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.
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.
SUMMARY OF ARGUMENT
Standards are vital to government procurement, national competitiveness, and the efficiency and safety of society. Standards are created by voluntary, self-governing organizations that have no effective enforcement power to police the conduct of their members. In the technology sector, the implementation of standards is often likely to result in the infringement of the patents of members and/or non-members. If the owner of a patent that would be infringed by a standard is only willing to license that patent selectively, or on such unreasonable or discriminatory terms as it may wish, then severe consequences will follow, including unreasonable costs to end-users, unfair discrimination against industry participants, and even the complete failure of the standard in question. While the potential for such a result cannot easily be avoided in the case of a patent claim owned by a non-participant in the standard setting process, it is highly inequitable for a participating patent owner to manipulate the process of an SSO in which it was active to ensure such a result for its own benefit.
The value and importance of standards in the modern world is profound. As an example, the Department of Commerce concluded in 2004 that standards affect an estimated 80 percent of world commodity trade. U.S. Department of Commerce, Standards and Competitiveness — Coordinating for Results 1 (May 2004). In the technology sector, the role of standards is particularly crucial, as vital infrastructural elements such as telecommunications, the Internet and the Web literally cannot exist without common agreement on, and implementation of, enabling protocols and other standards.
The suitability of the voluntary, consensus-based standard setting process for creating standards for public, as well as private, interests has been recognized by Congress, which enacted the National Technology Transfer and Advancement Act of 1995 (NTTAA), Pub. L. No. 104-113, 110 Stat. 775 (1996). Under that Act, Congress instructed each Federal agency to utilize standards created by SSOs in preference to “government unique” standards to the extent “practicable.” Other government actions discussed below recognize, and encourage, industry-wide reliance on SSO developed standards. As a result of the promulgation of the NTTAA, the proper functioning of the voluntary consensus-based standard setting system has become vital to the proper functioning of government agencies charged with ensuring national interests as diverse as nuclear power, defense, transportation, healthcare and homeland security.
However, unlike public laws and regulations, standards are developed within a process that is not only entirely self-regulating, but also largely unsupervised, except by those that directly participate. As a result, its success or failure is highly dependent upon trust. If those that participate conclude that abusing the system is too easy to accomplish, and that such abuse is too lightly punished if discovered, then the entire system can find itself in danger of collapse, because the risks of participation and adoption of standards become greater than the benefits to be gained through such participation and adoption. Were such a result to occur, virtually no aspect of society would be immune from the impact of that collapse.
It is not the intention of amici curiae in this brief to advocate for a particular remedy or remedies, with respect to which the Commission will be receiving advice from other knowledgeable sources. Rather, the amici curiae represented by this brief wish to stress the importance of imposing penalties that are sufficiently severe to clearly demonstrate that abusing the voluntary standard setting process cannot prudently be evaluated in terms of simple business risk. To do otherwise would be to send a clear signal not only to Rambus, but to the world at large that there is more to be gained in the United States by “gaming” the standard setting process than by obeying the rules.
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