FTC hears closing arguments in Rambus antitrust case

FTC hears closing arguments in Rambus antitrust case
By Jack Robertson, EBN
October 9, 2003 (9:55 a.m. EST)
URL: http://www.eetimes.com/story/OEG20031009S0010

WASHINGTON — Rambus Inc. and the Federal Trade Commission clashed Wednesday (Oct. 8) during closing arguments in the FTC's antitrust suit against the IP developer, with Rambus arguing that a recent favorable decision by a U.S. Court of Appeals should be factored in its defense.

Gregg Stone, an attorney representing the Los Altos, Calif., company, claimed that the Federal Circuit of the Appeals Court described Rambus' position when it ruled in January that Rambus was not obligated to disclose its synchronous DRAM (SDRAM) patent applications while a member of the industry Jedec group drafting the SDRAM standard. The appellate court threw out a lower court jury verdict that had found Rambus committed fraud when it failed to disclose pending SDRAM patents.

During a lengthy hearing, FTC counsel Sean Royall contended that the FTC administrative law judge was not bound by the appeals court decision, claiming that the antitrust charges against Ram bus are separate from the Richmond, Va., federal district court trial that considered the fraud charges under Virginia state law.

The stakes in the FTC's antitrust suit are high given that government lawyers are asking that the Rambus synchronous memory patents pending at the time it was a member of Jedec's SDRAM committee be declared unenforceable. Rambus has secured SDRAM and DDR licenses with many DRAM manufacturers, and is suing Infineon Technologies, Hynix Semiconductor and Micron Technology for refusing to submit to the licenses.

Rambus and the FTC are also divided over the interpretation of the appellate court decision, which found that, under Jedec rules, Rambus wasn't required to disclose its synchronous patents. The FTC's Royall said the court ruling "was incoherent" and based on the testimony of one industry witness, compared to a total of 18 industry witnesses who testified during the FTC trial that amended Jedec rules did in fact require Rambus to disclose its pending patents.

FTC Chief Administrative Law Judge Stephen McGuire agreed that the appeals court ruling "was very unclear." McGuire referred to an October 1993 revision to the Jedec patent policy manual No. 21i, which required the chairpersons of standards committees to begin each meeting with a viewgraph showing that disclosure of patents and pending patents was required if related to the specification under deliberation.

Stone cited memos and letters by Jedec and its parent, the Electronic Industries Alliance, stating that the patent policy was meant only "to encourage early voluntary disclosure," and did not make mandatory the disclosure of patents related to in-process standards.

'No comment'

Steve Perry, an attorney who also represented Rambus, argued that Rambus "didn't hide" anything from Jedec by not disclosing its patents. The company twice declined to comment when asked directly during Jedec meetings whether it had patents relating to the SDRAM standard being drafted. Perry cited memos by some Jedec industry members that they viewed Rambus' "no comment" as an indication that the firm might have intellectual property related to the SDRAM standard.

Both parties claimed the FTC's ruling will have a tremendous impact on the chip industry. Stone warned that "use of an administrative proceeding to push the antitrust envelope will have momentous consequences. If competitors get together and describe the way patents should have been disclosed, people are in risk of losing their inventions after the fact."

FTC attorney Royall countered that Rambus stands to gain "hundreds of millions of dollars a year" in SDRAM and DDR royalties from what he alleged were the firm's anticompetitive actions. Both sides also were divided as to whether Rambus tried "to lock in" its position for SDRAM licenses by waiting until after Jedec had approved the standard before seeking to collect royalties. The FTC attorneys said that by the time Rambus asserted its patents, it was too late for DRAM makers, chip set vendors, motherboard makers or OEMs to pursue alternative designs and avoid the Rambus royalties.

Stone countered that standards change frequently and the industry wasn't locked into the Rambus patents. He said the Jedec memory committee itself changed the standard for DDR2.

Wednesday's closing argument concluded the open-trial phase of the Rambus antitrust case. The trial took 54 days with 11,000 pages of testimony and 1,900 documents. A total of 43 witnesses were called to testify, making the Rambus trial one of the most exhaustive proceedings ever conducted by the agency.