Commission closes alleged “patent ambush” case accepting commitments offered by Rambus

On 9 December 2009, the Commission adopted a decision accepting and making legally binding the commitments offered by Rambus in relation to its royalty rates for JEDEC-compliant Dynamic Random Access Memory chips (or “DRAMs”).

The Commission’s statement of objections of July 2007 stated that Rambus was likely claiming unreasonable royalties for the use of certain patents for DRAMs subsequent to a so-called “patent ambush” in breach of the EC Treaty rules on abuse of dominant position (Article 102 of the Treaty on the Functioning of the European Union – “TFEU”, formerly Article 82 EC).

In brief, according to the Commission, Rambus, first, intentionally concealed patents and patents applications during the standard-setting process within the U.S.-based standard setting organization JEDEC, and once the standard was set, it then claimed excessive royalties for those patents.

According to the commitments, Rambus will put a worldwide cap on its royalty rates for products compliant with the JEDEC standards for five years from the adoption date of the Commission decision.

In particular, Rambus will charge zero royalties for the Single Data Rate (“SDR”) and Double Data Rate (“DDR”) chip standards, in combination with a maximum royalty rate of 1.5% for later generations of JEDEC DRAM standards (DDR2 and DDR3).  The zero royalty rate for the SDR and DDR standards is deemed proportionate since those standards were adopted during the time in which the Commission provisionally considered Rambus may have engaged in intentional deceptive conduct. On the other hand, the maximum royalty rate is considered adequate and proportionate in the light of the fact that the industry is locked in to the JEDEC standards and therefore the effects of the alleged abusive behaviour extend to subsequent standards. The royalty cap does not exclude the possibility for prospective licensees to negotiate better rates for Rambus technologies.

The commitments offered by Rambus cover not only chips, but also memory controllers to the extent that they need to comply with the JEDEC DRAM standards.  The Commission considers that this further requirement is not unreasonable.

Another important feature of the commitments is their transferability. In practice, even if Rambus should later sell its patents (before the 5 year period in which they are operative), the commitments will stay in place and will be binding on the buyer(s) of Rambus patents.

In the MEMO accompanying its decision, the Commission shed some lights on how to calculate a reasonable royalty.  The Commission considers that while a reasonable royalty depends on the specifics of every case, the ex ante price that was being charged for a technology before a standard was set could be a good benchmark.

Rambus undertakes to post on its website two default license contracts – for DRAM chips and memory controllers respectively – compliant with the commitments.

The non-confidential version of the commitments decision will be published on the Commission website as soon as the Commission and Rambus will agree on a text which does not contain any business secrets or other confidential information. [Gabriele Accardo]