EC charges Rambus with DRAM antitrust violations

By Colleen Taylor, Contributing Editor -- 8/23/2007

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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