The FTC will ignore a judge's recommendation and go after memory maker Rambus, two regulatory lawyers have predicted.
The lawyers, participating in a US Chamber of Commerce symposium on legal issues in standards-setting, said the FTC was likely to push forward with its case focusing on Rambus' behaviour as a member of the Joint Electron Device Engineering Council Solid State Technology Association (JEDEC), even though FTC judge Stephen J. McGuire ruled in February that the FTC failed to make its case against the DRAM manufacturer.
"The commission will not affirm what the administrative law judge did," predicted Michael Zito, a regulatory lawyer with Lathrop and Gage and a former FTC lawyer who worked on the Rambus case. "Beyond that is much less clear."
FTC commissioners could decide not to support the judge's finding that the agency lacks jurisdiction to bring the case, which accuses Rambus of obtaining patents on chip design standards JEDEC was developing while Rambus was a member of the group. The commission could overturn the judge's ruling on jurisdiction while preserving his ruling on the charges, noted Alicia Batts, an anti-trust lawyer with Dickstein, Shapiro, Morin, Oshinksy.
Rambus general counsel John Danforth disputed the panel's analysis of the case, saying the FTC judge heard 55 days of testimony before making his ruling. "We didn't win on one, two or three grounds, we won on a dozen grounds or more," Danforth said.
Some witnesses in the case contradicted documents from the time of the alleged violations, Danforth said. He noted that Infineon, among the group of Rambus competitors accusing Rambus of anti-competitive behavior, pleaded guilty this week to US Department of Justice (DoJ) charges that it conspired with other DRAM manufacturers to fix prices. Infineon agreed to pay a $160 million fine and will co-operate with the DoJ's continuing investigation.
"Even if the FTC wants to second-guess its administrative law judge, would you do that today, when some of those witnesses come from a company that just admitted to being part of a cartel?" Danforth said. The FTC has scheduled a hearing for Tuesday on the technology issues in the Rambus case. A second hearing is scheduled for 9 December.
The FTC sued Rambus in June 2002, charging the company with violating federal anti-trust laws while deceiving JEDEC. According to the FTC, Rambus from 1992 to 1995 took part in standards-setting activity regarding SDRAM (synchronous dynamic RAM) technology with JEDEC, but did not disclose that it had also filed for patents to cover technologies involved in the standard.
Rambus has said that it complied with JEDEC's rules and that it filed a patent application for its memory technology in 1990, after which it was invited to join the group to develop a related standard. Several chip makers have licensed Rambus' patents, others have challenged the validity of Rambus' patents in court.
M. Sean Royall, who formerly lead the FTC's case against Rambus and now is an anti-trust lawyer at Gibson, Dunn and Crutcher, didn't make a prediction on the commission's action, but he noted that the charges against Rambus were "very detailed". "The FTC's case laid out in somewhat excruciating details the facts in this case," he said.
While the three lawyers on the Chamber of Commerce panel, all former FTC employees, agreed that the Rambus case should move forward, there was some debate about the proposed remedy: barring Rambus from enforcing its patents worldwide. The estimated value of Rambus' patents is $5 billion or more, noted Royall.
The three lawyers did agree on the need for standards-setting bodies to lay down rules for participants. Rambus has argued that JEDEC's rules weren't clear, but standards bodies should be clear about the rules for companies acting in a way that "serves the individual private interest of that company," Royall said.
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