Rambus rattled by monopoly ruling

Rambus designs key memory chip technology used inside PCs

US chip technology designer could be facing huge penalties after watchdogs said it operated an unlawful monopoly.

The Federal Trade Commission (FTC) said Rambus had deceived a standards setting committee and monopolised markets for four memory chip technologies.

The FTC has said it will hold more meetings to discuss any penalties, but the ruling puts at risk multi-million dollar royalty payments Rambus earns.

The California-based group has said it will appeal against the decision.

The case centres on patents Rambus secured in the 1990s for two types of memory chips popularly used in personal computers.

Patents question

The FTC ruling contends that the firm led an industry body to believe it did not hold such patents - which were later incorporated into industry-wide standards.

As a result of the "deception" other companies were essentially forced to either infringe on Rambus' patents or buy expensive licenses to use Rambus' technology.

In a statement, the FTC said that "through a course of deceptive conduct," Rambus was able to distort industry standards for a type of memory chip known as dynamic random access memory (DRAM).

As a result the firm was able to "engage in an anti-competitive 'hold-up' of the computer memory industry" , it added.

However, Rambus has long argued that it had told rivals Hitachi and Micron about the patents long before the standard-setting talks began at the Joint Electron Device Engineering Council (Jedec).

Rambus also argued that the council failed to specify what information it required from the firm.

Penalties?

The latest FTC decision reverses an earlier decision made in 2004, when an administrative law judge at the commission said Rambus was not liable in the matter.

The FTC's new 119-page ruling reserves the right to impose remedies to be determined by a judge.

Such remedies could involve paying back profits made on product licences or fines. A decision on the penalties Rambus faces will be made after 29 September.

Shares in the group sank as much as 30% on news of the ruling, before closing 25.5% lower at $12.66.