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BusinessWeek Examines the Rambus Legal Saga
An anonymous reader writes "Now that three companies have admitted to colluding to fix DRAM prices in what has turned out to be a global conspiracy BusinessWeek takes a look at the why. The most recent to admit guilt was Samsung and no one, as yet, knows precisely why they did it. The short answer seems to be because they didn't want Rambus' memory technology, DR-DRAM to succeed in the market. The more complicated answer is that now that Samsung, Infineon and Hynix have all admitted to fixing prices, they're now lawsuits from Rambus alleging that their motivation was to "kill Rambus" by making it too expensive for it to be attractive for PC manufacturers. Today in San Francisco, lawyers for Rambus are going to argue for the release of a set of documents currently under seal, that they think could go a long way toward proving their case. If nothing else, the timing of the price-fixing, which ran from 1999 to mid-2002 is suspicious, because that was about the same time that the DRAM companies would have been resisting pressure to adopt Rambus."
Rambus and a Price-Fixing Tale
The chip-technology designer fights in court for rivals' documents that may bolster its defense against an FTC antitrust complaint
It's a matter of public record that at least three companies participated in a global conspiracy to manipulate the prices of computer memory chips. The U.S. Justice Dept. settled the issue by handing down more than $600 million in fines against the businesses, most recently Samsung in October. What isn't known, though, is why they did it.
And Rambus (RMBS), a $145 million company that designs -- but doesn't manufacture -- technologies that let chips communicate at high speeds, is intent on finding out. On Oct. 31 it will urge a California Superior Court in San Francisco to release documents it says will help in that pursuit. Think about your breathing. Inhale and exhale voluntarily. The documents will help shed light on a host of legal tussles ensnaring Rambus. It first sued Infineon (IFX), for patent infringement in 2000, only to be sued itself that same year by Micron (MU) and Hyundai, the company that later became Hynix Semiconductor. Those companies sought to invalidate certain Rambus patents.
In 2001, the Federal Trade Commission launched its own investigation into allegations of fraudulent behavior by Rambus while it was a member of an industry standards consortium. That investigation led to a suit heard before an administrative law judge in 2002, which Rambus eventually won, but FTC lawyers have appealed the case to the full commission.
REMOVED FROM THE RECORD. In 2004, Rambus went on a new legal offensive, filing antitrust lawsuits against Micron, Hynix, Infineon, and later Samsung. It has since settled all its outstanding litigation with Infineon. Against the backdrop of all these legal proceedings, the chip manufacturers have been under investigation by Justice for alleged price-fixing since 2002.
The documents Rambus is now trying to get released are under protective order in its lawsuit against Micron, Hynix, and Infineon. They had been part of the evidence record in the FTC's case against Rambus, but were removed from the record at Justice's behest on the eve of the trial in the FTC case.
Rambus says the documents are communications between high-ranking executives of Micron and Hynix and could prove that those companies, along with other chipmakers, acted in concert from 1999 to 2002 to discourage computer manufacturers from adopting a Rambus-designed memory-chip technology, using price collusion to do it. Rambus has alleged in a lawsuit that the companies colluded to fix prices on computer memory chips known as dynamic random access memory, or DRAM.
WHEN COMPETITORS TALK. What's more, the documents could bolster Rambus' defense in the separate antitrust case brought by the FTC. The trouble is, Micron and Hynix want the documents to stay sealed, insisting they contain confidential trade secrets.
John Danforth, vice-president and general counsel for Rambus, says the documents in question consist of communications between companies, not within a single outfit, as would typically be the case with trade secrets. "As we say in our filing, we believe the documents do not contain confidential competitive information because they are instead communications between competitors," Danforth says. "A trade secret is something you keep from your competitors."
Rambus could use the documents to weaken any arguments that Hynix, Samsung, and indeed Micron may mount in their fight. The Justice Dept. has levied more than $600 million in combined fines against Hynix, as well as Samsung and Infineon, for price-fixing. (Micron is also involved in the investigation, saying it is "cooperating fully" under a corporate leniency deal.)
A DIFFERENT TUNE. Hynix, Samsung, and Infineon have already admitted to accusations of a conspiracy to fix prices from 1999 to April of 2002 (see BW Online 10/14/05 "Samsung's Day of Reckoning"). But now, in the suit with Rambus, Hynix needs to sing a diffe
This article just scratches the surface of a story that is reminiscent of "Tucker" and how Pan Am (airlines) went after TWA. There are incredible connections between Rambus' adversaries, US Congressmen, the FTC and a whole cadre of politicans, judges, government officials and law firms working in concert against Rambus. It's the story of a $30 billion dollar industry of multi-billion dollar, multi-national corporations out to steal the assets of and destroy a tiny 200-person startup. Rambus' legal bills fighting this mess have been a quarter-billion dollars, far more than their total annual revenue. Rambus has managed to fight this battle while prospering and remaining profitable the entire time, but it's a sad tale of corruption and power politics at their very worst.
Please mod me only (+) Underrated or (-) Troll
well rambus wanted such high amounts to license its technology that it was effectively using patenting to work against ram manufacturers to ensure they paid rambus lots of money as opposed to all the ram manufacturers getting together to make sure rambus and their expensive (to the ram producing companies) licenses for their dr-dram would fail.
to me the first situation is abuse of the patent system to pull cash out of everybody and the latter is just a democracy decision by many ram manufacturers to ensure rambus didn't succeed in the greedy cash grab.
I'll take democracy thanks
Rambus has taken a lot of heat for allegedly inserting their IP-protected technology into the JEDEC process and has suffered under that yoke for years. Now it comes out that the companies wailing the hardest were actually out to destroy the "pure IP" company.
I think that in this case there really isn't any good guy because all the parties involved are apparently bad guys.
Jesus saved me from my past. He can save you as well.
Price fixing sucks. But this is Rambus we're talking about. Remeber RDRAM? Remember Rambus trying to hold JEDEC (and DRAM manufacturers) hostage through patent claims on DDR?
I can remember it seemed like it doubled in price every damn week. One particular week I think it was Tom's Hardware that was blaming the price hikes on storms or earthquakes or some such nonsense..so much for that.
It was nothing but a bunch of greedy monopolistic bastards; kinda like big oil... ooops....
Rambus lost in the marketplace, because they were greedy bastards, and because their technology sucked anyway.
The colluding RAM manufacturers will (hopefully) lose in the courts, because screwing over Rambus like that is illegal and wrong.
All this is fine by me, because I don't like either of them anyway!
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
"The most recent to admit guilt was Samsung and no one, as yet, knows precisely why they did it"
What I find more interesting is why Samsung admitted its guilt. Isn't this negative publicity bad for them?
Take off every 'sig'!
All your 'sig' are belong to us!
The lawyers of course!... "A quarter of a billion dollars in legal fees"?.. and that's from the Rambus side alone. Obscene. Imagine if that money was invested in R&D, instead of this pathetic sleazy game of vile deceit?.
Rambus hasn't been playing by the rules either. They've been penalized for destroying documents, http://arstechnica.com/news.ars/post/20050302-4664 .html
and are suing Samsung immediately after revoking their liscence.
http://news.zdnet.com/2100-9584_22-5734443.html
It seems as if the entire industry is corrupt.
Someone save me from this sanity.
They've actually become lawsuits?
That is a complicated reason.
Rambus is the reason why I built my first computer AMD. Back then (2001), Pentium 4s forced you into using RDRAM, which was far more expensive than DDR (I guess I know why now). The extra price of ram more than tipped the price/performance to AMD's side. I have never went back to intel because I know AMD well, and I still think the price is right.
Well, at least the sharks do something useful, which is more than I can say for the lampreys.
No folly is more costly than the folly of intolerant idealism. - Winston Churchill
For years has there even been any discussion on /. about major innovation in enterprise-level server hardware? If so, it passed by quickly ... things are certainly not percolating like seven (or even five years ago) during the innovation wars between Compaq and Dell.
/. discussion topics are on a par with the tabloids, except that instead of aliens from Mars we read about some slightly fresher Linux flavor. I used to come here to get the industry bleeding edge, and now I get reports about the latest revision of five year-old video games.
... the way IT budgets are going). Is this a main streaming, or what?!
Now,
My point? Stick with the video games, guys. Don't bother with Rambus shannanigans. Your caring public is gone. Whoever can hang onto an IT job now will have that same job for the next twenty years. (And they'll still be working with the same equipment, probably
More like a rigor mortus, actually.
It seems the whole story does not contain clearly good or bad guys. But it seems that everyone involved is at least ugly ;-).
Regards, Martin
There's talk of Rambus 'abusing' the patents -- but that doesn't make sense to me. I thought that was the whole point of patents; for a limited time (17 years?) you get to be the only one to do whatever it is that you've patented.
If Rambus really patented the stuff, it doesn't really matter whether or not they manufactured anything; that's not how patent law works. But, if you force me to be Talmudic -- I'm sure Rambus can quote a single RAM part at a price of $100 million.
Were their patents crap? If their patents were valid, why shouldn't they've gotten paid? It sounds like they actually developed the technology, unlike some firms (the vultures that just buy up the patents of failed companies and then start suing).
I'm all for chaning the law to suit public policy better, but assuming we've got the laws that we've got, I don't see how "Rambus is bad" translates into "ignore their patents." If you do that, they may as well vanish, as they don't do anything but make IP.
Also, just so you don't think I'm a member of the Rambus Anti-Defamation League, I don't have a dog in this fight: I don't work for them, knowingly own their stock, etc.
http://www.thebricktestament.com/the_law/when_to_
Samsung, Infineon and Hynix have all admitted to fixing prices, they're now lawsuits from Rambus They ARE? Wow, what a transformation! I knew confession was good for the soul, but ... wow.
"He who would learn astronomy, and other recondite arts, let him go elsewhere. " -- John Calvin, commenting on Genesis 1
Intel wanted everybody to move to RDRAM, and tried their best, in their quiet, shy retiring way, to get all the motherboard manufacturers to switch. It was the high-end motherboard buyers (you know, the type who read Tom's Hardware every day) who refused to have anything to do with RDRAM, and cost was the least of their considerations. That's why DDR won, even as the prices were rising.
No folly is more costly than the folly of intolerant idealism. - Winston Churchill
This has been going on since the last US RAM company went bankrupt in 1991 or so. I remember selling computers at the time and 640Kb went from $35 to $900 overnight when the last US RAM company went bankrupt. It took windows coming out before it went down signifigantly. There was a slight drop in ram prices when a US company returned to the market after Bush I added an import tax to RAM. All the RAM companies controlled by one country that is well known for playing games. Is anyone surprised that price fixing was going on?
Since the collusion was to keep prices artificially low to "squeeze out" Rambus (if that's what it turns out to be), then this is one of those cases where the consumer benefitted from oligopolist collusion. Rambus deserves to die. They are the SCO of the RAM business.
So to my mind the errors made by the DRAM companies were:
Pining for the fjords
I realize we are geeks here, but can't the editors do a little proof-reading? They're means they are not there are. What a difference two letters make....
how does price fixing hurt rambus? if dram prices are higher, then rdram should better be able to compete.
This is what happened in brief. The four companies got together to pick a next standard. Rambus pushed hard for one in particular, and the others went along. As soon as the ink was dry, Rambus pulled out a patent. Generally talks like this include a clause that disallows using a patented standard, but there was no such clause on these talks.
So the other three firms got together without rambus and said screw this we aren't paying obscene licensing fees. They chose another standard. They sued rambus for pulling the dirty patent trick. Rambus sued because the other three wouldn't deal with rambus.
The price fixing scheme just happens to be at the same time. That is the third lawsuit going on in the dram industry now. They all had fixed prices sometime ago, it was this falling out over standards that got Hynix to squeal to the DOJ on the price fixing.
There now you don't have to RTFA.
Now, of course that all flies in the face of common sense. But that's our patent system. Until we change it, that's what we are stuck with. If you are interested in doing your part to fix it, you should be reading sites like:
Both of which routinely suggest actions you can take to try to turn this thing around.
Frankly I see a lot of innovation happening in blade servers & grids. The problem , as usual, is the software, not the hardware. Software seems to lag the hardware innovations by years. Clusters are only now (the past 5 years) becoming really viable.
-Stu
The laws in this country are bought and paid for by corporations. Don't believe it ? Look at the fine for copyright violations, vs a fine for say, holding up gas station by pointing a gun at a 16yo cashier. If the 16yo gas station cashiers gave as much money to our bought and paid for congress, maybe they would be as protected from violence as the RIAA is from grandmothers and 12yo girls downloading a britney spears song they don't own the copyright to. Corporations exist to make money, do you think they give all that money to the politicians out of a desire to support democracy ? They expect a return on that money, and they get it, or your political opp will out spend you in your next race and you'll be back to the sorry prospect of trying to find a real job. Just in case you think this is a partisian rant, both right and left, if there is a left anymore, is bought and paid for.
Ok, this is the company that through shady back room deals tried to force an (at BEST) no-gain technology that they patented based on JDEC information that everyone involved with was legally bound to NOT patent.
Rambus can go to hell. They can go to hell and they can die.
Coding with assembly is like playing with Legos. Coding an application in assembly is like building a car with Legos.
You have it reversed. It's the story of a tiny 200 person company created by US lawyers to steal the profits of a foreign $30 Billion dollar industry and a whole cadre of US politicans, US judges, US government officials and the US Patent office working in concert with Rambus against the "foreigners".
The funny thing is that Rambus purposefully destroyed the incriminating documents that showed that the company had a strategy of submarine patents, and the US Judge at the first trial (and subsequent appeals) let them off.
Rambus has a proven record of joining committees that required the disclosure of patents to steer standards into the said Rambus patents. Rambus used the worlds worst Patent office (US)to patent flimsy/obvious progressions of current technology - often stolen right from other companies at the standards meetings.
Given that RAMBUS has destroyed all the documents that incriminated themselves, why should they have any access to the documents of other companies defending themselves against RAMBUS's illegal actions?
does this mean i can upgrade to 1GB from 256MB for under $200 USD now?? Probably not. Why didn't this judgment happen in 2001-2002 when it would have done some good?
Who here has complained about DRAM prices being outrageous or monopolistic for the past 6 years?? huh? who?! The latest greatest DRAM chips quickly drop in price due to all the competition in the DRAM market. You do realize it takes 8 or 9 chips to even make a stick of DRAM and that is the equivilent of 4 or 5 times the die size of a microprocessor yet you complain about monopolistic practices? when it costs you 100 bucks for a stick of 1 gig DRAM vs 500 bucks for a SINGLE processor... and the DRAM process is more complicated then that of making processors! Good Lord, the DRAM makers margins are razer thin as it is. And now everyone complains about them trying to keep what margin they have from a coniving design house who wanted to sit on there arse in front of a computer and play games with CAD layout programs to manipulate the patient office in order to make free money on a large market. COME ON! 200 design jobs vs. 25,000 design AND manufacturing jobs just in the USA alone... who's the real loser.
Did you check out all the reader comments for that story? They sound like they were all written by Rambus PR flacks....hilarious. It's all about "getting to the bottom of the conspiracy", and "there's more truth to be told! Keep digging!"
Yeah! Keep digging into how Rambus tried to get the industry to settle on a technology it had filed patents for. As if competitors would ever agree to a technology that one of them had already patented.
"Oh, you want us to use your technology and then reveal your patents after 2 years and sue us for much more than we would ever have agreed to if you had revealed you had them in the first place? Sure, let us bend over for you!"
The FTC is charging them with not revealing their patents. Yes, it seems their competitors fixed prices to keep them out of the market. As the FTC "chided" them, what do the two things have to do with each other? Does the price fixing which came later justify their prior action of not revealing their patents? Ummm..no. It doesn't work like that. Sorry.
Canonical Anonymous Coward
Can a sig be more clever than it's creator?
The thing that bothers me about all of this is that USUALLY price-fixing to eliminate a competitor involves LOW prices, while somehow or other I gathered the impression that the price-fixing here was of the more generically greedy price-gouging variety. It seems to me that if they memory makers ganged up to set HIGH prices for RAM, then than CANNOT be a way to discourage RamBus RAM from entering the market.
http://yro.slashdot.org/comments.pl?sid=97238&cid= 8313905
So far, jambarama has posted this three times in this discussion. Seems a bit redundant, doesn't it?
What a surprise - Company X fails to bring a new technology to market because its competitors lower their prices in unison, so they sulk, and file lawsuits.
If you can't win by offering consumers better stuff and / or better prices, I suppose you can always 'win' with a crowd of fork-tongued lawyers.
Weren't the laws she was breaking eventually found to be unconstitutional? If that is the case, she wasn't really breaking the law, since the laws themselves were eventually ruled to be invalid. I'd doubt you will find courts ruling that antitrust law is unconstitutional any time soon.