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EU drops antitrust case against Rambus

European Union regulators on Wednesday dropped an antitrust investigation into U.S. memory chip company Rambus Inc. after the company pledged to cap royalty fees for its patents on computer memory chips.
/ Source: The Associated Press

European Union regulators on Wednesday dropped an antitrust investigation into U.S. memory chip company Rambus Inc. after the company pledged to cap royalty fees for its patents on computer memory chips.

Rambus, based in Los Altos, California, will avoid any EU fines by pledging not to charge any royalties for SDR and DDR chip standards and to bring fees for newer versions of DDR down from 3.5 percent to 1.5 percent.

This applies to worldwide sales for new or renewed licenses for five years. The company can be fined up to 10 percent of yearly global turnover if it doesn't follow these commitments.

Rambus' general counsel Thomas Lavelle told the AP that the end of the case was "a big relief."

He said he didn't expect a huge difference to future revenues — and the lower fees might even encourage new sales by attracting companies to take out licenses for the first time.

"People who have licenses will presumably keep them and people who don't have licenses will determine whether they want to take one out," he said.

The European Commission in 2007 charged Rambus with monopoly abuse, alleging that the company set "unreasonable" royalties for DRAM patents fraudulently set as industry standards.

Chip manufacturers claimed that Rambus was seeking royalties in the early 1990s even as it took part in industry-wide talks that set standards for chips that were to be made mandatory — giving the company a monopoly over key technology patents.

They claimed Rambus had deliberately withheld information from the Joint Electron Device Engineering Council, or JEDEC, which counted Rambus as a member as it established guidelines for the computer memory industry.

Any company that wants to make DRAM, or Dynamic Random Access Memory, has to pay Rambus for the design it developed. The chips are used in personal computers, servers, printers, personal digital assistants and cameras. Worldwide DRAM sales were $34 billion last year.

Rambus has consistently denied wrongdoing. Lavelle said the EU decision "closes a door into the investigations into the activities of Rambus at JEDEC."

"This was the second major government investigation, both of which are now closed and that's a good thing to allow us spend time on things we really want to spend time on," he said.

The U.S. Federal Trade Commission also ended an investigation into Rambus in May.

Regulators have found it difficult to prove allegations of "patent abuse," 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.

EU Competition Commissioner Neelie Kroes said the European Commission would use its experience from the Rambus case when it publishes guidelines next year for setting technology standards "under strict conditions of openness and transparency."

She said it was important for all companies involved to disclose patents and patent applications before the standards are set — and that regulators supported maximum royalty rates and licensing terms for standards in some cases.

However, European regulators last month dropped a similar probe into wireless chip maker Qualcomm Inc., saying they were still worried about high prices for technology set as an industry standard but that they could not commit the time or resources to such "complex" cases.

Last year, a U.S. federal court cleared Rambus of patent abuse accusations, dismissing legal action by chip makers Micron Technology Inc. of Boise, Idaho, Hynix Semiconductor Inc. of Icheon, South Korea, and Nanya Technology Corp. of Kueishan, Taiwan.

The FTC ruled in 2006 that Rambus had violated antitrust laws. But the U.S. Court of Appeals for the District of Columbia Circuit overturned the decision in 2008 and sent the case back to the FTC, saying the agency had not come up with enough evidence to prove that Rambus had sought a monopoly or hurt competition.

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On the Net:

EU and Rambus commitments: http://ec.europa.eu/comm/competition/antitrust/cases

Rambus: http://www.rambus.com