Rambus Files $1B Antitrust Suit

-May 06, 2004

Just two months after the U.S. Federal Trade Commission lawsuit against it was dismissed, Rambus is headed back to court for another antitrust suit.

But this time Rambus is the company filing the complaint and not the defendant.

The IP interface company is seeking $1 billion in actual damages, not including the treble and punitive damages it has also requested, in its antitrust case against Hynix Semiconductor, Infineon Technologies, Micron Technology and Siemens AG. The case was filed today in the Superior Court of the State of California.

Rambus is alleging that these companies conspired to block the success of Rambus' RDRAM type of memory by restricting production of RDRAM, which those companies controlled, making it more expensive, among other allegations

The company is relying on evidence made public during the antitrust case against Rambus in its new lawsuit against the memory chipmakers.

"When certain members of the memory industry encouraged the FTC to bring its case against us, I always thought they opened up a Pandora's box," said John Danforth, senior vice president and general counsel for Rambus. "I'm fairly sure I would not have had access to this evidence if they had not pursed that case with the FTC."

The Rambus complaint alleges conspiracy to restrict output and fix prices; conspiracy to monopolize; intentional interference with prospective economic advantage; and unfair competition.

Separately, the U.S. Department of Justice is investigating allegations that a handful of big memory chipmakers including Hynix, Micron and Infineon, may have engaged in price fixing. Danforth would not comment on whether he discussed the Rambus complaint filed today with the Justice Department before filing it.

Danforth believes the evidence in its case against the memory chipmakers – evidence which the Justice Department also possesses – definitively proves efforts to raise and fix prices.

In its complaint, Rambus cites an e-mail from Micron that says, "We will begin price discussions with OEMs today. Infineon has already laid the ground work by trying to lift pricing a few weeks ago. We believe they have been successful with only a couple OEMs to date. Samsung has also had discussions with the OEMs early last week and is preparing them for increases in the first part of December. The consensus from all suppliers is that if Micron makes the move, all of them will do the same and make it stick."

Danforth also said he believes the memory chipmakers were out to "kill" Rambus from as early as 1996.

The complaint cites another email from Farhad Tabrizi of Hynix to a "top Hynix executive" that says, "If Intel does not invest in us, I really want to ask you to let me go back to my old mode of RDRAM killing. I think we were very close to achieving our goal until you said we are absolutely committed to this baby."

"From substantial written evidence already on the public record, we believe that these memory manufacturers colluded illegally, thereby limiting consumer choice and depriving our RDRAM products of the opportunity to compete fairly in the marketplace," Danforth said in a statement.

Micron issued a brief statement in response to the suit, saying it would vigorously defend any lawsuit against it.

"Rambus failed in the marketplace because of excessive manufacturing costs and minimal RDRAM demand," said Dave Parker, director of corporate communications, in a statement.  "Several memory manufacturers, including the world's largest, continue to produce RDRAM products sufficient to meet its limited, worldwide market demand.  It is unfortunate that Rambus is trying to blame the market failure of its RDRAM technology on others, like Micron, who ultimately responded to marketplace demands.

Parker added that Micron believes Rambus' case is an attempt to deflect attention away from the FTC's suit against Rambus

The February dismissal of the FTC case against Rambus marked the end of a lengthy series of antitrust legal proceedings against the Los Altos, Calif.-based company.  Also in February, Rambus lost a related European patent. Micron, Infineon and Hynix had filed the original opposition to the patent in 2000. Rambus has appealed the decision.

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