UPDATE 3-US top court won't hear FTC appeal in Rambus case

(Adds Rambus, analyst comment, updates share price)

WASHINGTON Feb 23 (Reuters) - The U.S. Supreme Court declined on Monday to hear the Federal Trade Commission's appeal in its suit against Rambus Inc (RMBS.O) that accused the memory chip maker of "deceptive conduct," sending the company's shares up as much as 16 percent.

The FTC, one of two U.S. agencies to enforce antitrust law, said Rambus failed to tell a standard-setting group about patented technologies while advocating them as a new chip standard.

The Supreme Court denied the FTC's appeal without any comment.

The suit is one of several legal issues involving Rambus, whose shares whipsaw with each development.

The FTC asked the high court to review a ruling by the U.S. Court of Appeals for the District of Columbia, which had found on April 22, 2008, that the FTC had erred in concluding Rambus had acted to gain a monopoly.

The FTC last year had ordered Rambus to stop collecting some patent royalties. The agency later amended that order to put the royalties in escrow, but then had its order put aside by the appeals court.

Rambus General Counsel Tom Lavelle said the Supreme Court's decision not to hear the case was a big loss for the FTC. "I'm very pleased by the decision," he said. "We think it's the right decision."

FTC Commissioner Jon Leibowitz said the agency would continue to make standard-setting and monopolization cases a priority.

"Obviously, it's disappointing (that the Supreme Court declined to hear the case) because we continue to believe that the D.C. Circuit got it wrong," he said.

In midafternoon trading, Rambus shares were up 44 cents or 7 percent at $6.75, after rising as high as $7.35 earlier in the session.

Rambus's technology has been successful in part because it was adopted as part of an open standard by an industry group and incorporated widely by companies including Intel Corp (INTC.O).

Government agencies and others have said that Rambus had unfairly tried to collect excessive royalties on patents that covered technologies in that standard.

The European Commission is pursuing a similar investigation in Brussels.

Dan Prywes, of the law firm Bryan Cave, said the court rulings showed that the FTC had to not only prove that deception occurred but that it affected the standard-setting body's decision.

"What the FTC was arguing, which I actually agree with, was that the standard-setting group would have limited the royalties but for the deception," he said. "My take-away from this whole case is that it's going to be tougher for the FTC to prove deception in standard-setting groups."

Rambus asserts that a number of memory chip makers infringe on its patents for improving dynamic random access memory (DRAM), which is used in computers and other electronics.

The company has legal battles pending with Hynix Semiconductor Inc (000660.KS), NVIDIA Corp (NVDA.O), Samsung Electronics Co Ltd (005930.KS) and others.

Among recent litigation, a district court judge in Delaware barred Rambus from enforcing 12 patents in a ruling that arose from a legal fight with Micron Technology Inc MU.N. Rambus had been accused of spoiling evidence in that case. (Reporting by James Vicini and Diane Bartz, editing by Gerald E. McCormick and Derek Caney)