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.
The Rambus dispute has three legs to it. The first is a snarl of suits between Rambus, on the one hand, and four semiconductor companies (Hynix, Infineon, Micron, Samsung) individually on the other. Rambus sued each for patent infringement and for conspiracy, and each countersued for deception in the JEDEC standards setting process in which the standard in question was developed. The second leg involves complaints brought against US regulators against the same four semiconductor companies alleging them with price fixing (each has settled with the regulators). And the third involves US regulators (the Federal Trade Commission, or FTC) and European Regulators (the European Commission), each of which opened a separate investigation into the same course of conduct.
One of those legs, or at least the US part of it involving the FTC, is now coming to a climax, with the FTC petitioning the U.S. Supreme Court to grant "certiorari," which is legalese for a review by the Supreme Court of a ruling by a lower court. In this case, that ruling was entered by the United States Circuit Court of Appeals for the District of Columbia Circuit, which earlier this year overturned a unanimous decision by the Commissioners of the FTC against Rambus. If the Supreme Court denies certiorari, then this part of the long Rambus saga will be over, although the possibility for further action by the EC will continue.
Would a final loss by the FTC matter? I think so. I’ve filed five pro bono amicus curiae ("friend of the court") briefs in this case before (one with the Federal Circuit, one with the Supreme Court, and three with the FTC), and, as noted, I’m about to file another one. Here are the details:
Facts: The underlying facts are that both the Federal Trade Commission (FTC) and a trial court have found that Rambus Incorporated practiced deliberate deception on the JEDEC standards development process. Specifically, both found that Rambus:
– participated in the JEDEC process while amending patents already filed so that these patents would be sure to be infringed by the standard under development once it was finally adopted
– deliberately failed to disclose its patents when it knew that it was required to do so
– waited until the standard had been widely adopted and the market place had become "locked in" via adoption. Only then did Rambus assert its patents, demanding royalties higher than it presumably would have been able to negotiate had it made timely disclosure of its patents. Of course, by then it was also too late for JEDEC to amend the specification to render it non-infringing
Case history: Rambus sued various companies that refused to pay royalties, and they counterclaimed on various legal grounds based upon Rambus’s deceptive conduct. In 2002, the FTC filed a complaint against Rambus, alleging violation of the antitrust laws. An Administrative Law Judge (ALJ) for the FTC at first found in favor of Rambus (based largely because the judge found the JEDEC patent policy to be vague), but the FTC appealed that decision, and the Commissioners of the FTC unanimously over ruled the ALJ, coming out decisively against Rambus. Rambus then appealed to the Circuit Court of Appeals of the District of Columbia Circuit, which found in its favor.
The Current appeal: The FTC is now appealing the case to the Supreme Court (technically, this is called a "petition for certiorari"). The FTC believes that the Appeals Court misapplied the relevant antitrust laws to the facts of the case (as do I). Specifically, the FTC charges that, by failing to disclose its patents before the standard was adopted (i.e., at a time when JEDEC could have either chosen a different, non-infringing route, or the members of the working group could have negotiated RAND terms with Rambus), Rambus restrained competition between the Rambus approach and the various alternative technologies that might have been adopted instead. The Appeals Court applied a very technical analysis to conclude that an illegal restraint of competition was not proven.
Why should SSOs care? It is vital to note that the Appeals Court did not dispute that Rambus sought to game the standards development process by deceiving the other members of the working group, and then by allowing the marketplace to become locked in before asserting its patent claims. Rather, it differed on whether, and how, specific provisions of the antitrust laws should be applied to the facts at hand. The result is that, if the Appeals Court decision stands:
– other participants in the standards development process (including some of your own members) may conclude that they can get away with similar deceptive conduct
– those that would be unwilling to engage in such conduct may be less likely to participate in standards development at all (including in your organization), because they might have more to lose than to gain from doing so, knowing that others may engage in conduct similar to that employed by Rambus
– those that might otherwise adopt your standards may be less willing to do so, because they may fear that they, too, may fall into the kind of "patent ambush" trap that the adopters of the JEDEC standard fell into.
What my brief will say: There are several other amicus briefs that will be filed (in addition to the brief of the FTC itself) that will argue the points of law. The purpose of the brief that I will file will be to demonstrate to the Supreme Court that a broad variety of SSOs have serious concerns over the consequences of the Appeals Court decision. In other words, my brief will not be directed at arguing the law, but rather at persuading the Supreme Court that it should agree to accept the FTC’s petition, instead of the hundreds of other petitions competing for its time, due to the great importance that standard setting has for society, commerce, education and government. In substance, what it will say, and what you would be supporting, would be the following arguments:
1. Standards are vital to the national interest, to society and to commerce.
2. The standards development process is conducted by a light weight private sector infrastructure comprising hundreds of non-profit organizations in which industry, academia, consumer and government representatives participate, at their own cost, to develop standards for the good of all.
3. SSOs adopt intellectual property (IPR) policies to minimize the chance of inadvertent infringement of patents, and to ensure that anyone can implement standards on RAND terms (and ideally without cost).
4. The standards development process relies heavily on a presumption of trust as between those that participate, and specifically on the assumption that members will honor their obligations under IPR policies. If that trust can be violated with impunity, then there is more for participants to lose than to gain by participating, and the whole process becomes in danger of collapse.
5. Due to concerns such as cost, SSOs are not capable of enforcing their rules in court, and it is extremely expensive for their members, and others that adopt their standards, to defend themselves when IPR policy rules are violated and patent infringement is asserted against them in violation of those rules.
6. SSOs, their members, those that adopt standards, and those that rely upon them, therefore need to be able to rely on the courts to defend their interests when standards development participants betray their duties of trust and violate IPR policy rules.
7. If the decision of the Appeals Court stands, then the standards development process will be endangered, at great cost to society, to the national interest, and to those that have taken the time and effort, and undertaken the cost, to participate in good faith in the development of standards.
Relief Requested: For these reasons, parties to my brief will be urging the Supreme Court to grant the FTC’s petition for certiorari, and then conclude that the FTC correctly applied the law, thereby supporting the integrity of the standards development process.
Participants: Thus far, two accredited standards development organizations, and six (updated: 10) consortia, representing a very wide variety of industries have agreed to be parties to my brief, together representing thousands of individual members.
Prognosis: Will the Supreme Court grant certiorari? The odds are never good, because the Court has the docket space to accept only a few percent of all of the cases that are submitted to it each year. Accordingly, the Court weighs factors such as the importance of the legal issues at stake, whether there are differences in outcome among the various federal circuits that should be resolved to ensure equal application of federal laws, and so on.
When the brief is completed, I’ll post it for your review, as well as links to any of the other amicus briefs that will be filed that are available on line.
For further blog entries on Intellectual Propery Rights issues, click here
I seriously question your "facts":
"Facts: The underlying facts are that both the Federal Trade Commission (FTC) and a trial court have found that Rambus Incorporated practiced deliberate deception on the JEDEC standards development process. Specifically, both found that Rambus:
– participated in the JEDEC process while amending patents already filed so that these patents would be sure to be infringed by the standard under development once it was finally adopted
– deliberately failed to disclose its patents when it knew that it was required to do so
– waited until the standard had been widely adopted and the market place had become "locked in" via adoption. Only then did Rambus assert its patents, demanding royalties higher than it presumably would have been able to negotiate had it made timely disclosure of its patents. Of course, by then it was also too late for JEDEC to amend the specification to render it non-infringing"
No trial court has found that Rambus practiced deception – please guide me to where that ever happens. Quite the contrary, the FTC ALJ, the CAFC, The 9th circuits appeal court and a jury in Hynix v Rambus has found that Rambus DID NOT practice deception. The jury in NDCA found in a 37-0 decision that Rambus patents were valid, infringed and no deception had taken place as far as JEDEC. Even the JEDEC Chairman at the time Rambus was a member (G. Kelly of IBM) stated that "IBM will NOT disclose any patents nor patent application. Judge Whyte in NDCA has also ruled in addition to the FTC ALJ and the CAFC that no disclosure duty existed.
Might I inquire as to your motivation for reporting "facts" the way you do? I am a Rambus shareholder, do you have any stake in the game from any angle?
Rolv,
One need simply read the opinions. When Rambus has won, it has been because of factors not related to the fact that it intended to practice deception – such as being able to persuade a fact finder that the JEDEC IPR policy was too vague. However, using that as an excuse after the fact does not erase the documents that came to light during the litigation that indicated that Rambus did, in fact, understand its obligations, and did, in fact, intend to game the system. Other elements in the case do not make these facts disappear, and it is Rambus’s intent and strategy that I am concerned with. If everyone acted as Rambus did in standard setting, you and I might not even be able to engage in an electronic exchange like this – because the standards wouldn’t exist to enable it.
And the answer to your question is no, I have no stake in this dispute of any sort, nor am I a stockholder in any party, nor is any party a client of mine. My filing of amicus briefs over the years has always been on a pro bono basis. So I have spent many, many hours supporting the FTC’s efforts as a matter of principle, and not for any economic gain.
– Andy
The members of JEDEC were fully aware of Rambus’ technology as they cherry-picked the best features to add to their standard. Many of the members had signed non-disclosure agreements with Rambus and knew that the technology was indispensable and needed to be included in the standard. This fact has been fully proven and accepted by the FTC’s administrative law judge, by federal district court, and by the appeals court.
Lock-in is another myth disproven in federal court. The members weren’t locked in for SDRAM. Not only that, but they continued to add technology to DDR and DDR2 when all semblance of lock-in had disappeared many years before.
Opponents of Rambus often try to cloak their intentions with the wonderful idea of open industry-wide standards. That cloak has been removed and several members of JEDEC have been shown to be thieves with powerful ties to FTC. The FTC’s shakedown of Rambus is on its last legs.
Mr. Upgrove,
It is no surprise to see you once again jumping in at the behest of your own financial business interests in the matter of FTC vs. Rambus. A careful perusal of your client list explains clearly what motivates you.
I have reviewed your 6 points and for the most part agree with you; unfortunately your points simply do not apply to the Rambus situation. The standards setting in which Rambus participated (JEDEC) was a carefully executed ‘set-up’ by multi-billion dollar, multi-national corporations seeking to ‘cherry pick’ the Rambus inventions, incorporate them into the standard and make them part of the public domain.
As it turns out, the leaders at JEDEC not only acted in bad faith by not allowing Rambus to present their ideas to the group or at the very least request an industry standard ‘RAND’ letter, they themselves refused to disclose their own patents that read on the standards being discussed. In many cases, other JEDEC members announced that they would NOT be seeking royalties for particular technologies only to flip-flop later and issue demand letters.
SSO’s must have clear, written policies that are applicable to each and every member of the SSO. You would better serve your masters if you focused your attention on developing clear policy for SSO’s and stopped wasting your efforts persecuting RAMBUS, one of our nation’s premier innovators and defending the revolving door, graft driven politically appointed lackeys that work at the FTC.
It is hunch that the Supreme Court will not be wasting their precious time adding to the stench that emanates from the FTC at 600 Pennsylvania Avenue!
from my friend Prufrock:
Upton Sinclair once remarked that it’s difficult to get a man to understand something when his salary depends on him not understanding it. I’m sure, Mr U that you will NEVER understand because even when the facts stare you in the eyes you look away. The FTC case against Rambus was ginned up by Micron and its DRAM buddies who used their considerable political clout to get the FTC to attempt to destroy Rambus. The Memory Manufacturers (Micron, Hynix, Samsung, and Infinion) didn’t want to pay for Rambus patents which made their products work properly and faster. These same crooks formed a cartel to "kill Rambus". Of course you know all this. They are also the fellows who the DOJ prosecuted for conspiracy and price fixing in the DRAM industry (including Rambus proprietary DRAM). But you know this already. The FTC certainly know these things, but it doesn’t matter to them because they are a political body beholding to the powers that appointed them, NOT beholding to the law!
Judge Ronald Whyte stated that Rambus is NOT a patent troll. But you know that. Several judges much brighter than you and me, such as Judge Randall Rader, Judge Steven McGuire, and Judge Whyte, have clearly stated that Rambus’s conduct at JEDEC was legal beyond a shadow of a doubt. They have committed to the record in their respective courts that there was no lock-in, that there was no work around, that there was no duty to disclose, that Rambus did NOT act deceptively at JEDEC. But you’ve read all that, and you know it to be true because the evidence says so. But, you don’t care about evidence or the truth any more than the 5 Commissioners do.
cont….
I really am trying to understand your viewpoint, but your explanations leave a lot of holes. Can you please answer these questions to help me undestand what exactly Rambus did that was wrong?
– participated in the JEDEC process while amending patents already filed so that these patents would be sure to be infringed by the standard under development once it was finally adopted
Are you saying they somehow "steered" the committee to make the standard a certain way, or that they just sat and listened in to the proceedings and modified their patents accordingly? For the latter, couldn’t they have done the same thing without even "participating" in JEDEC, by simply reading the publicly available meeting minutes?
– deliberately failed to disclose its patents when it knew that it was required to do so
Hadn’t they already privately "disclosed" their patents to all the JEDEC members via NDA’s? And didn’t the written JEDEC policy have no requirement in regards to disclosure of patents?
– waited until the standard had been widely adopted and the market place had become "locked in" via adoption.
Didn’t the manufacturers already learn of the patents before JEDEC when they met with Rambus and signed the NDE’s? Or did the members just assume that Rambus (an IP-only company) would just let them use the revolutionary inventions, that resulted from years of hard work, for free?
Of course, by then it was also too late for JEDEC to amend the specification to render it non-infringing
Are you saying there was an equal alternative to the revolutionary Rambus inventions? If so, why hasn’t anyone talked about it or developed a work-around after all these years? Or are you saying that the JEDEC members would have chosen to use a far inferior technology just so they could avoid paying royalties? Do you really think the end users would have incorporated the inferior (slow) standard instead of just buying the superior Rambus design and forgetting about being JEDEC compliant?
All,
It’s always quite wearying responding to Rambus stockholders, because they only see one half of the data (the opinions of judges when their side wins) and completely ignore everything else (the opinions of the judges and juries when they lose, as well as the actual facts contained in documents that are produced in discovery), but that’s life, so here we go:
To those of you who claim I have a financial motive:
The answer is no, none. I don’t represent any party, or even an individual JEDEC member with skin in the game. It always amuses me when Rambus stockholders accuse me of a financial stake, making it up where it doesn’t exist, while ignoring their own financial interest.
Rolv:
Copying first, for the sake of completeness, the comment I posted in an earlier reply above to your first comment: One need simply read the opinions. When Rambus has won, it has been because of factors not related to the fact that it intended to practice deception – such as being able to persuade a fact finder that the JEDEC IPR policy was too vague. However, using that as an excuse after the fact does not erase the documents that came to light during the litigation that indicated that Rambus did, in fact, understand its obligations, and did, in fact, intend to game the system. Other elements in the case do not make these facts disappear, and it is Rambus’s intent and strategy that I am concerned with. If everyone acted as Rambus did in standard setting, you and I might not even be able to engage in an electronic exchange like this – because the standards wouldn’t exist to enable it.
And the answer to your question is no, I have no stake in this dispute of any sort, nor am I a stockholder in any party, nor is any party a client of mine. My filing of amicus briefs over the years has always been on a pro bono basis. So I have spent many, many hours supporting the FTC’s efforts as a matter of principle, and not for any economic gain.
Now on to your second, where you say:
>>Upton Sinclair once remarked that it’s difficult to get a man to understand something when his salary depends on him not understanding it.
Interesting, but totally irrelevant observation (see first response above). Presumably your comment applies equally to your investment return.
>>The Memory Manufacturers (Micron, Hynix, Samsung, and Infinion) didn’t want to pay for Rambus patents which made their products work properly and faster. These same crooks formed a cartel to "kill Rambus". Of course you know all this. They are also the fellows who the DOJ prosecuted for conspiracy and price fixing in the DRAM industry (including Rambus proprietary DRAM). But you know this already.
Indeed yes; I pointed that out in my blog entry. However, as I’ve noted in previous posts, because two sets of criminals show up to rob the same bank doesn’t make either of them innocent – just that they both have really bad timing.
>>Judge Ronald Whyte stated that Rambus is NOT a patent troll.
Not so sure about that. And for sure other judges have concluded to the contrary. One is not automatically right, and the other wrong simply because you like where they came out.
>>But you know that. Several judges much brighter than you and me, such as Judge Randall Rader, Judge Steven McGuire, and Judge Whyte, have clearly stated that Rambus’s conduct at JEDEC was legal beyond a shadow of a doubt.
My point, if you read my blog entry carefully, was not as regards legality – but whether Rambus believed that it was acting deceptively. Some of the judges you cite concluded that Rambus did act deceptively, contrary to what you later say.
>>But, you don’t care about evidence or the truth any more than the 5 Commissioners do.
Quite true. I have only the evidence to rely on that the unanimous commisioners of this independent (i.e., not subject to changes of administration) government agency had available to them. Now who would ever believe them?
Dale C:
I appreciate your trying to understand my viewpoint, and I think I can help you out on some of the points that you raise, because I think that you are relying on information that does not in fact square with the court record. Here are some examples:
– participated in the JEDEC process while amending patents already filed so that these patents would be sure to be infringed by the standard under development once it was finally adopted
>>Are you saying they somehow "steered" the committee to make the standard a certain way, or that they just sat and listened in to the proceedings and modified their patents accordingly? For the latter, couldn’t they have done the same thing without even "participating" in JEDEC, by simply reading the publicly available meeting minutes?
You are right in part, in that it has not been alleged or proven that Rambus "steered" the committee in a particular direction. In fact, the testimony is that it primarily listened. However, what Rambus did do was to amend existing patents to track the progress of the standard. And no, it could not simply track minutes after it quit (after it became more than too obvious that it was not disclosing its patent claims). Instead, the testimony shows that it relied on "moles" that leaked the confidential course of the working group in order to continue to move its patent applications into the infringement zone.
– deliberately failed to disclose its patents when it knew that it was required to do so
>>Hadn’t they already privately "disclosed" their patents to all the JEDEC members via NDA’s? And didn’t the written JEDEC policy have no requirement in regards to disclosure of patents?
Concisely stated, the answers are "no" and "no." Rambus’s own records indicate that it understood JEDEC’s policy to require disclosure. In fact, it was advised by its own lawyers that it was undertaking great risk by not dropping out, because it wasn’t disclosing its patents. It only claimed later – after companies countersued – that it the JEDEC policy was too vague – something neither it, nor its attorneys, found to be the case at the time.
– waited until the standard had been widely adopted and the market place had become "locked in" via adoption.
>>Didn’t the manufacturers already learn of the patents before JEDEC when they met with Rambus and signed the NDE’s? Or did the members just assume that Rambus (an IP-only company) would just let them use the revolutionary inventions, that resulted from years of hard work, for free?
People that own patents that they don’t want to disclose shouldn’t join standards organizations – because the are that you have to disclose them, and JEDEC knew it. Sophisticated companies disclose their patents, gain RAND royalties if they become necessary to implementation, and/or make money on other patent claims, outside the strict parameters of a standard, that most implementers would need to license if they implemented the standard. Rambus simply got greedy, or wasn’t very good at playing the game (as well as being deceptive). in fact, in the real world, implementers almost always need to license additional patent claims – for a fee and without any obligation to be reasonable in what they charge, or who they charge what – over and above the necessary ones that they might be obligated to make available for free, or for a cheaper price.
Of course, by then it was also too late for JEDEC to amend the specification to render it non-infringing
>>Are you saying there was an equal alternative to the revolutionary Rambus inventions? If so, why hasn’t anyone talked about it or developed a work-around after all these years? Or are you saying that the JEDEC members would have chosen to use a far inferior technology just so they could avoid paying royalties? Do you really think the end users would have incorporated the inferior (slow) standard instead of just buying the superior Rambus design and forgetting about being JEDEC compliant?
If you read the FTC complaint and ruling, you will see that there are two points at issue. The first one relates to "lock in." Would you want to replace every outlet in your house if a submarine patent owner wanted to charge you $500 to plug in your razor? And replace every lamp – every appliance – every thing else? Multiply that by 300 million houses, and how bad does that sound? That’s why the disclosure rules are there.
Second, it’s not a given that another approach would have necessarily been inferior. But either way, Rambus joined a standards organization that had a commitment to make necessary claims available for a reasonable fee. Rambus didn’t amended its patents so that they would include necessary claims, lurked until the market was locked in, and then sought to charge an unreasonable fee. Even after the FTC won, the FTC only sought to limit Rambus to a reasonable fee – and a fee that would reap huge rewards, nonetheless, because Rambus gained monopoly power by reason of its patent claims becoming necessary claims under the standard – a result Rambus achieved by its decepive behavior. That’s a hell of a lot better than the deal that the FTC struck with Dell Computer in 1995, which lost the right to charge anything at all for the patent claims it failed to disclose.
To all: you really need to not spend so much time drinking your own Kool aid. Yes, both sides did bad things. That doesn’t mean that Rambus didn’t do bad things. You need to deal with the fact that two wrongs don’t make a right, that decisions that you agree with aren’t automatically revealed truth while those you don’t are the work of the devil, and so on. And at the end of the day, you might also reflect on the fact that if there wasn’t a vibrant standards development process, you couldn’t even log into your investor boards to chatter about how Rambus is the white knight and everyone else is evil personified at all.
Which, come to think of it, might not be all bad.
– Andy
Rolv,
Exactly my point. You don’t include anything from the Commissioner’s opinion, which comes out the other way (and overruled Judge Maguire), or the Appeals Court opinion, which accepted the FTC’s conclusion that Rambus engaged in deliberate deception. The judge you do quote, by the way, also commented on Rambus’s sleazy behavior.
But the bigger point is that simply picking the opinion you like best doesn’t really prove anything. Ultimately, the only opinion that matters is the final appeal – which may end up being that of the Court of Appeals (which overruled the FTC), or it may not. That’s what the Supreme Court will decide, if it decides to accept the petition for certiorari..
– Andy
The Appeals court did not "accepted the FTC’s conclusion that Rambus engaged in deliberate deception" but assumed it for the sake of argument. In fact the Appeals Court spoke at some length on whether there was any evidence that Rambus deceived JEDEC, the opposite of what you stated.
Also you seem to make a lot of statements without any substantiation. For example would you care to quote from ALJ McGuire’s decision where he "commented on Rambus’s sleazy behavior"?
There is no indication, given your previous statements, that you will accept the Supreme Court’s final decision if it comes out in favour of Rambus. Perhaps you would like to go on the record before the outcome to show your intellectual honesty about this matter.
Dear Andy, Thank you for taking the time to reply to my posting here. Yes, there are certainly places where we can agree to disagree. However, and putting motivations aside (although you are kind to note that the Rambus conduct you attack was before my tenure), I hope you agree there are certain facts to which we can stipulate: 1. Your references to “the” trial and its results are references to a 2001 EDVA trial that was reversed by the CAFC in 2002. 2. That 2001 trial, among other things, included a refusal to give a Kingsdown instruction – an instruction that (a) recognized settled law that it is legal to amend patent applications to cover competing products, and (b) that the EDVA trial judge said, if given to the jury, would have resulted in a verdict for Rambus. 3. “The” trial to which you refer also included assertions that Rambus stole from JEDEC (essentially turning reality on its head). That trial was also predicated on very broad assertions about the broad scope and binding effect of JEDEC “IPR” (intellectual property rights) disclosure rules. On appeal, those JEDEC disclosure rules were severely criticized by the CAFC. The CAFC concluded that they suffered from a “staggering lack of defining details,” failing to specify, for example, what or when to disclose. The CAFC further cautioned that “when direct competitors participate in an open standards committee, their work necessitates a written patent policy with clear guidance on the committee’s intellectual property position.” It was years ago, and I may be wrong, but I seem to recall that you essentially agreed with the CAFC’s conclusions. I have in mind a 2002 blog posting of yours (or perhaps it was a client newsletter, I forget which). I think I recall your urging SSOs (commendably, I think) to review and revise their IPR rules to avoid similar problems. 4. Subsequent to “the” trial on which you still hope to rely, there has been considerable additional discovery and two other much longer, much more detailed trials about Rambus’ conduct at JEDEC. One was four month trial in 2003 in the FTC conducted by its Chief ALJ. A second was a lengthy jury trial this year in the Northern District of California. 5. Both of these subsequent trials soundly rejected all of the JEDEC-related claims you continue to endorse. The DC Circuit and the DC Circuit En Banc have now agreed, also rejecting these JEDEC-related claims (with the DC Circuit saying that they rely on an “aggressive use of weak evidence”). 5. Subsequent to 2001 there has been very substantial additional discovery – much of which was reflected in these 2003 and 2008 trials. It includes substantial evidence that JEDEC and its members knew they were “taking” the work of Rambus and issuing that work as their own standards. It also shows that JEDEC discussed (and researched) the IP risks they were taking (including by undertaking substantial prior art research to block the Rambus patents they feared were coming). There is more in the record to which I hope you would stipulate, but I want to turn as well to the Senate Judiciary Committee members whom you characterize as “courted by lobbyists, who doubtless know little or nothing about standards development.” Please read (or re-read) the Senate letter to which I provided a link. It purports to say nothing about standards development. It speaks volumes, however, about growing concerns about the FTC. That letter adopts a harsh tone. Between the lines (and not so subtly) it reflects troubling facts that the FTC (1) acts as prosecutor, judge, jury and appellate court in its antitrust enforcement cases, and (2) has institutional conflicts of interest (doctrinally, and in terms of the scope of its mission and budget and expenditures) in those cases. Add to this the fact that the FTC, at the commission level, appears to have managed things so that (in 25 years) it never loses and I think you should agree that this is not a system of adjudication that ought to continue in this way. Rambus is just one example of how it has failed us. The Senate letter I urge you to read seems to suggest that many now recognize this. Very truly yours, John Danforth (former Rambus GC, writing now only on my own behalf)
This is a duplicate of a comment that John added to a later post, which I have replied to at length, so please skip down to that one.
– Andy
It’s not possible, as I’ve said in response to other comments, to simply point to the verdicts you like and pretend that the finders of fact in the others somehow had it all wrong.
Ain’t that the pot calling the kettle black. You are doing exactly what you are accusing others of doing. You don’t even mention the district court case in California where Rambus was cleared of spoliation and deceiving JEDEC and ignore the CADC’s criticism about the FTC’s weak evidence of deception.
Dear Andy,
Thank you for taking the time to reply to my posting here. Yes, there are certainly places where we can agree to disagree. However, and putting motivations aside (although you are kind to note that the Rambus conduct you attack was before my tenure), I hope you agree there are certain facts to which we can stipulate:
1. Your references to “the” trial and its results are references to a 2001 EDVA trial that was reversed by the CAFC in 2002.
2. That 2001 trial, among other things, included a refusal to give a Kingsdown instruction – an instruction that (a) recognized settled law that it is legal to amend patent applications to cover competing products, and (b) that the EDVA trial judge said, if given to the jury, would have resulted in a verdict for Rambus.
3. “The” trial to which you refer also included assertions that Rambus stole from JEDEC (essentially turning reality on its head). That trial was also predicated on very broad assertions about the broad scope and binding effect of JEDEC “IPR” (intellectual property rights) disclosure rules. On appeal, those JEDEC disclosure rules were severely criticized by the CAFC. The CAFC concluded that they suffered from a “staggering lack of defining details,” failing to specify, for example, what or when to disclose. The CAFC further cautioned that “when direct competitors participate in an open standards committee, their work necessitates a written patent policy with clear guidance on the committee’s intellectual property position.”
It was years ago, and I may be wrong, but I seem to recall that you essentially agreed with the CAFC’s conclusions. I have in mind a 2002 blog posting of yours (or perhaps it was a client newsletter, I forget which). I think I recall your urging SSOs (commendably, I think) to review and revise their IPR rules to avoid similar problems.
4. Subsequent to “the” trial on which you still hope to rely, there has been considerable additional discovery and two other much longer, much more detailed trials about Rambus’ conduct at JEDEC. One was four month trial in 2003 in the FTC conducted by its Chief ALJ. A second was a lengthy jury trial this year in the Northern District of California.
5. Both of these subsequent trials soundly rejected all of the JEDEC-related claims you continue to endorse. The DC Circuit and the DC Circuit En Banc have now agreed, also rejecting these JEDEC-related claims (with the DC Circuit saying that they rely on an “aggressive use of weak evidence”).
5. Subsequent to 2001 there has been very substantial additional discovery – much of which was reflected in these 2003 and 2008 trials. It includes substantial evidence that JEDEC and its members knew they were “taking” the work of Rambus and issuing that work as their own standards. It also shows that JEDEC discussed (and researched) the IP risks they were taking (including by undertaking substantial prior art research to block the Rambus patents they feared were coming).
There is more in the record to which I hope you would stipulate, but I want to turn as well to the Senate Judiciary Committee members whom you characterize as “courted by lobbyists, who doubtless know little or nothing about standards development.”
Please read (or re-read) the Senate letter to which I provided a link. It purports to say nothing about standards development. It speaks volumes, however, about growing concerns about the FTC. That letter adopts a harsh tone. Between the lines (and not so subtly) it reflects troubling facts that the FTC (1) acts as prosecutor, judge, jury and appellate court in its antitrust enforcement cases, and (2) has institutional conflicts of interest (doctrinally, and in terms of the scope of its mission and budget and expenditures) in those cases. Add to this the fact that the FTC, at the commission level, appears to have managed things so that (in 25 years) it never loses and I think you should agree that this is not a system of adjudication that ought to continue in this way. Rambus is just one example of how it has failed us. The Senate letter I urge you to read seems to suggest that many now recognize this.
Very truly yours,
John Danforth (former Rambus GC, writing now only on my own behalf)
John,
Thanks for the additional thoughts. Here are mine in return:
1. Your references to “the” trial and its results are references to a 2001 EDVA trial that was reversed by the CAFC in 2002.
>>Yes, but it would take thousands of words to note my differences with the CAFC opinion, it’s narrow claim construction, and so on, although the amicus brief that I filed in support of the en banc review that was not granted describe some of them.
2. That 2001 trial, among other things, included a refusal to give a Kingsdown instruction – an instruction that (a) recognized settled law that it is legal to amend patent applications to cover competing products, and (b) that the EDVA trial judge said, if given to the jury, would have resulted in a verdict for Rambus.
>>It’s been too long since I read the record for me to recall that, but I’d certainly take your word for it.
3. “The” trial to which you refer also included assertions that Rambus stole from JEDEC (essentially turning reality on its head).
>>Yes, but of course many other allegations as well – this is only one, and hardly necessary to allow the jury to reach the conclusion that it did, or for the unanimous Commissioners of the FTC to reach a similar conclusion.
That trial was also predicated on very broad assertions about the broad scope and binding effect of JEDEC “IPR” (intellectual property rights) disclosure rules. On appeal, those JEDEC disclosure rules were severely criticized by the CAFC. The CAFC concluded that they suffered from a “staggering lack of defining details,” failing to specify, for example, what or when to disclose. The CAFC further cautioned that “when direct competitors participate in an open standards committee, their work necessitates a written patent policy with clear guidance on the committee’s intellectual property position.”
It was years ago, and I may be wrong, but I seem to recall that you essentially agreed with the CAFC’s conclusions. I have in mind a 2002 blog posting of yours (or perhaps it was a client newsletter, I forget which). I think I recall your urging SSOs (commendably, I think) to review and revise their IPR rules to avoid similar problems.
>>Yes, but again, this only part of the story. The JEDEC policy was almost identical to those of hundreds of other "ISO family" accredited SSOs, and people know what the intention of the policy was. Munger Tolles did a good job of creating a record that seemed to indicate that the policy was not universally understood – but as I recall, evidence was also produced that Rambus itself understood the intention, and the obligations, of the policy the way they were intended. As I’ve always pointed out, my concern is with Rambus’s intent – and not whether it could later come up with a legal argument that could get it off the hook.
4. Subsequent to “the” trial on which you still hope to rely, there has been considerable additional discovery and two other much longer, much more detailed trials about Rambus’ conduct at JEDEC. One was four month trial in 2003 in the FTC conducted by its Chief ALJ. A second was a lengthy jury trial this year in the Northern District of California.
>>Yes, and we know that the unanimous commissioners threw out the ALJ opinion. John, you can’t point to the CAFC decision throwing out the trial court as indicating Rambus’s innocence, and then point to the ALJ opinion, which was rejected on appeal by the FTC to indicate again that Rambus was innocent. All we really know is that the same facts have been munged over many times, and that different triers of fact and law continue to come out different ways. Both of us can assemble a litany of points of decisions to support our position, and I don’t think that either of us really gains a lot by doing so.
5. Both of these subsequent trials soundly rejected all of the JEDEC-related claims you continue to endorse. The DC Circuit and the DC Circuit En Banc have now agreed, also rejecting these JEDEC-related claims (with the DC Circuit saying that they rely on an “aggressive use of weak evidence”).
>>See prior point on other "sound rejections" that went in the opposit direction.
5. Subsequent to 2001 there has been very substantial additional discovery – much of which was reflected in these 2003 and 2008 trials. It includes substantial evidence that JEDEC and its members knew they were “taking” the work of Rambus and issuing that work as their own standards. It also shows that JEDEC discussed (and researched) the IP risks they were taking (including by undertaking substantial prior art research to block the Rambus patents they feared were coming).
>>I have always noted that Infineon, Micron et al. were bad actors. But that doesn’t excuse Rambus for being a bad actor, too. Those companies have all settled, and paid big fines, to the FTC. Rambus in contrast continues to try to point to other bad actors as a reason why its own conduct should be excused. I have frequently analogized this to two sets of bank robbers robbing the same bank, and one set saying that it should be innocent of intent to rob, because the other robbers got their first.
There is more in the record to which I hope you would stipulate, but I want to turn as well to the Senate Judiciary Committee members whom you characterize as “courted by lobbyists, who doubtless know little or nothing about standards development.”
Please read (or re-read) the Senate letter to which I provided a link. It purports to say nothing about standards development. It speaks volumes, however, about growing concerns about the FTC. That letter adopts a harsh tone. Between the lines (and not so subtly) it reflects troubling facts that the FTC (1) acts as prosecutor, judge, jury and appellate court in its antitrust enforcement cases, and (2) has institutional conflicts of interest (doctrinally, and in terms of the scope of its mission and budget and expenditures) in those cases. Add to this the fact that the FTC, at the commission level, appears to have managed things so that (in 25 years) it never loses and I think you should agree that this is not a system of adjudication that ought to continue in this way. Rambus is just one example of how it has failed us. The Senate letter I urge you to read seems to suggest that many now recognize this.
>>I recognize that these senators have an opinion on the subject, but I don’t see that it indicates any more than that. There are, and have been, senators that have wanted to do away with many agencies, or cripple them. Under the Reagan and Bush administrations, they have often been successful. Reagan tried to emasculate both regulatory agencies. Bush has dramatically restricted the Department of the Interior, the scientific independence of NASA, and much more. All this indicates is the continuing war between those of different political stripes and opinions. I’ve met personally with the FTC several times over the past several years as part of a process of give and take between the regulators and lawyers representing the standards community, and I have personally been quite impressed with the balanced views that they have brought to the table, and their honest interest in helping, rather than hindering, the standards development process.
Where I’d like to end on this is where I began – either of us could ask the other to stipulate to a set of facts that would support their position. I won’t bother to do the same, because I don’t think that it advances the cause any more than this did.
What we really need is closure – and that’s where the Supreme Court can come in. They or may not reach the "right" answer in either of our opinions, but they may supply a final answer that would make both of our personal views moot, but that everyone will have to live by.
And that would be useful.
Best,
Andy
Rolv,
First, sorry about the spam filter; I have the same problem as well from time to time when I respond to comments. It is aggravating, but unfortunately there’s nothing I can do to disable it.
Turning to your specific questions:
>>"it’s my understanding from the discovery of the original trial proceeding that (a) Rambus destroyed evidence to avoid its disclosure, (b) believed that it was violating JEDEC rules, (c) was advised by outside counsel to the same effect, and (d) continued to get information from the JEDEC process after withdrawing to assist it in amending its patent applications"
How did you come to this "understanding", please don’t tell me you relied upon Judge Payne’s Jury trial where on appeal the Court of Appeals for the Federal Circuit wrote:
Sorry you don’t like that answer, but note that it’s based on the actual evidence as produced in court. More specifically:
>>"In sum, the district court erred in its construction of each of the disputed terms. In light of the revised claim construction, this court vacates the grant of JMOL of noninfringement and remands for the district court to reconsider infringement."
This doesn’t actually have anything to do with your point, but refers to the very narrow approach that the court took relating to the very complex question of how the Rambus patent claims were amended over time, and in what state they existed at particular points in time. In other words, they relate not to Rambus’s intent at the time, but the arguments they raised after the fact to the effect that whatever their intent might have been, they didn’t technically have a duty to disclose the claims in question at those points in time. My concern, as I’ve repeatedly noted, is with ensuring that participants in standards groups act in a trustworthy fashion. Infineon, Samsung, et al. have all settled with the FTC for their misconduct and paid big bucks for what they did. Rambus has tried to say that it didn’t technically do anything wrong (some of the courts have agreed, and some haven’t) regardless of its intent. It’s the intent that I’m concerned with.
>>"In sum, substantial evidence does not support the jury’s verdict that Rambus breached its duties under the EIA/JEDEC policy. Infineon did not show the first element of a Virginia fraud action and therefore did not prove fraud associated with the SDRAM standard. No reasonable jury could find otherwise. The district court erred in denying JMOL of no fraud on the SDRAM verdict. Because of these holdings, the new trial and injunction issues are moot."
This point depends on the specific law that the plaintiff chose to argue – fraud. Rambus’s attorneys made a great effort to try and fog what the policy was, and exploit the fact that the same words weren’t used in every case. The judge and jury didn’t buy it, and the FTC didn’t buy it – in part, presumably, because the evidence showed that Rambus understood the policy the way it was intended, and only after the fact tried to say otherwise.
But once again, this is a case of you pointing to the decisions that came out your way, and me pointing to the ones that disturb me. We really can’t take it farther than that. The next step is to see whether the Supreme Court will decide to become involved and call the coin toss or not. If they don’t, that’s it. If they do, then it will either be over (they’ll find in favor or Rambus), or it won’t, but there are multiple possibilities for what could happen next, depending on their decision.
– Andy
This doesn
Please take a look at this link and tell me how you came to your "understanding based upon the facts and legal rulings of this case – with this staggering evidence against your position you cannot fault me for looking for your motivation. An "understanding" is hardly a legal argument!
Tig,
Thanks for joining in – it was getting a little lonely here.
And I’m happy to report that the count of parties to the Amicus brief is up to 16, and counting, representing somewhere between 10,000 and 20,000 members of the combined organizations, representing a very broad range of industries. Typically, these organizations have decided to join in the brief as a result of a board-level discussion and decision. Clearly, there are a lot of knowledgeable people that see the record differently than John.
– Andy
1) Replace "knowledgeable" with "self-interested" and you would be more accurate (applies to both sides).
2) It was the DOJ that was involved in the DRAM price fixing case not the FTC as you have written in a least 2 posts – very sloppy and unprofessional for someone that makes many bold pronouncements about the facts of this case.
3) Are you going to quote ALJ McGuire where he "commented on Rambus’s sleazy behavior"? Or was just another unsubstatiated claim that you like to make and then ignore when challenged – a clear case of cognitive dissonance.
4) You claim others are being selective but then cherry pick small pieces of dicta from the cases while ignoring the significant dicta from the CADC about the aggressive use of weak evidence by the FTC. You even go so far to claim that the CADC accepted Rambus was deceptive when this clearly was not the case. There is a huge difference between "accepting" and "assuming" facts although you do have incentives to try and confuse this issue given your position.
If you want the real story of the development of the RamBus, I’d be happy to chime in and can provide all of the source documents that detail the entire evolution of the scam.
Sorry, Freddie, that was ruling not dictum. Learn the difference before trying to "educate" me.
Statements from the bench such as:
"In this case there is a staggering lack of defining details in the EIA/JEDEC patent policy. When direct competitors participate in an open standards committee, their work necessitates a written patent policy with clear guidance on the committee’s intellectual property position. 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. Without a clear policy, members form vaguely defined expectations as to what they believe the policy requires — whether the policy in fact so requires or not. JEDEC could have drafted a patent policy with a broader disclosure duty. It could have drafted a policy broad enough to capture a member’s failed attempts to mine a disclosed specification for broader undisclosed claims. It could have. It simply did not."
Whether reasonable or not, or well based within the law of contract or not, aren’t to be relied on as a basis of judgment. They weren’t in the Infineon case, where the finding of no fraud in the case of SDRAM was predicated on the fact that as of 2004:
"If evidence of Rambus violating its duty to disclose exists, Infineon did not place it in the record or provide it to this court. Infineon bore the burden of proving the existence of a disclosure duty and a breach of that duty by clear and convincing evidence. Infineon did not meet that burden. Infineon did not show any expectation that the patents and applications identified by the district court covered the SDRAM standard. Instead, the record shows that, despite Rambus’s best efforts, Rambus did not obtain SDRAM claims. Because there is no expectation that the undisclosed claims are necessary to implement the standard, these claims did not trigger Rambus’s disclosure duty. Rambus’s actions might constitute fraud under a different patent policy; however, they do not constitute fraud under this policy."
Rambus still doesn’t have claims necessary to implement the SDRAM standard, despite their continued efforts and protestations to the contrary. On the other hand there’s a difference between a finding of lack of success in committing a fraud and lack of intent to defraud that seems lost on the likes of Rambus and its supporters.
Quite the non sequitur there tig. I was clearly trying to "educate" Andrew Updegrove not you (Tig) as 1) my post was in reply to his post 2) I make multiple references to his previous postings.
Well you’re not educating anyone.
I’ll help Andy out, since he’s a busy guy and you seem unable to see anything other than through rose colored glasses in reading the "Rambus roadmaop to victory" as the investor’s club (or cult) is used to calling the vacated Initial Decision of the FTC’s ALJ.
Here’s a relevant excerpt:
"In the Order On Complaint Counsel’ s Motions For Default Judgment And For
Oral
Argument, issued February 26 2003 , seven rebuttable adverse presumptions
were imposed
against Respondent. ("February 26 2003 Order ). The February 26 2003 Order
was issued to
resolve Complaint Counsel’ s motion for default judgment relating to
Respondent’ s destruction of
evidence. In that Order, the Court determined that "(When Rambus instituted
its document
retention policy in 1998, it did so, in part, for the purpose of getting rid
of documents that might
be harmful" in future anticipated litigation involving "its JEDEC related
patents. " February 26
2003 Order at 5 (internal quotations omitted). Moreover, this Court has
expressed "significant
and ongoing concerns about the Respondent directing its employees to conduct
a wholesale
destruction of documents and failing to create an inventory of what was
destroyed." Order
Denying Complaint Counsel’ s Motion for Additional Adverse Inferences and
Other Appropriate
Relief, issued April 15, 2003 , at 4. The Court further indicated that the
spoliation issue is not
closed to future reconsideration after trial." Id at 4 n. 2 (emphasis in
original).
While the Commssion wil not tolerate spoliation efforts afecting its Part 3
administrative
proceedings, the document destruction issue in this case, based on the
conclusions reached herein
does not warrant the Court’ s continued attention. Rambus s conduct in this
regard is, at best
troublesome. In a different cause of action, the Court might well have
sanctioned Rambus for
having deprived Complaint Counsel of their ability to present the merits of
the case and thereby
prejudicing Complaint Counsel and the adjudicative process. See, e. g.,
Anderson v. Cryovac
Inc. 862 F.2d 910 925 (1st Cir. 1988).
However, the process here has not been prejudiced as there is no indication
that any
documents, relevant and material to the disposition of the issues in this
case, were destroyed.
fact, Complaint Counsel noted that the record shows "an unusual degree of
visibility into the
precise nature of Rambus s conduct." (Opening Statement, Tr. 15). Moreover,
as discussed
below, none of the adverse presumptions are material to the disposition of
the case."