Rambus Inc. v. Infineon Technologies AG

   and 

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.)

 

On January 29, 2003 A  three-judge panel of United States Court of Appeals for the Federal Circuit overturned the jury’s verdict against Rambus and the trial judge’s decision upholding the verdict.  In a 2-1 decision, the majority of the panel rejected JEDEC’s patent disclosure rule as too “amorphous” and “unbounded.”  The majority dismissed the broad disclosure rule stated in the JEDEC bylaws, and instead interpreted the evidence to support only a very narrow and highly technical patent disclosure policy—one that is “claim specific,” “standard specific,” and triggered only at the very end of the standardization process when the standard is put up for formal balloting.  The majority then engaged in its own independent review of the claims that were contained in Rambus’ pending patent applications at the time it was a JEDEC member and found that since the claims did not technically “read on” the standard, Rambus did not breach its duty of disclosure.  

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.”  

By 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.  

In the petition, Infineon poses the following two questions:

"1. Whether the Federal Circuit is entitled to substitute its own view
of the facts for the jury's in this landmark case, in violation of both the
Seventh Amendment and basic norms of appellate procedures, such that summary reversal is appropriate.

2. Whether the Federal Circuit is entitled to reverse the rebuttal
presumption endorsed by [the Supreme Court] in Markman v. Westview
Instruments, Inc., 517 U.S. 370 (1996), that a patent's specification
provides the presumptive meaning of an ambiguous claim term, and replace it with a rebuttal presumption that a dictionary definition provides the
presumptive meaning of such a term, thereby deepening an internal circuit
split on this fundamental issue of patent law, and subverting the
public-notice function of patent specifications."

Five   amici curiae  briefs in support of Infineon's July 3 appeal  to the Supreme Court have been filed:

bulletThe Attorneys General of sixteen states and Commonwealths,  The primary author of the brief was the Attorney General of Virginia (the site of the original jury trial in Rambus v. Infineon), with the support of Alabama, Connecticut, California, Idaho, Illinois, Iowa, Maryland, Massachusetts, Missouri, New Hampshire, Oregon, Oklahoma, Puerto Rico, Utah, and West Virginia.
bulletLucash, Gesmer & Updegrove LLP on behalf of the organizations below:
- Consumer Electronics Association (CEA)
- Electronic Components, Assemblies and Materials Association (ECA)
- Electronic Industries Alliance (EIA)
- Government Electronics and Information Technology Association (GEIA), and
- IPC - Association Connecting Electronics Industries (IPC)
- GlobalPlatform, Inc. (OGC)
- IMS Global Learning Consortium, Inc. (IMS)
- OpenGIS Consortium, Inc. (OGC)
- PCI Industrial Computer Manufacturers Group, Inc. (PICMG)
- The Open Group (TOG)
- Video Electronics Standards Association (VESA)
- MasterCard International Incorporated
- Visa International
- EMVCo, LLC

 

bulletFive  semiconductor companies: Advanced Micro Devices; Hynix Semiconductor America, Inc.; Micron Technology, Inc.; Mindspeed Technology, Inc.; and Nvidia Corporation
bulletJEDEC protesting the Federal Circuit's reinterpretation of the JEDEC policy in a way which JEDEC contends makes it "ineffective and unworkable," to the detriment of the past vendors and purchasers of billions of dollars of compliant products.
bulletAnd  Robert Harmon, a patent attorney concerned about the impact of the decision on the consistent application of the law regarding patent claim construction

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.  

FTC's  administrative complaint against Rambus DOCKET NO. 9302 )  charged:

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." 

In  May  the trial began 

 

 

 
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