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Rambus Favored in FTC Ruling

New York, Feb 24, 2004

On February 17, 2004, a U.S. administrative law judge dismissed the Federal Trade Commission’s (FTC) antitrust case against Rambus Inc., a company that develops and licenses memory technologies to companies that manufacture semiconductor memory devices, in a significant win for the company.

The FTC’s case was centered on allegations that Rambus intentionally decided not to disclose its essential pending and approved patent claims related to a JEDEC standard under development. Rambus participated in the standards-setting activities of the JEDEC Solid State Technology Association, the semiconductor engineering standardization body of the Electronic Industries Alliance (EIA). Rambus had developed and patented its SDRAM architecture for random access memory, which was relevant to the JEDEC standards-setting activity.

The FTC alleged that, as a member of the JEDEC Solid State Technology Association, Rambus was required to disclose or license relevant intellectual property to other members. Rambus has maintained that competitors knew about its patents and product plans while SDRAM-related standards talks were going on at JEDEC. After the standard was approved, Rambus sought to extract royalty payments from those companies implementing the standard.    [The judge ruled that the royalties were reasonable and non-discriminatory.]

According to a 348-page opinion released on February 24, U.S. Administrative Law Judge Stephen McGuire rejected nearly every aspect of the government's case and concluded that it had failed to prove charges that Rambus deceived chip manufacturers, that it had improperly gained a monopoly, or that it had violated antitrust laws.  Among other things, McGuire held that the JEDEC patent policy did not mandate disclosure of essential patents and pending patents, that the JEDEC members largely were aware of Rambus’s technology and business strategy, and that Rambus’s market power derived from its superior technology and endorsement by Intel.

FTC lawyers "have failed to sustain their burden of proof with respect to all three of the violations alleged in the complaint," McGuire wrote in a summary of the opinion.

With the formal release of the opinion, the FTC's staff now has 10 days to decide whether to appeal the ruling. The FTC has the opportunity to seek another review of the case with the full FTC commission and also a review by the U.S. Court of Appeals.

Rambus has patent infringement cases pending against computer chip manufacturers Micron Technology Inc., South Korea's Hynix Semiconductor Inc., and Germany's Infineon.

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