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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
Greedy Bastards
While the collusion of established companies to wipe out newcomers is nothing to dismiss, you can't portray Rambus as a pure, innocent victim. If you recall, Rambus silently filed patents (for a relatively obvious concept) then submitted similar proposals to an ostensibly open forum of RAM manufacturers. They waited until their standards were adopted before filing suit to bilk the other manufacturers out of their profits. Indeed, Rambus could be considered a standard "patent factory" -- a company that produces nothing and relies on the patent system to siphon profits from the people who do actual development.
Unfortunately, this is what you get when you pretend to support capitalism but actually have your government artificially subsidize all sorts of companies (through patents, tax breaks, and freedom from the responsibilities individual humans have). The successful companies are the ones who maximize their profits, and if there are minimal negative consequences for some vile act, they'll perform it eagerly. [end of rant]
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.
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
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
I was wondering the same thing! I am guessing that it happened this way:
That is the danger of using contractions everywhere.
There still is a US DRAM manufacturer. Micron is still alive and kicking (and has been continuously in business since 1978), selling to consumers via the Crucial brand. There was price-fixing (which Micron doesn't seem to be completely innocent of, either), but one thing to keep in mind is that RDRAM, even if it weren't patented, required approximately 5-7 extra mask steps to create, as compared to DDR DRAM. In the cut-throat world of DRAM manufacturing, where every penny counts, this is a deal-breaker. Samsung was able to make money off RDRAM only because it was so expensive. Was it illegal for these companies to team up and kick down RDRAM? Yes. Am I sad to see it go? No way.
The thing is that they were in JEDEC, the consortium where companies decide on standards for things like RAM. JEDEC rules are set up to prohibit what Rambus tried to do, i.e. get stuff that they'd patented written into the standards, and once everyone is committed to it, say "Surprise! We hold the patents to X, Y, Z, so all your profit are belong to us!"
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?