Post a CommentFTC orders Rambus to license IP, cap royalties
By Colleen Taylor -- Electronic News, 2/5/2007
The Federal Trade Commission (FTC) today issued a steely final opinion and order in the legal proceeding against memory giant Rambus Inc. in a move it said was "to remedy the effects of the unlawful monopoly Rambus established in the markets."
In addition to barring Rambus from making misrepresentations or omissions to standard-setting organizations, the order requires Rambus to license its SDRAM and DDR SDRAM technology and sets maximum allowable royalty rates it can collect for the licensing, bars Rambus from collecting or attempting to collect more than the maximum allowable royalty rates from companies that may already have incorporated its DRAM technology, and requires Rambus to employ an FTC-approved compliance officer to ensure that the company’s patents and patent applications are disclosed to industry standard-setting bodies in which it participates. Rambus' alleged monopoly was on four technologies that the FTC said have been incorporated into industry standards for DRAM chips.
The FTC/Rambus antitrust wrangling dates back to 2002, when the FTC charged Rambus with violating federal antitrust laws by deliberately engaging in a pattern of anticompetitive acts to deceive an industry-wide standard-setting organization, which it said "caused or threatened to cause substantial harm to competition and consumers."
The FTC complaint alleged that Rambus participated in the Joint Electron Device Engineering Council (JEDEC), a standard-setting organization that the government organization said "maintained a commitment to avoid, where possible, the incorporation of patented technologies into its published standards, or at a minimum to ensure that such technologies, if incorporated, will be available to be licensed on royalty-free or otherwise reasonable and non-discriminatory terms."
According to the FTC complaint, Rambus nonetheless participated in JEDEC's DRAM standard-setting activities for more than four years without disclosing to JEDEC or its members that it was actively working to develop, and possessed, a patent and several pending patent applications that involved specific technologies ultimately adopted in the standards.
The charges were litigated in an administrative trial. In February 2004, the charges were dismissed in an initial decision and order by an Administrative Law Judge (ALJ). The FTC complaint counsel appealed the decision, which overturned the ALJ's decision in July 2006.
In its liability opinion dated July 31, 2006, the FTC unanimously ruled that Rambus engaged in "exclusionary conduct that significantly contributed to its acquisition of monopoly power in four related markets." The opinion and order announced today prescribes the remedy for the July ruling.
"Having found liability, we want a remedy strong enough to restore ongoing competition and thereby to inspire confidence in the standard-setting process. At the same time, we do not want to impose an unnecessarily restrictive remedy that could undermine the attainment of pro-competitive goals," the ruling said.
The order also contains bookkeeping and record-keeping requirements to allow the FTC to monitor Rambus' compliance with the order.
The FTC vote to issue the opinion and order was 3-2, with Commissioners Pamela Jones Harbour and J. Thomas Rosch concurring in part and dissenting in part, and issuing separate opinions.
Not surprisingly, Rambus said in a statement today that it was "disappointed" by today's FTC order. "Because we strongly disagree with a number of the Commission's determinations, we plan to appeal its decision," Tom Lavelle, senior VP and general counsel for Rambus, said. "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" in the February 2004 ruling.
Copies of the FTC's opinion and order, the Commissioners' separate statements and the other legal documents associated with this case are available from the FTC's Web site.
