Academic journal article Santa Clara High Technology Law Journal

Controlling Patent Rights in the Industry Standard Context

Academic journal article Santa Clara High Technology Law Journal

Controlling Patent Rights in the Industry Standard Context

Article excerpt

I. INTRODUCTION

High technology industry standards-setting organizations provide consumers with the most efficient, interoperable technology in the market. (1) The purpose of these organizations is to encourage new developments and eliminate anti-competitive markets by requiring their members to disclose their patents or pending applications to the organization and its members. (2) In addition, most organizations require owners of industry standard patents to license their technology to members for a reasonable fee. (3) Because standards-setting organizations embody the inherent tension between antitrust laws and patent rights, many patent owners are reluctant to join, posing a problem for the future of technology development. The problem is that a decrease in membership presents a technological roadblock for these organizations that are designed to make products that are compatible in the industry. (4) However, by joining a standards-setting organization, patent holders relinquish their exclusive rights to their inventions by being forced into licensing their industry standard invention. (5) Therefore, it is clear that there is an essential conflict between allowing for the lawful exploitation of intellectual property rights and the need for interoperability in the high technology community. (6)

The protection of intellectual property is extremely important to a company's exclusive right of control over its inventions. Although protecting such rights through litigation can adversely impact the financial performance of the rights holder, sometimes it is the only way to protect intellectual property. (7) This dilemma is exemplified by the actions of Rambus Inc., a company that has expended millions of dollars in bringing and defending suits relating to its patents. Lack of success in the litigation arena would expose Rambus to loss of patent protection in high-speed memory chips, which it develops and licenses to semiconductor manufacturers.

The loss of patent protection would create uncertainty throughout the semiconductor industry, especially if chip designers and manufacturers become reluctant to expend time, money, and effort on developing new technology that could easily be labeled industry standard. Nevertheless, the establishment of industry standard technologies, and the responsibilities of parties that participate in the standards-setting process, implies an obligation of disclosure of technology embedding within standards adopted by international standards setting organizations. As such, lawful monopolies created by the exercise of patent rights are not permitted without a corresponding duty on the part of a patent holder to license his patented technology on reasonable and non-discriminatory terms.

Patent negotiations have been a fixture of the DRAM industry

since its beginning, and DRAM companies usually end up signing

cross-licensing agreements so that both companies can get on with

manufacturing. Rambus, on the other hand, develops signaling

technology used in DRAMs but does not make its own chips.

Hence, its revenues depend entirely on the payments of DRAM

makers that use its technology. (8)

The intricate balance between the need to maintain the proprietary character of certain technologies, while simultaneously encouraging standard settings that facilitate the development of interoperable systems, is at the core of the legal dilemma that has enveloped Rambus Inc.

This Case Note examines the conflict between the rights of intellectual property owners to exploit their intellectual property to advance their business objectives, and the need to regulate new technology to create industry standards. It does this by reviewing the Delaware District Court's decision in Micron Technology, Inc. v. Rambus Inc. (9)

II. FACTUAL AND PROCEDURAL BACKGROUND

Micron Technology, Inc. …

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