...not on a technical level, but on a government level.
Everyone remembers when Rambus was found guilty of fraud in a Virgina court by Judge Payne, and ordered to pay millions in legal fees. As a result of that trial, the FTC launched a lawsuit against Rambus quoting this fraud verdict.
However, when Rambus appealed, the verdict was completely overturned. Of special note, Judge Randall Rader actually said that Rambus "disclosed far more than they were legally obligated to disclose" and noted that other JEDEC participants (such as IBM and Hewlett-Packard) were actually more guilty of non-disclosure than Rambus was (they COMPLETELY refused to divulge patent information that might be pertinent to SDRAM).
As a result of this complete reversal, the FTC changed its lawsuit basis against Rambus from fraud to "willful document destruction", stemming from their late-90's document retention program. Since Rambus had NEVER had a document retention program, they had amassed several hundred TONS of paperwork that needed to be sorted and removed (including junk office faxes and printed emailed jokes).
However, In the FTC's pre-trial court briefs though, they are still bringing up fraudulent non-disclosure practices as part of their case against Rambus. This case is interesting because it appears that the FTC case is being fueled and driven by Micron, who has retained legal counsel consisting mostly of former and current Federal Trade Commission employees (initially posted at congress.org's website, but is no longer there. However, it is still in Google's cache.
The big thing about this trial is the actual destructiveness it could potentially have to any open standards process. Everyone in this forum appears to love their really cheap DDR, even if it is costing the memory manufacturing industry billions in lost revenue. Rambus has asserted that it is the rightful owner of SDRAM and DDR technology (which has been acknowledged by Federal Circuit judge Randall Rader, the #1 undisputed authority on US Patent law, and teaches the subject at George Washington University. He is also a co-author of "Patent Law", a textbook used at over 40 law schools.
Now, I think it's safe to say that the MAJORITY of people have the impression that Rambus is "guilty as charged", even though the #1 patent law authority has taken Rambus' side in a well-documented case. It's also obvious that companies like Micron, Infineon and Hynix all have billions of dollars at stake if Rambus wins their cases against them. But what Judge Rader has asserted in his ruling in Rambus' favor is that open standards committees like JEDEC must make their policies CLEAR and ENFORCEABLE to the point where they can hold up in court. JEDEC failed to do so, which is what has allowed this case to proceed.
Of course, now you have the FTC badgering Rambus about "good faith" practices that could inevitably strip them of their patent rights. The big problem here is that the FTC has the power to rule in any way they choose, even if there's prior law that states they're wrong. This has often branded the FTC as a "kangaroo court", making them Judge, Jury and Executioner in the majority of its cases. It's rare that the FTC actually finds a company "not guilty" after launching a lawsuit against them. Most of their cases must be won on appeal, when it enters a "real" court of law (such as the federal circuit which ALREADY ruled in Rambus' favor).
So why is this case so important? Well, let's think about it from the 2 possible outcomes:
What if Rambus wins?
Of the 11 or so companies that manufacture SDRAM and DDR, 8 of them already pay Rambus royalties. The are 3 that do not: Micron (the 2nd largest memory manufacturer, a US company - plays 2nd fiddle to Samsung, the world's largest), Hynix (3nd largest memory manufacturer, formerly known as Hyundai) and Infineon (4th largest, formerly known as Siemens). The collective royalties they will eventually owe on SDRAM alone is nearly $1 billion dollars. If you look at the current state of these 3 companies, you'll see that each is losing millions of dollars per quarter because of the fierceness of the DRAM market, and with very good reason.
When the big thing was "Y2K", everyone in the 90's was in a furor to upgrade their systems. These systems needed ram, and the resulting demand for new memory products made it possible for everyone to make a huge profit. However, now that this demand has waned as a result of the world not blowing up, the memory market itself has far too many players, and each is trying to undercut the other. This causes memory manufacturers to sell products below their own cost in an effort to drive out the competition by forcing them to sink or swim.
It is in these companies interest (though not their BEST interest) to fight Rambus, as paying a $1B fee in back royalties at a time when they're already losing a billion or more per year has the capability of bankrupting any (or ALL) of these companies. The big problem here is that these memory manufacturers are now losing in court, and being forced to appeal. However, if they take this all the way to the supreme court and LOSE (assuming the Supreme court agrees to hear the case), they will be responsible for paying "treble damages", which awards them a TRIPLE royalty rate of an astounding 10.5% on DDR.
So, at this point it would be safe to say that Micron would be done for. They will likely go bankrupt anyway, since they are currently in a position of selling the shirt on their back to stay in business. Hynix is already being fed money by the korean government in an effort to keep them alive. If they lose in court, they will likely not be able to get any additional funding. They're already seeing huge a huge exodus of their top executives, because after all - the first rats to jump off a sinking ship are always the best swimmers.
The only survivor of these 3 memory manufacturers would be Infineon, since their huge parent company (Siemens) would have the funds to pay up. They also have the option of just canning Infineon altogether and just writing 'em down as a business loss.
Of course, this would also mean that Rambus essentially controls the entire memory market until someone can develop technology that outdoes what Rambus technology already does WITHOUT infringing on their patents.
But the bottom line is: Open standards would survive. Why? Because companies would still have incentive to participate in them WITHOUT losing their patent rights. The most important thing a technology company has is their innovation, and their innovation can still be protected by patent law.
But what if Rambus ultimately loses?
If the FTC's verdict is upheld, what would this mean to open standards? While the answer isn't potentially devastating on a financial level to the big dram companies like Infineon/Micron/Hynix (for them it would be one less bill payment to worry about), it would mean no royalties on SDRAM and DDR for Rambus. This wouldn't KILL Rambus per se, as they still have future technologies like Redwood and Yellowstone. However, if these technologies aren't accepted on a mass market scale, Rambus will remain a small 200 person company with some interesting technology, and not much more. Kind of like what they are now.
But the blow this would deal to the Open Standards world would be devastating.
This case has the potential to raise a critical precedent. That precedent being [/i]"If you participate in a standards setting organization, and don't divulge everything about technologies when you participate - INCLUDING all patent CLAIMS on your technology, you will lose ALL rights to those patents, AND be responsible for legal fees in the process."[/i]
But what about the flipside? What if you DO divulge all your information about a technology an open standards committee is trying to implement? With this precedent set, it would mean that they could, but the company who developed this technology would NOT be able to collect royalties on it.
So tell me, what large-scale innovative technology company is going to participate in a standards setting body if it has the potential to strip them of their intellectual property rights whether they divulge those patents or not? None of them. It isn't worth the risk, since their intellectual property is the ONE thing they have to compete with. Do you think Intel is going to participate in an open standards setting if AMD can simply run to the FTC and claim that their participation in an open standards body has invalidated their right to collect royalties on their patents?
NO WAY!
Rambus losing this case has the potential to completely kill the open standards process by subverting the way patent laws protect a company's innovations.
This is all a very interesting turn of events for Rambus....
Everyone remembers when Rambus was found guilty of fraud in a Virgina court by Judge Payne, and ordered to pay millions in legal fees. As a result of that trial, the FTC launched a lawsuit against Rambus quoting this fraud verdict.
However, when Rambus appealed, the verdict was completely overturned. Of special note, Judge Randall Rader actually said that Rambus "disclosed far more than they were legally obligated to disclose" and noted that other JEDEC participants (such as IBM and Hewlett-Packard) were actually more guilty of non-disclosure than Rambus was (they COMPLETELY refused to divulge patent information that might be pertinent to SDRAM).
As a result of this complete reversal, the FTC changed its lawsuit basis against Rambus from fraud to "willful document destruction", stemming from their late-90's document retention program. Since Rambus had NEVER had a document retention program, they had amassed several hundred TONS of paperwork that needed to be sorted and removed (including junk office faxes and printed emailed jokes).
However, In the FTC's pre-trial court briefs though, they are still bringing up fraudulent non-disclosure practices as part of their case against Rambus. This case is interesting because it appears that the FTC case is being fueled and driven by Micron, who has retained legal counsel consisting mostly of former and current Federal Trade Commission employees (initially posted at congress.org's website, but is no longer there. However, it is still in Google's cache.
The big thing about this trial is the actual destructiveness it could potentially have to any open standards process. Everyone in this forum appears to love their really cheap DDR, even if it is costing the memory manufacturing industry billions in lost revenue. Rambus has asserted that it is the rightful owner of SDRAM and DDR technology (which has been acknowledged by Federal Circuit judge Randall Rader, the #1 undisputed authority on US Patent law, and teaches the subject at George Washington University. He is also a co-author of "Patent Law", a textbook used at over 40 law schools.
Now, I think it's safe to say that the MAJORITY of people have the impression that Rambus is "guilty as charged", even though the #1 patent law authority has taken Rambus' side in a well-documented case. It's also obvious that companies like Micron, Infineon and Hynix all have billions of dollars at stake if Rambus wins their cases against them. But what Judge Rader has asserted in his ruling in Rambus' favor is that open standards committees like JEDEC must make their policies CLEAR and ENFORCEABLE to the point where they can hold up in court. JEDEC failed to do so, which is what has allowed this case to proceed.
Of course, now you have the FTC badgering Rambus about "good faith" practices that could inevitably strip them of their patent rights. The big problem here is that the FTC has the power to rule in any way they choose, even if there's prior law that states they're wrong. This has often branded the FTC as a "kangaroo court", making them Judge, Jury and Executioner in the majority of its cases. It's rare that the FTC actually finds a company "not guilty" after launching a lawsuit against them. Most of their cases must be won on appeal, when it enters a "real" court of law (such as the federal circuit which ALREADY ruled in Rambus' favor).
So why is this case so important? Well, let's think about it from the 2 possible outcomes:
What if Rambus wins?
Of the 11 or so companies that manufacture SDRAM and DDR, 8 of them already pay Rambus royalties. The are 3 that do not: Micron (the 2nd largest memory manufacturer, a US company - plays 2nd fiddle to Samsung, the world's largest), Hynix (3nd largest memory manufacturer, formerly known as Hyundai) and Infineon (4th largest, formerly known as Siemens). The collective royalties they will eventually owe on SDRAM alone is nearly $1 billion dollars. If you look at the current state of these 3 companies, you'll see that each is losing millions of dollars per quarter because of the fierceness of the DRAM market, and with very good reason.
When the big thing was "Y2K", everyone in the 90's was in a furor to upgrade their systems. These systems needed ram, and the resulting demand for new memory products made it possible for everyone to make a huge profit. However, now that this demand has waned as a result of the world not blowing up, the memory market itself has far too many players, and each is trying to undercut the other. This causes memory manufacturers to sell products below their own cost in an effort to drive out the competition by forcing them to sink or swim.
It is in these companies interest (though not their BEST interest) to fight Rambus, as paying a $1B fee in back royalties at a time when they're already losing a billion or more per year has the capability of bankrupting any (or ALL) of these companies. The big problem here is that these memory manufacturers are now losing in court, and being forced to appeal. However, if they take this all the way to the supreme court and LOSE (assuming the Supreme court agrees to hear the case), they will be responsible for paying "treble damages", which awards them a TRIPLE royalty rate of an astounding 10.5% on DDR.
So, at this point it would be safe to say that Micron would be done for. They will likely go bankrupt anyway, since they are currently in a position of selling the shirt on their back to stay in business. Hynix is already being fed money by the korean government in an effort to keep them alive. If they lose in court, they will likely not be able to get any additional funding. They're already seeing huge a huge exodus of their top executives, because after all - the first rats to jump off a sinking ship are always the best swimmers.
The only survivor of these 3 memory manufacturers would be Infineon, since their huge parent company (Siemens) would have the funds to pay up. They also have the option of just canning Infineon altogether and just writing 'em down as a business loss.
Of course, this would also mean that Rambus essentially controls the entire memory market until someone can develop technology that outdoes what Rambus technology already does WITHOUT infringing on their patents.
But the bottom line is: Open standards would survive. Why? Because companies would still have incentive to participate in them WITHOUT losing their patent rights. The most important thing a technology company has is their innovation, and their innovation can still be protected by patent law.
But what if Rambus ultimately loses?
If the FTC's verdict is upheld, what would this mean to open standards? While the answer isn't potentially devastating on a financial level to the big dram companies like Infineon/Micron/Hynix (for them it would be one less bill payment to worry about), it would mean no royalties on SDRAM and DDR for Rambus. This wouldn't KILL Rambus per se, as they still have future technologies like Redwood and Yellowstone. However, if these technologies aren't accepted on a mass market scale, Rambus will remain a small 200 person company with some interesting technology, and not much more. Kind of like what they are now.
But the blow this would deal to the Open Standards world would be devastating.
This case has the potential to raise a critical precedent. That precedent being [/i]"If you participate in a standards setting organization, and don't divulge everything about technologies when you participate - INCLUDING all patent CLAIMS on your technology, you will lose ALL rights to those patents, AND be responsible for legal fees in the process."[/i]
But what about the flipside? What if you DO divulge all your information about a technology an open standards committee is trying to implement? With this precedent set, it would mean that they could, but the company who developed this technology would NOT be able to collect royalties on it.
So tell me, what large-scale innovative technology company is going to participate in a standards setting body if it has the potential to strip them of their intellectual property rights whether they divulge those patents or not? None of them. It isn't worth the risk, since their intellectual property is the ONE thing they have to compete with. Do you think Intel is going to participate in an open standards setting if AMD can simply run to the FTC and claim that their participation in an open standards body has invalidated their right to collect royalties on their patents?
NO WAY!
Rambus losing this case has the potential to completely kill the open standards process by subverting the way patent laws protect a company's innovations.
This is all a very interesting turn of events for Rambus....
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