Rambus Conduct Before Board Won’t Get Review by Supreme Court
February 23, 2012, 10:17 AM ESTBy Susan Decker
Feb. 21 (Bloomberg) -- Memory-chip designer Rambus Inc.’s conduct before an industry board won’t be reviewed by the U.S. Supreme Court, clearing an obstacle in the company’s decade-long pursuit of patent royalties from semiconductor makers.
The high court today declined to take an appeal of a lower- court decision clearing Rambus of accusations it improperly used knowledge gleaned from a standard-setting board to obtain patents so it could extract royalties from the computer-chip industry. The case was brought by Hynix Semiconductor Inc. as part of an effort to overturn a $397 million judgment.
Rambus contends that the semiconductor industry conspired to steal its technology and has filed patent-infringement lawsuits against companies that refuse to pay licensing fees. The litigation has defined Sunnyvale, California-based Rambus since the late 1990s, and its activities at the semiconductor industry’s standard-setting board form the basis of those disputes.
“There is enormous pressure on industry actors to reach global settlements whenever an industry is ensnared in the intellectual-property trap of a dishonest” participant in a standard-setting group, Hynix wrote in its Supreme Court petition.
The high court has declined to hear two previous appeals of rulings that favored Rambus on the issue of the company’s participation in the industry board.
No Broad Principles
“The holding here is limited to a particular set of duties” for that industry group “and a particular member’s course of conduct nearly 20 years ago,” Rambus wrote. “This case presents no opportunity to fix broad equitable principles.”
A U.S. appeals court specializing in patent law said in May that Rambus didn’t breach its duty to disclose pending patent applications when it took part in the chip-industry group. The U.S. Court of Appeals for the Federal Circuit in Washington did say Rambus improperly destroyed documents related to its patent strategy, a separate issue that wasn’t part of the case brought by Hynix to the Supreme Court.
The case stems from Rambus’s participation in a group called the Joint Electron Device Engineering Council that in the early 1990s was developing the new generation of dynamic random access memory, or DRAM, which acts as the main memory in computers.
Without Fees
Rambus has argued that it attended the group’s meetings until it realized that other industry members wanted to use the company’s inventions without crediting or paying fees.
Hynix is among chipmakers that have accused Rambus of attending the meetings and then quitting the organization to avoid complying with a policy to notify participants of relevant patents and patent applications.
After leaving JEDEC in 1996, Rambus had people with codenames “Secret Squirrel” and “Deep Throat” attend meetings to inform the company of discussions by the board so it could amend its patent applications to ensure the patents covered the standard, Hynix said.
Infineon Technologies AG had won a fraud trial against Rambus, only to have it thrown out by the U.S. Court of Appeals for the Federal Circuit, the same court that ruled in the Hynix decision. The companies later settled their dispute.
The U.S. Federal Trade Commission accused Rambus of plotting to obtain patents on industrywide standards so it could demand high royalty rates. A different appeals court threw out that case, saying the agency had taken “an aggressive interpretation of rather weak evidence.”
The FTC held hearings last year to look at the policies of standard-setting organizations, particularly as it applied to patents.
Documents Destroyed
Rambus destroyed more than 2.7 million documents, including many related to its JEDEC activities. Rambus contends it was part of a regular effort to reduce clutter, while Hynix has argued that it was part of a litigation strategy to hide its actions at the standard-setting board.
Micron Technology Inc., which also was challenging Rambus patents, had won a ruling that the Rambus patents were unenforceable as punishment for document destruction conducted on “shred days” at the company; the judge in the Hynix case rejected similar arguments.
The Federal Circuit, the patent appeals court, ruled that Rambus violated its duty to preserve documents. It said the Micron judge failed to determine whether Rambus acted to gain an advantage in its efforts to force chipmakers to pay patent royalties.
The court set aside the judgment against Hynix and returned both cases to determine the appropriate penalty. The Hynix judge heard arguments on that issue on Dec. 16 in San Jose, California. Arguments in the Micron case were heard on Jan. 26 in federal court in Wilmington, Delaware.
The case is Hynix Semiconductor Inc. v. Rambus Inc., 11-549, U.S. Supreme Court.
--With assistance from Greg Stohr in Washington. Editors: Steve Walsh, Justin Blum
To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net
To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net
