RealTime IT News

FTC Continues Pursuit of Rambus

The Federal Trade Commission (FTC) says Rambus' Supreme Court victory earlier this week shouldn't be a factor in the agency's antitrust suit against the memory chip designer. On Monday, the court declined to hear Infineon's appeal of a lower court decision dismissing the German-based semiconductor maker's fraud case against Rambus.

In a separate action involving the same case against Rambus , the FTC claims the company violated federal antitrust laws by deliberately engaging in a pattern of anti-competitive acts and practices that served to deceive an industry-wide standard-setting organization.

Rambus attorney Gregg Stone told an FTC administrative judge Wednesday that the ruling by the Federal Circuit of the Appeals Court accurately describes the issues in the case, but the FTC countered that its case is separate since the court only considered fraud charges under Virginia law.

The FTC is attempting to invalidate Rambus' synchronous memory patents obtained during its membership on the Joint Electron Devices Engineering Council (JEDEC), a non-profit organization that promotes technological standards. Rambus participated in the standard setting process between 1991-95.

During Rambus' membership, JEDEC developed and adopted a standard for synchronous dynamic random access memory (SDRAM). When Rambus joined the group, it had applied for a patent on RDRAM, a competing technology. The FTC produced documents in May that showed before, during, and after Rambus dropped its JEDEC membership, the company made repeated filings to ensure intellectual property rights to the SDRAM standard.

In addition, FTC attorneys produced confidential notes from Rambus' outside legal counsel advising the company to resign from JEDEC and cease applying for patents on SDRAM. Once the SDRAM standard was adopted, Rambus made moves to either collect on royalties or sue those companies that refused to comply, which included Infineon, Samsung, Hitachi, Hyundai, and Micron Technology.

FTC attorney Sean Royall said Wednesday the administrative court should continue to pursue a Rambus decision since the appeals court heard only one industry witness while the FTC's trial, which has consumed more than 50 days over five months, has produced 18 industry witnesses who all claimed amended JEDEC rules required Rambus to disclose its pending patents.

FTC Chief Administrative Law Judge Stephen McGuire pointed out to the Rambus legal team an October 1993 revised JEDEC policy manual stating chairpersons of standards committees have to remind members before every meeting that disclosure of patents or pending patents is required if the patents are related to the committee's deliberations.

Rambus' Stone said the policy was not mandatory and was meant to only to encourage "early voluntary compliance."

Infineon was one of the first SDRAM manufacturers to step forward and accuse Rambus of fraud by "gaming" the entire JEDEC process. Rambus then sued Infineon for copyright infringement. A counterclaim resulted and the trial court awarded Infineon more than $7 million for attorney fees and damages.

In January, however, a three-judge panel of the U.S. Court of Appeals overturned the Infineon award and directed the lower court to reconsider the finding of patent non-infringement, effectively allowing Rambus to successfully assert its patents not only against Infineon but other SDRAM manufacturers.

In the meantime, the FTC was moving against Rambus on antitrust charges, at one time seeking a summary judgment against the company. The FTC claimed Rambus forfeited its right to a trial because of the company's actions in allegedly destroying documents that were essential to an FTC antitrust action.

In March, Judge James Timony agreed that Rambus had destroyed documents or at least failed to have proper procedures in place to preserve documents, but the company's "utter failure to maintain an inventory of the documents its employees destroyed makes it impossible to discern the exact nature of the relevance of the documents destroyed to the instant matter."

While ruling Rambus had not forfeited its right to trial, Timony sanctioned the company for its document retention procedures by declaring the burden of proving innocence will shift to Rambus.

If the FTC wins the case, Rambus could be forced to forfeit more than a billion dollars in royalty claims for its chip designs. Rambus doesn't make or sell chips but collects patent royalties for its designs from chip makers such as Intel. The company's primary chip designs are used to improve the speed of programs used for databases, digital photography and games.