The European Commission has confirmed that it has launched its first antitrust volley against chip technology company Rambus.
The Commission's preliminary antitrust view of Rambus, sent in a Statement of Objections on 30 July, is that Rambus has "infringed EC Treaty rules on abuse of a dominant position by claiming unreasonable royalties for the use of certain patents for Dynamic Random Access Memory [DRAM] chips," the Commission said in a statement on Thursday.
In the first European Commission operation of its kind, the Commission will investigate whether Rambus participated in a "patent ambush". The Statement of Objections outlines the Commission's initial view that Rambus engaged in "intentional deceptive conduct" in the standard-setting process for DRAM chips.
The relevant DRAM chip standards were decided in the 1990s by a US-based standard-setting organisation, the Joint Electron Device Engineering Council (JEDEC). Rambus participated in JEDEC between 1992 and 1995. The Commission is to investigate whether the company failed to disclose DRAM patents it owns and asserts during the standards-setting process.
Rambus owns and asserts patents that it claims cover the technology included in the JEDEC standards, said the Commission. "Every manufacturer wishing to produce synchronous DRAM chips or chipsets consequently must either acquire a licence from Rambus or litigate its asserted patent rights," said the Commission's statement.
The Commission provisionally considers that Rambus breached the EC Treaty's rules on abuse of a dominant market position by claiming unreasonable royalties for the use of the relevant DRAM patents. "The Commission's preliminary view is that without its 'patent ambush', Rambus would not have been able to charge the royalty rates it currently does," said the Commission's statement.
While Federal Trade Commission (FTC) orders issued in August 2006 and in February 2007 found that Rambus had engaged in "illegal monopolisation", the "remedy" imposed by the FTC is applicable only to US patents. It is applicable to foreign patents to the extent that they relate to the import or export of relevant products into or from the US, said the Commission. Rambus said that it was still challenging the FTC decision in US courts.
European companies wishing to apply JEDEC DRAM standards may be exposed to patent litigation from Rambus in Europe, as the US FTC decision does not give European "relief", said the Commission, and European action is therefore "appropriate".
DRAM chipsets are used to temporarily store data in a wide variety of computer systems, including servers, workstations, printers, PDAs and cameras.
First procedural step
The Statement of Objections is the first procedural step in a European Commission antitrust investigation. The Commission will review Rambus's response to the Statement of Objections in order to determine whether to issue a final decision.
Any decision would be subject to appeal to both the European Court of First Instance and the European Court of Justice, said a Rambus statement.
Rambus confirmed that the Commission had sent a Statement of Objections, and said that it planned to respond "over the next several months".
"The issues raised by the European Commission include Rambus's participation in JEDEC that ended over a decade ago," said Thomas Lavelle, senior vice president and general counsel at Rambus. "These are largely the same issues examined by a number of US courts, the Federal Trade Commission, and currently before the US Court of Appeals for the District of Columbia Circuit. We are studying the Statement of Objections and plan to respond in due course."
The Commission has the power to impose fines for breaches of antitrust law, and also to order cessation of antitrust "abuse". However, the Statement of Objections has preliminarily concluded that "the appropriate remedy to such an abuse would be that Rambus charges a reasonable and non-discriminatory royalty rate," said the Commission.