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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