Rambus and FTC clash in court
Antitrust case report
By Bill Teel in Washington DC: Thursday 01 May 2003, 09:18
THE FTC antitrust case brought against Rambus began yesterday in the FTC's home court, the Federal Trade Building in Washington DC.
Complaint Counsel's lead attorney in the case, Sean Royall, opened the proceedings with their reasons for bringing Rambus to trial. For the FTC, the case is largely centered on Rambus' alleged violation of the "good faith disclosure rules" that applied at JEDEC, which means Rambus didn't disclose enough information about their patent applications and intentions to file patents, while JEDEC members were formulating the standards. In the words of Mr. Royall, "Knowledge triggers a duty to disclose."
In the coming weeks, the FTC will try to prove that the industry would have avoided Rambus' technologies had they known Rambus was going to seek patents on the various concepts discussed in meetings. According to the FTC's complaint, Rambus understood the rules, and willingly violated them.
He outlined why the FTC should take away their patents:
1) Rambus refused to play by the rules
2) To this day, Rambus refuses to play by the rules
3) Rambus seems determined to evade the legal consequences of its conduct
4) Rambus seeks to cling to a potential fortune in royalties that it acquired not through competition, but through deception
In the FTC's opinion, Rambus failed to listen to the advice of their lawyers, who warned Rambus executives while they were members of JEDEC that they were at risk of collateral estoppel if they did not follow the JEDEC patent policy. And, as a result, they were perhaps risking their patent rights if they continued to participate in JEDEC. "Twice, their lawyers told them to get out of JEDEC, and they didn't heed that advice."
In its opening, remarks the FTC had a lot to say about Rambus' bad acts, but not nearly as much evidence and support for their arguments. The attorneys have the advice from lawyers, they have the correspondence between employees and their patent attorneys when they were filing for patents (as members in JEDEC). Complaint also has the business plan that outlined the company's intentions to seek patents that covered SDRAM concepts being proposed.
But, what seems to be lacking in the FTC's case, at least at this stage, is a strong enough argument as to whether or not Rambus' actions really did cause the industry to unknowingly standardize technology that Rambus could have, and indeed did, obtain patents on. And did this really happen with the technologies in DDR?
Beyond a survey ballot that asked members if they thought, "dual edge clocking" was good idea, there is not much in the way of support for the Complaints case on DDR.
Rambus' opening was filled with plenty of its own colorful citations, and there seems to be more than a lot of evidence that points to an industry that started to ignore the risk of RDRAM when Synchlink came a long, because it felt it was prior art on DDR – type technologies (or those that related to it), and it might predate Rambus' designs.
Gregory Stone, Rambus' attorney, listed what the Complaint must prove in order to find Rambus guilty:
1) Duty – Enforceable under antitrust laws
2) Breach – Exclusionary conduct
3) Causation – Anticompetitive effects
Today, Desi Rhoden, a chairman of JEDEC, is scheduled to testify as a witness called by the Complaint. µ
*A point of clarity that will make understanding the trial easier: Long before Rambus entered JEDEC, it filed its original invention with the USPTO, known as the '898. All the claims that Rambus sought to add while they were members of JEDEC, and long after they left, are based on this original filing. Rambus' patent activity while it was in JEDEC is often misinterpreted. All the patents Rambus applied for while in JEDEC are merely claims on their original specification, which was filed in 1990. It would be virtually impossible for Rambus to obtain those patents without having a technical description to support them. Had Rambus submitted new claims (without a new technical description) that was not based on its original technical specification, they could not be granted. Likewise, had Rambus filed an entirely new patent that was purely inspired from what they saw in JEDEC, and then enforced that patent, the FTC would be on to something, and Rambus would probably not be entitled to enforce the patent. But, to our knowledge, nobody is accusing Rambus of stealing ideas from JEDEC in this sense (that's like, sooo Richmond 2001). Rambus had the patents (everyone agrees to that), and obtained them fairly, although possibly motivated to do so faster after what they saw going on in JEDEC.
Bill Teel is the Editor of Hedge Fund Confidential. He owns Rambus shares.
Picture of Man controlling Trade statue outside the FTC building courtesy of DC Stock Photo |
