The Standards Blog

Updated 9/19/06:  Ah, my good friends the Rambus daytraders have discovered the fact that I have filed another Amicus Brief and (better yet) that I now have a blog where they can leave public comments.  Those who are not members of this community will find their comments below amusing, as they may RMBS and (Another) Dark Side of the Internet, which will help to place them in context

Today is the deadline for filing amicus curiae (friend of the court) briefs and other forms of input with the Federal Trade Commission, as it considers what the punishment of Rambus, Inc. should be for having engaged in "an anticompetitive 'hold up' of the computer memory industry [that]... contributed significantly to Rambus’s acquisition of monopoly power in the four relevant markets."  The FTC made that announcement on August 2, and also announced that it would accept briefs from interested industry participants and others, as well as from Rambus and the FTC prosecuting team.

I've submitted three amicus curiae briefs over the past several years (with the Federal Circuit, Supreme Court, and FTC), on a pro bono basis, in relation to this investigation as well as in connection with the litigation between Rambus and Infineon, on behalf of a large group of standard setting organizations that collectively represent many thousands of corporate, government, university and non-profit members, and was encouraged to provide input in response to this invitation by the FTC as well. 

Below are the "Issue Urged" and "Summary of Argument" from the brief, which will give you an idea of why the Rambus litigation is so important, and why it's equally important that the remedies that the FTC levies send a clear message that, when it comes to abusing the standard setting process, "crime does not pay."  If you'd like to read the whole brief, you can find it in PDF form here.

ISSUE URGED

The remedy levied by the Commission against Rambus must send a clear message to that company, as well as to all that participate in the standard setting process, that the consequences of such bad-faith conduct, if discovered, will significantly exceed the potential gains of engaging in such practices. To fail to include a significant punitive element in the remedies assessed by the Commission would dangerously undermine the standard setting process, to the detriment of society and the national interest.

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.