FTC sets limits on Rambus royalties

Memory chipmaker ordered to cut back size of royalties on DRAM technology; Rambus plans to appeal.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
The Federal Trade Commission in a decision announced Monday substantially limited the size of royalties that memory chipmaker Rambus can charge for its DRAM technology.

The commission's order sets a maximum royalty rate of 0.25 percent for SDRAM products; 0.5 percent for DDR (double data rate) SDRAM products, as well as SDRAM memory controllers or other non-memory chip components; and 1 percent for DDR SDRAM memory controllers, or other non-memory chip components.

Rambus, which plans to appeal the order, charges a 3.5 percent royalty on the manufacture of its DDR SDRAM, a figure that other memory chipmakers have issued complaints about paying, given the slim profit margins in the industry and the typical 1 percent royalty range charged.

The commission's order calls for these maximum rates to remain in effect for three years, after which time the maximum royalty rate will fall to zero percent.

DDR 2 SDRAM and other post-DDR Joint Electron Device Engineering Council (JEDEC) standards technology, however, are not subject to the order.

JEDEC is a standards body for various technologies and had accused Rambus of failing to disclose its plans to develop a version of high-speed memory chips while it was a member of JEDEC in the 1990s.

"While we believe it appropriate that the commission did not reach DDR 2, GDDR 2 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 (Stephen) McGuire," Tom Lavelle, Rambus general counsel, said in a statement.

In 2002, the FTC charged Rambus with violating federal antitrust laws. The agency alleged Rambus engaged in deceit when it failed to disclose to JEDEC its patent plans for its high-speed memory chips.

But FTC administrative law judge McGuire threw out the FTC's complaint, effectively finding the conduct was not illegal.

The FTC, however, appealed the ruling to the full commission, which in turn ruled in favor of the FTC in August.

Rambus plans to seek a stay of the order, pending its appeal. Should the courts reject Rambus' request for a stay, the FTC remedies are set to take effect in 60 days.