WASHINGTON Increasing patent litigation, particularly in the semiconductor industry, is making it harder for technology standards groups to operate, according to a former regulator.
In a speech to a law conference in New York, David Balto, a Washington antitrust attorney and former policy director at the Federal Trade Commission (FTC), focused primarily on SDRAM patent infringement litigation between Rambus Inc. and Infineon Technologies AG. Balto warned that "increasing litigation and claims for licensing fees has dramatically increased uncertainty in high-tech standard-setting bodies, undermining the effectiveness of these bodies to facilitate technological change."
In May, a Richmond, Va., jury ruled in favor of Infineon in the SDRAM litigation that stemmed from the participation of Rambus (Los Altos, Calif.) in industry standards group Joint Electron Device Engineering Council (Jedec, Arlington, Va.). Balto and other antitrust experts have issued warnings that intellectual-property fights are harming innovation.
The FTC has also stepped up investigations of the antitrust implications of intellectual-property (IP) disputes. It has reportedly been watching the Rambus SDRAM litigation, which also involves Micron Technologies and other IC makers.
Balto said one remedy to the crisis in standard setting is stronger disclosure requirements for companies participating in groups like Jedec. The "time when relatively vague disclosure requirements were sufficient is probably passing quickly," he said. The growing number of lawsuits over licensing fees means standards groups need stronger disclosure guidelines, Balto added.
Legal experts said the issue for standards groups is establishing rules that give member companies confidence that once a standard is set that they will not have to pay steep licensing fees.
"Absent a strong disclosure system, firms may be increasingly reluctant to engage in intellectual-property-based standard s etting," Balto told the conference.
Jedec officials defended the group's procedures and said the success of standards-setting efforts essentially depends on the good faith of participants. John Kelly, who heads Jedec, said that in the aftermath of the Rambus case his group is "in the process of reviewing our procedures, and we are going to continue to do that."
Kelly nevertheless acknowledged that the Rambus patent infringement allegations against Infineon and other rivals clouds the future of open standards. "It's not a pretty picture," he said.
Still, Kelly took issue with Balto's claim that open standards are always preferable to IP-based specs, explaining that it would be impractical to attempt to standardize around all licensed technologies.
Despite the jury verdict in the Rambus-Infineon case, in which the jury awarded Infineon punitive damages that have yet to be determined, concerns about "late-blooming" IP rights are far from resolved. Unlike Infineon, Balto said other companies may not be as successful in avoiding licensing fees.
The legal standard for licensing technology is generally considered to be "reasonable and nondiscriminatory" access. Although nondiscriminatory licensing means all licensees should be treated the same, Balto said the principle "does not mean that competition or consumers will not suffer. Uncertainty about licensing fees may diminish the incentives for firms to innovate."