Rambus Roars After Favorable Court Ruling

Shares of Rambus(RMBS Quote - Cramer on RMBS - Stock Picks) soared by more than 50% Wednesday on news the company has received a favorable ruling in a patent case.

The stock jumped after a federal appeals court ruled that Rambus had not committed fraud in a dispute involving memory maker Infineon(IFX Quote - Cramer on IFX - Stock Picks), reversing the ruling of a lower court, according to a Reuters report.

The appellate court also revived Rambus' patent infringement claim against Infineon. The court requested that the case be heard again in a lower court, using parameters likely to bolster Rambus' case.

Shortly before the closing bell, shares of Rambus had leaped $3.83, up 52% to $11.27. Infineon dropped 7 cents, or 1%, to $7.23.

Rambus continues to battle an antitrust complaint filed by the Federal Trade Commission last June over the same allegation.

The complaints against Rambus allege that it deceived an industry standards-setting organization in the early 1990s, helping to set standards in a way that favored its own technologies and later reaping royalties from memory manufacturers.

"It's hard to imagine a better ruling for Rambus out of this," said analyst Mike Crawford of B. Riley & Co. of today's decision, calling it "the biggest legal victory Rambus has ever had." B. Riley doesn't do banking, but Crawford owns shares of Rambus.

"I think this is a big blow to the FTC's case, the reversal of the fraud verdict," he added.

Rambus has spent heavily on legal fees in recent years, shelling out some $27 million in 2001 and around $12 million last year. Today's ruling "doesn't mean Rambus doesn't have more legal fees," said Crawford, "but I think this could turn out to be a turning point in the history of Rambus and that legal fees could start to scale down from this point."