March 08, 2004
Conflict of Interests - Semiconductor IP Patent Rights vs Standards
Please note that contributed articles, blog entries, and comments posted on are the views and opinion of the author and do not necessarily represent the views and opinions of the management and staff of Internet Business Systems and its subsidiary web-sites.
Peggy Aycinena - Contributing Editor

by Peggy Aycinena - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

Rambus, Inc announced on February 17th that the anti-trust suit brought by the Federal Trade Commission (FTC) against the company has been dismissed in its entirety. “Today's ruling dismissing the FTC case is a fundamentally important step for Rambus as we seek to be fairly compensated for the use of our intellectual property," said John Danforth, senior vice president and general counsel for Rambus. "The ruling adds to the powerful reasoning favoring Rambus that the Federal Circuit issued in January 2003. It is now time, we believe, for these issues to be set aside, and for Rambus patent claims to be resolved on their merits." This case is important and
because it involves both patent rights and a standards making organization. A public version of the court's initial
decision was released on February 24th. On March 5 the FTC announced an intention to appeal the decision.

A brief synopsis of the case follows: Rambus has certain patents related to synchronous dynamic random access memory (SDRAM). Rambus entered into license agreements with several major DRAM manufacturers under which Rambus is entitled to collect royalties in the range of $50 to $100 million per year. Some memory manufacturers (Infineon Technologies, Hynix Semiconductor, Inc and Micron Technology, Inc) have opposed Rambus's royalty demands, choosing instead to dispute Rambus's patent rights in litigation. On June 19, 2002 the FTC charged Rambus with violating federal antitrust laws in particular by deceiving industry-wide standard-setting organization, namely the JEDEC Solid State
Association. JEDEC has maintained a commitment and has implemented procedures to avoid, where possible, the incorporation of patented technologies into its published standards, or at a minimum to ensure that such technologies, if incorporated, will be available to be licensed on royalty-free or otherwise reasonable and non-discriminatory terms. According to the FTC's complaint, Rambus participated in JEDEC's SDRAM-related work for more than four years without ever making it known to JEDEC or its members that Rambus was actively working to develop, and did in fact possess, a patent and several pending patent applications that involved specific technologies proposed for, and ultimately
adopted in, the relevant standards.

The judge ruled that Complaint Counsel failed to prove the facts they alleged in the complaint and that the legal theories advanced by Compliant Counsel failed to demonstrate that a violation of the FTC Act had occurred.

The legal issues are quite complicated. Trials and appeals are still ongoing. There is no way of knowing what the final outcome will be and when it will be known.

Before examining the implications of the ruling, let us review some material on patents and standard making organizations.


A patent is a property right granted by the U.S. Government to an inventor “to exclude others from making, using, offering for sale, or selling the invention throughout the U.S. or importing the invention into the U.S.” for a limited time in exchange for public disclosure of the invention when the patent is granted. Patent rights date back to the U.S. Constitution Article 1, Section 8, Clause 8 to wit: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” The first patent was granted in 1790.

According to the USPTO, United States Patent and Trademark Office, the number of patent applications (355,418) and approvals (189,597) have more than tripled in the last twenty years.

In the case of utility patents, the application must include a detailed and complete description of the invention such that that any person skilled in the technological area will be able to make and use the invention. The application also includes a set of claims, which precisely define what the proposed patent will and will not cover- the scope of the protection. The claimed invention must be new, useful and non-obvious when measured against all previous inventions, referred to as “prior art". Under U.S. law, a patent must be applied for within one year of the first offer for sale, public use or publication of the invention. The term of a U.S. utility patent is 20 years
from the
date on which the application for patent was filed.

Patents enable the originator of an idea to attract capital, to recover the investment (time, talent, labor, money) in developing the idea and to earn reasonable compensation for its use by others. Trademarks, copyrights, employment agreements and so forth also provide protection. Without having to make comparable investments, others could simply copy (“free ride” on) the invention and sell it at a much lower price. AutoDesk CEO Carol Bartz testified before Joint Congressional Joint Economic Committee on the opportunities and risks of the "new economy”. She warned of the dangers of Internet software theft and other cyber-crimes. She characterized the Internet
as the “Home Shoplifting
Network”. She reported that CDs of AutoDesk software, valued at $9K, could be purchased in open air markets for $2.

The Semiconductor Chip Protection Act of 1984 (the "SCPA") provides a special form of protection for "mask works fixed in a semiconductor chip product". The SCPA protects three-dimensional images or patterns fixed in the semiconductor product so long as the "topography" of the chip is not singularly dictated by the electronic function of the chip, nor one of only a small number of possible design choices. Protection does not extend to an idea or concept, process, or system behind the semiconductor product.

It is important to understand that the SCPA does not provide as broad protection as the patent laws do. Certain activities by competitors are permitted, such as reverse engineering for the purposes of teaching, analyzing, or evaluating the concepts embodied in the mask work including the circuitry, logic flow, and organization of components. The results of legitimate reverse engineering may be incorporated into another original mask work and commercially exploited.

Many have raised concerns regarding current patent law and USPTO practices and policies. For example, patent examiners have insufficient breath and depth of knowledge and insufficient time and resources to exhaustively investigate all prior art. They rely on the information provided by the applicant plus a search of the patent database. A patent once approved is assumed valid. It takes a considerable amount of time and money to contest a patent. Many simply pay license fees as a shorter, less costly and less risky alternative. From February through November 2002 the FTC and Department of Justice (DOJ) held hearings to examine the Balance of Competition and Patent Law and Policy. They
observed that poor patent quality and legal standards and procedures that inadvertently may have anticompetitive effects can cause unwarranted market power and can unjustifiably increase costs. Such effects can hamper competition that otherwise would stimulate innovation.

In its Executive Summary the FTC/DOJ cited testimony that

“In some industries, such as computer hardware and software, firms can require access to dozens, hundreds, or even thousands of patents to produce just one commercial product. One industry representative from a computer hardware firm reported that more than “90,000 patents generally related to microprocessors are held by more than 10,000 parties.” Many of these patents overlap, with each patent blocking several others. This tends to create a “patent thicket” - that is, a “dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology.” Much of this thicket of
overlapping patent rights results from the nature
of the technology; computer hardware and software contain an incredibly large number of incremental innovations. Moreover, as more and more patents issue on incremental inventions, firms seek more and more patents to have enough bargaining chips to obtain access to others' overlapping patents. One panelist asserted that the time and money his software company spends on creating and filing these so-called defensive patents, which “have no . . . innovative value in and of themselves,” could have been better spent on developing new technologies”

Recommendations from FTC/DOJ to Congress and the USPTO included:

- Create a new administrative procedure to allow post-grant review and opposition to patents

- Specify that challenges to the validity of a patent are to be determined based upon “preponderance of the evidence” rather than on “clear and convincing evidence” of invalidity.

1 | 2 | 3  Next Page »

You can find the full EDACafe event calendar here.

To read more news, click here.

-- Peggy Aycinena, Contributing Editor.

Review Article Be the first to review this article
CST Webinar Series


Featured Video
Manager, Field Applications Engineering for Real Intent at Sunnyvale, CA
Upcoming Events
SEMICON Europe at Grenoble France - Oct 25 - 27, 2016
ARM TechCon 2016 at Santa Clara Convention Center Santa Clara CA - Oct 25 - 27, 2016
Call For Proposals Now Open! at Santa Clara Convention Center, Santa Clara, CA California CA - Oct 25 - 27, 2016
DeviceWerx - 2016 at Green Valley Ranch Casino & Resort Las Vegas NV - Nov 3 - 4, 2016
S2C: FPGA Base prototyping- Download white paper

Internet Business Systems © 2016 Internet Business Systems, Inc.
595 Millich Dr., Suite 216, Campbell, CA 95008
+1 (408)-337-6870 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering TechJobsCafe - Technical Jobs and Resumes GISCafe - Geographical Information Services  MCADCafe - Mechanical Design and Engineering ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy Policy