FTC asks to skip Rambus trial over missing documents

The U.S. Federal Trade Commission (FTC) has asked an administrative law judge to issue a "default judgment" against memory chipmaker Rambus Inc. and go straight to the punishment phase in the FTC's anticompetition case against the company because Rambus allegedly destroyed documents related to the matter.

Rambus has filed a strenuous objection to the motion for default judgment, contending that the FTC has not and cannot prove that the company acted in bad faith when it adopted its "document retention" policy in 1998, which is a requirement of a default judgment. Rambus argues that its policy is no different from that of "most" public companies.

"Unless intended simply as character assassination, this motion likely reflects a growing recognition ... that there are serious holes in their case," Rambus said in a response it has made available to the media. The FTC motion has not yet been made publicly available.

The FTC filed a complaint against Rambus in June of last year, alleging that Rambus did not tell the Joint Electron Device Engineering Council Solid State Technology Association (JEDEC) that it held patents on SDRAM (synchronous dynamic RAM) technology during standard-setting discussions for that technology. Rambus, based in Los Altos, California, has been involved in several private lawsuits over the past few years with DRAM vendors such as Infineon Technologies AG, Hynix Semiconductor Inc., and Micron Technology Inc. over claims that the DRAM vendors are infringing upon Rambus' memory technology patents, and not paying licensing fees for that technology.

The latest turn in the legal battle with the FTC stems from the Commission's misinterpretation of Rambus' internal document policy, said John Danforth, Rambus' general counsel. Like most companies, Rambus generates backup copies of its e-mail servers as a hedge against a catastrophic system breakdown. The company erases those tapes every three months under the document policy, instituted years before the FTC filed a formal complaint against the company, Danforth said.

Danforth denied the claims of document destruction. "It's a way to make the company look bad and to make executives look bad," he said, referring to the public sentiment after a year of high-profile fraud and corruption cases among U.S. companies.

The FTC did not immediately return a call seeking comment. The proceeding -- which is similar to a trial -- before Administrative Law Judge James P. Timony is scheduled for April 9, and both the FTC and Rambus have asked the judge to rule on the motion for default judgment as soon as possible, Danforth said.

The FTC is an independent federal agency created by Congress to deal with "unfair methods of competition" and "unfair or deceptive acts or practices." The commission is meant to act on behalf of consumers and over the years since its creation in 1914 has been given authority to enforce a range of consumer protection laws. In the case of Rambus, the FTC filed an administrative complaint with Judge Timony. FTC administrative law judges are independent, but work for the commission. Decisions by the administrative law judge may be appealed by either side to the full Commission and the Commission's decision can then be appealed at the federal court level.

Rambus makes a type of computer memory called RDRAM (Rambus DRAM). RDRAM is mainly used for high-performance, computing intensive applications, while most PC vendors use the less expensive DDR (double data rate) SDRAM (synchronous DRAM) format in their machines. RDRAM has won more acceptance among gamers and it is used in the extremely popular Playstation 2 gaming console from Sony Computer Entertainment Inc.

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Tom Krazit

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