Long-time Rambus investors licked their wounds and pondered their loyalty on Thursday after a crushing legal defeat that underscores the risks companies face when they rely heavily on litigation.

Retiree Jim Rockwell lost 80 percent of his savings on Wednesday when Rambus was defeated in a $4 billion antitrust lawsuit against Micron Technology and Hynix Semiconductor.

I thought 80 percent that Rambus would win something. I didn't think they'd win nothing, said Rockwell, who lives in Orange. Connecticut and has invested in Rambus for more than a decade. I don't know what I'm going to do now.

Nearly two thirds of Rambus' stock value evaporated after jurors emerged from over eight weeks of deliberation and rejected claims by Rambus that Micron and Hynix colluded to fix memory chip prices and discourage the adoption of its technology in the late 1990s, which they would have had to pay to use.

Shares of Rambus bounced back somewhat on Thursday with a 23 percent gain to $8.78, leaving them at about half their pre-verdict price.

The Sunnyvale, California company's goal has been to generate revenue by licensing its intellectual property to other memory chip companies rather than manufacturing chips itself.

The importance of patents has heated up this year, with tech giants like Apple, Samsung and Sony spending billions of dollars to acquire patents related to smartphones and other gadgets or suing rivals over intellectual property.

Companies that specialize in acquiring patents and then licensing them out are also attracting more attention. Some are seen as potentially lucrative, like Acacia Research. But Rambus' defeat underscores the volatile nature of that sort of business.

Companies that make money off of patents rather than products face significant risks to their business model as each important case, in a sense, is a bet-the-company litigation, said Colleen Chien, a professor at Santa Clara Law.

This case shows me that a business model built on litigation and licensing is anything but a sure thing, Chien said.

DAVID AND GOLIATH

Rambus has run up more than $300 million in legal bills since it was founded by two professors in 1990, equivalent to $1 million per employee. It has sued the biggest names in the business for infringing some of its more than 1,000 patents.

Rockwell and other supporters over the years have seen Rambus as a David battling semiconductor Goliaths. During the trial, shareholders chipped in to pay for the lunches of members who attended the trial and posted progress reports.

Wednesday's verdict, which may be appealed, was the culmination of years legal fighting and the loss leaves Rambus with a smattering of lower-profile patent cases and ongoing revenue of about $100 million a quarter from licensing agreements.

It was the second major defeat for the Silicon Valley semiconductor designer this year. In May, a court ruled it had been wrong to shred hundreds of boxes of documents relevant to two patent-infringement lawsuits involving Micron and Hynix.

Hamed Khorsand, one of a handful of analysts who follows Rambus, still recommends its shares, saying he expects more licensing revenues, including through the recent acquisition of security technology firm Cryptography Research.

The (jury) decision clears out investors scavenging for a court mandated windfall. Now that the lotto ticket has come up empty, the focus of remaining investors will turn to the core operating business at Rambus, said Khorsand, who works at BWS Financial.

Capstone Investments analyst Jeff Schreiner dropped coverage of Rambus within minutes of Wednesday's verdict, saying there was no point continuing to follow the company he dedicated 10 years to.

(Reporting by Noel Randewich. Additional reporting by Dan Levine)

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