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."

Comments

Sad story

[5, Troll]

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.

Only a good thing to collude against rambus

[Saven Marek]

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

Re:Only a good thing to collude against rambus

[aussie_a]

And if Microsoft, Apple and the biggest Linux distro's

..We apologise for this interruption. The person writing this post is currently busy laughing his ass off. Please hold...

*ahem* anyway, if SOMEHOW, for SOME reason, they all got together and worked towards price fixing in order to kill SCO, then I would support SCO's litigation against them.

People often post stuff like "I'm confused. Microsoft is bad. But they're fighting SCO, so does that make them good?"

Bad people can do good things, and good people can do bad things. Same thing holds true for companies. Just because I don't support their practices in one area, doesn't mean I think they should have to suffer by those breaking the law.

Re:Only a good thing to collude against rambus

[value_added]

Do you know what happens when companies get together to collude towards a certain price against a competitor (not that this has been proven, but from what I've read, I don't feel it's much of a leap)? Once the competitor dies, they raise the prices.

Once upon a time in New York when the Genovese, Gambino and Columbo families were household names, the price for getting the garbage picked up was higher inside the city than elsehwere. The DoJ et al decided this wasn't A Good Thing and decided to go break up the cosy business arrangements, eventually sending scores of hard working Italian Americans to jail, and ending years of tradition. As expected, the prices soon plummeted as competition was brought back into the marketplace. The people saw that It Was Good and cheered.

That would be a happy ending, but the story doesn't end there. Waste Management, Inc. and another company decided that there was money to be made in New York and moved in to start buying up the local competition. Within two years of The Big Bust, garbage pickup was handled by two conglomerates, and the price of getting it picked up was higher than in the days when mob was in charge of things.

If there's a point to this it's that when there's money involved, rules get bent, and then some. There are no good guys or bad guys, and the side you're on is just that.

PC133

[Kurt Russell]

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....

Re:Wow - I am so conflicted

[Anonymous Coward]

Ditto, mostly for their fraud in the JEDEC matter. As a result they put themselves at the top of a lot of peoples 'love to hate' list along with MS and SCO for dodgey business pratices. Too bad the execs didn't do time for it. That would have been funny.

It seems as they are now getting a taste of their own medicine.

What I want to know ...

[dennison_uy]

"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?

Re:Wow - I am so conflicted

[Omnifarious]

Yes, the companies were basically engaging in vigilante justice. I can understand why. They wouldn't want to change laws to make RAMBUS' evil patent strategies unworkable because they themselves might want to use those strategies in the future. So, I guess in the final analysis I have little sympathy for them.

Isn't it interesting how most talk about patents, even by their proponents, are all about restricting competition and keeping a hold on markets, and not about getting new ideas out in the open where people can see them?

Too honest to be a successful cartel

[Flying pig]

Anticompetitive practice legislation was designed to punish cartels who raised prices artificially, not ones which forced them down. In many industries the way this issue is handled is by meetings in standards bodies such as ISO and the IEC. Representatives of manufacturers (and governments) get together to agree on standards - norms- for product types, and this is perfectly legal because it is intended to promote safety and to enable easier consumer choice and so lower prices. And at these meetings manufacturer representatives never ever get together in the bar and say "OK guys, balls on the table, we're being eaten up by these shit merchants from -name of third world country-, how low can we all go on price to keep them out while we raise the standards barriers and get them excluded on safety grounds?". Because that would be collusion...and in any case there are no reporters present and no notes are taken. Why otherwise would executives of large companies travel round the world to boring meetings when they could exchange traceable emails or recordable phone calls instead?

So to my mind the errors made by the DRAM companies were:

• They seem to have put things in writing
• They worked with a JEDEC standard instead of creating an IEC standard and so keeping out patentable technology.
• They weren't based in the US (the most serious error).

Here is the deal...

[jambarama]

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.

Re:Bad Behavior -- But Were the Patents Valid?

[jambarama]

The d-ram 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 setting the standard, Rambus pulled out a patent for the standard. Generally talks like this include an explicit clause that disallows using a patented standard, but there was no such clause on these talks.

So the other 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. Non-competition agreements are a violation of section one of the sherman antitrust act (yes that is still the relevant act).

This is why other d-ram manufacturers were mad. Deceit. Standards are good, tricking others into licensing fees (rather than truly innovative technology everyone wants to license) is bad. So while it is illegal to do what the other firms did, rambus certainly acted unethically if not illegally.

What the DOJ should do is slap the other firms on the wrist and let them develop a royalty-free d-ram standard. Rambus's patents were legal, their methodology was deceitful.