Why did perennial litigant Rambus, Inc. settle with the European Commission?
Certainly the most watched standards-related legal conflict of the decade involves the participation of memory technology vendor Rambus, Inc. in a working group hosted by standards developer Joint Electron Device Engineering Council (JEDEC) in the early 1990s. The fame (or notoriety) of the conflict arises in part from the importance of the conduct at issue (did Rambus set a "patent trap" for implementers of the standard that emerged from the working group?), and in part from the seemingly endless string of law suits that resulted from that conduct some fifteen years ago.
Most of these suits were brought by Rambus against vendors that refused to pay royalties when they implemented the standard, but these suits almost always resulted in vigorous counterclaims against Rambus, brought by those same implementers. And investigations into Rambus's conduct were also brought by both the Federal Trade Commission (FTC) in the United States, and by the European Commission in Europe. A separate string of cases related to alleged price fixing and other improper conduct by other vendors that participated in the same working group, which ended in record settlement amounts being paid by those vendors to the regulators.
It would be an understatement to observe that Microsoft's patent suit against Dutch GPS vendor company TomTom has been closely watched. Why? Because Microsoft alleges that several of the patents at issue are infringed by TomTom's implementation of the Linux kernel. In this first month of the dispute, the most urgent question has been this: will TomTom fight or fold? Now we have the answer: TomTom has decided to fight - and perhaps fight hard. Yesterday, it brought its own suit against Microsoft in a Virginia court, alleging that Microsoft is guilty of infringing several of TomTom's own patents.
The question that many Linux supporters are now asking is this: is this good news for Linux, or bad? Here are my thoughts on that important question.
Yesterday I filed a pro bono amicus curiae ("friend of the court") brief with the United States Supreme Court in support of the Federal Trade Commission's petition for writ of certiorari in its suit against Rambus Technologies. I'm pleased to report that 19 standard setting organizations (SSOs), representing over 13,300 members, joined as amici curiae supporting this brief; the list of participants appears later in this blog entry. As noted in the brief itself, these SSOs:
...represent a broad range of SSOs that participate in the standard setting process, and each is greatly concerned by the adverse effects that it anticipates will result from the [lower court reversal of the FTC's sanctions of Rambus]. Those effects will reach virtually all aspects of modern society, commerce, education and government, because all of these interests rely heavily upon the efficient development and broad adoption of standards by the private sector.
The pervasiveness of standards, and of the potential reach of the decision on petition, is indicated by the range of focus of the amici curiae that have joined in this brief. They include SSOs that develop standards or support standards development in sectors as diverse as defense, consumer electronics, photography, on-line learning, geospatial information, credit “smart" cards and a broad array of computer system products and services.
In agreeing to be parties to the brief, these organizations demonstrated their concern over maintaining the integrity of the standards development process, as well as their belief that SSOs, their members, and non-members alike must be able to rely upon the support of the courts when they believe that SSO intellectual property rights (IPR) policies have been violated. (I outlined the facts and disputes underlying the Rambus case in this blog entry ten days ago.)
Long time readers will recall that perhaps the most high-profile (and high emotion) legal dispute involving standards revolves around the conduct of a memory design company called Rambus Incorporated. The emotion arises in part because Rambus develops and licenses technology, but does not actually fabricate semiconductors. This has made its stockholders particularly partisan, as its stock has risen and fallen in synchrony with its fortunes in court, and its detractors particularly irate, because they view Rambus not only as a patent troll, but also as one that has gamed the standards development process during the creation of a universally adopted SDRAM memory standard. Hundreds of millions, and perhaps billions, of dollars of royalties are at stake.
The Federal Trade Commission (FTC) is one of those that thinks that Rambus gamed the system and deceived the marketplace, and I'm another. That's why the FTC is asking the Supreme Court to overturn a lower court decision and reinstate the FTC's conviction of Rambus, and why I'm filing another in a series of "friend of the court" briefs in support of that goal.
Today those who believe in free content and free and open source software won a major victory in court, as reported by Larry Lessig, Mark Radcliffe, and Pamela Jones, among others. The underlying facts, and the legal counsel involved, were hardly major figures on the commercial landscape: the open source software at issue - the JAVA Model Railroad Interface - had been developed by the plaintiff, Robert Jacobsen, for model train buffs under an infrequently used free and open source license, and the attorney representing the plaintiff - a solo practicioner in Maryland - was young and inexperienced. But as often happens, a small case between small parties can have huge implications. And decisions that may make good strategic sense to the parties can also have disastrous consequences for those that are not in the same situation.
The case in question is called Jacobsen v. Katzer, and you can read the opinion here (a brief summary of the facts and proceedings to date is here). It's been going on for quite awhile, and a lot of people have spent a lot of time behind the scenes helping make sure that it came out the right way. That said, it hasn't received a lot of attention outside of FOSS legal circles, so for those of you who haven't heard of it before, I'll try to distill briefly why this decision is so important, and why people are so pleased with today's decision.
Last week I sent out the latest issue of Standards Today, my bi-monthly eJournal of "News, Ideas and Analysis." This time around, my topic is what I call "The Open Collaboration Revolution," by which I mean the unprecedented ways in which the Internet and the Web are allowing communities to form around projects of all types. The benefits that can be enjoyed as a result of such collaboration are leading those involved to reevaluate the traditional rights of creators and content owners. What they are realizing is that they have more to gain by sharing than hoarding. The result is a new focus on "openness" of all kinds - not just open standards and open source, but open development, open content, open data and more. The promise held out by these new methodologies and the innovative legal tools that have been created to serve them will, I believe, be truly transforming.
What follows below is the Editorial from this issue, titled Patience and the Possibilities of Collaborative and Derivative Expression. If that piques your interest, you may want to read the deeper dive that I take on openness of all types in the Feature Article for this issue, titled Openness and the Pursuit of Knowledge.
The one great principle of the English law is, to make business for itself. There is no other principle distinctly, certainly, and consistently maintained through all its narrow turnings. Charles Dickens, Bleak House
According to John the Apostle, the poor will be always with us. So too, it seems, will the never-ending skein of cases enmeshing Rambus, Inc., the brash memory design company that famously participated in a JEDEC standard setting process in the early 1990s, and later asserted various patent claims against implementers of the very standards created by the working group in which it participated. And while the lawyers may not be to blame in this case (or more properly, these many cases), the flood of litigation involving more than a half a dozen different vendors and government agencies certainly rivals the worst that Jarndyce ever threw against Jarndyce in Charles Dickens' epic tale of litigation gone wild.
On Wednesday, the Federal Trade Commission (FTC) announced the most important resolution of a standards-related enforcement action since Rambus, and possibly since its landmark settlement with Dell Computer in 1995. At issue was whether a licensing promise made by a patent-owning participant in a standards development process is binding upon someone that later owns the same patent. In a split 3 – 2 decision, the FTC has ruled that it does, when the later owner exploits the “lock in” of the marketplace by dramatically increasing the cost to license the patent in question.
The decision is significant for a number of reasons. First, the marketplace has long worried over whether such promises can be relied upon in the long term. Second, the sole business of the defendant in the action, Negotiated Data Solutions (N-Data), is licensing patents – in other words, a “troll,” in market parlance. Trolls are viewed by vendors and end users alike as a pernicious and increasing threat.
I posted the following piece at my other blog (at the Linux foundation site). If you haven't checked out the home page of the Foundation before, you should check it out, as it consolidates quite a bit of news of interest to the Community, including the blog entries of many of the staff.
One of the enduring soap operas this year has involved the ongoing patent infringement threats by Microsoft against “Linux, OpenOffice, email, and other open source software.” According to Microsoft, 235 of its (unnamed) patents are being infringed, and it should be entitled to be paid for this use of its intellectual property. Steve Ballmer believes that Microsoft owes it to its stockholders to file patents to protect its innovations, and then to assert these intellectual property rights in this way, and at this time.
Of course, Linux is based on Unix, which has been around for decades, as have many flavors of Unix created by IBM, HP, Sun and others. Curiously, Microsoft is not now, and never has, alleged that those systems infringe upon these same patents. Apparently, its stockholders do not expect it to assert patents against Unix vendors or users - just open source vendors.
I first learned of Microsoft bringing suit against in-car navigation company