MANHASSET, N.Y. The Federal Trade Commission dealt a severe blow to Rambus Inc. Wednesday, ruling the company has unlawfully monopolized the markets for computer-memory technologies incorporated into industry standards for dynamic random access memory (DRAM) chips.
In an opinion by Commissioner Pamela Jones Harbour, the FTC found that, through a course of deceptive conduct, Rambus was able to distort a critical standards-setting process and engage in an anti-competitive "hold-up" of the computer memory industry. The Commission has ordered additional briefings to determine a course of action for Rambus, which according to reports could be forced to pay damages or lower its prices.
The unanimous vote by the FTC sent shock waves through the stock market, where Rambus's stock price tumbled Wednesday morning. It also capped off a string of recent bad news for Rambus (Los Altos, Calif.), which earlier in the year appeared to gain momentum after claiming victory
in an antitrust case in the U.S. District Court in San Francisco.
For years, Rambus has accused major memory chip makers of conspiring to fix prices and engage in other anti-competitive practices to drive it out of business. Rambus is also entangled in patent disputes with several of these suppliers.
But it was the FTC that accused Rambus of engaging in anticompetitive behavior in June 2002, when it filed a complaint alleging Rambus of participating in the Joint Electron Device Engineering Council (JEDEC), a standards setting organization. The FTC accused Rambus of taking part in JEDEC's DRAM standards-setting activities for over four years while secretly developing patents involving specific memory technologies ultimately adopted in JEDEC's standards.
Rambus received a reprieve in February 2004 when FTC administrative judge Steve McGuire dismissed
the charges. However, FTC staff appealed the decision to the Commission, which overturned the judge's decision Wednesday.
The Commission's opinion states, "We find that Rambus's course of conduct constituted deception under Section 5 of the FTC Act. Rambus' conduct was calculated to mislead JEDEC members by fostering the belief that Rambus neither had, nor was seeking, relevant patents that would be enforced against JEDEC-compliant productsUnder the circumstances, JEDEC members acted reasonably when they relied on Rambus's actions and omissions and adopted the SDRAM and DDR SDRAM standards."
Rambus has so far not responded to a request for comment by EE Times
. But the company stated in an analysts' conference call Wednesday morning, "We are disappointed that any form of liability was found during and following our 2003 trial."
Rambus is likely to appeal the ruling.