When Attempts To Establish IP Empires Died

Moreover they must, said Lowe, get companies to reveal the amounts they intended to charge for licensing patents which may be adopted in standards.

The EC Competition Directorate was at the time investigating both Rambus and Qualcomm in connection with such practices.

Rambus for allegedly hiding DRAM patents during the standards setting process, and Qualcomm for allegedly over-charging on IP after it had agreed to charge reasonable fees prior to it being incorporated in an industry standard.

In Qualcomm’s case the issue arose when, in return for acceptance of Qualcomm’s CDMA and WCDMA standard for 3G, Qualcomm committed to license its technology on ‘fair, reasonable and non-discriminatory terms’.

Since then, Panasonic, Nokia, NEC, Ericsson and Broadcom, have complained that Qualcomm has ignored this condition by, among other things, demanding IP charges based on the value of a hand-set, and giving companies cheap IP deals if they bought Qualcomm’s chips.

What was peculiar, in Qualcomm’s case, was the unreasonableness with which the company conducted its legal cases, leading to the resignation of Qualcomm’s top lawyer, and judicial criticism of another six Qualcomm lawyers.

US Judge Barbara Major asked the California Bar Association to investigate the conduct of six Qualcomm lawyers after behaviour she described as ‘exceptional misconduct’.

“Producing 1.2 million pages of marginally relevant documents, while hiding 46,000 critically important ones, does not constitute good faith,” said. Judge Major.

The case involved was Qualcomm vs. Broadcom. The case turned on the timing of Qualcomm’s attendance at meetings of a standards-setting committee called Joint Video Team (JVT) that led to the adoption of a video coding standard in 2003.

JVT participants were required to disclose relevant patents and license them to anyone who followed the 2003 standard. If Qualcomm had attended the JVT before adoption of the standard, then Qualcomm’s action against Broadcom for breach of Qualcomm patents was waived. Qualcomm asserted, however, that it was not a participant prior to 2003.

Then, a Qualcomm lawyer found an August 2002 e-mail welcoming a Qualcomm employee to the AVC, a sub-committee of the JVT. Qualcomm’s lawyers decided not to produce the email to the court, even though they were obliged under US law to do so.

Judge Major said that Qualcomm had been ‘aggressive’ in its assertion that it had not participated in the JVT in 2002. At the court hearing, cross-questioning of the Qualcomm employee revealed her 2002 email exchanges. The court found for Broadcom.

Subsequently it transpired that 46,000 documents, containing 300,000 pages of relevant unproduced documents, had been withheld by Qualcomm from the court.

Judge Major’s findings on Qualcomm were very like the allegations made against Rambus: that Qualcomm went to standards-setting meetings, did not disclose its patent position at those meetings, used knowledge gained at those meetings to apply for patents on technologies likely to be adopted as standards, and then, when the technologies became standardised, sought to claim unusually high levels of royalties on those patents.

The Nokia-Qualcomm lawsuits started in 2005 with Qualcomm suing for infringement of GSM patents.

This was followed in 2006 by four similar suits about GSM patents brought by Qualcomm, and one brought by Nokia alleging a breach of the fair, reasonable and non-discriminatory terms for licensing. In 2007: the two companies stepped up the pace initiating no fewer than eight lawsuits plus an arbitration request.

Nokia-Qualcomm lawsuits were initiated in California, Wisconsin, Texas, the UK, Germany, the Netherlands, France, Italy and China.

The biggest downside effect of the litigation for Qualcomm, was that the telecommunications industry refused to touch Qualcomm’s proposed standard for 4G telephony called Ultra-Mobile Broadband (UMB).

Verizon and AT&T decided to go for the alternative, European standard, LTE and Japan’s biggest carrier, NTT DoCoMo also went for LTE while Japan’s second largest carrier, KDI, went for Wimax.

Rambus had spent the previous decade in litigation with DRAM companies, its potential customers.

According to US stock analysts if Rambus succeeded in the litigation its shares could be $100 compared to their then level of $20 as Rambus claimed $10bn in back royalties from the DRAM companies..

Recent decisions in the most recent case in the US District Court of the Northern District of California, under Judge Ronald M. Whyte had been favourable to Rambus. The case was Hynix Semiconductor vs Rambus Inc.

The case turned on whether Rambus failed to disclose its patents to a JEDEC committee engaged in setting standards for the DRAM industry. The patents relate to SDRAM and DDR DRAM, but not to subsequent products like DDR2 and DDR3.

Hynix argued that Rambus violated antitrust and fraud laws by failing to disclose its technology at meetings from 1992 to 1996, then changed patent applications to cover JEDEC specifications.

In 2006, the US FTC ruled that Rambus wrongfully obtained patents, then used them to impose undeserved license fees.

The EC  said that Rambus deceptively failed to disclose patents during the standards-setting process without which Rambus could not have charged high royalties in a “patent ambush”.

Rambus says that patent abuse could be claimed only under exceptional circumstances and that JEDEC, which set the DRAM standards, lacked defining detail in its patent policy.

The sheer legal grind and expense of the Qualcomm and Rambus legal cases eventually persuaded US companies to avoid  the litigious route of trying to establish an IP hegemony over an industry sector as Rambus and Qualcomm were suspected of trying to do.