On Tuesday, March 10, 2009, at 1pm ET, the Practising Law Institute will host a 1 hour telephone briefing discussing the future of standard setting bodies in the wake of the recent decision of the United States Court of Appeals for the Federal Circuit in Qualcomm v. Broadcom. This discussion of standard setting is particularly topical at the moment given that just two weeks ago the United States Supreme Court decided not to accept the appeal of the Federal Trade Commission in the Rambus matter. You may recall that on Monday, November 24, 2008, the Federal Trade Commission filed a petition for certiorari with the United States Supreme Court (see also Appendix Vol 1 and Appendix Vol 2) seeking review of the April 22, 2008 decision of the United States Court of Appeals for the District of Columbia in Rambus Inc. v. Federal Trade Commission, which was an enormous victory for Rambus due to the fact that the DC Circuit did not find any support in the record to support the FTC’s determinations that Rambus engaged in unfair and deceptive activities while participating in a standard-setting organization without disclosing its relevant patents. The FTC had petitioned to seek a rehearing of the case by the entire DC Court of Appeals rather than just letting the panel decision stand, but this rehearing request was denied, thereby necessitating this appeal to the Supreme Court.
On Monday, December 2, 2008, the United States Court of Appeals for the Federal Circuit issued a decision affirming in part the district court’s ruling in the patent dispute between Broadcomm and Qualcomm. See Qualcomm Inc. v. Broadcom Corp. This patent infringement case involved the consequence of silence in the face of a duty to disclose patents in a standards-setting organization. The district court concluded that Qualcomm breached its duty to disclose U.S. Patent No. 5,452,104 and U.S. Patent No. 5,576,767 to the Joint Video Team (“JVT”) standard setting organization. As a remedy, the district court ordered the ‘104 and ‘767 Patents (and related patents) unenforceable. Additionally, based on both Qualcomm’s JVT misconduct and its litigation misconduct, the district court determined that this was an exceptional case and awarded Broadcom its attorney fees. The Federal Circuit affirmed the district court’s determinations that Qualcomm had a duty to disclose the asserted patents to the JVT, that it breached this duty, and that the JVT misconduct and litigation misconduct were proper bases for the court’s exceptional case determination. Because the scope of the remedy of unenforceability was too broad, however, the Federal Circuit vacated the unenforceability judgment and remanded with instructions to enter an unenforceability remedy limited in scope to H.264-compliant products.
The Federal Circuit pointed out that he language of the JVT policies did not expressly require disclosure by all participants in all circumstances, but it did require at least best efforts to disclose relevant patents even apart from the submission of technical proposals. The Court then went on to explain that even by Qualcomm’s own admission, it did not present evidence of any efforts, much less best efforts, to disclose patents associated with the standardization proposal to the JVT prior to the release of the H.264 standard. This seemed to lead the Federal Circuit to conclude that Qualcomm, as a participant in the JVT prior to the release of the H.264 standard, did have at least some disclosure obligations and those disclosure obligations were not satisifed.
But how does one reconcile the Federal Circuit’s decision in Qualcomm and the DC Circuit’s decision that Rambus did not engage in anti-competitive activities by not disclosing its patent applications? It seems to be a matter of proof and not that what Rambus was alleged to have done was acceptable. In the opinion issued by the DC Circuit in the Rambus matter the court explained that the case turned on the fact that those who participated in the standard setting were obligated to disclose information about patents and patent applications, but that there was no formal finding by the FTC that the policies actually contained such a requirement. In fact, the DC Circuit was disturbed by the fact that the FTC relied on witness testimony from those who had an interest in the outcome of the litigation. Thus, it would seem that the DC Circuit did not rule that what Rambus was alleged to have done was appropriate, but rather that there was no hard and impartial evidence that suggested what they did violated the rules set for participation in standard setting.
As high-technology markets proliferate, the importance of interoperability standards that permit products from different vendors to work together will only continue to grow. The legal regime governing these industry standard-setting activities, however, remains very much in flux, and no doubt there will remain differences of opinion as to what is appropriately required to participate in standard setting organizations. Given that the United States Supreme Court has elected not to weigh in on the Rambus matter, it seems likely that in the future those participating in standard setting organizations will continue to open themselves up to charges of inappropriate conduct, and potential investigation and prosecution by the Federal Trade Commission.
Anyone interested in these issues should strongly consider attending the PLI presentation – Standard Setting and “Patent Ambush”: Lessons from the Federal Circuit’s Recent Qualcomm v. Broadcom Decision. Presenters Susan A. Creighton of Wilson Sonsini Goodrich & Rosati, P.C., Michael A. Lindsay of Dorsey & Whitney LLP and M. Sean Royall of Gibson, Dunn & Crutcher LLP will discuss:
- The Qualcomm v. Broadcom decision
- How Qualcomm v. Broadcom compares with recent actions by the FTC and other courts
- The significance of Qualcomm v. Broadcom for companies that are participants in industry standard-setting activities
CLE credits are available for attorneys practicing in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Missouri, Montana, North Carolina, North Dakota, New Hampshire, New Mexico, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
About the Author
|Eugene R. Quinn, Jr.
President & Founder of IPWatchdog, Inc.
US Patent Attorney (Reg. No. 44,294)
B.S. in Electrical Engineering, Rutgers University
Gene is a US Patent Attorney, Law Professor and the founder of IPWatchdog.com. He teaches patent bar review courses and is a member of the Board of Directors of the United Inventors Association. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, CNN Money and various other newspapers and magazines worldwide.