The FTC releases its final statement and penalties for Rambus after more than six months of deliberations

Thursday the Federal Trade Commission settled a long standing anti-trust case against Rambus Inc. Originally filed in June 2002, the 4-year case has at least indirectly affected every PC memory manufacturer in the industry. 

The FTC first raised charges against Rambus in June 2002 on grounds the company was violating federal antitrust laws.  The FTC’s decision found Rambus guilty of monopolizing 4 computer memory technologies which were eventually used in DRAM chips.  Specifically, the FTC complaint states Rambus participated in assisting JEDEC's validation and development of DRAM technologies, many of which Rambus had already patented.  The Joint Electron Device Engineering Council, or JEDEC, is an international panel that sets standards for all memory technology manufacturers and integrators to use.

The charges were dismissed in February 2004 in an initial decision and order by Chief Administrative Law, Judge Stephen J. McGuire. McGuire’s decision, however, was overturned in August 2006 by the FTC.

The FTC's decision to re-evaluate its decision against Rambus stated "We find that Rambus’s course of conduct constituted deception under Section 5 of the FTC Act. Rambus’s conduct was calculated to mislead JEDEC members by fostering the belief that Rambus neither had, nor was seeking, relevant patents that would be enforced against JEDEC-compliant products ... Under the circumstances, JEDEC members acted reasonably when they relied on Rambus’s actions and omissions and adopted the SDRAM and DDR SDRAM standards."

The official FTC opinion released by FTC Chairman Deborah Platt Majoras, states "Rambus was able to conceal its patents and patent applications until after the standards were adopted and the market was locked in. Only then did Rambus reveal its patents – through patent infringement lawsuits against JEDEC members who practiced the standard."

Rambus currently charges DDR SDRAM manufacturers that use its technologies a 3.5% royalty. The FTC’s decision has told Rambus it can only charge 0.25% for SDRAM products and 0.5% royalty for DDR SDRAM products. The FTC went on to say that after three years Rambus will not be allowed to levy any royalties against companies for use of its SDRAM/DDR SDRAM technologies.

The FTC explicitly states these royalty changes would not apply to DDR2 SDRAM or other post-DDR JEDEC standards.  Considering Intel transitioned from DDR SDRAM in 2004 with AMD right behind in 2006, the FTC ruling may have very minimal impact on memory manufacturers.

The FTC’s decision is planned to take effect in 60 days. Rambus is "disappointed" with the decision and believes the FTC "ignored key facts." Currently it plans to appeal the decision.

"While we believe it appropriate that the Commission did not reach DDR2, GDDR2, or succeeding generations, we are nevertheless disappointed that the Commission’s remedy with respect to SDRAM and DDR SDRAM continues to ignore the extensive findings of fact made by its own Chief Administrative Law Judge McGuire," responded Tom Lavelle, senior vice president and general counsel for Rambus. "Because we strongly disagree with a number of the Commission’s determinations, we plan to appeal its decision. We believe that a fair review of the underlying facts will restore the perspective of the Chief ALJ who exonerated Rambus by dismissing the complaint."

Rambus's legal stigma does not end at this FTC ruling.  Last year the company was awarded a $307 million patent infringement case against Hynix, a memory manufacturer.  This ruling was then overturned, and two weeks later the FTC reopened its opinion on the anti-trust suit.

And yet, Rambus plays a key role as legal aid and witness testimony against big memory manufacturers in a pending multi-state investigation that claims memory manufacturers artificially set prices for DRAM from 1998 to 2002 -- the same period the FTC claims Rambus monopolized on SDRAM royalties.

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