Fri, Aug 24, 2007 - Page 11 News List

Chip maker Rambus hit by antitrust abuse charge

BLOW The firm has nine weeks to respond to EU charges that could lead to a fine totalling 10 percent of the company's global turnover for each year it broke the law


EU regulators said yesterday they had charged US memory chip maker Rambus Inc with antitrust abuse, alleging that the company set "unreasonable" royalties for DRAM patents fraudulently set as industry standards.

The EU's preliminary charges come weeks after the US Federal Trade Commission (FTC) ruled that the company deceived a standards-setting committee, failing to disclose that its patents had been incorporated into an industry standard for memory technology.

Every manufacturer that wanted to make synchronous DRAM chips had to negotiate a license with Rambus.

EU and US antitrust officials allege this allowed Rambus an illegal monopoly in the 1990s for Dynamic Random Access Memory (DRAM) chips used in personal computers, servers, printers, personal digital assistants and cameras.

The FTC order stops Rambus from collecting royalties on US patents and foreign ones relating to goods imported into or from the US. But the EU's executive arm said it had to act because the US decision would not grant relief to companies in Europe.

Rambus has nine weeks to respond to the European Commission's statement of objections and can seek a hearing before the EU comes to a final decision that could levy a fine that can total 10 percent of a company's global turnover for each year it broke the law.

But it is more likely that the EU would require Rambus to charge "a reasonable and nondiscriminatory royalty rate," it said. It did not give details on how much that would be.

Rambus claimed it saw nothing new in the EU charges.

"These are largely the same issues examined by a number of US courts, the Federal Trade Commission, and currently before the US Court of Appeals for the District of Columbia Circuit," said Rambus general counsel Thomas Lavelle. "We are studying the statement of objections and plan to respond in due course."

This is the first time the European Commission has charged a company with patent ambush where a company deceives a standards body by keeping secret the fact that it holds patents on technology that all players will later be forced to license.

Regulators are charging Rambus with abusing a dominant market position by squeezing too high a price for its patents.

"The commission's preliminary view is that without its patent ambush, Rambus would not have been able to charge the royalty rates it currently does," it said.

Rambus has emphasized for several years that it disclosed the patents to memory makers Micron Technology Inc and Hitachi Ltd before the standards-setting discussions begun.

Rambus attorneys have also argued that disclosure policies of the Joint Electron Device Engineering Council Solid State Technology Association failed to specify what Rambus should have revealed to the standards committee.

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