The case of Rambus in the US – Standards vs. Antitrust Law


Scientific Essay, 2007

26 Pages, Grade: "-"


Excerpt

Contents

1. Introduction
1.1 Abstract
1.2 Legal foundation Sherman Act/FTC Act
1.2.1 The Sherman Act
1.2.2 The FTC Act
1.3 Patent registration under US law

2. Terminology
2.1 Legal Standards
2.2 JEDEC

3. The Rambus case in the USA
3.1 Parties Involved
3.1.1 Federal Trade Commission
3.1.2 Rambus Inc.
3.2 The Facts
3.3 Indictment
3.3.1 The monopolization of certain Technology Markets
3.3.2 Patent Ambush
3.3.3 Amendment
3.3.4 Destruction of Evidence
3.4 The judgment of the Federal Trade Commission
3.5 Foreseeable Consequences

4. Rambus judgment to be applied to Europe?
4.1 Market Demarcation
4.2 Possible Judgment according to European Antitrust Laws

5. Final Remark

1. Introduction

Global competition is particularly fierce in the IT and communication industry. For this reason the competitive landscape is changing permanently and innovation is a key competitive driver, especially in the software industry.[1] Patents have the objective to legally protect innovations from competition, as there would otherwise be less funding for R&D, or inventions and state of the art technical knowledge would be kept a secret. This would hamper technical progress. The objectives of patent law however, run contrary to the objectives of antitrust legislation, which have the goal to foster competition and to protect market actors and to avoid damnifications. Additionally a permanent contradiction between privately funded research and collective standards exists.[2]

In an industry, where counterfeiting is a common problem and R&D expenditures are as immense as in the software industry, it is reasonable that innovative companies keep their inventions secret until industrial property rights are fully registered.[3] Hence it is not surprising that cases in which companies attempt to manipulate a standardization process in order to gain unfair competitive advantages are rather common. The Rambus case[4] of 2006, which has been decided in the US[5], is such as case.

1.1 Abstract

Latest judgments[6] have proven the relationship between industrial property rights and antitrust laws a difficult one. Industrial property rights offer a legal entity exclusiveness, which could also be described as monopolies.[7] In contrast to that antitrust laws have the objective to prevent deeds that might obstruct or hamper market actors’ actions. For this reason both types of laws might collide under certain circumstances.[8]

Businesses invest a lot of money in R&D and new technologies need to be patented in order to support the development of the businesses themselves, or to collect royalties. Especially in the soft- and hardware industry compatibility is a vital success factor for new products and it has been shown that an exchange of licenses between competitors is unavoidable in certain situations. For these reasons specific standards that play an important industry spanning role[9] have been developed that unite a certain group of technologies[10]. The establishment of these standards has led to a further of unfair competition in the highly competitive software industry.

Additionally the summing up of competing patents into a unified norm improves the market position of the participating parties and basically disrupts the competition among them (market closure effect)[11]. This ousts non-participating companies and inevitably strengthens the market power of the participating companies[12]. In case one of the participating companies manages to manipulate the standardization process that company could gain a dominant position in the market that might even turn into a monopoly. If these so-called “Submarine patents”[13] are unified under a broader legal standard a conflict of interest may arise. Standards have the objective to encourage growth, but companies holding patents can only collect royalties that were not expected and aggravate the use of legal standards.[14]

1.2 Legal foundation Sherman Act/FTC Act

The Sherman Act, the Clayton Act and the Robinson-Patman Act form the foundation of the US antitrust law. The FTC Act of the Federal Trade Commission is a further additive. The following abstract introduces the legal foundations that are of importance to the Rambus case.

1.2.1 The Sherman Act

The Sherman Act is the oldest US antitrust law.[15] The Sherman Act lists up the legal foundations that address the prosecution and penalization of monopolies.[16] With regard to the following judgment Section 2 of the Sherman Acts is of particular importance.[17] The Act is similar to 82 EG and bans any utilization of a monopoly, as well as the attempt to establish a monopoly.[18]

1.2.2 The FTC Act

The FTC Acts are the basis for a shared enforcement of antitrust laws by the US Federal Trade Commission and the Department of Justice (DoJ). The FTC Act is no general applicable law, but an antitrust law enforceable by these two antitrust authorities.[19] These acts are, similar to the European (Art. 81 EG) and German law (§ 1 GWB), the most important regulations for the prosecution and penalization of unfair competition. This is stated in section 5 of the FTC Act.[20]

1.3 Patent registration under US law

Contrary to the rapid development of the chip industry, alterations of antitrust laws are a slow process. Especially in the computer and software industry the process has reached its limits, which leads to various, overlapping patents of questionable quality. This obviously limits the development potential of some companies. Due to the low quality of a certain share of granted patents, the lacking control mechanism and an immature patent registration process, situations in which competition is hampered or monopolies are created, can occur. The possibility to amend existing patents (so-called amendments) is one of the central problems of US antitrust laws. Amendments are used with the objective to hamper, to disengage competition, or to sue potential competitors due to patent infringement.[21]

[...]


[1] Montagnani, Predatory and Exclusionary Innovation, IIC 2006, p. 304, 305; Mackenrodt, The Political Economy of Intellectual Property Rights and Competition Policy, IIC 2005, pp. 113-114.

[2] Mackenrodt, The Political Economy of Intellectual Property Rights and Competition Policy, IIC 2005, pp. 113-114.

[3] Verbruggen/Lõrincz, Patente und technische Normen, GRUR Int. 2002, p. 815.

[4] Federal Trade Commission, In the matter of Rambus, Inc., Docket No. 9302, opinion of the Commission, public record version, p. 3 et seq., [online] (cited 18 August 2007) Available from <URL: http://www.ftc.gov/os/adjpro/d9302/060802commissionopinion.pdf >

[5] Cf. Wolfram, Can you hear us now? - Did the Rambus decision fall on deaf ears?, Global Competition Review 2006, p. 36.

[6] Commission as of 25.06.2005, ABl. L 332 as of 30.11.2006, pp. 24 - 25, COMP/A.37.507 - „AstraZeneca“;German Federal Court of Justice as of 13.07.2004, Az. KZR 40/02, GRUR 2004, p. 966 et seq. – "Standard-Spundfass".

[7] Singer, Ausschließliche Patentlizenz- und Know-how-Verträge nach deutschem, amerikanischem und europäischem Kartellrecht, p. 19.

[8] Cf. Böttcher, Kartell- und Lauterkeitsrecht, p. 38 f; Heinemann, Gefährdung von Rechten des geistigen Eigentums durch Kartellrecht?, GRUR 2006, p. 705.

[9] Verbruggen/Lõrincz, Patente und technische Normen, GRUR Int. 2002, p. 815.

[10] Geradin, Standardization and Technological Innovation, World Competition 2006, p. 511.

[11] Federal Trade Commission, In the matter of Rambus, Inc., Docket No. 9302, opinion of the Commission, public record version, p. 3, loc. cit.; Koelmann, An Exeptio Standardis: Do We Need an IP Exemption for Standards?, IIC 2006, p. 823, 842.

[12] Wörz, Die kartellrechtliche Beurteilung von Lizenzaustauschvereinbarungen und Patentgemeinschaften im Europäischen Recht, p. 22.

[13] A submarine patent is a patent that is kept a secret until a standard is determined and that appears once it is being used in order to collect royalties.

[14] Cf. Böttcher, Kartell- und Lauterkeitsrecht, p. 39; Montagnani, Predatory and Exclusionary Innovation, IIC 2006, p. 304, p. 332.

[15] Peritz, Competition Policy in America, p. 13 et seq.

[16] Wamser, Enforcement of Antitrust Law, p. 29 et seq.

[17] Section 2 Sherman Act: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction of thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.”

[18] Wenzel Bulst, Zur Schadensabwälzung nach deutschem, europäischem und US-amerikanischem Recht, p. 35; Beckmerhagen, Die essential facilities doctrine im US-amerikanischen und europäischen Kartellrecht, p. 34 et seq.

[19] Beckmerhagen, Die essential facilities doctrine im US-amerikanischen und europäischen Kartellrecht, p. 31 et seq.

[20] Section 5 FTC Act:”Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.“

[21] Kretschmer, USA: FTC veröffentlicht Bericht über Wettbewerbsrecht und Patentschutz, GRUR 2004, p. 42.

Excerpt out of 26 pages

Details

Title
The case of Rambus in the US – Standards vs. Antitrust Law
Grade
"-"
Author
Year
2007
Pages
26
Catalog Number
V133185
ISBN (eBook)
9783640397563
ISBN (Book)
9783640397129
File size
578 KB
Language
English
Tags
Antitrust law, cartel, rambus, commission, jedec, sherman act, EG-Vertrag, spundfass, standard, kartellrecht, FTC, federal Trade commission, intelectual property, standardisation, standardization, patent, Astra Zeneca, AstraZeneca, clayton act, robinson patman, immenga, SDRAM, RDRAM, UMTS, Kommission, Europäische Kommission, Europarecht, Grundrecht, Kartell, Kartellrecht, Hardcore, Kernbeschränkung, U-Boot, UBoot, Urheberrecht, Erfinder, case, antitrust, microsoft, heimann, gewerblicher Rechtschutz, gewerblicher, kunden, IT, RAM, Speicher, IBM, Union, AEU, Lizenzen, Lizenzrecht, Patentrecht, Markenrecht
Quote paper
Diplom-Wirtschaftsjuristin (FH) Anni Heimann (Author), 2007, The case of Rambus in the US – Standards vs. Antitrust Law, Munich, GRIN Verlag, https://www.grin.com/document/133185

Comments

  • No comments yet.
Read the ebook
Title: The case of Rambus in the US – Standards vs. Antitrust Law



Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free