Rambus Trial Opens With Incriminating Documents

Federal Trade Commission (FTC) attorneys came out swinging Wednesday on the first day of the FTC’s antitrust case against Rambus, claiming the memory chip designer’s own attorneys advised the company to “stop what it was doing.” The FTC says Rambus 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.

The FTC claims Rambus failed to disclose it held patents or pending patents for technologies that were ultimately adopted by 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 Wednesday 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 Samsung, Hitachi, Hyundai, and Micron Technology.

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.

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