Judge Dismisses Rambus Antitrust Suit

A federal administrative judge Tuesday dismissed an antitrust lawsuit filed by the Federal Trade Commission against memory chipmaker Rambus over its use of patents.

The ruling comes after a two-year investigation and a recent
three month hearing over whether the company deceived the technology industry by not disclosing that it sought patents on chip-making standards, as the FTC claimed. Rambus said the full Commission and/or a United States Court of Appeal could still review the case.

The dismissal means Rambus will not have to forfeit more than a
billion
dollars in royalty claims for its chip designs. The company doesn’t
make or
sell chips but collects patent royalties for its designs from
chipmakers
such as Intel . The company’s primary chip designs
are
used to improve the speed of programs used for databases, digital
photography and games.

In June 2002, the FTC claimed that the Los Altos, Calif.-based
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, specifically, not
disclosing
that it was in the process of seeking patents related to the proposed
standards.”

FTC Chief Administrative Law Judge Stephen McGuire did not
immediately
issue a traditional court brief. A 330-page initial decision explaining
the
ruling is expected to be issued to the public on Monday, February 23rd.

“Today’s ruling dismissing the FTC case is a fundamentally important
step
for Rambus as we seek to be fairly compensated for the use of our
intellectual property,” John Danforth, senior vice president and
general
counsel for Rambus said in a statement. “The ruling adds to the
powerful
reasoning favoring Rambus that the Federal Circuit issued in January
2003.
It is now time, we believe, for these issues to be set aside, and for
Rambus
patent claims to be resolved on their merits.”

In its case, the FTC attempted 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.

The settlement comes less than a week after the Technical Board of
Appeals of the European Patent Office (EPO) revoked one of Rambus’
patents
on chip technology. The ruling does not affect its U.S. patents, which
have
been the subject of intense legal wrangling. Rambus has been cleared of
fraud charges leveled by German-based semiconductor maker Infineon,
which,
along with chipmakers Micron and Hynix, is battling to avoid paying
royalties to Rambus.

In October, the U.S Supreme Court upheld a lower court ruling that
Rambus
did not mislead the JEDEC Solid State Technology Association, a
standards
board, about patents it held relating to DDR SDRAM memory technology,
which
became the industry standard.

Last April, A federal court of appeals denied a request by
German-based
semiconductor maker Infineon Technologies to revive its patent
infringement
case against rival Rambus.

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