FTC Finds Rambus Unlawfully Obtained Monopoly Power

[Zaphod]

By a unanimous vote, the Federal Trade Commission has determined that computer technology developer Rambus, Inc. unlawfully monopolized the markets for four computer memory technologies that have been incorporated into industry standards for dynamic random access memory – DRAM chips. DRAMs are widely used in personal computers, servers, printers, and cameras.

http://www.ftc.gov/opa/2006/08/rambus.htm

Now that the Commission has found, and determined the scope of, liability, the Commission believes it would exercise its broad remedial powers most responsibly after additional briefing and, if necessary, oral argument devoted specifically to remedial issues.

[...]

The Commission is most interested in the parties’ views regarding possibilities for establishing reasonable royalty rates for JEDEC-compliant products affected by Rambus’s exclusionary conduct.

 

[_xxx_]

Auch, this will be VERY expensive. But hey, "You shall reap what you sow" hitting hard here.

 

[Zaphod]

Auch, this will be VERY expensive. But hey, "You shall reap what you sow" hitting hard here.

Their stock is down more than 70% in the last 11 weeks. ~20% yesterday.

BTW: Anyone know how corporate antitrust liabilities work in the US? I presume finding "reasonable royalty rates" would (by any standard) be lower than what those who already caved in are currently paying and include reimbursing the difference?

 

[Tahir2]

I wonder on a different level if individuals will be implicated... (coming from someone that does not understand this kind of law).

 

[zsouthboy]

Glad they finally got what was coming to them.

Jerks.

 

[StefanS]

Schadenfreude is the best kind of joy. hehe

 

[_xxx_]

I wonder on a different level if individuals will be implicated... (coming from someone that does not understand this kind of law).

There's not much to understand, they patented stuff that was openly discussed back then in the pre-development stages of SDR/DDR etc. They basically stole the common stuff and patented it silently, then came back a few years later when everyone and his mother were already producing/selling the memory to claim revenues for "their" IP.

 

[Zaphod]

I presume finding "reasonable royalty rates" would (by any standard) be lower than what those who already caved in are currently paying and include reimbursing the difference?

To answer my own question: According to TheStreet.com, it seems the FCC have a rather wide array of options available to them. Within the scope of the action this could end up anywhere from actually helping them (though, I doubt it...) to bleeding them dry.

Pacific American Securities analyst Michael Cohen pointed to a footnote in the FTC opinion which notes that Rambus' 3.5% royalty rate is above the 1%-2% rate that is standard for RDRAM. Thus, says Cohen, it's possible that the remedy phase will involve capping Rambus' royalty rate at the midpoint of 1.5%.

Given that the worldwide DRAM market is $26 billion, Cohen estimates that a 1.5% royalty rate could potentially provide Rambus with $390 million in annual revenue, and by his calculations, a price target of $50 a share (Cohen personally owns shares in Rambus).

Of course, another possible scenario is that the FTC determines Rambus is entitled to zero royalties, given its belief that the standards-setting organization might have selected other technologies had Rambus not deceived it. And it's possible the commission could even decide that Rambus needs to repay its past royalties, with interest.

 

[Zaphod]

There's not much to understand, they patented stuff that was openly discussed back then in the pre-development stages of SDR/DDR etc. They basically stole the common stuff and patented it silently, then came back a few years later when everyone and his mother were already producing/selling the memory to claim revenues for "their" IP.

Actually, their patents have been upheld previously, and whether the industry acknowledge their validity is another matter altogether. This ruling establishes that Rambus 'baited' JEDEC into adopting IP they already owned by not disclosing relevant patent portfolio and existing applications. Subsequently they amended existing patents and applications to make sure that the wording and implementation of the standard were covered by their IP. It is not alleged that they directly stole DRAM from the other JEDEC members.

 

[Pete]

Schadenfreude is the best kind of joy. hehe

This sounds more like justice than misfortune, at least from everyone but Rambus' POV. But, for Rambus, I won't get in the way of a good Schadenfreuding.

 

[_xxx_]

Actually, their patents have been upheld previously, and whether the industry acknowledge their validity is another matter altogether. This ruling establishes that Rambus 'baited' JEDEC into adopting IP they already owned by not disclosing relevant patent portfolio and existing applications. Subsequently they amended existing patents and applications to make sure that the wording and implementation of the standard were covered by their IP. It is not alleged that they directly stole DRAM from the other JEDEC members.

Yeah well, it's pretty much the same thing, just sugar-coated...