Rambus Slammed by European Patent Ruling

Updated from 2:08 p.m. EST

Shares of Rambus(RMBS) swooned Thursday after the European Patent Commission revoked one of the company's patents.

The stock was down $5.09, or 17.3%, or $24.49 in recent trading. Still, two of the company's three-person sell-side following downplayed the significance of the decision.

"Rambus is a manic-depressive stock. [Investors] are either very euphoric or they're down in the doldrums. This isn't really that big of a deal," said Steve Allen, an analyst at Sierra Tech Research. "If you're shipping into a global market, U.S. patents are really all that you need." (Sierra Tech firm doesn't do investment banking.)

In a press release, the European patent office confirmed that it had revoked a patent for a semiconductor memory device from Rambus, following legal protests initially filed in 2000 by memory makers Micron(MU), Infineon(IFX) and South Korea's Hynix. Rambus has been embroiled in messy litigation with the three, which refuse to pay technology royalties to which Rambus claims it is entitled.

Rambus, which licenses intellectual property used in memory chips, stands accused of deceiving an industry standards-setting organization in the early 1990s. The U.S. government has pursued an antitrust suit against the company, arguing that it helped to set standards in a way that favored its own technologies and later reaped royalties from memory manufacturers.

In that vein, analysts stress that U.S. legal decisions are far more important to the company. Notwithstanding the antitrust action, Rambus can claim some major victories. In October, the U.S. Supreme Court declined to hear Infineon's appeal of a case decided in favor of Rambus.

"Rambus has patents that have been court-tested in the U.S., " said Allen. "Their patents went through appellate court and then the Supreme Court, so that's pretty solid ground as far as patents go."

Moreover, the European decision won't affect Rambus' patent infringement suit against Infineon in the U.S., scheduled to begin in May.