US watchdog says Rambus monopolised chip markets

Rambus, the chip designer, staged an anti-competitive “hold-up” of the computer memory industry, according to a Federal Trade Commission ruling on Wednesday that sent its shares more than 20 per cent lower.

The FTC’s commissioners voted 5-0 in finding that Rambus had unlawfully monopolised the markets for four computer memory technologies that have become industry standards.

The Commission is to hold additional hearings to determine an “appropriate remedy”, but its decision threatens past and future royalties Rambus has earned from patents it holds on memory technology.

The Silicon Valley company said it would appeal against the decision, but its shares had fallen 25.5 per cent by the close to $12.65.

The FTC first charged Rambus with violating antitrust laws in June 2002, but an administrative judge ruled there was insufficient proof in February 2004. FTC staff then appealed to the commissioners.

The memory chip industry has been plagued in recent years by federal investigations into price-fixing by the major manufacturers and by patent infringement lawsuits led by Rambus, which has also accused its customers of trying to exclude it from the market. Commissioner Pamela Jones Harbour said: “Through a course of deceptive conduct, Rambus was able to distort a critical standard-setting process and engage in an anti-competitive hold-up of the computer memory industry.”

The FTC’s complaint centred on Rambus’s involvement in a standards-setting organisation, the Joint Electron Device Engineering Council (Jedec).

The FTC alleged Rambus worked within Jedec for four years without revealing it was developing patents involving technologies that were eventually adopted as standards.

If it had done so, Jedec members might have taken a different view as to which standards to adopt.

“Through its successful strategy, Rambus was able to conceal its patents and patent applications until after the standards were adopted and the market was locked in,” said the commissioners’ opinion.

“Only then did Rambus reveal its patents – through patent infringement lawsuits against Jedec members who practised the standard.”

The standards concerned are for SDRAM (Synchronous Dynamic Random Access Memory) and DDR (Double Data Rate) SDRAM chips, whose manufacturers have balked at paying what they consider to be high royalty fees to Rambus.