FTC VS Rambus: Oral Arguments JUDGE McGuire: All right, thank you, Mr. Royall. If you want, you can just stay up there, because I'm going to inquire of you, and then what I intend to do during this phase is to -- I have a few inquiries I want to make. Some of them will go to a party, and I won't require the other side inherently to respond. Other inquiries I may make will be open questions for either side offered in their argument. With that in mind, having gone through all the arguments and the briefs, it is the argument of the FTC that the patent policy of EIA and JEDEC was clear. Now, one of the things that I'm challenged in this case to do is that -- what I intend to do is take the evidence that speaks to the policies themselves, the express terms of the policy, put them in one pile. In a second pile, I'm going to put all the evidence that deals with what we can call the course of conduct that occurred at the time in question. And in one other pile, I'm going to put all the evidence and the trial testimony after the fact and see if I can't make a coherent understanding of what the policy was. Again, it's your argument that the policy in this case was clear. In the context of just the express patent policies, and at this point not course of conduct and not any trial testimony on the issue, how does complaint counsel comport its argument that the patent policy required participants to disclose patents and patent applications when the EIA policy seemed to indicate and the correspondence to the FTC stated that the EIA patent policy is to encourage the voluntary disclosure of certain patents? How can I, trying to determine all the evidence on the express statements of the policy, put those two together and uphold your argument? MR. ROYALL: If I understand it, there are two questions there, and Mr. Oliver may want to comment on part of this, but one thing that I can say with respect to the question about patents and patent applications, obviously by October '93 -- JUDGE McGuire: Right. MR. ROYALL: -- the 21-I manual referred to patent applications. It's hard -- I do think that it is hard to fully answer -- to sever the manuals and the written evidence from the testimony, because there were understandings obviously that were key and there were 2 discussions in the meetings that were key, and Mr. Oliver went through a lot of that evidence today and what Mr. Townsend said. So, it's hard to sever the two, but the testimony from people like John Kelly -- JUDGE McGuire: All right, I'm not interested in testimony -- MR. ROYALL: Okay. JUDGE McGuire: -- in the context of this question. So, what your answer seems to be is I cannot base an interpretation on what the policy was unless I clearly invoke the course of conduct at the time by all the parties involved. Is that correct? MR. ROYALL: Well, I think it's absolutely necessary to reach a correct factual determination here definitely to take into account the course of conduct and the testimony, yes. JUDGE McGuire: Now, if that's the case, the evidence shows that at JEDEC, we had some companies that clearly disclosed patent applications. We have evidence that other companies had not disclosed patent applications. If that's the case, then how does that speak to the clarity of the patent policy, and if, in fact, the policy was clear, then what does that say to how the policy was enforced in JEDEC? MR. ROYALL: I think Mr. Oliver may be better to answer, having worked with more of the witnesses on this issue. JUDGE McGuire: Go ahead, Mr. Oliver. MR. ROYALL: Before he does, could I -- just so we don't lose the question about the letter to the FTC, because you mentioned that? JUDGE McGuire: Well, that was part of the EIA policy, but go ahead and tell me. MR. ROYALL: If I could just cover that and defer to Mr. Oliver on the other part. JUDGE McGuire: Go ahead. MR. ROYALL: I mainly would just point you to our briefs on this. Mr. Kelly's testimony was very thorough on this question of what he meant by encouraging voluntary disclosure, and he went through the ANSI and -- JUDGE McGuire: I understand that, and I understand -- like I say, I am going to analyze all this evidence in the context of three aspects of the evidence. The testimony at trial is going to speak for itself. The course of conduct at the time is going to speak for itself. And the express terms of the policy is going to speak for itself. MR. ROYALL: Yes. JUDGE McGuire: So, I don't have inquiries about the after-the-fact trial testimony. MR. ROYALL: Understood. JUDGE McGuire: Okay. MR. ROYALL: Perhaps then I could ask Mr. Oliver to answer your question. JUDGE McGuire: All right, Mr. Oliver. MR. OLIVER: Your Honor, as I understand at least part of your question is how one can reconcile the evidence with respect to EIA and with respect to JEDEC, and I believe that Mr. John Kelly was very clear on this in that the meaning of the word "patent" when used in the EIA materials included patent application, and the reason the 21-I manual was amended was in order to make that clearer. JUDGE McGuire: Now, how did he acquire that interpretation of the EIA policy including applications in the term "patent"? I mean, where did that come from? Because the EIA policy was in effect before the 21-I was published. So, where did his interpretation 4 come from that the term "patents" in the EIA policy included patent applications? MR. ROYALL: I apologize, Your Honor, for going -- no, please, stay up here. Because I handled Mr. Kelly at trial, I want to answer this, because he did testify when he arrived at EIA/JEDEC, in late 1990, he had meetings with the existing general counsel, with I believe the president of EIA, and they explained to him what the policies meant, and he explained that it was from that very time when he started that he was told and he understood -- and he never heard different -- that "patent" meant both patent and patent application. JUDGE McGuire: Okay, if I assume for argument's sake that that's the case and that the policy clearly obligated participants to disclose patents and patent applications, how should I construe the evidence in this case that shows that some companies in JEDEC comported with that policy and other companies had not comported, and other than the episodes involving TI, quad CAS and WANG, was there any evidence that would show that the other five or six companies, IBM, Samsung, Toshiba, several of those, was there any enforcement ever taken by JEDEC because they did not offer and disclose their patent applications? MR. OLIVER: Your Honor, you ask a very difficult question, because there are many different companies and -- JUDGE McGuire: It's one I have to answer, so I'm giving you a chance to offer me some assistance. MR. OLIVER: Certainly, absolutely. I simply want to point out that there are many different companies with different factual situations. I will start with IBM, but I think it's -- JUDGE McGuire: I'm really not interested in going into the facts. If we can stipulate for purposes of this question that there were some companies who did not disclose patent applications, then what does that say about the clarity of the patent policy, where some companies have disclosed and some have not? And also, how should I interpret the fact that there was apparently no enforcement action taken other than the three episodes that I have described with those companies that had not disclosed patent applications? MR. OLIVER: Your Honor, I think part of my point is I don't think the record evidence shows that companies did not disclose patent applications. I said this morning, is it possible, yes, it's possible, but I don't think the evidence shows that, and IBM, just as an example, Rambus has made a great deal about the way in which Mr. Kelley's statements were taken down in the minutes, but the fact shows that IBM did disclose not only patents, not only patent applications, but even their intention to file before they even filed for a patent application. We've heard -- JUDGE McGuire: Now, was there one episode? Is there evidence in this record that shows that IBM had at least one patent where the co-inventor was, in fact, the chairman of JEDEC and that that patent was not disclosed to JEDEC -- the application was not disclosed to JEDEC during the time that the technology was being offered before the presentation by IBM? Is that in dispute? MR. OLIVER: I'm sorry, could you repeat that, please? JUDGE McGuire: It's my understanding of the evidence -- now, tell me if I have construed it properly -- that there was at least one episode where a patent application of IBM was not disclosed to JEDEC during the period of time when IBM was even offering a presentation of that application or technology, but yet it was not disclosed. Is that not true? If it's not true, then I'll drop the question. 6 MR. OLIVER: I don't recall that, Your Honor. JUDGE McGuire: Mr. Stone, I believe you had indicated in your arguments that IBM had failed to disclose patent applications. Is that an issue in dispute? MR. STONE: IBM announced in 19 -- JUDGE McGuire: I know it announced it was not going to file applications or it was not going to disclose applications, but was there not at least one episode where they had a patent application -- and if not, just tell me, and I'll just drop this. I may have misunderstood the evidence. MR. STONE: There is one instance with IBM. They weren't the presenter, but it was the no-write transfer mode that they had a patent application on that they did not disclose in that time period. So, that's in our findings. So, there's that one. We have other examples. JUDGE McGuire: Okay, Mr. Oliver, I just want to stay with IBM. Is that an issue, what he's just said? MR. OLIVER: Your Honor, I would have to go look at the evidence, but again, I simply want to point out that simply because a patent application was not disclosed does not establish, for example, that there was knowledge that that was relevant at the time. JUDGE McGuire: Okay, but I guess I'm trying to inquire as to how shall I interpret, one, the policy when we have companies doing two different things? Now, the respondents have said, well -- if we adopt their argument -- that the policy was, in fact, to encourage voluntary disclosure, then that might well speak as to why some people disclosed applications and some didn't, but I've tried to put the context of my question on the assumption that the patent policy has required patents and applications. 7 How should I interpret the course of conduct at the time where some companies disclosed, some companies have not, and the fact that there apparently was not a lot of enforcement against those companies that had not disclosed by JEDEC? MR. OLIVER: If I can answer that, it's a two-part answer, Your Honor. First of all, even taking the assumption that there were patent applications that were relevant but were not disclosed, there's still a question as to whether participants were aware of the patents. We heard, for example, in the case of IBM how many different facilities they had, how many different research and development plants that they had. Mr. Kelley said a number of times, and the reason the statement appears in the minutes, is that it was impossible for him to know of all the patents and applications going on within IBM. JUDGE McGuire: Right. MR. OLIVER: So, even if there was a patent application, for example, from IBM that was relevant, that in no way shows that Mr. Kelley somehow violated -- JUDGE McGuire: And I understand that in the context of IBM, but how about some of the other companies that have failed to disclose, Samsung and Toshiba? Do you want to go into those facts? MR. OLIVER: Again, Your Honor, I'm not certain which instances you're referring to, but I don't think that there has been record evidence that would show that they had patent applications that were relevant to the work going on in JEDEC -- JUDGE McGuire: Okay, so that's an issue. Are you saying that, Mr. Stone? Because I'm taking this from your argument. MR. STONE: Yes, yes. JUDGE McGuire: Are you saying that the applications by these other companies that had not been disclosed are just applications but had no real pertinence to the standard? MR. STONE: No, the IBM inventor was present at the meeting when the write transfer was talked about with regard to SyncLink, which was one of the ones I raised. Desi Rhoden was a named inventor on a SyncLink patent application. He did not disclose it and no one else disclosed it when they sought standardization of the SyncLink pin-out. Brett Williams of Micron was present at the meetings. Micron presented and asked that they standardize the burst EDO standard, and nobody from Micron -- Brett Williams, who was a named inventor or no one else -- disclosed those. That's just a few of the examples that are set out in more detail. JUDGE McGuire: Mr. Oliver, let's talk about that episode with Micron. MR. OLIVER: Yes, Micron -- JUDGE McGuire: Now, first of all, Mr. Stone, that was a technology that did have bearing on the standard being proposed? MR. STONE: Absolutely. Micron was asking for standardization of the very technology on which they had patents. JUDGE McGuire: All right, Mr. Oliver, could you respond to that? MR. OLIVER: Yes, Your Honor. My recollection is that Micron did, in fact, disclose 15 to 16 months later. As I mentioned this morning, there was disclosure that was late, but they did disclose. They disclosed voluntarily. JUDGE McGuire: All right, voluntarily. Okay, let me ask you [parts missing] MR. OLIVER: Your Honor, because they understood it to be their obligation. In other words, it was not that someone else caught them. They came forward and they disclosed. That last exchange was quite revealing. It even prompted Mr. Danforth of Rambus to comment on it in the recent earnings conference call. Ultimately, the exchange ended with the FTC saying that Micron had disclosed voluntarily. On seeing the [following parts scrambled] judge pick up on ?All right voluntarily? of course the complaint counsel did try to clean it up by saying ?it was not that someone else caught them. They came forward and they disclosed.? JUDGE McGuire: Okay. You've made argument today and in your briefs regarding the policy contained in 21-I, which again involves the disclosure of patents and patent applications. That policy was published in October of '93. If I understand the evidence correctly, the approval of the SDRAM standard was made earlier that year, I think -- was it April of '93 or say March of '93? Is that correct from an evidentiary point of view? MR. OLIVER: The 42.3 committee adopted the SDRAM standard in March. JUDGE McGuire: In March. MR. OLIVER: Approved by the council in May. JUDGE McGuire: Okay. If that's the case, then how could the policy contained in 21-I, adopted and published in October of that year, have any application to any perceived obligation to disclose as it may apply to the SDRAM standard? MR. OLIVER: The overwhelming weight of the evidence, which is laid out in great detail in our findings of fact, states that there was no change in 10 the policy, that that was, in fact, the policy that existed prior to that. The 21-I manual was changed only to clarify the existing policy. JUDGE McGuire: So, that goes back to your earlier comment that the EIA policy as interpreted through JEDEC was that "patents" also included patent applications -- the term "patents" also incorporated the term "patent application"? MR. OLIVER: Yes, Your Honor. JUDGE McGuire: Okay. Did you want to comment? You don't have to, Mr. Stone. MR. STONE: I just want to make one comment on that. I don't want to go back through all the evidence, but I want to remind the Court that Gordon Kelley, the chairman of 42.3-B and the chairman of the JEDEC Council, said "patent" as used in the EIA manuals meant only patent and did not mean patent application. So, if Mr. Oliver's right, that the policy for EIA was always that "patent" meant patent and application, then Gordon Kelley didn't know it, and that means it was not clear. We have a lot of other evidence as well in the record, but I did want to make that one point. JUDGE McGuire: Okay. Mr. Oliver, what is the agreement here between participants in JEDEC and JEDEC? Is it based on contract? Is it construed as a private agreement? What are the antitrust implications in this case? I know that's -- I know you feel -- but if -- first of all, is the involvement here between JEDEC and its companies that are involved with JEDEC, is that -- could that be construed as a private agreement for antitrust purposes? 11 MR. OLIVER: Your Honor, I would prefer not to look at it in terms of contract law or private agreement, but rather in terms of antitrust law. As I think I tried to emphasize this morning, the EIA Legal Guides, which establish the basic rules for standardization, spoke of the importance of not conducting standardization programs in a way that would exclude competition or work to the benefit of any particular competitor or groups of competitors, and I believe that Mr. Kelley also testified that those are found at the heart of antitrust concerns. I think that is the core of what we are dealing with. Exchange #5: What needed to be disclosed? Were specific claims required? JUDGE McGuire: If we assume for the context of the coming question that the patent policy was that you had to disclose patents and applications, was there ever an obligation on companies to disclose the claims that comprise an application? MR. OLIVER: You mean the specific language of the claims? JUDGE McGuire: Yes. MR. OLIVER: No, the obligation was to disclose sufficient information about the application that JEDEC members could understand to what technology it applied and understand what the ramifications would be. JUDGE McGuire: And in fact, isn't that what happened when the CEO of Kentron testified that he would not disclose claims or applications but yet he gave sort of a broad overview of what the application entailed? Would that comport to the patent policy if we assume it was mandatory to disclose patents or applications? MR. OLIVER: So long as it was sufficient to disclose the relationship between the patent application and the ongoing work at JEDEC, yes. 12 JUDGE McGuire: Okay. Mr. Stone, I want you to address this. MR. STONE: Yes, thank you, Your Honor. JUDGE McGuire: What kept your client from -- and I understand the argument about how it had interests and a justification to protect its claims and their IP. What kept your client from disclosing a broad-based concept of the application and still being able to protect its IP and the claims as what occurred with the CEO of Kentron? MR. STONE: Okay, they did. They did, and the Federal Circuit addressed that at page 1098 of their decision, 318 F.3d 1098. They said if you didn't have to disclose claims and you only had to disclose your invention, then Rambus' disclosure of the '703 patent satisfied all of its obligations, because the only distinction between the '703 patent and any of the applications that were otherwise pending was in the claims. So, by disclosing the '703 patent, they disclosed the complete written description of their inventions, and that's what the Federal Circuit said. If the only difference between the '703 and all these applications is in the claims, and if you don't have to disclose the claims, as counsel just said, then all that you could have been required to disclose was disclosed when Rambus disclosed the '703 patent. JUDGE McGuire: Mr. Oliver, what is next -- MR. OLIVER: I'm sorry, Your Honor, could I follow up on that? JUDGE McGuire: Sure. MR. OLIVER: We do take great issue with that, Your Honor. That is a theoretical, abstract argument that is completely divorced from the facts of this case. We've heard large volumes of evidence in this 13 case that witnesses did not understand the nature of the claims that Rambus could obtain from review of the general application, and we've heard a great deal of information from Professor Jacob as to exactly why that was the case, the distinction between narrow versus wide bus, the multiplex versus nonmultiplex architecture, packetized versus nonpacketized architecture, et cetera. The fundamental fact is at the time they disclosed the '703 patent, they did not provide sufficient information for JEDEC members to understand how the Rambus patent applications or the work that they were doing related to the ongoing JEDEC work. MR. STONE: May I respond just briefly, Your Honor? I have two responses. The only difference between the '703 and those others was in the claims. Mr. Oliver just said we didn't have to disclose the claims, but he says, oh, we have lots of testimony that people couldn't read that WIPO application of the '703 patent and understand what the invention was all about. We have the Mitsubishi documents, and they go through claim by claim by claim in the WIPO application, and they show how it has applications to SDRAM. They write about a number of applications to SDRAM. They write about it being DDR in any kind of a DRAM. They go through each of the features at issue here, and they see them all in the application. If we didn't have attorney-client privilege that protected the DRAM manufacturers' analysis of Rambus' patent applications, I suggest, Your Honor, that we'd have the same sort of analysis done by the manufacturers that would show the same thing, and so we have testimony from our expert, we have testimony from the Mitsubishi documents, and -- we have the evidence of the Mitsubishi documents, and we have the patent office's determination that all of those inventions were fairly disclosed in the written description in either the WIPO application or the '703 patent. That's one and the same. JUDGE McGuire: I have a question that came up during closing arguments of respondent, and that is, first of all, is there any dispute as to whether the technologies and the architecture within DDR are inherently about the same as that of the RDRAM? Is that in dispute? MR. OLIVER: Your Honor, there is some dispute. I think Professor Jacob in particular discussed the differences and the way in which the technologies were described in the specification and the '898 application. JUDGE McGuire: But the DDR standard did, in fact, contain the four technologies at issue in this proceeding, did it not? MR. OLIVER: I'm sorry, the DDR standard -- JUDGE McGuire: The DDR standard did incorporate the four technologies in RDRAM. Isn't that true? MR. OLIVER: Well, DDR certainly included programmable CAS latency, programmable burst length -- JUDGE McGuire: And dual-edge clock, the four technologies. MR. OLIVER: That's right. JUDGE McGuire: So, it's true that the standard incorporated the four technologies of DRAM. Is that true? MR. OLIVER: The only reason I'm quibbling, Your Honor, is that those technologies were used in a slightly different way in RDRAM, and the DDR standard certainly uses the four technologies that Rambus claims to have patent rights over, but they were used in slightly different ways in the RDRAM architecture, and they were described in different ways in the patents than they were used in the DDR SDRAM standard. JUDGE McGuire: All right, Mr. Stone, how were they different? MR. STONE: I quibble just slightly on a different point, Your Honor, that our view is on-chip DLL is not required by the DDR standard. Some manufacturers use it. We don't believe it's required by the standard. Otherwise, we think the four features are either in the products today or three of the four features are required by the standard. JUDGE McGuire: Okay. I know as far as the RDRAM goes, there's the argument of complaint counsel and that of its experts that said that RDRAM did not do well in the industry because of its high cost. There's also evidence in this record that certain DRAM companies acted in concert to perhaps artificially drive up the cost of RDRAM. If the Court were to incorporate all of those findings, that one, perhaps there's evidence that it did cost more, but yet there's evidence that it cost more because of the actions of other DRAM companies, and you said that RDRAM did not do well, and acknowledging that there might be some slight variations between DDR and RDRAM, then why couldn't you say the same about DDR? It obviously has done well in the market, so why didn't RDRAM do almost as well? MR. OLIVER: If I could give you a two-part answer, Your Honor. First of all, I do want to be clear that the evidence indicates that RDRAM was not doing well since 1991 or 1992. Indeed from other documents that we went through this morning, it showed in April of 1992 evidence that the industry was already very concerned about issues such as high cost, low latency and royalties. Even accepting the face value of the evidence of conspiracy -- which I do not, I do not believe that has been shown -- even if that were to be accepted, the evidence indicates that RDRAM was not doing well long before that. Second, Your Honor, there's considerable additional evidence that you have not mentioned. In particular, the technical problems with RDRAM, including problems that Intel had with their chipset that interfaced with RDRAM, and I believe that the testimony indicated and the documents also indicated that perhaps even more than the cost issues were these technical problems and creating the conditions in which RDRAM ultimately failed. JUDGE McGuire: We've discussed how DDR II, which has just been approved here of late, incorporated as well the same four technologies contained in RDRAM, and you've made the argument that, in fact, they contain those four technologies not because they offer the best answer to the DRAM industry, but because industry was, in fact, locked in to these technologies. Other than the testimony of your experts on this issue, was there any evidence at the time the DDR II was being debated, was there any evidence that people had discussed that, yeah, we can't pursue alternative technologies because we are locked in? MR. OLIVER: Yes, Your Honor, there is a great deal of evidence. There are a number of documents throughout 1998 and 1999 that Mr. Macri in particular explained that really traced the history of DDR II starting in April of 1998, and one of the very first questions they asked, of course, is, okay, what should be used as a starting parameter, if you will, and it was very quickly decided that there was no interest in using anything other than DDR SDRAM as a starting point for DDR II, and from that moment, all technologies in DDR were presumed to carry over to DDR II. By the time the Rambus patents became known -- actually, almost two years later, there had already 17 been substantial work done on the DDR II standard. A number of companies had actually already begun their own individual work on DDR II. In addition, as I mentioned a few moments ago, there were concerns about backward compatibility, and companies like IBM, as Mr. Kellogg testified, wanted to be able to use chipsets to be compatible with both DDR and DDR II. So, I think that record is established not only through the series of documents, but through the testimony of Mr. Macri in particular, also the testimony of Mr. Kellogg, the testimony of Mr. Lee, and to a lesser extent, the testimony of Mr. Polzin. MR. STONE: That goes directly to the point I made earlier. Once they learned about the patents, they went and looked at all the alternative technologies that Mr. Oliver has suggested were substitutes. They looked at them, spent time on them. They didn't say we can't do them because of backward compatibility, they didn't say we were locked in. They ultimately rejected them on their merits because the four technologies were superior. MR. OLIVER: If I could respond to that, Your Honor, we have heard a lot of testimony about the differences that different JEDEC members had in terms of opinions, what technology they felt was better, as well as the effect to the companies, and this is exactly a case in point. I believe it was Mr. Rhoden testify that if you have 10 engineers in a room, you have 12 opinions, and this is very much on point here. We heard, for example, from Mr. Lee and Mr. Kellogg. Now, Mr. Lee said that Micron was proposing changes. They wanted to work around these technologies. For them, the lock-in issues were less important than the four technologies, and they were willing to make the changes. Mr. Kellogg, for example, when he was reviewing the proposal to change dual-edge clocking, he believed that it was not suitable for IBM, that backward compatibility was too important for IBM. This is simply an example that simply because some companies propose change does not mean that nobody is locked in; 18 rather, it simply means that companies are positioned differently. Some companies may be willing to change, but others are not. The DDR II evidence indicates that the majority were locked in and were not in a position to change. MR. STONE: Mr. Oliver is just wrong about the last point. IBM in the document that we cited to earlier today said single data rate is preferred. They didn't say we have to go double data rate. They said we prefer single data rate. They preferred it. They didn't go with it because it didn't work. JUDGE McGuire: Okay. In this complaint, I've been asked if I uphold these counts, these antitrust allegations, that to impose a sanction that would in essence preclude the patent holder from exercising its due rights under the patent issued by the patent office, and there has been no showing of any fraud on the patent office. So, my question is, what authorization in law does the FTC have and by implication does this Court have to impose the type of sanction that I've been asked to impose in this case? MR. OLIVER: If I could just as a preliminary comment, before directly answering your question, I simply do want to make clear that the remedy we are seeking would preclude enforcement of certain aspects of their patents; that is, only with respect to patents with priority before 1996, and only -- JUDGE McGuire: And all those that claim priority back to the '898? MR. OLIVER: Yes, and again, they would be free to assert their RDRAM. JUDGE McGuire: Right, but to those patents, I'm talking about the ones that you've included in your complaint and have asked me to impose the sanction, my question is what authorization in law does this Court have and does the FTC have to do that? MR. OLIVER: Your Honor, the most direct precedent is the Dell matter. The Dell consent laid out the authorization it has, and it relies in part on principles of equitable estoppel. JUDGE McGuire: Outside of Dell -- because that's a consent agreement -- outside of Dell, is there any other legal authority, because it seems to me like if that -- you know, if there is no authority in law, then to impose such a sanction would in some way be an unconstitutional exercise to take their property without proper compensation. So, other than Dell, what authorization in law is there for the FTC and this Court to impose that kind of sanction? MR. OLIVER: Your Honor, it clearly would not be a taking of property unconstitutionally. This clearly is an important issue for you, for Your Honor, and I would suggest if it appropriate that perhaps we could submit a short brief on that. JUDGE McGuire: At this point, I'm not going to ask you to do that. Okay, Mr. Stone, did you want to offer anything on that? MR. STONE: No, Your Honor. I think we addressed that fully in our brief that we filed. JUDGE McGuire: Okay. MR. OLIVER: Your Honor, if I could just follow up briefly, the most direct precedent other than the Dell matter would be American Cyanamid. JUDGE McGuire: Okay. Can there be any antitrust implications if a patent policy is unclear? MR. OLIVER: In terms of the JEDEC policy? JUDGE McGuire: In terms of JEDEC. MR. OLIVER: Absolutely there can, Your Honor. JUDGE McGuire: Absolutely there can? MR. OLIVER: Yes, there can. As I stressed this morning, the Commission's complaint looked at three separate sources. It was not just rules, but rather it was basic purposes of the organization, and it was the basic principles by which the organizations operate. JUDGE McGuire: Can there be antitrust implications purely on a conclusion that a participant in JEDEC did not act in good faith? MR. OLIVER: Yes, Your Honor, there can. Again, that is set forth particularly in paragraphs 47 through 55 of the complaint. MR. ROYALL: If I could just supplement that by noting the testimony at trial relating to rules of JEDEC and EIA that required good faith, and these rules are not just mere aspirations. They're rules that has been enforced, just as the patent policy has been enforced, so it's really no different. MR. MELAMED: Your Honor, could I speak briefly to the last question about fuzzy rules and good faith and so forth? JUDGE McGuire: Go ahead, Mr. Melamed. MR. MELAMED: Very briefly. If that's all they have, I don't think they have an antitrust claim. Certainly citing their complaint doesn't establish that there's authority for it. The reason for that is this: The antitrust laws -- and this goes back to something Mr. Royall said a few moments ago -- the antitrust laws are intended to encourage people to be aggressive competitors up to but not across the line. They require clear lines. Here, the issue is not do we welcome conduct in standard-setting organizations that offends Mr. Royall's or complaint counsel's sense of fair play. It's under what circumstances do we require companies to surrender their trade secrets, their intellectual property? And I think the basic antitrust principles that say you want clear rules so that companies know what they have to do and can go aggressively up to the line applies here as well. MR. ROYALL: Could I respond briefly, Your Honor? The Allied Tube case, again, Your Honor, says that you can impose antitrust liability when someone subverts a standard-setting organization even if there's no rule, and that's exactly what the Supreme Court said, and I pointed it out earlier, that because of the public concern around standard-setting and the potential for anti-competitive risk, the law will not allow someone to subvert and get away with an abusive monopolistic manipulation of a standard-setting process and be immune from any liability simply because the standard-setting organization itself has failed to write a rule to prohibit. If it was subversive, anti-competitive conduct in that setting and it results in anti-competitive effect, the Supreme Court says that is exclusionary conduct that is within the reach of the antitrust laws. MR. STONE: If I could just respond briefly, Mr. Royall has conceded earlier in this case that if Rambus hadn't joined JEDEC, it would have had no obligation to disclose anything. Rambus' failure to disclose is not like Allied Tube's collusive Section 1 violation. All that Rambus did was not disclose certain applications. It had every right not to do that but for what complaint counsel say is a violation of the rules. MR. ROYALL: Your Honor, could I very briefly? That argument is a non sequitur. Obviously this company did join JEDEC. It participated for four and a half years. We've shown all of the evidence of what it knew, exactly what it was doing. It engaged in a scheme, and it achieved its end, and it has a monopoly now, and it has caused serious harm. Clearly that can be condemned under the antitrust laws, and it is clearly within the authority of this agency to impose a remedy that does what? Restores competition. That is something that clearly this agency can do. JUDGE McGuire: Okay, let me -- MR. ROYALL: And the remedy we propose is designed to do that. JUDGE McGuire: Let me ask you a question on this, Mr. Royall. If I understood your argument earlier today, you said you really do not take issue with the fact that in this case, I guess that respondent -- you aren't taking issue with the fact that they added claims to their patent applications that covered the JEDEC standards, but your argument with them is they did not then disclose those efforts and those claims to JEDEC. So, as a matter of patent law, you aren't taking any issue with the act of what they did in adding claims that cover the standards, but your whole point is that having done that, they have an obligation to JEDEC to inform them of that fact? MR. ROYALL: Yes, Your Honor. If Rambus, contrary to fact, had never joined JEDEC and just amended its patent applications to cover JEDEC standards or something else, well, the patent law, as I understand it, wouldn't allow you to challenge that and we wouldn't challenge it in antitrust law, but there's an interesting analogy here, though. Under Kingsdown and other cases that they have cited, the patent law would not allow you to challenge the mere act of amending a patent application to preclude a competitive product, but under patent law, what you can do -- and there are many cases that we've cited -- is challenge the act of engaging in a misleading way in a standard-setting organization by not disclosing patents. That is called equitable estoppel. There's lots of authority for that. That's the type of claim that we're making, but we're making it in an antitrust context, and I would tell you -- I would also say that there is substantial authority for taking conduct that can be a violation in the patent law context and challenging it in the antitrust context when it results in anti-competitive effects. Walker Process is exactly that. Handgards is exactly that. And what this case does is it takes these equitable estoppel concepts, and it challenges them in an antitrust context when the very same conduct that in patent law could result in equitable estoppel has an anti-competitive effect. JUDGE McGuire: Okay, I think that's all the inquiry I have of complaint counsel at this time. JUDGE McGuire: -- there is evidence in this case that there were certain emails that were sent by -- internal emails by CEO Tate and Crisp regarding the fact that -- and you touched on this somewhat today -- that let's not tell our partners that we think that DDR may infringe on RDRAM, and so that implies that the partners could not determine on their own that that was the case, then does that not stand in conflict with your overall argument that because these patent applications were out there in the industry, that an engineer exercising skill in the art could have interpreted all the way back to the '898 application that these four technologies were, in fact, included? If that was the case, then why did you feel that your partners hadn't caught onto that? MR. STONE: I think I can answer that by reference to the testimony and the record, and there's quite a bit of deposition testimony from Mr. Tate that addresses this as well as from others, and what they say is that it makes a lot of sense when they say we don't want to go to our partners and say you're infringing a patent until we have a patent and we know for sure it's infringed. The fact that Rambus might be seeking claims or claims to have inventions or describe inventions broad enough that might result in those patents could certainly be determined by them. At the point in time when Mr. Tate wrote that and the other emails that were written, they did not have any patents or any patent claims that were infringed by any of their partners, and what Tate was advising was sound advice, both business and legal. He said until you have an issued patent that you know is infringed, don't go threaten somebody. A, it can make them mad; B, you might be breaking the law or doing something improper by threatening them when you don't have it; and C, if you don't have it and you're not ready to file a lawsuit, if you go out and threaten somebody, they may sue you under a declaratory judgment action. That's the legal advice part. I don't know if that's part of it or not, but we know that's good, sound legal advice. What we do know is that at the time he was saying that, they did not have claims that were infringed, because when they got those claims, they did ultimately, immediately start the negotiations and ultimately the lawsuit was filed first with Hitachi and then the others. JUDGE McGuire: Mr. Royall? MR. ROYALL: The only thing I would add to that is Mr. Stone has given an explanation for why Rambus might have wanted to wait in disclosing patents, but there's lots and lots of other evidence of another explanation, which is the concern about the patents being worked around and the potential that if they were to disclose and to let people know, then they could work around in the standards and avoid the patents. Now, he didn't mention that, but there's lots of evidence that that is something that was very much in the minds of people like Mr. Tate and Mr. Crisp who were making decisions about whether to disclose or to conceal. MR. STONE: Well, I am not going to engage in any "yes, you're right/no, you're not" argument with Mr. Royall, but if you look through the findings, you're not going to find any evidence to support Mr. Royall's proposition that that was the thinking that Mr. Tate had in the time frame that you're asking about. It's not there. JUDGE McGuire: All right. Mr. Stone -- MR. OLIVER: Could I have one word on this, Your Honor? JUDGE McGuire: Go ahead. MR. OLIVER: First of all, I think your question goes directly to the heart of the matter. Why is it that engineers couldn't figure this out on their own? Why did Rambus make the effort to conceal from the industry to an extent its potential patents? I simply want to point out that it's not only the one document that you reference, but there are 10 or 12 that we've listed. For example, the Karp document with regard to their patents, that is simply inconsistent with the explanation given by Mr. Stone. JUDGE McGuire: Thank you, Mr. Oliver. Mr. Stone, the arguments you've made regarding the patent applications that were out there in the industry and those companies that had gone through them and determined that they would not issue due to prior art, did those applications pertain to RDRAM? MR. STONE: The application that most everyone was looking at was the WIPO application, the original '898 application, which the U.S. Patent Office split into a bunch of them, and that was a patent that ultimately resulted in patents that applied specifically to RDRAM, that also applied generally to SDRAM and patents that applied to DDR SDRAM. JUDGE McGuire: And to the extent that they might have applied to RDRAM, then why, if these companies all felt that these patents would not issue because of the prior art, then why was it important that some of the DRAM companies that you've alleged acted in concert to keep Intel from adopting RDRAM in its processors and why to the extent that some of these applications that they felt would not issue due to the prior art, then why was that effort so important? MR. STONE: I think there's probably two answers. One, I think they thought some of the very specific features of the RDRAM were likely to result in patents regardless, even if they didn't think the patents would have any breadth, I think they thought there was likely to be specific patents on RDRAM, and two, Rambus and Intel were offering a deal, and Rambus was offering a license, much more than just patents. Rambus was offering the technology, the design, the cookbook or how-to kit, if you will, and they were partnered with Intel in a way that let the DRAM companies fear -- led them to fear that what would happen is future technologies would be dictated and designed by a team of Rambus and Intel, and that's why we have the documents that talk about Rintel at some points, where they combined the two, and their fear was not that we can or can't get around the patents. Their fear was our technology is going to be dictated to us by Intel, and Intel will drive the price down, and we won't make any money. JUDGE McGuire: And we touched on this earlier, Mr. Stone, but again, on kind of the same topic, how certain DRAM companies in the industry had some knowledge of these patent applications and for whatever reason they determined that they would not issue due to prior art. How would that understanding, though, be imputed to JEDEC as a whole? MR. STONE: Well, they said it at some of the meetings. We have minutes where they describe the Rambus application, the '898 application, when it was discussed -- I believe the second time it was discussed at the JEDEC meeting, where it was disclosed as -- described as simply a collection of prior art. So, it was discussed at the JEDEC meetings where they said we don't think it's going to issue, it's stuck in the patent office, we think it's just a collection of prior art. So, I think everyone in attendance heard that, and it's reflected in memos and notes from those meetings. JUDGE McGuire: Mr. Oliver? MR. OLIVER: If I could respond to that, Your Honor, this again goes to a fundamental point that I was making this morning that there is a clear distinction between a vague statement that, you know, either Rambus has patents or Rambus has patents that may apply to SDRAM versus a specific disclosure that Rambus itself believes it has patents that apply to a particular technology. Only with that latter disclosure is it a context that permits members really to conduct an appropriate analysis. I submit that it's just not -- it's not probative of what would have happened at JEDEC to engage in this type of speculation. MR. STONE: And I would add that in 1994, when Betty Prince gave her presentation to Samsung, based, as she told us, wholly on public information, she explained how the concern of the DRAM manufacturers had lessened due to their analysis of the application and her understanding that they thought there was a lot of prior art. JUDGE McGuire: Okay, one last question on that issue -- well, just one last question. In terms of your client's understanding of what it perceived to be the patent policy at the time, there's evidence in this record that its rep, Crisp, had sent an email regarding the technology of the PLL/DLL presented and disclosed by a company called MOSAID, that it had disclosed its application on PLL/DLL, and in that email sent by Crisp, he had indicated back internally to Rambus that he felt that that comported with the patent policy of JEDEC under the policy manual 21-I. How does that email and his understanding of the patent policy at that point in time speak to the overall understanding of the patent policy through JEDEC by Rambus? MR. STONE: I understand, Your Honor. Could I defer to Mr. Perry who spoke to that today? JUDGE McGuire: Sure. MR. PERRY: Your Honor, with respect to the MOSAID disclosure, actually the minutes show that MOSAID didn't actually disclose it themselves, somebody told on them, but in terms of Mr. Crisp's email, I believe that what you're referring to is an email that describes what the gentleman from MOSAID said, which was that if it is an implementation patent, it wouldn't matter, people can get around it, but if it's a patent that is required to be used, they would agree to RAND. Mr. Crisp's email is not about the disclosure issue. It's about them saying that they would license it and then everybody went forward and standardized it. He is not talking about a disclosure being in compliance with anything. He is talking about the fellow from MOSAID saying under what circumstance is he promising to give reasonable and nondiscriminatory licensing assurances. JUDGE McGuire: Thank you, Mr. Perry. Mr. Royall, were you going to comment, because I've only got about two more questions. MR. ROYALL: Oh, you do? I was going to respond -- JUDGE McGuire: Not on this issue, but if you want to follow up, go ahead, and then I'm almost done. MR. ROYALL: Your Honor, I had understood that that was your last question. I was just going to stand up to respond to something Mr. Stone had said earlier. JUDGE McGuire: How much earlier? MR. ROYALL: How much do I have to say? MR. PERRY: April. JUDGE McGuire: Let's move on. MR. ROYALL: That's fine. JUDGE McGuire: And this actually goes back to a question I had of complaint counsel. The argument has been offered here that the '327 patent, which was not included apparently in the inventory of patents given to JEDEC at the time of the termination of JEDEC by Rambus, the argument is that the '327 patent really had no pertinence to any SDRAM or DDR standard at JEDEC. If that's the case, then why is it important that they did not include that in their inventory of patents to JEDEC at the time they terminated their relationship? MR. OLIVER: Thank you, Your Honor, I'm glad you asked that question. That was a note that I had made that I wanted to respond to if I had the opportunity. That frankly was just a complete red herring. The issue here is whether JEDEC would have had the opportunity to work around patents by using other alternatives. If the '327 patent had been disclosed and JEDEC knew that Rambus had patents on dual-edge clocking technology, they would have had the opportunity to use a different clocking technology that would have avoided the patents that Rambus is currently seeking that do cover dual-edge clocking. MR. STONE: Except that the '327 was on a list sent to every JEDEC member in early 1998, before they standardized on DDR, and they didn't work around it, and we know that they didn't have to work around it to do so because it didn't infringe on what they were doing. So, there is no witness that testified, if I had only seen the '327, I would have moved away from DDR. No evidence in the record, and in fact, they knew about it, it was on a list circulated in JEDEC in early '98, and they did nothing. [I think a paragraph is missing here] Exchange #15: If Rambus had been allowed to make their presentations would these issues of disclosure have been resolved then? JUDGE McGuire: Again, another question for complaint counsel, and again, this was an argument that you made here this afternoon, that if there had been disclosure of the four technologies at issue earlier in the process to JEDEC, then perhaps they could have pursued alternative technologies. Couldn't you say that would also be true other than for the fact that they were precluded from making a presentation of this technology to JEDEC? MR. OLIVER: No, Your Honor. That issue is that Rambus was considering making a presentation with respect to RDRAM-related technology. That was not related to the technologies that were being incorporated within the SDRAM or the DDR SDRAM standard. JUDGE McGuire: All right, then I'm confused, because I was thinking that they had attempted to make a presentation of RDRAM to JEDEC, but then that was not allowed, so my question was then, well, had they made that presentation, then wouldn't that have put everyone in JEDEC on notice that now maybe we should consider alternative technology? MR. OLIVER: No, absolutely not, Your Honor. JUDGE McGuire: Okay. MR. OLIVER: Because the presentation that would have been made would have either been RDRAM itself, in other words, a narrow bus, multiplexed, packetized system, which again people knew about. I think there's very little dispute that everyone knew about that, but what they didn't understand was that the Rambus patents extended beyond that to reach the wide bus, nonpacketized, nonmultiplexed architecture that they were working on in JEDEC, and that was information that Rambus did not supply to JEDEC. JUDGE McGuire: Okay. Mr. Perry, are you -- MR. PERRY: Yes, could I just respond briefly to that? It's Gordon Kelley's testimony that in May 1992, he had refused to allow Mr. Crisp to present the RDRAM technology, and if it was the case that presenters would have to disclose their patents and patent applications, as Mr. Crisp later said he came to understand, and if he had presented the RDRAM technology in '92 and if he had been told he had to give up those patents and applications, then JEDEC would have known what we were after. So, I think you have pointed to an niche there that actually I hadn't thought about JUDGE McGuire: Okay, that's all that I have. You were going to make I believe a motion, Mr. Stone? MR. STONE: No, I don't think I'm going to make a motion to dismiss, Your Honor. I think I'd just ask you in your findings, when you conclude this case, to ultimately dismiss the complaint. That's the relief we think is appropriate. JUDGE McGuire: Okay, counsel, that's it. I apologize to the audience and to counsel. I actually told someone this morning that I thought we'd be done certainly be 12:00 noon, so this has gone on now for ten or so hours, and again, I want to thank each side. You've done an excellent job here today and throughout the course of this case. You've made my job somewhat easier and somewhat more complicated, so you've done your jobs, and now it's time for me to do mine. Again, it's been an honor to be involved in this case. MR. STONE: Thank you very much, Your Honor. MR. ROYALL: Thank you. JUDGE McGuire: Hearing adjourned.