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Friday, 24 August 2007

Rambus in Euro-trouble


The European Commission has announced that a Statement of Objections has been sent to Rambus regarding an alleged breach of Article 82 EC (also reported here). The Commission allege that Rambus have been claiming unreasonable royalties for the use of certain patents (a list of Rambus patents can be found here) subsequent to a "patent ambush".

Rambus designs, develops and licenses high bandwidth chip connection technologies for computers, consumer electronic and communication products (including systems memory, PC graphics, multimedia, workstations, video game consoles and network switches) but it does not manufacture any of the products itself.

The Commission says:

"The SO concerns “Dynamic Random Access Memory” chips (DRAMS) a type of electronic memory primarily used in computer systems, but also used in a wide range of other products which need to temporarily store data, including servers, workstations, printers, PDAs and cameras.

DRAMs have been standardised by an industry-wide US based standard setting organisation – JEDEC. Rambus owns and is asserting patents which it claims cover the technology included in these JEDEC standards. Therefore, every manufacturer wishing to produce synchronous DRAM chips or chipsets consequently must either acquire a licence from Rambus or litigate its asserted patent rights.

The SO outlines the Commission’s preliminary view that Rambus engaged in intentional deceptive conduct in the context of the standard-setting process, for example by not disclosing the existence of the patents which it later claimed were relevant to the adopted standard. This type of behaviour is known as a "patent ambush".

Against this background, the Commission provisionally considers that Rambus
breached the EC Treaty's rules on abuse of a dominant market position (Article
82) by subsequently claiming unreasonable royalties for the use of those relevant 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.

This is the first time that the Commission is dealing with a "patent ambush" under EC antitrust law, but the approach reflects well-established general case-law under Article 82 of the Treaty.

In parallel proceedings in the US, the Federal Trade Commission (FTC) issued an
order in August 2006 and in February 2007 whereby it found that Rambus had
engaged in illegal monopolisation and imposed a remedy applicable to US patents
and foreign patents to the extent that they relate to import or export of
relevant products into or from the US.

As Rambus is active worldwide, has obtained patent protection for the relevant technologies in Europe and it is enforcing its patents against companies applying the relevant standards in Europe, these companies are therefore exposed to litigation over the relevant European patents and may not seek relief on the basis of the US decision. Commission action is therefore appropriate."

The IPKat is not holding his breath to wait for the outcome of this one. He knows that the Commission has the power to impose very heavy fines on undertakings that are guilty of breaches of Articles 81 or 82 EC. However, actually getting to the point of handing the money over can take quite a while, as we know from the (still-ongoing) Microsoft saga. Will Rambus be able to last the full course?

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