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Utmost Caution: The Standard of Conduct for SSO Participants

By Timothy W. Mungovan and Nicholas G. Papastavros
February 10, 2004

The legal odyssey of Rambus, Inc. (“Rambus”) over the last 4 years is a cautionary tale for companies that participate in standards-setting organizations (SSO) while developing and maintaining patent portfolios. Although Rambus has successfully defeated claims brought by Infineon Technologies, A.G. (“Infineon”) that Rambus engaged in fraud while participating in an SSO, and while Rambus appears poised to beat back claims brought by the U.S. Federal Trade Commission (FTC), the cost to the company has been substantial. Rambus' legal fees alone have run into the tens of millions and have consumed the lion's share of its profits, while its business reputation and prospects have sustained incalculable damage. Given the FTC's vow to continue to pursue investigations in this important area, and given new allegations of standards-setting misconduct in other cases, companies ignore the lessons learned from the Rambus actions at their own peril.

Rambus' IP Development

In the early 1990s, Rambus was in the business of developing and licensing technologies to companies that manufactured semiconductor memory devices. In 1990, Rambus filed a U.S. patent application with claims directed to a memory technology known as dynamic random access memory (“DRAM”) (“the '898 application”). Over a period of years, Rambus filed numerous “divisional” and “continuation” applications based on the same written description as the '898 application, at least 30 of which issued as patents.

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