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Rambus Trial (Standard setting)
The Situation
Rambus Inc. filed a lawsuit against several major semiconductor chip manufacturers, claiming patent infringement and seeking royalties from the companies' use of Rambus's dynamic random access memory (DRAM) technology. Three of the chip manufacturers—Hynix Semiconductor, Nanya Technology, and Micron Technology—countersued, accusing Rambus of fraud and violation of antitrust laws. The manufacturers alleged that they should not have to pay licensing fees to Rambus because Rambus allegedly participated in the establishment of the SDRAM standard by the JEDEC Solid State Technology Association (JEDEC) in the early 1990s without disclosing that it was seeking patents on the technologies eventually adopted.
NERA's Role
NERA Special Consultant Dr. Richard Rapp provided expert testimony that addressed the economics of standard setting, market power, and "lock-in." He described two kinds of standard setting: formal standards set by committees (such as JEDEC), and de facto standards set by market preferences over time. Dr. Rapp explained that in cases where technology adopted into a formal standard is also clearly the superior technology in terms of performance and cost, adoption into formal standard does not enhance the technology owner's market position. Dr. Rapp's testimony made clear that if there were no cost-performance equivalent technologies available, Rambus's presence in the formal standard-setting process could not have affected the choice of technology. Even with all information known today about Rambus's issued patents and royalty rates, he explained, a rational standard-setting organization would still have adopted the superior technologies.
Dr. Rapp also testified that lock-in can only occur when the economic cost of switching is high and that in the absence of high switching cost, specifications could readily be changed, especially when designs are already subject to periodic revision.
The Result
On 26 March 2008, the jury in San Jose rejected the semiconductor manufacturers' allegations of fraud and antitrust violation, finding that the chip makers did not meet their burden of proving their antitrust or fraud claims. The ruling removes an obstacle for Rambus to recover past royalty payments based upon a prior finding of infringement.