Rambus Wins Appeal of FTC Anti-Trust Ruling

I Don't Believe in Imaginary Property writes "Rambus has won its appeal in the DC Circuit Court of Appeals. The decision said that it wasn't sufficient to prove that Rambus lied or harmed competitors; the FTC had to prove that it harmed consumers in order to fall under anti-trust law. This is, unfortunately, a very dangerous ruling in light of some of Microsoft's activities relating to OOXML because it raises the bar on the proof required to act against such behavior. However, the ruling in the Rambus case was merely vacated and remanded for further proceedings, not overturned. So, if the evidence warrants, the lower court might be able to decide that consumers were actually harmed by Rambus' conduct and rule against them. Alternatively, this ruling could be appealed to the Supreme Court by filing a petition for a writ of certiorari, but the Supreme Court only grants a few of those per year."

Legal Dispute of Dickensian Proportions

[TropicalCoder]

Check out the blog at Consortium Info on this [consortiuminfo.org]

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[TropicalCoder]

Duh... Got so excited to get first post that I didn't check the FA, which is all about Andy Updegrove's blog I linked to. Go ahead - mod me redundant. I deserve it.

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[esocid]

If you say so.

Shit, now I can't use my last mod point on you. Damn my spiteful nature.

This isn't a bad ruling at all

[moderatorrater]

As long as the burden of proof to show harm to consumers isn't too high, this should be relatively simple. Explain to a judge how the PC market grew and evolved into one where all parts are interchangeable and show the benefit that's had to the consumer. Then show how the actions that rambus took fragmented the market artificially, resulted in artificially high prices from rambus and set back the ram industry overall.

The ooxml case is a little harder, especially since it's so early in the game that you can't see all the blowback yet, but considering the fact that even MS Office isn't compliant with the standard, it should be fairly simple to show that it's hurt the standards industry as a whole.

The biggest downside is that this ruling encourages lying and backstabbing between competitors trying to work together to build good standards.

The burden of proof is a big deal...

[Anonymous Coward]

> As long as the burden of proof to show harm to consumers isn't too high, this should be relatively simple.

Well, that's the rub, isn't it? Proving things like "harm to consumers" is VERY expensive and requires expert witnesses and studies to counter your opposition because it's so vague. Proving someone lied is a lot simpler and less expensive. Not to mention less of a matter of opinion.

As long as they can get away with lying to standards bodies to create or further a monopoly, though, I really don't like it. Suddenly, it changes the economic equation so that people can't challenge them unless it's too expensive not to. In other words, Microsoft may be able to use this as nearly a carte blanche to subvert standards bodies in its war on open standards.

Oh, I should also add an addendum to this story: it seems that this was decided by a three judge panel, so there's one more possibility for appeal, according to some Groklaw comments. They may be able to appeal and have all the judges decide. But this appeal might not be granted, either, so who knows? If any actual lawyer responds and tells us about the appeals route, listen to them, not me :) I'm only sure about the Supreme Court being able to overturn this ruling (if they deign to), and the lower court being able to hold Rambus accountable for other reasons.

- I Don't Believe in Imaginary Property [eff.org]

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[robkill]

Given that Rambus was charging 2X the royalty for DDR than for RDRAM in an effort to get memory and chipset manufacturers to use their proprietary RDRAM, and the performance and integration problems Intel had with RDRAM, the harm to consumers should be obvious. Then again, in a world where common sense ruled, all of Rambus' executives should be in jail already, and Rambus' DDR patents would have been nullified.

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[ibbey]

This ruling will be cheered by the average free-market zealot, while being absolutely terrible for the free-market itself. It's anti-competitive and pro-big-business. If you don't have the money to argue (or defend against) the relatively vague notion of "harmed consumers" then you cannot win no matter what the merits of your case. It seems to me that any artificial restriction of the marketplace is inherently harmful to the consumer. If it can be proven that Rambus lied and its actions harmed its competito

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[manwithmanyquestions]

The burden of proof IS the rub - not just because you have to have the resources to obtain expert witnesses, economists etc. which a private litlgant or consumer class might have a harder time with than the Federal Government, but because if you have to make a prima facie showing specific consumer harm notwithstanding apparent anti-competitive behavior at the pleading stage to survive a motion to dismiss you might never be able to obtain the corporate records through discovery that will be dispositive. Als

This is a bad ruling after all

[jbengt]

Requiring a showing of harm to consumers is a lousy way to reign in anti-competitive practices.
IIRC this emphasis on consumer harm started during the Reagan administration; they were no enemies of large corporate interests (and yes, I realize most democrats are similar in this regard).
Why shouldn't the law consider the harm done to competitors? After all, shouldn't my freedoms extend to the ability to compete fairly in a free market?
And why in the hell are consumer coupons for a discount on some stu

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[Jeff DeMaagd]

Proving that consumers were harmed is hard. I really don't see how it can be easily proven to any standard that's even somewhat rigorous. I'm not sure it can be truly proven to any standard that's stricter than a Slashdot-esque handwaving argument.

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[MightyMartian]

And apparently the intellectual work of others, if RAMBUS ultimately is victorious.

Scambust

[digitaldc]

----Judge Williams wrote that there wasn't sufficient evidence to claim that the standards organization would have gone with different technology. He also wrote that "deceit merely enabling a monopolist to charge higher prices than it otherwise could have charged ... would not in itself constitute monopolization."

Huh?

Re:Scambust

[mapsjanhere]

The point the judges make is: If JEDEC would have known about the patents and intended patents, they would probably just have enforced RAND (reasonable and non-discriminatory)licensing terms. This would still made Rambus the monopolist, just at a lower rate. So the deceit did not give Rambus the monopoly, it just gave it better licensing rates.
But the judges also doubt that the evidence holds up to the light in regards to the deceitfulness the FTC found. It doesn't say in the JEDEC rules of conduct that you have to tell everyone about everything you plan to patent in the future, only that you have to list existing and pending patents (which can be found by a 15 min search on the USPTO website anyway). Rambus "crime" was that they knew they had the ability to patent the technology JEDEC was discussing, and were not disclosing it; something against the spirit, but not the letter of the code for standard setting organizations.

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[NormalVisual]

So the deceit did not give Rambus the monopoly, it just gave it better licensing rates.

...which in turn resulted in higher memory prices, which cost the consumer more money than if Rambus had been forthright from the start. Doesn't unnecessarily being charged higher prices due to Rambus' actions constitute "harm to consumers"?

Hurting the Competition

[MozeeToby]

Hurting competition in and of itself hurts consumers. I thought that was the whole idea behind antitrust laws in the first place.

Re:Hurting the Competition

[Frosty Piss]

Hurting competition in and of itself hurts consumers.

"Hurting" the competition is a part of Capitalism, which is by definition competitive. There is always a winner and a loser in Capitalism.

Re:Hurting the Competition

[MozeeToby]

True, I guess what it comes down to is whether you are "hurting the compitition" or just "hurting competition"; as in the spirit of a fair and even playing field. In this case, Rambus was clearly trying to tilt the field in their favor.

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[magarity]

Capitalism, which is by definition competitive. There is always a winner and a loser in Capitalism

Competition is a subset of capitalism. The other half of capitalism is free trade (as in free trade, not as in 'NAFTA'). In competition there is always a winner and a loser. In real free trade there is always a winner and a winner. Otherwise no one in their right mind would do it. And A free to trade with B instead of C means C is the loser of the B-C competition but A and B both the winners of th

Re:Mod parent up

[jbengt]

he gets it.

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[99BottlesOfBeerInMyF]

Hurting competition in and of itself hurts consumers.

"Hurting" the competition is a part of Capitalism, which is by definition competitive. There is always a winner and a loser in Capitalism.

You're failing to distinguish "competition" and "the competition." The former is the process of multiple entrants competing to make the best and most profitable product. The latter is specific entrant, not the process itself.

Capitalism is about beating competitors and thus "hurting" them. It is not about hurting the ability of others to compete, it is just being better than it.

An analogy might be a boxing match. Your goal is to beat "the competition" and win. Your goal is not supposed to be to beat "co

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[bit01]

"Hurting" the competition is a part of Capitalism, which is by definition competitive.

No it isn't. You can compete positively by improving your product. You can compete negatively by damaging your competitor's product. The first benefits the consumer. The second doesn't. Laws try to block the latter while allowing the former. Parasites of course try to avoid this.

There is always a winner and a loser in Capitalism.

No there isn't. When companies compete to create better products they add value for t

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[Frosty Piss]

No it isn't. You can compete positively by improving your product.

And when everyone buys YOUR product because it is better than the others, the other businesses suffer and go out of business. They end up "hurting".

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[bit01]

And when everyone buys YOUR product because it is better than the others, the other businesses suffer and go out of business. They end up "hurting".

This is only true for a short term perspective.

Ideally, other businesses learn from their mistakes, compete and eventually make a better product than yours. You need to do the same, the market grows and, on average, everybody wins.

Some "businesses" compete by explicitly trying to bring either customer or competitor down. Those are parasites and the law t

Competition is a means not an end

[l2718]

Hurting competition in and of itself hurts consumers. I thought that was the whole idea behind antitrust laws in the first place.

Wrong. Actually, consumers benefit when they can get better goods or services at cheaper prices. Sometimes competition actually harms consumers. Here are two examples: first, due to economies of scale, sometimes when competitors merge prices actually go down. This is not to say every merger is good for the consumer, just that sometimes there's a downside to further competition

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[jbengt]

I agree somewhat with your remarks. But I disagree with your examples.
Slightly off topic: Economies of scale work both ways; at some points, bigger is more expensive. If not, there would only be one giant power generating plant in the world, and all electricity would be transmitted on lines from there to everywhere.
More to the point, utility monopolies, one of the so-called natural monopolies, are about distribution, not generation. The idea is that competing distribution lines duplicate effort, thus c

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[jd]

What happened to the idea that, if you indulged in dishonest and otherwise scumbag practices, you had 'unclean hands' and deserved to lose on that basis.

They found Herod's hand-washing dish. Besides, if you put two corporations in the same room and argue that the one with dirty hands looses, we'd need a new type of verdict of mutual guilt, where both sides get locked in the slammer for a few years. Hmmm. Actually, there might be something to be said for that...

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[nebaz]

Call it the death-lock penalty.

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[jd]

Ohhhhh that's briliant!

then people should go after the patents

[futureb]

if the technology was so widely recognized/easily adopted that it became industry standard during or just after the prosecution of the patents, isn't this a great argument that the patents themselves are invalid for obviousness?

The geek with 20-20 hindsight

[westlake]

if the technology was so widely recognized/easily adopted that it became industry standard during or just after the prosecution of the patents, isn't this a great argument that the patents themselves are invalid for obviousness?

It is an argument that the patented solution was practical and cheap.

that makes sense

[Speare]

I'm not 100% up on my late-1990s corporate dramas anymore, and maybe it's just a flippant or spurious kind of analogy to ponder, so set me straight where I've got this wrong:

Putting a file in a particular directory, so that other users might possibly request initiation of a download, is a criminal activity that can incur penalties of ~10000000% the cost of obtaining the original file legally. It doesn't matter if the file is actually downloaded. That's the "making available" charge.

But somehow, brazenly sharing ideas in memory technologies with all your competitors in the standards group, while maintaining a submarine patent, and then launching legal attacks on all those who built on the shared ideas, this is somehow okay because they hadn't proved that such a move had moved beyond the standards group and affected the marketplace? That's the "no harm to consumers" defense?

Huh?

[PenguinX]

Perhaps I'm missing something, but what does an FTC ruling have to do with a different ruling from ISO? They are two entirely different organizations entirely.

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[fritsd]

IANAL, but I've read of an interesting common denominator in some U.S. lawsuit between "Allied Tube" and "Indian Head" [justia.com].

It's about vote packing (OOXML) but also that subverting a standards process is not nice (Rambus).

Well, maybe this part isn't quite so bad.

[jd]

had to prove that it harmed consumers in order to fall under anti-trust law. This is, unfortunately, a very dangerous ruling in light of some of Microsoft's activities relating to OOXML because it raises the bar on the proof required to act against such behavior.

There is proof that it has damaged ISO operations (their voting system has been crippled due to OOXML supporters not voting on other issues) and there is proof that it has damaged ISO credibility (several countries are appealing their own votes, o

This court is Microsoft's best friend

[hpa]

This is the same court that let Microsoft off the hook on appeal (so Bush could then let them off the hook entirely.) In fact, that same ruling was quoted as a reason to let Rambus off the hook.

IANAL but...

[Philodoxx]

The decision said that it wasn't sufficient to prove that Rambus lied or harmed competitors; the FTC had to prove that it harmed consumers in order to fall under anti-trust law.

Isn't harming competitors harming customers? I mean less competition means more monopolies/duopolies, and that's never good for prices. I mean it's ok to screw over your competitor by offering a superior services/products and equal/better prices, but it's totally different to deceive a standards body so you can sue its members for patent infringement.

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[mapsjanhere]

Harming competitors in not necessarily harming consumers, remember VHS vs. Betamax? We had $1000 VCRs until one format killed the other (clearly harming its competitors). But VHS machines dropped to $30 after it became a monopoly format, because other competitors were able to invest now that the format war was over.

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[b4dc0d3r]

And then blu-ray won the format war and prices went UP. It's not about market opportunities, it's about who wins. Sony lost one battle and prices went down, won another and prices went up. Harming competitors isn't what capitalism is about - it's supposed to be about making yourself better, enough that everyone wants a part of it. IBM teamed up with Microsoft to make itself better, now Windows is everywhere and IBM doesn't even sell computers. But then you look at all of the dirty tricks like when Wind

... only grants a few of those per year

[v1]

Wikipedia has more details on that at http://en.wikipedia.org/wiki/Certiorari [wikipedia.org]

The great majority of cases brought to the Supreme Court are denied certiorari (approximately 7,500 petitions are presented each year; between 80 and 150 are granted), because the Supreme Court is generally careful to choose only cases in which it has jurisdiction and which it considers sufficiently important to merit the use of its limited resources

I generally consider "a few" to be a much lower number than 80, but I suppose it's

Rambo Won the appeal

[electricbern]

...all he needed was a army knife, a bow and explosive arrows.

You're Right

[JamesRose]

"This is, unfortunately, a very dangerous ruling in light of some of Microsoft's activities relating to OOXML because it raises the bar on the proof required to act against such behavior."

It'd be so much EASIER if we could just change the law so we can prosecute the people we don't like. How hipocritical ARE YOU!?

Consumers.

[Rydia]

"This is, unfortunately, a very dangerous ruling in light of some of Microsoft's activities relating to OOXML because it raises the bar on the proof required to act against such behavior."

What? Antitrust law pertains to actions by firms that harms, or is likely to harm, consumers. In the US, that is the alpha and omega. Whether it is collusion, actions by a firm with market power, or a merger which would lead to an overly consolidated market/small nontransitory increase in price. Now, the government can arg