Microsoft has just posted the text of a new patent "promise not to assert " at its Website, and pledges that it will honor that promise with respect to 35 listed Web Services standards. The promise is similar in most substantive respects to the covenant not to assert patents that it issued last year with respect to its Office 2003 XML Reference Schema, with two important improvements intended to make it more clearly compatible with open source licensing. Those changes are to clarify that the promise not to assert any relevant patents extends to everyone in the distribution chain of a product, from the original vendor through to the end user, and to clarify that the promise covers a partial as well as a full implementation of a standard.

I learned about the new covenant from Microsoft yesterday, which provided me an advance copy of the covenant and the FAQ that accompanies it and an opportunity to ask questions about what it is intended to accomplish. I did have a few requests for clarifications that I'll incorporate below which may resolve some of the questions that might occur to you as well.

Of course, Microsoft (along with IBM and BEA) proposed most, if not all, of these standards to begin with, but I am still impressed with the new covenant, and am pleased to see that Microsoft is expanding its use of what I consider to be a highly desirable tool for facilitating the implementation of open standards, in particular where those standards are of interest to the open source community.

For the last five years, memory technology developer Rambus has been locked in litigation with chip vendors Infineon, Samsung, Micron, and Hynix - and the Federal Trade Commission, which brought an action against Rambus.  All of these suits involved their joint involvement in standard setting activities in JEDEC.   The four chip vendors accused Rambus of setting a "submarine patent" trap for them in the JEDEC process, while Rambus accused them of a price fixing conspiracy.

For a number of years, Rambus won most, although not all of the legal battles, including in its initial round against the FTC.  But a month ago, the Commissioners of the FTC unanimously overturned the ruling in favor of Rambus earlier handed down by an FTC Administrative Law Judge, and held Rambus liable.  You can read more about that ruling, and the background of the various Rambus suits here.

The echoes of the FTC decision are still reverberating.  First, it helped Foundry Networks, which recently brought a "son of Rambus" suit against French telecommunications giant Alcatel.  Since the FTC verdict, multiple class action lawsuits have been filed against Rambus on behalf of purchasers of SDRAM chips, seeking recovery of the premium added to the price of those chips in order to pay the royalties Rambus demanded to license the undisclosed patent.

Now, Broadcom has announced that it may cite the FTC verdict to revive an antitrust suit against its rival, Qualcom, according to Bloomberg News.  That action was dismissed a few days ago. 

It's not often that you see standards organizations sue each other, but two - the National Fire Protection Association (NFPA) and the International Code Council (ICC) - have been going at it hammer and tongs for the last several years.  Both are accredited "standards development organizations," (SDOs) and follow the same business model that almost all such organizations do to underwrite their activities: they sell their completed standards. 

In the case of construction codes (the types of standards at issue here) and other long and detailed standard sets, the amounts at issue can be substantial, not only on a per-copy basis, but in volume, since compliance with building, safety, and other such codes is mandatory.  Trademarks and copyrights can therefore be as important to non-profit SDOs as they are to any other business that relies on selling a product or service to keep the lights on.

Of course, as is also true for any type of business, litigation is expensive and wasteful of resources that can better be spent on furthering the SDO's mission.  That reality appears to have won out in this case, with the two parties settling all three outstanding suits rather than taking any of them to a final decision in court.

Now that the dust has settled, it appears that the NFPA had the better hand over all, based upon a read of the detailed press release issued by the NFPA on August 14, as compared to the much shorter, terse notice released by the ICC two days later.  The two releases offer predictably different spins on the settlement, as the following excerpts demonstrate:

As I've often noted before (see, for example, Microsoft, Adobe and the Murky World of "RAND" ), the exact meaning of the simple phrase "reasonable and non-discriminatory" is anything but universally acknowledged.  This leaves plenty of room for game playing, and can even lead to litigation — as happened this week when Nokia filed the latest in a series of lawsuits ricocheting between it and Qualcomm.  All of those suits relate to mobile handsets built by Nokia that implement  a standard issued by ETSI, the European Telecommunications Standards Institute.   

Qualcomm alleges that anyone implementing the ETSI standard will infringe Qualcomm's patents, and would therefore require Qualcomm license. Qualcomm is willing to offer such a license (and has already granted licenses to others) on what it says are "fair, reasonable and non-discriminatory" (or FRAND, the European variant that means the same thing as RAND), as required by ETSI. 

Nokia, however, has thus far refused to pay up, leading Qualcomm to bring three different actions against Nokia (in the US, the UK, and before the U.S. International Trade Commission), seeking injunctions that would prevent Nokia from selling any products based on the ETSI standard unless it rolls over and obtains a license from Qualcomm.

Now, Nokia has counterattacked, announcing last Wednesday that it has sued Qualcomm in the Delaware Court of Chancery (which exclusively hears business cases).  Nokia admits in the press release that the suit is intended as a defensive measure, and seems to concede that its products do indeed infringe Qualcomm's patent.  But it also asserts that Qualcomm is requiring license terms that are not in fact "FRANDly" (as it were).

As I noted last week, the Federal Trade Commission ruled unanimously that computer memory technology company Rambus, Inc. had violated the antitrust laws by "gaming" the standard setting process.  After the Commissioners of the FTC review the pleadings of the FTC's own Complaint Counsel and Rambus's lawyers in the final phase of their deliberations, the Commissioners will decide what penalties Rambus will have to bear for its actions.

But what does the FTC's decision mean in the bigger picture of the technology industry?  One clue comes from a complaint that was quietly filed in the US District Court for the District of Delaware on August 1 — the day before the FTC announced its decision.  In what could not be better timing, this new complaint alleges a nearly identical course of conduct by French telecommunications giant Alcatel SA in an IEEE standard setting process.  Or, as stated in the complaint filed by Santa Clara, California-based Foundry Networks, Inc.  (Nasdaq: FDRY), Alcatel "duped" the IEEE into adopting a user authentication standard that would infringe Alcatel's patents pending, setting a classic "submarine patent" trap for the industry after it became "locked in" through adoption of that standard.

So far, the case doesn't seem to have caused so much as a ripple in the press; I only know about it through Alan McGrath, who spotted what is apparently the only article written to date about this action.  The article appears at a subscription-based legal site, and summarizes the allegations contained in the complaint.

Alan was kind enough to send me a copy of that complaint, which reads like Son of Rambus, but with a few interesting twists.  Here's what it says.

In what can only be called a stunning development in a high profile standards case, the U.S. Federal Trade Commission (FTC) unanimously reversed the earlier decision of one of its own Administrative Law Judges and ruled that semiconductor technology company Rambus, Inc. had "unlawfully monopolized the markets for four computer memory technologies that have been incorporated into industry standards for dynamic random access memory," or DRAM.  The FTC will deliberate further before announcing the penalties to be levied against Rambus.

The FTC decision is only the latest in the series of dramatic reversals that has typified the course of a web of cases filed by Rambus against DRAM manufacturers; by the same manufacturers against Rambus; by antitrust regulators against Rambus; and by the same regulators against the same DRAM manufacturers, charging them with a price fixing conspiracy against Rambus. 

This decision is very welcome to me on a personal level as well for two reasons: first, the decision is a vitally important ratification by the FTC of the need to enforce rules of trust in standard setting.  And second, because I filed a pro bono "friend of the court" brief on behalf of 12 standard setting organizations (including both consortia and accredited organizations) in support of this outcome. The membership of those organizations totals over 8,600 companies, government agencies and universities, and encompasses a broad range of technologies.  I've just received a phone call from lead FTC Complaint Counsel Geoffrey Oliver thanking me and the standard setting organizations in whose name the brief was filed for helping the Commissioners reach this decision, as well as welcoming any suggestions on the penalties that the Commission should impose.

If you follow technology news or music news (or both), you doubtless know of an amendment to a French on-line copyright bill that would make it legal to thwart the digital rights protection (DRM) software of the fabulously successful Apple iTunes/iPod system. The vote to adopt that legislation takes place in Paris today, and Apple has stated that if it passes, it may no longer offer French customers the ability to purchase music from its iTunes site.

George Harrison wrote of the "Sue me - Sue You Blues." Rambus, Micron, Infineon and Samsung have been singing that one for years, and today Micron Technologies began a new verse, with its latest suit against Rambus. It all relates to a JEDEC standard setting initiative from the early 1990s, but it has reshaped standard setting.

The current U.S. patent system is something that just about everyone loves to hate, particularly if they have anything to do with software. Now, there is hope, as well as some trepidation, that significant reforms will take place. Hope, because there is a bill in Congress to take such action, and trepidation over whether Congress will get it right.

An article by Randall Stross in the Sunday Business Section of the New York Times today called Why Bill Gates Wants 3,000 Patents put me in mind of the classic John Lennon song, "Imagine", one verse of which reads as follows:

Imagine no possessions,
I wonder if you can,
No need for greed or hunger,
A brotherhood of man,
Imagine all the people
Sharing all the world...

Unlike a world with no possessions, though, a world with no software patents isn't really that hard to imagine -- especially by those of us that can remember what it was like when there were no software patents, or those that live in Europe today, where software patents are not accepted, as reaffirmed by a recent vote by the European Parliament, despite a protracted effort by the software industry to drop this restriction.