FTC Caps Rambus Memory Royalties

WASHINGTON — Saying it wants to preserve competition in the memory market, the Federal Trade Commission (FTC) on Monday (Feb. 5) set maximum royalty rates for some Rambus Inc. memory technologies and ordered the IP vendor to establish internal procedures to ensure full disclosure of its patents and patent applications to standards groups.

The royalty caps apply to Rambus SDRAM and DDR SDRAM licenses. The order also prohbits Rambus (Los Altos, Calif.) from attempting to exceed the caps in collecting royalties. The regulator also ordered Rambus to hire an FTC-approved "compliance officer" to ensure full disclosure of the Rambus patent portfolio to industry standards-setting groups in which Rambus participates.

"The order is designed to remedy the effects of the unlawful monopoly Rambus established in the markets for four computer memory technologies that have been incorporated into industry standards for dynamic random access memory—DRAM chips," the FTC said in a statement.

Rambus said it would appeal the ruling, initially petitioning for a stay of the FTC order pending its appeal of the remedy and related liability findings.

Rambus said the ruling would not apply to its DDR2 SDRAM "or other post-DDR JEDEC [memory] standards."

"We are nevertheless disappointed that the Commission's remedy with respect to SDRAM and DDR SDRAM continues to ignore the extensive findings of fact made by its own Chief Administrative Law Judge McGuire," Tom Lavelle, senior vice president and general counsel for Rambus, said in a statement.

McGuire dismissed anticompetitive charges against Rambus in February 2004. The commission overturned McGuire's ruling in July 2006.

In reversing McGuire's ruling, the commission found that "Rambus engaged in exclusionary conduct that significantly contributed to its acquisition of monopoly power in four related markets." Monday's decision prescribes remedies to enforce the earlier monopoly ruling.

According to Rambus, the FTC remedies include the following royalty caps: 0.25 percent for SDRAMs; 0.5 percent for DDR SDRAMs; 0.5 percent for SDRAM memory controllers or other non-memory chip components; and 1.0 percent for DDR SDRAM memory controllers or other non-memory chip components.

The maximum rates will be in effect for three years, Rambus said.

If the Rambus appeal fails, the FTC order would take effect in 60 days.