Is the FTC on its way to dismantling JEDEC?

TOMORROW, the FTC will bring Rambus into their courtroom and judge whether or not the intellectual property firm violated anti-trust laws while a member of the JEDEC¹ standardisation committee.

While observers have largely focused on the battle between The FTC and Rambus, industry members may be looking closely at the effects of a "full-disclosure" precedent the FTC will set for JEDEC if they win their case against Rambus.

If current members are subjected to JEDEC rules, as interpreted by the FTC's understanding of them, they may not only find the newfound disclosure obligations extremely burdensome to fulfill, they may realize they're at risk of losing extremely valuable patent applications to the interests of the committee's future standardization efforts.

As the FTC's complaint goes, while Rambus was a member of JEDEC, the company didn't reveal enough information about their patent applications and intentions² that may have related to, but did not read on, the SDRAM and DDR DRAM standards in question. And the information the company did reveal wasn't disclosed to the group soon enough.

According to the FTC's interpretation of JEDEC disclosure duty, members such as Rambus are required to disclose their patent applications, as well as their intentions to apply for patents that may relate to a standard being discussed. And the duty to disclose, according to the FTC, seems to be triggered at no specific time, but rather as soon as a concept is pondered aloud among members.

On the surface, such a disclosure duty may sound like a reasonable way to avoid conflicts in the standard-setting process, but in a practical sense, it could very well paralyze JEDEC, or cause an exodus of nervous members fearing the loss of their intellectual property.

The FTC Would Require JEDEC Members To Disclose Patent Applications
If the FTC were to require JEDEC members to disclose patent applications at an early time in the standardization process, the new rule would be a detour from the guidelines of JEDEC's parent organizations, the EIA³ and ANSI4.

Testifying before the FTC and DOJ at their Hearings on the Implications of Competition and Patent Law, ANSI's Vice President and General Counsel, Amy Marasco stated, "The ANSI patent policy does not apply to pending patent applications. This is due to the confidential nature of such applications and the fact that patent applications impose an additional layer of uncertainty (above and beyond the changing technical content of a standard under development) given the dynamic nature of the patent approval process and the fact that a valid patent determination has not yet been made."

In patent law, a patent application is an invention being evaluated by the United States Patent and Trademark Office (USPTO). When an invention is being judged by the USPTO, inventors should not discuss or reveal their invention, as competitors could derail the process with their own similar filings. Considering the value of patents are crucial to the success of many businesses and inventors, the fundamental precept to patent law states that an inventor should never reveal their patent applications before they've secured their patent.

The Lost Keefauver Paper
In a report submitted on Rambus' behalf by standards developing organization (SDO) expert, William Keefauver5, the former AT&T General Counsel of intellectual property states, among other things, the reason other standardization committees don't require the disclosure of patent applications, or intended patents, is for the sake of efficiency during the standardization process, in addition to protecting the inventor.

Mr. Keefauver explains, in his opinion, why the duty imposed by the EIA, from which JEDEC was formed, is to limit the disclosure of issued patents to only the appropriate time in the standardization process. Requiring members to disclosure patent applications, or intentions to file for applications, early on in the process would put an impossible burden on the group, as they would have to track every conceivable concept that related to a possible standard.

While the judge in the FTC case has rejected Rambus request to use Mr. Keefauver's report at trial (it is still unknown if Mr. Keefauver will testify), the report raises some relevant concerns that many companies, other than just Rambus, might be wise to take notice of.

In the FTC's complaint against Rambus, the disclosure duty includes patent applications and intentions to file patents, and members would be required to disclose their intentions "at the earliest time possible," as the Complaint Counsel states.

Mr. Keefauver claims, "Patent policies that require the disclosure of (thereby possibly putting in jeopardy) trade secrets, such as unpublished patent applications or future plans for obtaining patents, would impose a high and avoidable cost. Such costs can be extremely steep, in particular of intellectual property-intensive companies, such as those who were members of JEDEC."

Keefauver argues two basic points as to why standard setting bodies should not require members to disclose patent applications or intentions.

First, "Simply processing the volume of information disclosed - including determining whether the patent applications or intentions to file patent applications are likely to result in issued patents; whether, if assured, the patents are likely to be essential to practice standard; etc. - can be burdensome.

"A second cost imposed on SDOs by requiring disclosures of patent applications or intentions to file patent applications is the possibility of foregoing the best possible standard. One of the main purposes of patent disclosure policies is to alert SDOs of the possible need to design around a patent if the enforcement of that patent is likely to impose an unreasonable cost on members.

"But to design around a patent requires a degree of certainty regarding what it is that is being designed around; as a technical matter, a detailed understanding of the patent rights that the SDO is seeking to avoid is a prerequisite. Because patent applications at best only approximate what the final issued patent and the allowed claims will look like (if a patent is issued at all), they involve great uncertainty, and SDOs would be loath to undertake an effort to design around them. Considerable time and effort could be expended in an attempt to design around a patent application only to find after the standard was approved that the issued patent wasn't essential, does not apply, or never was issued at all.”

In the instance of DDR, the follow-on to SDRAM, the technologies that enable the higher data rates were ratified by JEDEC in 1999, and first presented officially in 1996, but after Rambus left JEDEC.

The FTC argues that Rambus had a duty to disclose their DDR patent interests before the company resigned from JEDEC, because the general technologies in question were discussed in meetings before Rambus departed. Although there were no formal "first presentations" on the technologies in DDR, or any “balloting” done while Rambus was a member of JEDEC, the group was far enough along, according to The FTC, to assume the standard had evolved enough for members to assume it might incorporate technologies Rambus was in the process of, or intending to patent, but did not disclose while in JEDEC.

If current members are obligated to follow the comprehensive and early disclosure duty the FTC is seemingly attempting to mandate, there are likely many technologies under consideration that members may be at the risk of losing their patent rights too.

Additionally, there is nothing to stop a current, or future JEDEC member, from stepping into a JEDEC organization meeting and claiming their ownership to a vast array of current and future concepts being discussed at JEDEC. In a simple conceit, a member could walk in to a meeting with a long list of concepts, however vague and far-reaching, and read the list to members to fulfill their disclosure duty. Such a simple action would thereby put the industry on notice, and for perhaps a very long time. As soon as a company states their intentions to patent concepts being discussed, the organization would be obligated to avoid such technologies, or agree to a royalty arrangement, regardless of whether or not the ideas have even been filed for patents. Such a scenario opens the door for members to intentionally slow down the standardization process for their own competitive purposes.

Not only does the FTC's interpretation of the JEDEC disclosure duty seem to be an extreme departure from the practices of the majority of today's standards setting bodies, a ruling that supports their arguments in their case against Rambus could set a precedent that may ultimately strip current members of current and future patents, while suffocating the standardization process in the process. µ

¹JEDEC (Formerly the Joint Electron Device Engineering Council), is the semiconductor engineering standardization body of the Electronic Industries Alliance (EIA), a trade association that represents all areas of the electronics industry.

² All the technologies Rambus ultimately did patent that may be infringed by JEDEC members are concepts included in Rambus' original patent application, serial No. 07/510,898. Rambus filed this patent in 1990, and it covered essentially all of its novel DRAM technology. Upon analyzing the original invention, the Patent Office required Rambus to isolate the various inventions disclosed in the application and file for them individually. As a result, Rambus filed numerous divisionals and continuations based on the application, and eventually secured, according to the Court of Appeals, approximately 31 unique U.S. patents. Rambus also filed internationally to secure and protect its rights in the rest of the world. Rambus filed their 07/510,898 patent application with the United States Patent and Trademark Office (USPTO) before the company joined JEDEC.

³ EIA (Electronics Industry Alliance) - Develops standards in several high0tech electronic industry sectors, including consumer electronic devices, telecom, semiconductors, and electronic components. Follows ANSI's patent rules.

4 ANSI (American Standards National Institute) - An umbrella organization considered the leader of the Standard Developing Organizations (SDOs).

5 William Keefauver chaired the Patent Committee of the Electronics Industry Alliance ("EIA"), and held positions as Vice President of Law at and head of intellectual property at AT&T, and Bell Labs.

See Also
Intel can dance, no doubt
Is JEDEC a joke?
An exercise in building a conspiracy theory External

Bill Teel is the Editor of Hedge Fund Confidential. He owns Rambus shares.

Picture of the FTC courtesy of DC Stock Photo