Rambus 'deception' could cost $3B, FTC claims in appeal

Rambus stands to gain up to $US3 billion in royalties as a result of its allegedly deceptive actions before a memory standards-setting committee, the US Federal Trade Commission (FTC) said in a brief last week arguing for a reversal of a decision earlier this year favouring Rambus.

In February, FTC Chief Administrative Law Judge, Stephen McGuire, ruled that Rambus was not liable for its failing to disclose during discussions with the Joint Electron Device Engineering Council Solid State Technology Association (JEDEC) that it had patents for technology that became part of a new JEDEC standard for memory technology.

The full Commission will now decide whether to hear an appeal claiming that Rambus illegally obtained a monopoly "through exclusionary means" in securing patents for SDRAM (synchronous dynamic RAM) and DDR (double date rate) SDRAM, the most commonly used form of memory in PCs. FTC lawyers filed the appeal earlier this month, and made the brief public last week.

The FTC is an independent federal agency created by the US Congress to deal with allegations of unfair competition or business practices. 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 claims that it disclosed the patented technology to a number of industry companies, including memory makers Micron Technology and Hitachi, prior to the JEDEC standards-setting discussions. It has also claimed that the disclosure policies of JEDEC were poorly defined and did not specify exactly what the company was required to disclose to the standards committee.

A federal appeals court in a separate Rambus case against Infineon Technologies AG as well as Judge McGuire have agreed with Rambus' position.

The FTC and other SDRAM memory makers say the company deceived JEDEC by failing to disclose its patents and improperly influenced the committee into adopting patented Rambus technology into the SDRAM standard.

"The force of the deceptively captured JEDEC standards, not Rambus’s ability to triumph in the open marketplace, today allows Rambus to command the monopoly power it unquestionably enjoys: the power to reap from $1-3 billion in royalties, ultimately from consumers," the FTC wrote in its appeal brief.

In the 1990s, Rambus attempted to launch a new memory standard with the backing of Intel called Rambus DRAM (RDRAM).

RDRAM is a high-speed memory interface that also comes with a hefty price tag. The low-cost and competitive performance of the SDRAM standard, coupled with problems on Intel's part in delivering RDRAM chipsets in a timely fashion, eventually won over consumers and PC companies in 2000.

Only after it became clear that RDRAM would not be the next memory standard did Rambus reveal that it held patents for certain technology contained within the SDRAM standard and the DDR SDRAM standard, the FTC wrote in its appeal brief.

Rambus should have known during the standards setting process that it was required to disclose its patents to the group, because the JEDEC chairman opened every meeting with a reminder that participants should indicate their intent to patent the technologies under consideration for the SDRAM standard, the FTC wrote.

Once Rambus realised that SDRAM vendors would retaliate against its plans to enforce its patents with legal action, Rambus executives authorised what the FTC called Shred Day 1998, in which thousands of documents were destroyed, the FTC said.

Rambus has admitted to destroying a number of documents, but said the actions were part of a routine policy that was not linked to impending litigation.

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