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FTC outlines appeal against Rambus ruling

Sticking to its guns

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The US Federal Trade Commission (FTC) has detailed its appeal against a Commission judge's February decision to drop the anti-trust action the organisation brought against Rambus.

The appeal was launched early last March, but the FTC didn't release its appeal brief until late last week.

The FTC's argument centres on the belief that Judge Stephen J McGuire's February ruling was based on incorrect conclusions.

Judge McGuire "found that Rambus indeed has acquired monopoly power, but did not acquire that power by exclusionary [i.e. anticompetitive] means, for two reasons: First, that Rambus did not violate a 'clear and unambiguous' JEDEC disclosure rule. Second, that Rambus' entire course of conduct was irrelevant, because no matter what Rambus or JEDEC did, Rambus' technologies would have been adopted wholesale by JEDEC, at exactly the same prices as Rambus is now demanding", the brief states.

The FTC claims these conclusions are wrong: "Rambus engaged in a prolonged, deliberate course of conduct that undermined the fundamental purpose of JEDEC to adopt open standards, contravened JEDEC's procedures of adopting patented technologies only on the basis of full information and a commitment to RAND terms, and violated Rambus' duty of good faith and its specific JEDEC obligation to disclose patents and patent applications that might be involved in JEDEC work," the brief says.

"Rambus' deliberate conduct in violation of its JEDEC obligations and contrary to JEDEC's purposes and procedures, in circumstances that lead to concrete harm to the marketplace, constitutes exclusionary conduct," it continues.

This "conduct led to specific anticompetitive harm... The record establishes the requisite causal link between Rambus' course of conduct and its acquisition of monopoly power... Rambus' concealment of this material information was capable of contributing to JEDEC's choice to select technologies covered by Rambus' patents. Even if the Commission were to apply a strict but-for test of causation, the record demonstrates... that absent Rambus' conduct, JEDEC members likely would have adopted alternative technologies or, at a minimum, would have negotiated in advance to secure lower royalties."

The brief concludes: "In order to undo the effects of Rambus' unlawful acquisition of monopoly power, restore competition in the technology markets associated with the JEDEC standards, and preserve the integrity of JEDEC's industry-wide standards" the Commission should essentially force Rambus for a period of 20 years to stop demanding intellectual property licence fees from SDRAM vendors offering JEDEC-compliant products and not to sue those vendors who have or may yet refuse to cough up.

The FTC filed its lawsuit against Rambus in June 2002. It accused the memory designer of covertly modifying memory patents to incorporate technology which it knew industry standards body JEDEC was to build into the official SDRAM specification. This was a violation of Federal anti-trust law and an attempt to "deceive an industry-wide standard-setting organisation, resulting in adverse effects on competition and consumers", the FTC said at the time.

However, last February Judge McGuire ruled that the FTC had not proved its allegations against the company.

Judge McGuire's decision was always potentially subject to review by the FTC's commissioners, and the case may also yet be referred to the US court of appeals. ®

Related link

The FTC appeal brief can be downloaded here (PDF)

Related stories

FTC appeals against Rambus ruling
Judge throws out FTC case against Rambus
FTC declares war on Rambus

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