FTC's Rambus decision could set standards rules

The U.S. Federal Trade Commission's (FTC's) decision Wednesday to charge Rambus Inc. with illegal monopoly activities could have some far-reaching implications for technology companies participating in standards bodies, some legal experts said.

The FTC found that Rambus illegally monopolized markets for computer memory technologies by failing to disclose its patents on DRAM (dynamic RAM) memory chip-related technology while working with a standards-setting organization to create royalty-free or low-royalty standards for DRAM technology.

The FTC decision could give technology companies a better set of ground rules when participating with standards bodies, said Daniel Prywes, an antitrust lawyer who has represented standards body the Joint Electron Device Engineering Council (JEDEC) in the Rambus case. In recent years, tech vendors have disagreed on the appropriate disclosure of intellectual property (IP) when they're involved in standards-setting bodies, he said.

"I view this as a landmark decision that will really guide the joint development of technology for years to come," said Prywes, with Bryan Cave LLP in Washington, D.C. "The decision says, 'If you don't disclose your IP rights, you're likely to lose your IP rights.'"

The FTC, however, did not require standards bodies to mandate patent disclosures, he added. Most standards bodies do require IP disclosures of participants, though.

Rambus has disputed the FTC charges. The company is likely to appeal the decision, and in 2004, an administrative law judge struck down an FTC antitrust ruling against Rambus.

James V. DeLong, a senior fellow and digital property rights advocate at conservative think tank the Progress and Freedom Foundation, agreed that companies should be punished if they deceive standards organizations. "You should not be allowed to play games with the standards-setting body," he said. "It looks like to me ... a fairly important case to the standards-setting community."

But Jim Turley, a semiconductor industry analyst and member of the board at Patriot Scientific Corp., said he sees little change in the way IP is licensed because of the FTC ruling. Companies such as Rambus that license IP as their primary business plan will continue to exist, he said, because the FTC case seems targeted specifically at Rambus' actions in dealing with JEDEC.

"I don't see this indicative of any problems found in the IT licensing business," Turley added. "That business model is pretty sound."


Copyright © 2006 IDG Communications, Inc.

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