Rambus accusations reveal Commission's appetite for action

The European Commission has accused chip firm Rambus of a "patent ambush" and has said that it is guilty of abusing a dominant market position. The move comes just weeks after the Commission accused chip firm Intel of competition offences.

A leading competition lawyer said that the Commission's actions show that it still has an appetite for IT competition law probes, despite its drawn-out case against Microsoft, and despite the move of national regulator the Office of Fair Trading (OFT) away from such cases.

"With this and Intel the Commission appears to still be pursuing computing-related competition cases vigorously. This compares with the OFT which has publicly stated that its appetite for such cases is very limited," said Angelo Basu, a competition law expert with Pinsent Masons, the law firm behind OUT-LAW.COM.

"It does look like it is making the point that its interest in the IT sector hasn't been put on hold pending judgment in Microsoft," he said.

The Commission is still in dispute with Microsoft over a three-year-old competition case. It ruled in 2004 that it had broken EU antitrust law and fined it €497 million. The Commission claims that Microsoft is still in violation of its orders in 2004, though Microsoft disputes this.

Rambus makes dynamic random access memory (DRAM) and participated in a 1990s exercise to set industry-wide standards for DRAM. The Commission said that Rambus is asserting patent rights which says cover technology included in the industry standards.

"Therefore, every manufacturer wishing to produce synchronous DRAM chips or chipsets consequently must either acquire a licence from Rambus or litigate its asserted patent rights," said a Commission statement.

"The Statement of Objections outlines the Commission’s preliminary view that Rambus engaged in intentional deceptive conduct in the context of the standard-setting process, for example by not disclosing the existence of the patents which it later claimed were relevant to the adopted standard," it said.

"This type of behaviour is known as a 'patent ambush'. Against this background, the Commission provisionally considers that Rambus breached the EC Treaty's rules on abuse of a dominant market position by subsequently claiming unreasonable royalties for the use of those relevant patents," said the statement.

Rambus has nine weeks to reply to the Statement of Objections and can request an oral hearing to put its case. After that, the Commission will decide if its accusations stand and what penalty to impose. It can, it said, "require Rambus to cease the abuse and may impose a fine".

Basu said that its accusations are unlikely to be overturned. "Statements of Objection usually result in the Commission proceeding to issue a full infringement decision," he said.

"I would expect the proportion of cases which get withdrawn by the Commission after issue of a Statement of Objections, but would expect it to be pretty low, particularly in big, long-running cases where the Commission will have had to take a strong view as to whether to proceed and to be prepared for the almost inevitable appeals that infringement findings would involve. I would expect the Commission to proceed to a final decision," said Basu.

Basu said that in the UK the OFT was not pursuing cases in the same way as the Commission any more. "The OFT has also put most of its activity in the IT field on hold pending the European Courts' judgment in Microsoft. The Commission is clearly more bullish about the need to take action in the IT sector. [The patent ambush] is a novel form of abuse and so it does show that the Commission is still looking to develop the range of behaviours which it considers to have anti-competitive effects into new forms of abuse."

"Again, this contrasts with the OFT's approach in abuse cases where it is strongly moving away from looking at categorising forms of conduct as abusive and towards focusing on whether a particular behaviour has harmed consumers," said Basu.


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