FTC: Rambus monopolized memory chip market

FTC commissioners, in a unanimous decision announced Wednesday, found Rambus monopolized the markets for four computer memory technologies, which eventually made their way into industry standards for dynamic random access memory (DRAM) chips. The decision by the full five-member commission is the latest chapter in the four-year legal battle between the FTC and Rambus.

"Rambus withheld information that would have been highly material to the standard-setting process within JEDEC," according to the commission's opinion. "JEDEC expressly sought information about patents to enable its members to make informed decisions about which technologies to adopt, and JEDEC members viewed early knowledge of potential patent consequences as vital for avoiding patent hold-up."

Rambus was a member of the Joint Electron Device Engineering Council, which sets standards on various technologies. The company was accused of failing to disclose it was developing a version of a high-speed memory chip while a JEDEC member in the 1990s.

Rambus, however, contends it has always complied with JEDEC's disclosure policy and plans to appeal the FTC's decision to the U.S. Appellate Court, said John Danforth, Rambus' attorney.

The FTC alleges Rambus waited for JEDEC to include its technology into the SDRAM and DDR SDRAM standards before it began seeking royalty payments from other companies using those standards. Rambus subsequently filed lawsuits against a number of companies, alleging patent infringement.

In 2002, the FTC charged Rambus with violating federal antitrust laws by allegedly engaging in deceit when it failed to disclose to JEDEC its patent plans for its memory chips. But the company won a major round when an FTC administrative law judge ruled in Rambus' favor.

The FTC staff appealed that decision and the issue was taken up by the full commission. With the new ruling, the commission's next step is to address remedies, such as limiting the size of the royalties Rambus can charge for its DRAM technology.

"We are focusing our efforts on the remedies phase," Rambus' Danforth said. "We think there are limitations on what the FTC can and should do...We think our royalty rates are reasonable."

If the FTC submits a remedy that Rambus can "live with," he said, then the case could end there.

Rambus charges a 3.5 percent royalty on the manufacture of its DDR SDRAM, Danforth said. But some memory chip makers have balked at those rates, given the slim profit margins on which the industry operates and traditional rates for some types of memory that fall in the 1 percent range.

Rambus may face more legal wrangling if it finds the FTC's remedies are not acceptable. Danforth noted that an appeal of the FTC's remedies to the appellate court could add another year or two to the case.