New rules needed to prevent 'gaming' of industry specs

WASHINGTON — New rules that would prevent technology companies from "gaming" the standards process are needed in the aftermath of antitrust lawsuits against Rambus Inc. over its patents and memory standards, industry and legal experts said.

Speaking at a conference here Thursday (Sept. 16) sponsored by the Jedec standards organization (Arlington, Va.), experts said the government's antitrust case against Rambus (Los Altos, Calif.) has highlighted the need to clarify rules for how standards bodies operate. The Rambus case focused on requirements for disclosing patents during standards debates. Several experts called for clearer guidelines on disclosure rules.

"The Rambus case represents a failure of the standards process," said John Kelly, Jedec's president.

A major concern in hard-ball standards debates is the tendency of companies with intellectual property to "game" the process by failing to disclose patents. In the Rambus case, rivals alleged that it attempted to steer DRAM standards toward its patented RDRAM technology.

"Standards setting has been used for a lot of hard game playing," said Scott Peterson, senior counsel for intellectual property at Hewlett-Packard Co.

One proposal has been to urge standards groups to adopt "good faith and fair dealing" rules to prevent gaming. But Peterson and other industry attorneys said convincing companies to disclose all of the relevant patents to standards groups is not a viable goal.

"Incremental progress is possible," Peterson said. "We can gradually develop experience with different [patent disclosure] rules and get a sense of what rules work best."

The stakes are high, particularly in the Rambus case where some experts estimate the company could collect royalties totaling as much as $5 billion for its patented RDRAM technology. Rambus filed a countersuit in May seeking $1 billion in damages from its DRAM rivals. It alleged they have tried to "sabotage" its memory technology since the mid-1990s.

A Federal Trade Commission administrative law judge has dismissed the agency's antitrust case against Rambus, ruling in February that Rambus acquired monopoly power in a long-running patent dispute, but did not do so by exclusionary means. M. Sean Royall, former FTC lead counsel in the Rambus case, said the antitrust action doesn't mean "the FTC is going to tell [standards groups] how to operate."

Royall said the case sought to highlight how the chip industry has become "locked in" to an industry spec based largely on Rambus patents. Rambus has argued that industry specs can be changed at little cost on an individual company basis. The FTC counters that standards are critical for achieving compatibility between products, a feature that benefits consumers.

"The industry is locked in, it can't change these standards" based largely on Rambus patents, Royall told the conference.

Royall said FTC antitrust attorneys are still reviewing the Rambus decision and will present initial arguments next week to the five-member FTC, which must still review the February ruling. Final arguments are scheduled in December.