The European Commission has confirmed that a Statement of Objections was issued to Rambus on July 30. The claim is for an abuse of a dominant position by “claiming unreasonable royalties for the use of certain patents” for DRAM chips. From the press release:

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.

The European Commission’s SO follows the FTC’s administrative proceedings against Rambus. In June 2002, the FTC had charged Rambus with violating federal antitrust laws by deliberately engaging in a pattern of anticompetitive acts to deceive an industry standard-setting organization (JEDEC). The FTC had issued a final opinion and order back in February, in which it sets maximum royalties that Rambus may charge:

[T]he Commission has previously declared, and we agree, that ‘where the circumstances justify such relief, the Commission has the authority to require royalty-free licensing.’ . . . We conclude, however, that Complaint Counsel have not satisfied their burden of demonstrating that a royalty-free remedy is necessary to restore the competition that would have existed in the ‘but for’ world – i.e., that absent Rambus’s deception, JEDEC would not have standardized Rambus technologies, thus leaving Rambus with no royalties. . . .We have examined the record for the proof that the courts have found necessary to impose royalty-free licensing, but do not find it. We therefore are left with the task of determining the maximum reasonable royalty rate that Rambus may charge those practicing the SDRAM and DDR-SDRAM standards. Royalty rates unquestionably are better set in the marketplace, but Rambus’s deceptive conduct has made that impossible. Although we do not relish imposing a compulsory licensing remedy, the facts presented make that relief appropriate and indeed necessary to restore competition.

All FTC documents relating to the Rambus matter, including Rambus’s motion to reconsider, an interesting amicus curae brief, and the FTC’s order and opinion on that motion, can be found here.

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