix didn't buy any time. Hynix paid a significant price for taking this thing to a jury verdict, and other companies need to think about that, too, and they also need to think about the fact the longer they delay in reaching accord with us, if they are among the memory cartel that's pled guilty to criminal price fixing, the closer they get to what will be, we think, a 10 billion dollar+ antitrust verdict, and the last man standing has to pay that. So, I think that there's all kinds of good and important reasons for rational people to sit down around their board of directors table and say, "Let's take another hard look at this. Have we been going down the right path?" OK? Daniel Amir: K, thanks. One other question which related to the antitrust -- so, the next step there is -- what -- in 3 weeks there's a motion with documents, whether those documents will be released, and do you anticipate a trial this year, or -- or is it more like '07? John Danforth: That's a good question. The timing of the antitrust case right now, which is the case that I -- I referenced earlier when I said there's a patent -- antitrust case kind of heading down the road. That case is currently partially stayed, because there's an -- two of the parties asked to compel arbitration. Until that issue is decided by an appellate court -- the arbitration was denied -- the court exercised its discretion to deny arbitration -- we think we are very confident that that exercise of discretion will be upheld, and those defendants will also have to face a jury in San Francisco county. But, until the appellate court rules on that appeal, the case has been partially stayed in San Francisco Superior Court, and so my guess is we will not see a trial in that case until sometime in '07 at the earliest. We will know better when we get a sense of what the briefing looks like in the appellate court. The appellate court in the antitrust case is supposed to expedite resolution of this, so -- and we think that the trial court judge in ruling on the arbitration clause is squarely within his discretion as defined by California statute. Daniel Amir: OK. Thanks a lot. Operator: And our next question comes from Michael Cohen of Pacific American Securities. Michael Cohen: Congratulations on finally getting justice after waiting 6 years. Harold Hughes: Thank you, Michael. John Danforth: Thank you, Michael. Michael Cohen: Going back to the Hitachi settlement back in 2000 -- the 7 cases that were discussed -- the Hitachi one was the only one that was higher than 3.5% because they fought you and then settled. Should investors assume that since these people are fighting you that you'd also be asking for higher than 3.5? John Danforth: I think it's fair to say the following: 1. We've been pretty consistent about not talking about settlement negotiations or rates going forward, and today's not the day to change our -- our view on that. Right? 2. I do think within their boardroom, they need to think about whether a jury in the future will hit them with bigger numbers. Harold Hughes: Let me add something if I could -- I mean -- [People briefly talk over each other, unintelligibly.] Harold Hughes: Sorry. John Danforth: There is the problem they face of an injunction, and there is -- potentially -- and the problem they face of willfulness damages from this day forward. OK. That's it. Harold Hughes: We believe ourselves to be logical business people. Obviously, this is information, and the other side will use it, and John has given ways in which they might use it. We would like to find business solutions to these problems. We believe that we have the ability to help people make higher performance products, which products tend to have higher gross margins, and there's not only the legal issues that John has taken you through, I think, very clearly, but the fact that we can help people be more competitive in a very competitive world. So, we look forward to having discussions at length on both the elements of this particular problem. Michael Cohen: OK. Switching over to the conduct trial, I was at the hearing where you had motions for summary judgment. Were there affirmative defenses asserted in the conduct trial for which you did not file summary judgment, or is there literally a potential for no trial if you want to cross the board on those? John Danforth: I -- I think, and it's been a while since I looked at this question, but I think that a small part of that case could survive even if we won on all of the -- all of the summary judgment motions that are pending. That wasn't ever in, frankly -- that -- It's not clear what the outcome would be, but what survives should be significantly smaller than what currently exists, and even if we have to try what currently exists, you know, these are issues we've addressed before, by and large. Michael Cohen: OK. And the court of appeals federal circuit backed -- it was January 29, I believe, of 2003 -- they not only threw out the fraud ruling against you, but had the reasoning that you had no duty to disclose your apps. Could that make it a judgment of a matter of law? John Danforth: No. Michael Cohen: With the main -- John Danforth: Right, what you'll see in our summary judgment motions is that we do rely to some extent on that, but we also think there are other issues that mean that no reasonable jury could find a duty to disclose, so, you know, I think that we'll have to see how Judge Whyte rules on it. Michael Cohen: OK. Do you know when you'd expect a ruling? Any idea of time frame? John Danforth: No, except this. The judge has said that he would like to get this done this summer. The parties, and, in fact, this may be going even as we speak, 'cause there is a hearing going on right now to talk about the timing of that -- of that trial, but he's said that he understands that for the parties to get ready for that trial, they need to understand the scope of it, and therefore he needs to rule on these motions. So, I would expect he'll rule on the motions fairly quickly. On the other hand, you know, Mike, let me say, we are so grateful for how much work and attention this court has given Rambus and Hynix in the various claims and counter claims both ways, and -- and the judge has said pretty clearly in open court he's got other work which doesn't go away, and he's got a -- I'm sure -- a backlog of things to do now, so I can't predict when we're gonna see those rulings other than he knows that it's important to the parties. He knows it's important for the trial to be shaped appropriately. That's all I can say. Michael Cohen: OK. And on your last conference call, one thing that was noticeably absent was any comment on the update of the Federal Trade Commission. Are you willing to pr -- provide us, you know, kinda any comments to how things are tracking? John Danforth: I can only say this: There's been a full briefing of those matters. We have told the court that if -- the Federal Trade Commission, rather -- that if and when we get documents from the state court proceedings, that is the antitrust documents, which we hope to have for them in a couple of weeks, we will try to supply those to the Federal Trade Commission. I think that a lot of things have occurred that show that Judge McGuire's opinion was correct, but that's for the Federal Trade Commission to decide, and we hope that they are diligent in doing that. Michael Cohen: And they -- they would wait for these documents to come out perhaps in mid-May? John Danforth: I -- I can't say what sense of timing they have. They are aware that there is the potential for them coming to them in mid-May, but I -- we've made that clear to them. Michael Cohen: Great. OK. Thank you so much. Operator: And from Barrington Partners, we have a question from Mike Crawford. Mike Crawford: Yes, could you just walk through how this would go with Hynix, assuming that you're not able to reach some kind of a, you know, business solution settlement and that goes through a whole appellate process, you know, all the way up to the Supreme Court through all the phases and still nothing's resolved at that point. I guess, presumably, there could be an injunction on the Oregon fab [semiconductor chip fabrication facility] and, at that point neither -- I'm just trying to get at how the process goes with you end up on what the appropriate go forward rate would be for someone that took it all the way to the end of the line? Do you understand the question? John Danforth: Well, I think I do, Mike. There's like 3 different -- there's at least 3 processes moving forward at the same time that Hynix, I think, has to worry about and that inform the question that you've asked, because if this were a simple patent case, standing alone, you know, they might decide well -- and they may still -- but they might decide we're gonna take this to the Supreme Court. In that case, there would be probably an injunction entered which would be stayed by the appellate court, and they'd have to post a bond, which would be considerable, and then they would be continuing to manufacture goods in this -- in this country and selling them in this country at their peril, because they'd be facing a high likelihood of trebled damages for those goods from this day forward. They'd probably have problems with their supply chain -- with their -- with the procurement agents of their various customers, because nobody wants a supplier who may get shut down, and nobody wants to qualify parts if it looks like the parts may get shut down. So, they'd have some reasons to think -- even if this were a single track case -- some reasons to think about resolving it now. That's one point. Now, the second point is: going along in parallel with this are other cases, other patent cases, and those patent cases are gonna keep moving forward, and they have exposure there. For example, their willfulness exposure may be considerably greater after this verdict with respect to the DDR2, DDR3, GDDR2 & 3, which are high, kind of high ASP [average selling price], high margin, or higher margin products. So, they should be worrying about that. And then the third thing is -- and I -- I don't know how this is entering into their thinking, but I suspect that it needs to enter into their thinking more and more. The fact of the matter is -- and their own documents, some of which I just shared with you, show it -- the industry expected that RDRAM was going to become the winner, if you will, among memory types in the late '90s and early '80s, and the fact that there's a criminal conspiracy which has been admitted to, and the fact that we think we can link that criminal conspiracy up very precisely to the efforts to push us from the market, mean that anybody who wants to kinda stay at the table and keep playing this game, this patent game, has to be aware that the time is running out for their an -- for their antitrust game, and that game, which is a 10 billion+ dollar exposure, is -- is even more serious than what they saw today. So, I -- I think and I hope and I -- and I very much, again, want to extend an olive branch [peace offering] to all of these companies. I hope people will look rationally at this and realize that the delay, delay, delay approach may not work. Mike Crawford: OK. Thank you. Operator: And our next question comes from Arik Hesseldahl with BusinessWeek. Arik Hesseldahl: John, big win today. I guess you've answered a lot of these questions the -- my question previously, but I guess this -- this -- there's a lot of other cases pending in Eastern District of Virginia and so forth. How does this -- this ultimately bears on those, just like you said in that it makes those companies give pause to the thought of whether or not they want to proceed. John Danforth: I think that's right. I think that's right. I think that people -- and, again, I think that we're dealing with sophisticated, intelligent business people who will have to step back and say, "You know, we have a duty to our corporate entity. As much as we might not have liked Rambus in the past, or as much as we might have gotten ourselves all fired up around this, 'JEDEC made us do it,' defense, you know, let's take home a fresh look at it and see if it really makes sense to keep fighting this." But, you know, Judge Whyte -- before this trial started, he stepped back from the bench and he looked at both sides, and he said, I sure hope you've given this a very hard try to settle it, because it's gonna be insanely expensive. And, I think, our remaining defendants and potential defendants have to look at that. Arik Hesseldahl: John, what does this mean, obviously with the conclusion of this pr -- matter, the litigation expense is gonna be -- come down, but, you know, we've seen -- I was just looking at the numbers and we've seen litigation expense go from 17% of sales to 1.25 of sales. Have -- have you given some thought as to how much longer you're prepared to keep this up, and as a percentage of revenue? John Danforth: Well, I'll look to my boss here, but I think we're prepared to keep this going until we're fairly compensated for these -- these innovations, and I think that that percentage of -- of current revenue is really not that relevant a measure. It's -- it's really how do these expenditures compare to the -- to the upside opportunity, and to what we think is fair compensation for these innovations, and if you measure it that way, it's a -- it's a extraordinarily reasonable investment, and today's verdict, if anything, shows us that it's even more reasonable than we had thought. Harold Hughes: I would confirm that my general counsel's financial analysis is -- is correct. Arik Hesseldahl: The numbers certainly look good to me. Harold Hughes: Somewhat surprisingly, but correct nonetheless. Arik Hesseldahl: Very good. Operator: And that's all the time we have for questions today. Ms. Noutsios, I'll turn things back over to you for any additional or closing remarks. Nicole Noutsios: With that, we'd like to thank everyone for your questions today, and your continued interest in Rambus, and that concludes today's call. Thank you for your time.