EU regulators drop investigation into Rambus as US company strikes deal to reduce royalties

EU drops antitrust case against Rambus

BRUSSELS — European Union regulators on Wednesday dropped an antitrust investigation into U.S. memory chip company Rambus Inc. after the company pledged to cap royalty fees for its patents on computer memory chips.

Rambus, based in Los Altos, California, will avoid any EU fines by pledging not to charge any royalties for SDR and DDR chip standards and to bring fees for newer versions of DDR down from 3.5 percent to 1.5 percent for five years.

It can be fined up to 10 percent of yearly global turnover if it doesn’t follow these commitments.

The European Commission in 2007 charged Rambus with monopoly abuse, alleging that the company set “unreasonable” royalties for DRAM patents fraudulently set as industry standards.

Any company that wants to make DRAM, or Dynamic Random Access Memory, has to pay Rambus for the design it developed. The chips are used in personal computers, servers, printers, personal digital assistants and cameras. Worldwide DRAM sales were $34 billion last year.

The end of the EU investigation closes the company’s antitrust disputes on both sides of the Atlantic over allegations of “patent abuse,” where a company deceives a standards body by keeping secret the fact that it holds patents on technology that all players will later be forced to license.

EU Competition Commissioner Neelie Kroes said in a statement that standards should be set “in a nondiscriminatory, open and transparent way” and that abusive practices could harm innovation and lead to higher prices for companies and consumers.

She said the Commission would vigorously enforce competition rules in this area.

However, European regulators last month dropped a similar probe into wireless chip maker Qualcomm Inc., saying they were still worried about high prices for technology set as an industry standard but that they could not commit the time or resources to such “complex” cases.

The U.S. Federal Trade Commission also ended an investigation into Rambus in May, the company said.

Chip manufacturers claimed that Rambus was seeking royalties in the early 1990s even as it took part in industry-wide talks that set standards for chips that were to be made mandatory — giving the company a monopoly over key technology patents.

Rambus has consistently denied wrongdoing.

It was last year cleared of such accusations by a U.S federal court which dismissed legal action by chip makers Micron Technology Inc. of Boise, Idaho, Hynix Semiconductor Inc. of Icheon, South Korea, and Nanya Technology Corp. of Kueishan, Taiwan.

They said Rambus had deliberately withheld information from the Joint Electron Device Engineering Council, or JEDEC, which counted Rambus as a member as it established guidelines for the computer memory industry.

The FTC ruled in 2006 that Rambus had violated antitrust laws. But the U.S. Court of Appeals for the District of Columbia Circuit overturned the decision in 2008 and sent the case back to the FTC, saying the agency had not come up with enough evidence to prove that Rambus had sought a monopoly or hurt competition.

On the Net:

EU and Rambus commitments: ec.europa.eu/comm/competition/antitrust/cases

Rambus: www.rambus.com