EC charges Rambus with DRAM antitrust violations
By Colleen Taylor, Contributing Editor -- EDN, August 23, 2007
The European Commission (EC) confirmed today that it sent a statement of objections (SO) to Los Altos, Calif.-based memory technology developer Rambus Inc. based on alleged anticompetitive business practices.
According to the EC, the SO, which was sent on July 30, outlines the commission's preliminary view that Rambus has infringed EC treaty rules on "abuse of a dominant position" by claiming "unreasonable royalties" for the use of certain patents for DRAMs, subsequent to a so-called "patent ambush."
The EC said that Rambus owns and is asserting patents which it claims cover the technology included in standards set by industry organization JEDEC; therefore, every manufacturer wishing to produce synchronous DRAM chips or chipsets consequently must either acquire a license from Rambus or litigate its asserted patent rights.
The SO goes on to assert that Rambus engaged in "intentional deceptive conduct" in the context of the standard-setting process by not disclosing the existence of the patents which it later claimed were relevant to the adopted standard, or engaging in a patent ambush. The EC said its preliminary view is that without its patent ambush, Rambus would not have been able to charge the royalty rates it currently does.
While this SO marks the first time that the EC is dealing with a patent ambush under EC antitrust law, such allegations are nothing new to Rambus. In past proceedings in the United States, the Federal Trade Commission (FTC) issued an order in August 2006 and in February 2007 whereby it found that Rambus had illegally monopolized the DRAM market. The FTC then and imposed an order that required Rambus to license its SDRAM and DDR SDRAM technology and sets maximum allowable royalty rates the company can collect for the licensing. However, that ruling is only applicable to products that are imported to or exported from the United States.
In its own statement on the SO, Rambus maintained that it first filed a patent application for its revolutionary memory technology in 1990, then, by invitation, it later joined a JEDEC committee that was developing a DRAM standard.
"The issues raised by the European Commission include Rambus’ participation in JEDEC that ended over a decade ago," said Thomas Lavelle, senior VP and general counsel at Rambus, in the statement. "These are largely the same issues examined by a number of U.S. courts, the Federal Trade Commission, and currently before the US Court of Appeals for the District of Columbia Circuit. We are studying the statement of objections and plan to respond in due course."
The EC claimed its action is necessary as Rambus is active worldwide. The SO preliminarily concludes that the appropriate remedy to such an abuse would be that Rambus charge a "reasonable and non-discriminatory" royalty rate, the precise amount of which would be determined during the case, the EC said. Rambus has nine weeks to reply to the SO, after which it will have the right to a hearing.
Rambus said it will present its response to the EC's SO over the next several months.
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Funny thing is that Rambus didn't have any "relevant patents" to disclose when SDRAM/DDR standards were discussed. They have invented fast memory in 1990 and they've been teaching memory manufacturers how to make it, under NDAs. They then have been invited to join JEDEC because of their expertise, seemingly. They have left a few years later after realizing that their inventions were being hijacked and incorporated into the standards, by the very memory producers they've been teaching. Everybody knew what Rambus invented but some didn't want to pay royalties. So they pretended not to remember where the inventions came from and accused Rambus of deceiving a standard-setting organization. And called in the government. Isn't that a wonderful way to strip somebody of patent rights? It's cheap too. That may have been the real reason behind JEDEC invitation.
Also funny is the fact that JEDEC continues to openly incorporate additional Rambus inventions into its new standards, DDR2, DDR3, GDDRx, etc. A decade after Rambus left. Nobody was able to come up with anything better, so they just take more of what works. US FTC started its case against Rambus at the urging of big memory companies, however it could only limit royalties on the old SDRAM/DDR standards. The mainstream has long moved to DDR2. Of course, memory companies wanted free unlimited use of all Rambus inventions. They didn't get it. The little they did get is under appeal. What will the EU Commissioners be left pointing to if FTC decision is overturned by a real court?
Indeed, there was a patent ambush. Only it was the other way around. Certain memory manufacturers ambushed Rambus in attempt to strangle it, so they could use its IP for free. Although unfortunately the "savings" didn't reach the consumer, as these companies were convicted by DOJ of memory price fixing. So for a long time consumers paid inflated prices for stolen, stripped down designs, without even knowing it. The memory in your computer could have been 10 times faster, just look at Rambus' XDR memory design. If there were no Rambus, it would quite possibly be 10 times slower. Is 1-4% royalty for inventions facilitating 100x faster memory - "unreasonable"?
Innovation is being strangled in front of your eyes, people. Wake up.
matam - 2007-26-8 13:04:00 PDT -
Once again, the EC shows itself to be a bunch of mindless bureaucrats that have no understanding of basic economics.
These guys have no clue of how bad they are hurting themselves. Who is going to want to develop, work with, or sell in a region where the leeches that work in government arbitrarily decide if a license agreement doesn't look good to them. Do they EVER find that a license agreement is too good for the other side?
Just tells me that, if I ever put together software or programmable hardware together that could be used in Europe, I need to make it very clear that it MAY NOT be used or sold to Europeans, and I also need to make sure that I have a way of ensuring it doesn't happen, so these thieves have no hold on me, and can't steal it by just allowing IP violations to go unchallenged.
Warren Norred - 2007-23-8 12:04:00 PDT
