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SANDARDS & PATENTS

SANDARDS & PATENTS. Kevin J. McNeely McNeely IP Law Washington, DC www.miplaw.com. Background. Industry standard setting agreement by competitors on certain product characteristics Important to an industrialized economy driven by economies of scale Critical in an information economy

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SANDARDS & PATENTS

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  1. SANDARDS & PATENTS Kevin J. McNeely McNeely IP Law Washington, DC www.miplaw.com

  2. Background • Industry standard setting • agreement by competitors on certain product characteristics • Important to an industrialized economy • driven by economies of scale • Critical in an information economy • driven by economies of networks

  3. Standards v. Patents • Standards are crucial for interoperability • Patents provide an exclusive monopoly • If a patent is essential to a standard, no way to design around the patent $$$ MONEY $$$

  4. Compliance with Intellectual Property Rights of Standards Bodies • Must disclose existence of intellectual property to standards bodies • Must agree either to: • not enforce patents • royalty free license, or • license on reasonable and non-discriminatory terms (RAND)

  5. FTC v. Dell Computer - 1992 • Dell participated in Video Electronics Standards Association (VESA) • VESA adopts local bus standard • computer bus design for instruction transfer • Dell representative participated in development of standard • No disclosure of patents obtained in 1991

  6. FTC Enforcement Action • Dell announces intent to enforce patents • FTC charges Dell with unfair competition • Dell agreed not to enforce patents • 1996 consent decree not to enforce patents for ten years

  7. Rambus Litigation • Rambus involved in design of SDRAM technology • Member of the Joint Electron Devices Engineering Council (JEDEC) • JEDEC working on SDRAM standard • Rambus did not report IP rights to JEDEC • Rambus drops out of JEDEC

  8. Rambus • JEDEC adopts SDRAM standard • Rambus amends claims to read on standard • Attempts to enforce patents on standards users • Rambus sues Infineon for patent infringement

  9. Trial Court • Finding of Fraud • Court found against Rambus and held that Rambus had committed fraud with respect to its failure to disclose its IPR, as required under JEDEC policy

  10. Appeal of Trial Court Decision • Vacated the lower court's finding of fraud to the surprise and consternation of many • Why? • Disclosure requirements not clear • Proof of attempted deception not clear

  11. Pitfalls in SDO Activity • Loss of rights to collect royalties • May be competitors holding patents oustide of the standards process • Assess Need to Participate

  12. Assess Participation • Carefully review IPR policy • Evaluate IP rights • Need to influence direction of standard • Need to keep abreast of new developments

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