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UPDATE: Correcting statements regarding Rambus' potential to collect royalties for post-DDR products.

The U.S. Federal Trade Commission (FTC) on Monday issued a ruling that limits maximum royalties that Rambus may demand from manufacturers of dynamic random access memory (DRAM). The commission still believes that Rambus illegally monopolized memory market and behaved inappropriately when applied for its patents.

“We find that a maximum royalty rate of 0.5% for DDR SDRAM, for three years from the date the Commission’s Order is issued and then going to zero, is reasonable and appropriate. We also find that a corresponding 0.25% maximum rate for SDRAM is appropriate. Halving the DDR SDRAM rate reflects the fact that SDRAM utilizes only two of the relevant Rambus technologies, whereas DDR SDRAM uses four,” the decision of the commission reads.

In addition to collecting fees for DRAM chips, Rambus will also be able to receive 0.5% royalty for SDRAM memory controllers or other non-memory chip components; and 1.0% royalty for DDR SDRAM memory controllers or other non-memory chip components.

Nevertheless, the FTC decision does not contain a ruling concerning Rambus' plan to collect royalties on any patents reading on DDR2 SDRAM and all other JEDEC post-DDR memory standards, which effectively means that going forward Rambus will either have to face another ruling on the matter of sueing memory producers or memory controller developers for patent infringements by their current generations of products, or will not be able to receive fees from manufacturers for post-DDR products due to the fact that the court ruling that allowed Rambus to collect royalties for DDR2 and other products was overturned.

“While we believe it appropriate that the Commission did not reach DDR2, GDDR2, or succeeding generations, we are nevertheless disappointed that the Commission’s remedy with respect to SDRAM and DDR SDRAM continues to ignore the extensive findings of fact made by its own Chief Administrative Law Judge McGuire,” said Tom Lavelle, senior vice president and general counsel for Rambus.

In June 2002, the FTC charged Rambus with violating federal antitrust laws by deliberately engaging in a pattern of anticompetitive acts to deceive an industry-wide standard-setting organization, which caused or threatened to cause substantial harm to competition and consumers. In particular, Rambus was accused of illegally receiving patents on several technologies while participating in  the Joint Electron Device Engineering Council (JEDEC) and not informing its other members about the patents.

The charges were litigated in an administrative trial. In February 2004, the charges were dismissed in an initial decision and order by Chief Administrative Law Judge Stephen J. McGuire. FTC Complaint Counsel appealed the decision to the Commission, which overturned the ALJ’s decision in July 2006.

“Because we strongly disagree with a number of the Commission’s determinations, we plan to appeal its decision. We believe that a fair review of the underlying facts will restore the perspective of the Chief ALJ who exonerated Rambus by dismissing the complaint,” Mr. Lavelle said.

Rambus intends to move for a stay of the Order pending its appeal of both the liability findings and the remedy. Absent a stay, this Order will become effective in 60 days.

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