In the latest ruling in a long legal saga between technology developer Rambus and the semiconductor and computing industry, the United States Federal Trade Commission has imposed a royalty cap on various disputed RAM technologies which Rambus claims intellectual property rights over. Standard SDRAM rates are now set at 0.25 percent, DDR SDRAM at 0.5 percent and miscellaneous DDR products such as memory controllers at 1 percent. Reports indicate that Rambus has been charging as much as 3.5 percent royalties on sales of these products in recent years. The ruling does not address newer technologies such as the DDR2 memory found in most new PCs and servers, which Rambus also claims royalty rights over.
The heart of the friction between Rambus and various memory manufacturers including Infineon is the allegation that Rambus subverted the JEDEC standards body to establish secretly protected Rambus properties as part of the common, open standard for system RAM including SDRAM and first-generation DDR. The argument goes that once JEDEC agreed to use Rambus' proposed technologies, manufacturers would have little choice but to pay royalties demanded by Rambus-and that JEDEC members would never have agreed to use those technologies had they known of the hidden IP rights.
In this ruling, the FTC indicates that it largely agrees with those claims. "Rambus nonetheless participated in JEDEC's DRAM standard-setting activities for more than four years without disclosing to JEDEC or its members that it was actively working to develop, and possessed, a patent and several pending patent applications that involved specific technologies ultimately adopted in the standards," the body said in a statement. Citing "deceptive conduct" on the part of Rambus, the commission decided to cap the company's ability to collect royalty fees, "to preclude Rambus from continuing to collect monopoly rents."
FTC commissioners voted 3-2 in favor of the terms imposed on Rambus. The company will be permitted to collect the prescribed royalties for a period of three years from the issuance of the order. After that date, the FTC decreed that the royalty rate will go to zero. The dissenting commissioners expressed preferences for a solution which denied Rambus any royalties whatsoever.
Although the FTC dubs this their "final order", in a statement Rambus indicated that it intends to appeal in order to restore an earlier, more favorable ruling from 2004, when a presiding judge dismissed the FTC's antitrust complaint.
The scope of the FTC's order only addresses royalty rates on sales from the issuance of the order (5 February 2007) forward. Representatives from Rambus and JEDEC were not available to address speculation that chipmakers may seek relief from past royalties as a result of this order.
