Government filing antitrust charges against computer memory-maker
By TED BRIDIS
Associated Press Writer
WASHINGTON (AP) -- The Federal Trade Commission said Wednesday it will file antitrust charges against computer
memory-maker Rambus Inc. (NasdaqNM:RMBS - News)
The case would enforce and clarify new rules requiring organizations that establish emerging technology standards
to disclose any related patent applications.
The government's complaint pits the protection of intellectual-property rights against the development of common
technology standards within an increasingly networked economy.
Industry rivals, along with some customers, have alleged that Los Altos, California-based Rambus deceptively
persuaded a nonprofit standards group to adopt technology for which Rambus quietly was seeking patent
approvals.
The FTC complaint cited internal Rambus documents saying, "We will be in a position to request patent licensing
(fees and royalties) from any manufacturer" of the new computer memory technology.
The FTC said the technology was worth more than $1 billion to Rambus over its lifetime. Rambus technology
speeds the exchange of electronic signals between a computer's memory and tiny logic chips, alleviating a
performance bottleneck that has hampered the speed of personal computers.
The behavior by Rambus did "substantial harm to important technology markets," said the director of the FTC's Bureau of Competition, Joseph J. Simons. He said the
government was sending a message to the technology industry: "If you are going to take part in a standards process, be mindful to abide by the ground rules and to
participate in good faith."
Rambus general counsel John Danforth said Rambus never was an "active participant" in discussions by the standards group, and said Rambus did not promote or
advocate engineering designs that fell under its patent applications.
Danforth also disputed that Rambus was obligated to disclose pending patents, according to the rules established by the standards group, the Joint Electron Device
Engineering Council.
Rambus shares fell $2.31, or 36 percent, in trading Wednesday to close at $4.12 on the Nasdaq Stock Market.
Outside antitrust experts said the FTC, if it prevails, could prevent Rambus from collecting lucrative royalties -- estimated at $50 million to $100 million annually -- from
some of the technology industry's biggest players and expose Rambus to triple damages in private antitrust lawsuits in the future.
A federal jury in Richmond, Virginia, found Rambus liable for fraud in May 2001 over its involvement with the standards group and ordered it to pay $3.5 million. That
case, brought by rival Infineon Technologies AG, is pending in Washington before the U.S. Court of Appeals for the Federal Circuit.
Experts said the Rambus case was similar to an FTC complaint against Dell Computer Corp. (NasdaqNM:DELL - News), which ended in a consent agreement in 1996.
The FTC said Rambus worked with the standards group for four years without ever disclosing its patents, even though the group's rules require participants to inform
others about "any patents, or pending patents, that might be involved in the work they are undertaking."
After the Rambus technology was broadly accepted, Rambus assessed royalty fees roughly three times the industry average for its computer memory designs, which
are used in personal computers, video games and other electronics.
The Rambus case will be decided by an administrative law judge. If Rambus were to lose, it could then appeal the judge's ruling to the full trade commission. |
