Industry Takes Sides in Rambus v. Infineon

In a recent advancement in the case of Rambus v. Infineon, Boston-based law firm Lucash, Gesmer & Updegrove LLP announced this week that it has filed a “friend of the court” brief on behalf of six major standard setting organizations (SDOs).

Those SDOs include the Open GIS Consortium, the IMS Global Learning Consortium, Inc., the PCI Industrial Computer Manufacturers Group, and The Open Group.

According to the law firm, the brief is intended to educate the U.S. District Court of Appeals on the potential influence this landmark case could have on the standard setting process.

The case in question involves Rambus , a Mountain View, Calif.-based maker of electronic ports that allow memory chips to communicate, and Infineon Technologies ADS , a Germany-based semiconductor maker.

A former member of the Joint Electron Devices Engineering Council (JEDEC), a non-profit organization that promotes technological standards, Rambus participated in the standard setting process between 1991-95.

During Rambus’ membership, the JEDEC developed and adopted a standard for synchronous dynamic random access memory (SDRAM).

According to reports, before, during, and after Rambus dropped its JEDEC membership, the company made repeated filings with the U.S. Patent and Trademark Office to ensure intellectual property rights to the SDRAM standard .

However, Rambus claims that during its membership with the JEDEC, it did not attempt in any way to influence or speed the progress of its patents through the committee process.

Once the SDRAM standard was adopted, Rambus made moves, which many say were legitimate claims, to either collect on royalties or sue those companies that refused to comply, which included Samsung, Hitachi, Hyundai, and Micron Technology .

The nagging detail for the plaintiffs in Rambus v. Infineon, is that Rambus did not disclose its patents until after leaving the JEDEC, by which time SDRAM was already poised as the next industry standard for memory chips.

Some say that if Rambus had disclosed its vested interest in the progress of SDRAM, that the standard would never have been adopted.

Infineon was one of the first SDRAM manufacturers to step forward and accuse Rambus of fraud by “gaming” the entire JEDEC process. Rambus then sued Infineon for copyright infringement.

A counterclaim resulted and the trial court awarded Infineon more than $7 million for attorney fees and damages.

But the case made a dramatic turnaround in January of this year when a three-judge panel of the United States Court of Appeals which deals with U.S. patent cases overruled Rambus v. Infineon and directed the lower court to reconsider the finding of patent non-infringement, effectively allowing Rambus to successfully assert its patents not only against Infineon but other SDRAM manufacturers.

The financial award to Infineon was also reversed.

The Court of Appeals’ decision in January knocked the breath out of many members of the technology industry by undermining the process of standards setting, which in today’s technology climate is essential for developers and manufacturers striving for industry-wide compatibility.

Those in favor of the Rambus ruling felt that the company had finally been vindicated and could now proceed with protecting billions of dollars worth of intellectual property in the manner that patent law dictates.

“Its difficult to underestimate the importance of standards in the modern world – they underlay all aspects of technology,” said David Schell, president of the Open GIS Consortium. “Since standard setting is an entirely voluntary process, its essential that the integrity of the system not be compromised, and that those who base their strategic decisions on the resulting standards know that what they agree on will be upheld by the courts.”

Infineon’s last-ditch effort against Rambus was to file a motion petitioning the entire U.S. District Court of Appeals to hear the case. However, according to Andy Updegrove, the lead attorney in the case, the chance of another hearing is very slim.

“The last thing that Infineon can do is to petition the whole court to rehear the case, and by doing so we underscore the reason why amicus briefs are so important and let the court know that the parties in the litigation are still at odds,” said Updegrove.

According to Updegrove, what was most surprising about the Court of Appeals decision to overrule was that the trial court had already determined that Rambus had engaged in “egregious behavior.”

“Even Rambus thought it had engaged in egregious behavior,” said Updegrove. “For the court to determine that even though Rambus itself thought it was breaking the rules and that there should be no adverse consequences is a very unwholesome outcome, particularly in a post-Enron business climate.”

Updegrove added that Rambus v. Infineon has given way to some very strong emotions on both sides of the issue within the technology community. For the time being, said Updegrove, Infineon is in a sit-and-wait period.

“It is up to the Court of Appeals at this point to think about whether they choose to hear the case,” said Updegrove.

In the meantime, Rambus survived another hurdle last week when an administrative law judge denied the Federal Trade Commission’s (FTC) motion for a summary judgment against the memory chipmaker.

In June of 2002, the FTC charged Rambus with violating federal antitrust laws by deliberately engaging in a pattern of anti-competitive acts and practices, resulting in alleged adverse effects on competition and consumers.

The FTC claimed that Rambus forfeited its right to a trial because of the company’s actions in allegedly destroying documents that were essential to an FTC antitrust action.

Last week, Judge James Timony agreed that Rambus had destroyed documents or at least failed to have proper procedures in place to preserve documents, but the company’s “utter failure to maintain an inventory of the documents its employees destroyed makes it impossible to discern the exact nature of the relevance of the documents destroyed to the instant matter.”

While ruling Rambus had not forfeited its right to trial, Timony sanctioned the company for its document retention procedures by declaring the burden of proving innocence will shift to Rambus.

The FTC trial is now scheduled to begin April 29.

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