FTC limits Rambus royalties

The Federal Trade Commission finalized its ruling that Rambus Inc. violated antitrust laws, imposing limits on the royalties the memory chip designer can charge.

Wall Street was bracing for a potentially harsher order than the one that the FTC released Monday, and Rambus stock surged 24%.

The order said Rambus violated federal antitrust laws “by deliberately engaging in a pattern of anti-competitive acts to deceive an industrywide standard-setting organization, which caused or threatened to cause substantial harm to competition and consumers.”

Legal experts said it would set an important precedent for the broader technology industry. But Tom Lavelle, senior vice president and general counsel for Rambus, said the company would appeal the decision.

The case hinges on whether Rambus illegally obtained a monopoly in the 1990s when it secured patents for two popular types of memory used in personal computers.

Rambus was accused of failing to disclose to an engineering council that its patents had been incorporated into an industry standard regarding memory technology.

An administrative law judge dismissed the complaint in 2004, but the FTC overturned that ruling in July 2006.

Rambus insisted for years that it disclosed the patents to memory makers Micron Technology Inc. and Hitachi Ltd. before the standards-setting discussions began.

Rambus attorneys also argued that disclosure policies of the council, the Joint Electron Device Engineering Council Solid State Technology Assn., failed to specify what Rambus should have revealed to the committee.

The ruling requires Rambus to license two types of PC memory, SDRAM (synchronous dynamic random access memory) and DDR SDRAM (double-data-rate synchronous dynamic random access memory), setting maximum allowable royalty rates it can collect for the licensing.

It also bars Rambus from collecting more than the FTC-mandated maximum allowable royalty rates from companies still using older DRAM technology licensed from Rambus.