(Adds decision in California involving Hynix, paragraphs 5,
14, 15, and share price, paragraph 11)
WASHINGTON Feb 23 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
The Supreme Court denied the FTC's appeal without any
The suit is one of several legal issues involving Rambus,
whose shares whipsaw with each development.
In another development on Monday, a judge in California
turned down a move by Rambus against chip maker Hynix
Semiconductor Inc, (000660.KS). Rambus tried to bar Hynix from
selling devices that depend on its technology.
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
FTC Commissioner Jon Leibowitz said the agency would
continue to make standard-setting and monopolization cases a
"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.
Rambus shares closed up 39 cents, or 6.2 percent, at
$6.70, 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
Government agencies and others have said that Rambus had
unfairly tried to collect excessive royalties on patents that
covered technologies in that standard.
Royalties were at issue in the California case decided on
Monday. U.S. District Court Ronald White judge denied Rambus's
request for an injunction to stop chip maker Hynix from making
and selling chips that use Rambus technology.
Instead, Whyte, in San Jose, ordered the two sides to
negotiate terms for a compulsory license so Hynix may continue
to use Rambus patents. Whyte also rejected Rambus's request for
The European Commission is pursuing a similar investigation
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
"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 continuing legal battles pending with Hynix
as well as 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.
(Additional reporting by Alexei Oreskovic, Peter Henderson
and David Lawsky in San Francisco)
(Reporting by James Vicini and Diane Bartz, editing by
Gerald E. McCormick, Derek Caney and Bernard Orr)