Rambus Inc. v. Infineon Technologies AG
FTC Docket 9302 In the Matter of Rambus Incorporated
The Rambus and Infineon litigation and related FTC complaint have generated much attention in the press and within the voluntary standards community (links to various press) The issues and status in August, 2003 are presented below
Rambus Inc. v. Infineon Technologies AG
Rambus Inc. licenses chip designs used to speed up computer memory systems. Rambus first sued Infineon, claiming Infineon infringed on certain Rambus patents in the design of some of its computer memory products. In May 2001, A jury in the U.S. District Court for the Eastern District of Virginia ruled that Rambus committed fraud against Infineon by failing to properly disclose patent information when required by an industry standards body. The jury verdict stemmed from a counterclaim Infineon made against Rambus, alleging the company failed to disclose to an industry committee, called JEDEC, that it had applied for patents on certain memory-chip design elements even while it was participating in drafting a standard of JEDEC
The JEDEC Solid State Technology Association is a standard-setting body (established under the auspices of the Electronic Industries Alliance or “EIA”) which adopts standards and specifications for semiconductor products including DRAM chips and other memory devices
The jury found that Rambus committed fraud by failing to disclose
the fact that it was prosecuting patent applications targeting JEDEC’s
standards for SDRAM memory chips. The
evidence established that Rambus intentionally set out to take advantage
of its membership in JEDEC to capture the standards for SDRAM chips.
In addition to concealing the fact that it was prosecuting patent
applications that directly targeted the SDRAM standards JEDEC was
developing, Rambus’ JEDEC representative took information obtained
during JEDEC meetings and provided that information to Rambus’ patent
lawyers so they could amend Rambus’ pending patent applications in an
attempt to better cover the SDRAM standards.
The trial judge who presided over the trial explained:
“[T]he evidence clearly and convincingly showed that Rambus committed actual fraud wantonly and maliciously and in total disregard of the rights of Infineon and all other JEDEC members by coupling its deliberate, pervasive, long-term violation of JEDEC’s disclosure policy with its implemented strategy to take advantage of its fraud by constantly using information (made known to it only because it was a JEDEC member) to modify its patent applications to assert claims which Rambus intended to cover the technology of the JEDEC standard.” (Order Denying Motion for JMOL, at pp. 73-74.)
The circuit court decision introduces a new degree of judicial oversight over the policies of voluntary, self-regulated standards development organizations. The majority’s decision rejects JEDEC’s chosen policy, finding that the
“[a] policy that does not define clearly what, when, how, and to whom the members must disclose does not provide a firm basis for the disclosure duty necessary for a fraud verdict.”
construing the JEDEC patent disclosure policy to effectively require a
complete infringement analysis comparing the claims of the patent or
patent application to the relevant standard, it may be that IPR policies
and practices adopted by many other standards development
organizations will be adversely affected by the precedent. As Judge
Prost explained in her dissenting opinion:
“JEDEC’s disclosure policy required its members to disclose patents and pending applications that ‘might be involved in the work they are undertaking.’ While the majority rejected this standard as unbounded, nothing required JEDEC to formulate its policy with precision and clarity. And, while the majority may believe that JEDEC’s ‘might be involved’ standard is impossibly amorphous, the majority’s restatement of the JEDEC policy might prove impossibly complex. The majority’s application of its rule arguably requires a Markman claim construction, application of the doctrine of equivalents, a Festo analysis, and perhaps even a Johnson & Johnston analysis before anyone can say for sure whether a claim reads on a standard.”
On February 26, 2003 Infineon filed a petition for rehearing en banc, which is essentially a review of the circuit court's majority’s decision by all the judges of the court. A coalition of standards organizations filed an “amicus brief” March 5 supporting rehearing en banc The court denied this petition in April, 2003
Infineon Technologies A.G. filed an appeal July 3 with the U.S.
Supreme Court seeking to overturn an appellate court ruling absolving
Rambus Inc. of fraud for failing to disclose pending SDRAM patents to
the JECEC Solid State Technology Association panel while the body was
drafting an industry SDRAM standard. Infineon's
brief petitioning the U.S.Supreme Court for a Writ of Certiorari in
connection with the United States Court of Appeals for the Federal
Circuit's decision in Infineon Technologies AG v. Rambus, Inc., 318 F.3d
1081 (2003). Earlier this year the
The U.S. Circuit Court of Appeals for the Federal District
threw out a jury verdict convicting Rambus of fraud stemming from a 2001
Richmond, Va., federal district court trial. The appellate court said
the JEDEC rules for patent disclosure during standards deliberations
were vague and conflicting and that Rambus was not obligated to reveal
its patents until ballots were cast for the SDRAM standard.
Five amici curiae briefs in support of Infineon's July 3 appeal to the Supreme Court have been filed:
See also also August CONSORTIUM STANDARDS BULLETIN by
FTC Docket 9302 In the Matter of Rambus Incorporated
On June 19, 2002 the FTC issued a complaint against Rambus contending Rambus participated in the work of an industry standard-setting organization, known as JEDEC, without making it known to JEDEC or to its members that Rambus was actively working to develop, and did in fact possess, a patent and several pending patent applications
The Federal Trade Commission charged Rambus, Inc. with violating federal antitrust laws by deliberately engaging in a pattern of anticompetitive acts and practices that served to deceive an industry-wide standard-setting organization, resulting in adverse effects on competition and consumers. In mid year 2000 DRAM manufacturers had begun to contemplate involving the Federal Trade Commission in their difficulties with Rambus.
Rambus's anticompetitive scheme involved participating in the work of an industry standard-setting organization, known as JEDEC, without making it known to JEDEC or to its members that Rambus was actively working to develop, and did in fact possess, a patent and several pending patent applications that involved specific technologies proposed for and ultimately adopted in the relevant standards. By concealing this information - in violation of JEDEC's own operating rules and procedures - and through other bad-faith, deceptive conduct, Rambus purposefully sought to and did convey to JEDEC the materially false and misleading impression that it possessed no relevant intellectual property rights. Rambus's anticompetitive scheme further entailed perfecting its patent rights over these same technologies and then, once the standards had become widely adopted within the DRAM industry, enforcing such patents worldwide against companies manufacturing memory products in compliance with the standards.
FTC Docket 9302 in the Matter of Rambus Incorporated contains the record of legal filings with the most recent entry July 29 at the time of posting this article August, 2003.
Sean Royall, Deputy Director FTC Bureau of Competition and Trial Counsel commented January 29 about the circuit court decision described above
""Our trial team is reviewing the Federal Circuit's decision to determine what if any bearing it may have on the Commission's federal antitrust suit against Rambus. However, given the significant differences in the factual and legal issues raised by the FTC's antitrust claims and Infineon's fraud claims, we do not expect that this ruling will have a substantial impact on our case going forward.""
On April 14 the court denied Rambus' Motion for Summary Decision stating the following: "In its Motion, Respondent [Rambus] frames the issue to be decided at hearing narrowly: whether Respondent had any duty under JEDEC patent disclosure policies to disclose its patents or patent applications. However, Complaint Counsel's allegations are far broader than whether Respondent simply had a disclosure obligation under JEDEC patent policies. The Complaint at paragraph 2 alleges that Respondent engaged in anti-competitive practices 'in violation of JEDEC's own operating rules and procedures - and through other bad-faith, deceptive conduct'. As a result, the question the Court must address is far broader than that which Respondent suggests. Whether Respondent engaged in a pattern of deceptive, exclusionary conduct by subverting an open standards process; whether Respondent utilized such conduct to capture a monopoly in technology-related markets; and whether the challenged conduct violates well-established principles of antitrust law are material questions of fact to be resolved at trial."
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