Appeals court vacates Rambus fraud judgement

A split decision by a panel of U.S. appeals court judges has thrown out a fraud judgment against memory chip designer Rambus, saying there was not enough evidence to convict the company of fraudulently seeking to influence a standards body into adopting its patented memory technologies as industry standards.

The U.S. Court of Appeals for the Federal Circuit Thursday found that a lower court correctly overturned one jury verdict that found Rambus guilty of fraud for trying to get patents on DDR SDRAM while it was participating on a standards committee for that technology.

However, the appeals court said the U.S. District Court for the Eastern District of Virginia improperly allowed a separate verdict that Rambus fraudulently sought to obtain patents on SDRAM technology when there had been insufficient evidence to support either claim.

“This endorses a broad reading of Rambus’ inventions, and does that by construing our patent claim in the manner we thought it should be construed,” General Counsel for Rambus John Danforth said in an interview Wednesday.

“This clears up an issue hanging over our heads for quite some time related to the JEDEC (Joint Electron Device Engineering Council) standards-setting body, and outlines the definition of a policy for standards-setting organizations that should be required reading for those organizations,” he said.

Rambus originally filed suit against rival memory vendor Infineon Technologies AG, alleging that Infineon had infringed on several of Rambus’ patents for DDR SDRAM and SDRAM technologies. Judge Robert E. Payne threw out Rambus’ claims of patent infringement last year and a jury found the company liable for fraud.

Rambus is also involved in ongoing litigation with other DRAM vendors Hynix Semiconductor and Micron Technology.

Rambus filed for patents on DRAM technology in the early 1990s, and later participated in standards-setting discussions with JEDEC regarding new types of memory technology. The dispute centers around how technologies that Rambus claims patents for wound up in the JEDEC standards for SDRAM.

Because the disclosure policies of the JEDEC were ill-defined, Rambus cannot be found guilty of fraud for its failure to disclose any current or pending patents, the court said.

“When direct competitors participate in an open standards committee, their work necessitates a written patent policy with clear guidance on the committee’s intellectual property position. A policy that does not define clearly what, when, how, and to whom the members must disclose does not provide a firm basis for the disclosure duty necessary for a fraud verdict,” the court wrote in its opinion. Circuit Judges William Bryson and Randall Rader backed the majority opinion.

One judge on the three-judge panel dissented from the fraud ruling, claiming there was “direct and circumstantial evidence supporting the conclusion that Rambus committed fraud in the context of its membership in the JEDEC standard setting organization.”

In her dissenting opinion, Circuit Judge Sharon Prost wrote that “JEDEC’s disclosure policy required its members to disclose patents and pending applications that ‘might be involved in the work they are undertaking.’ While the majority rejected this standard as unbounded, nothing required JEDEC to formulate its policy with precision and clarity.”

The decision likely means that Rambus will once again pursue its legal claims against memory chip vendors, claiming that they are violating intellectual property protected by Rambus’ patents, said Kevin Krewell, senior editor of the Microprocessor Report in San Jose.

“Rambus will still probably try to enforce what they feel are patents on DRAM technology,” he said.

“We believe that when we’ve made a contribution this significant to the industry, we should be compensated for that,” Danforth said. “We’ve contributed many substantial things to high-speed memory, and we should be compensated for what we’ve invented and other people use.”

The case will now go back to the lower court to decide how attorney’s fees will be allocated.

Infineon said Wednesday it will seek a rehearing in the case.

“We are disappointed by the court’s decision. We are studying the ruling, and expect to request a rehearing by the court,” said an Infineon spokesman.

Legislation between Rambus and the U.S. Federal Trade Commission is still pending, with a trial scheduled for April, Danforth said.

Rambus makes a type of memory known as Rambus dynamic RAM (RDRAM). It’s not interoperable with DDR SDRAM, but both technologies transfer data at a rate of more than 1 bit per clock cycle, said Dean McCarron, principal analyst at Mercury Research in Cave Creek, Ariz.