Rambus EU Settlement Appears Near

According to Reuters, one more thread in the long-running saga of Rambus and the JEDEC SDRAM standards abuse saga appears to be reaching an end.  Specifically, the wire service reports:

European regulators are set to accept a proposal by Rambus Inc to cut royalties to settle antitrust charges, according to a person familiar with the situation,... Under the terms of the settlement,...Rambus will not be fined and will not be found liable for any wrongdoing, the source said....Rambus will also offer some of its older products for free as part of the settlement.

The story goes on to state that the regulators are expected to announce next Wednesday that they will accept without change the terms offered last June by Rambus.  If this is confirmed, Rambus will agree to cap its royalties at 1.5 percent to 2.65 percent per unit for identified types of SDR memory controllers and memory types for five years, beginning in 2010. 

If the settlement is announced as anticipated, U.S. regulators may wonder whether their brethren across the pond are better poker players than they are.

In fairness to the attorneys at the Federal Trade Commission (FTC), the regulatory body that led the effort in the U.S., it is not really possible to make direct comparisons between prosecutions in different jurisdictions.  As I noted in an earlier post when Rambus offered its settlement terms, the antitrust laws, prosecutorial powers, and political background all vary from one situation to the other. 

As I’ve reported over the years, the FTC vigorously pursued Rambus, alternately winning and losing – but never settling.  The FTC’s luck ran out when Rambus won the final round in the federal court system shy of the court of last appeal – and the Supreme Court declined to take the case.

Could the FTC have settled, but thought it held better cards than proved to be the case?  That’s something we may never know, since settlement negotiations and terms are confidential to the parties.  Moreover, there were personnel changes on both sides during the course of the FTC’s efforts, which began before the EU stepped in.  Finally, the course of related private litigation between Rambus and  multiple private companies, in multiple countries and cases, continued to change as well, with each suit bringing new facts and contentions, victories and failures to the fore.  All of these factors would have had in impact on the strategic decisions made by each side along the way – as would Rambus’s financial condition and prospects.

Turning to the EU settlement, it’s interestingn that the EU is taking the terms offered without change.  Could it have done better, or had it already signaled, or horse traded, aggressively before the Rambus offer became public?  Again, that’s something we can’t know.

Either way, the fact remains that Neelie Kroess and her team brought home a victory (through settlement) while their U.S. peers did not (through litigation). 

While Rambus can (and I’m sure will) state that its settlement was motivated purely by business decisions, and will (fairly) report to its victories in court (it has also had some losses), the fact will remain that it has agreed to accept limitations on its profits as a result of the allegations of standards abuse that have been leveled against it for the many years during which these cases have proceeded.

That’s a good result for the standards process, because those that play by the rules need to have some assurance that there is more to gain than to lose by doing so.  Unless there are realistic consequences for those that violate the rules, then the whole system falls apart. 

Those consequences include, by the way, over $300 million in legal expenses that Rambus has spent over the years trying to enforce its patents in the face of standards abuse allegations (and – again to be fair – to assert its rights against the price fixing conspiracies that other chip manufacturers were charged with engaging in to the detriment of Rambus). Whether Rambus won or lost in any given suit, the dollars they spent defending themselves or pursuing chip manufacturers that refused to pay license fees still came off the Rambus bottom line

So my congratulations to the EU regulators – first, for allocating their scarce resources towards the defense of the standards development process, and second for their skills in bringing their investigations to a successful close.

Well done!

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Comments (1)

  1. I suppose my personal thoughts on this (and related) matters are that the sums of money involved represent a huge obstacle to the education of the next generation of engineers and scientists.


    Corporations and governments can handle the consequences of a multi-billion-dollar ‘involuntary reallocation of resources’. Schools, universties, and hobbyists cannot; and it’s the schools, universities, and hobbyists that are the source of the infrastructure-builders, the climate-change-remediators, the automobile designers, the Internet-digital-economy exploiters, for the coming years and decades.


    You know who I work for. You also know I don’t represent them in any way, and don’t have any authority to commit them to any particular course of action. I’m a ‘pawn’ in the game of Global Business Chess.


    Roll the dice again, and let’s see if we can do better than "Snake’s Eyes".

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