CASE BRIEF: RAMBUS V.

INFINEON 1

FACTS

1. Rambus is a memory technology developing company that that licences its

technologies to various semiconductor manufacturers. Rambus depends on licensing
of various memory technologies from its vast patent portfolio in order to generate
revenue and does not partake in the manufacturing of the said semiconductor devices.
2. A patent application bearing Serial No. 07/510,898 was filed by Rambus in April
1992. The said application was directed towards a technology called “dynamic
random access memory (DRAM)”, however the Patent Trademark Office decided that
the '898 application covered numerous independent inventions and issued a restriction
obligation necessitating Rambus to select a single invention to follow in the '898
application.
3. In view thereof, various applications were filed by Rambus diverging from the
original application from which thirty-one were accepted by the PTO most of which
were based on Rambus’ DRAM technology. Thereafter, Rambus was invited to attend
the Joint Electron Devices Engineering Council as a guest.
4. Rambus became a member of the JEDEC,which is a body that sets standards in
association with the Electronics Industries Association in February 1992. In order to
create standards for semiconductor technology, various committees with attendance
from JEDEC members were organized. As per policy oriented by the JEDEC and
EIA, it was encouraged that items and processed free from patents and standards be
adopted by its members. Furthermore, the aforementioned policies, at least by the
year 1993, required its members to any pending patent applications and any other
previously held patents which might be “related to” any of the work undertaken by the
standard setting committees.
5. A standard for a memory technology knows as “synchronous dynamic random access
memory (SDRAM)” was adopted by the JEDEC while Rambus was a member. The
technology increased the speed of the CPU by coordinating itself with the clock speed
of the CPU. The aforementioned technology standard was adopted by the JEDEC in
1993 and subsequently various revisions were also made to the SDRAM standard by
the JEDEC.

1
318 F. 3d 1081 (Fed. Circ. 2003)
 6. Rambus formally pulled out from the JEDEC after attending its final meeting in
December 1995. Thereafter, standard development work on the novel “double data
rate-SDRAM (DDR-SDRAM)” was started by the JEDEC in December 1996 and the
same was being looked at as the successor to the SDRAM.
7. Before Rambus’ exit from the JEDEC in 1995, four technologies had been discussed
by the committee and the same were adopted by the JEDEC in its DDR-SDRAM
standard. While Rambus was still a member at the JEDEC in 1993, it disclosed its
RDRAM patent bearing Serial No. 5,243,703 being a diverging application from its
original ‘898 application, however Rambus did not disclose any other patent
applications to the JEDEC.
8. An infringement suit alleging the infringement of fifty-seven claims in four patens
was filed by Rambus in the year 2000 against a company named Infineon which
manufactured Semiconductor memory devices.
9. In its counterclaim, Infineon filed for fraud under the state law of Virginia. It was
alleged by Infineon that, by not disclosing the various patents and patent applications
held by it, "related to" the SDRAM and DDR-SDRAM standards adopted by the
JEDEC, Rambus committed fraud under Virginia State Law.
10. In view thereof, and after construction and interpretation of the claims and
counterclaims filed by Rambus and Infineon respectively, the district court declared
judgement as a matter of law favouring Infineon’s counterclaims under Rule 50(a) of
the Federal Rules of Civil Procedure.
11. Furthermore, it was held by the Jury hat fraud was committed by Rambus while the
standardization process of the SDRAM and DDR-SDRAM. Rambus moved for
Judgement as matter of law with respect to the decisions of the jury on fraud in the
standardization on the SDRAM and DDR-SDRAM, but the district court only granted
JMOL of no fraud in case of the DDR-SDRAM holding that the Jury’s verdict was
not supported by enough evidence as Rambus had already exited from the JEDEC
before it even began working on the standardization of DDR-SDRAM.

ISSUES

1. Whether there was existence of a duty on part of Rambus to disclose to the JEDEC its
patents and patent applications related to the SDRAM and DDR-SDRAM standards?
 2. What relationship a patent had to have with the standard adopted by the JEDEC in
order to be disclosed under JEDEC's patent policy?
3. Whether the district court applied proper legal standard under § 285 while
determining the Attorney Fees awarded in favour of Infineon?

RULE:

A. JMOL

An affirmation or reversal of a Judgement as a matter of law (JMOL) can be granted by the

court only "if the jury's factual findings are not supported by substantial evidence or if the
legal conclusions implied from the jury's verdict cannot in law be supported by those
findings.”2

B. FRAUD
In order to prove fraud under Virginia State Law 3, there must be clear and convincing
evidence to show that:-
1) a false representation (or omission in the face of a duty to disclose),
2) of a material fact;
3) made intentionally and knowingly;
4) with the intent to mislead;
5) with reasonable reliance by the misled party; and
6) resulting in damages to the misled party.

A party's silence or withholding of information does not constitute fraud in the absence of a
duty to disclose that information.4

Generally, “fraud must relate to a present or a pre-existing fact, and cannot ordinarily be
predicated on unfulfilled promises or statements as to future events.”5

Failure to prove even one of the elements of fraud — such as existence of a duty to disclose
— defeats a fraud claim.6

C. DUTY TO DISCLOSE

2
Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454, 46 USPQ2d 1169, 1172 (Fed. Cir. 1998) (en banc);
3
TT Hartford Group, Inc. v. Va. Fin. Assocs., Inc., 258 Va. 193, 520 S.E.2d 355, 361 (1999); Bank of Montreal
v. Signet Bank, 193 F.3d 818, 826 (4th Cir. 1999).
4
 Bank of Montreal, 193 F.3d at 827
5
 Patrick v. Summers, 235 Va. 452, 369 S.E.2d 162, 164 (1988) (quoting Soble v. Herman, 175 Va. 489, 9
S.E.2d 459, 464 (1940))
6
 Bank of Montreal, 193 F.3d at 826
According to the court of appeal’s interpretation of the JEDEC policy, the relevant disclosure
duty is based on whether the issued or pending claims are needed to practice the
standard.Furthermore, the duty to disclose a patent or application only arises when a license
under its claims reasonably might be required to practice the standard.

D. ATTORNEY FEES
Only under exceptional cases may a district court award attorney fees to the prevailing party
as per 35 U.S.C. § 285. Litigation misdemeanours and dishonourableconduct may be
sufficient, by themselves, to make an exceptional case under section 285. 7 In cases deemed
exceptional only on the basis of litigation misconduct, however, the amount of the award
must bear some relation to the extent of the misconduct.8
With respect to making an award, broad discretionary powers lie with the district court if the
case is deemed to be exceptional under 35 U.S.C. § 285. However, there could be instances
where the court of appeals might vacate the award and refer/remand the matter back to the
district court for further evaluation.9

ANALYSIS:

With respect to the construction of claims the court of appeals was convinced based on the
specifications and prosecution histories that the term “bus” was not redefined by Rambus in
the patents-in-suit as a multiplexing bus. The court of appeals observed that, none of the
statements made by Rambus constituted a clear disclaimer of claim scope.

The court of appeals finally decided that the district court erred in its construction of each of
the disputed terms. In light of the revised claimconstruction, the court of appeals, through
majority, vacated the grant of JMOL of non-infringement and remanded for the district court
toreconsider infringement.

With respect to Rambus’ duty to disclose, the court placed reliance on the language of the
JEDEC and EIA policy. The court observed that, as per the language of the JEDEC and EIA
policy statements, no direct duty to disclose was imposed upon JEDEC members.

The court further observed that, while the policy language only recommends JEDEC
members as a whole to refrain from any standards "calling for the use of" patented
technology and the manual necessitates the chairperson of the committee to remind all

7
Epcon Gas Sys. Inc. v. Bauer Compressors, Inc.,279 F.3d 1022, 1034, 61 USPQ2d 1470, 1479(Fed. Cir. 2002)
8
Read Corp. v. Portec, Inc.,970 F.2d 816, 831, 23 USPQ2d 1426, 1438(Fed. Cir. 1992)
9
Molins, 48 F.3d at 1186.
members to notify the committee of any patents or applications relevant to the work of the
committee however,the court of appeals found no language expressly requiring members to
disclose information. The court found no indication to the fact that JEDEC members were
ever legally obligated to disclose information. The court of appeals further observed that
there was no Substantial proof to sustain the jury's decision that Rambus had breached its
duties under the EIA/JEDEC policy. The court further clarified that Infineon did not show the
first element of a Virginia fraud action i.e. a duty to disclose on Rambus’ part and therefore
did not prove fraud associated with the SDRAM standard.

With respect to attorney fees awarded under section 285, the court of appeals observed that
litigation misconduct remained to be the only ground for awarding attorney fees to Infineon
under section 285 given the modifications made by the court to the claim construction and
reversal of the verdict of fraud associated with the SDRAM standard, as neither the fraud
verdict nor the claim construction could provide for the basis of the award under Section 285.
The court further observed that reviewing an award under section 285 would require the court
of appeals to reviewthe underlying factual findings, including whether a case is exceptional,
for clear error and underlying legal conclusions without deference.10

CONCLUSION

The court of appeals vacated the grant of JMOL of non-infringement in favour of Infineon, in
light of the reversal in construction of claims and further remanded for the district court to
reassess its decision on infringement.

With respect to fraud and Rambus’s duty to disclose, the court of appeals held that there was
no substantial evidence to support the jury's verdict that Rambus breached its duties under the
EIA/JEDEC policy. The court of appeals further observed that Infineon failed to substantiate
the first element of a Virginia fraud action i.e. a duty to disclose and therefore did not prove
fraud associated with the SDRAM standard. In vied thereof, the court of appeals held that, the
district court was mistaken in denying JMOL of no fraud on the SDRAM verdict in favour of
Rambus. Furthermore, with respect to JMOL of no fraud on the DDR-SDRAM, the court of
appeals observed that the district court correctlyallowed JMOL of no fraud in Rambus's
favour as Infineon did not show that Rambus had a duty to disclose before the DDR-SDRAM
standard-setting process wasofficiallyinitiated.

10
Molins PLC v. Textron, Inc., 48F .3d 1172, 1186, 33 USPQ2d 1823, 1833 (Fed. Cir. 1995).
With respect to attorney fees award under § 285 the court of appeals observed that, given the
court's holdings on claim construction and fraud and the lack of apportionment between the
award and the misconduct, the court of appeals vacated the attorney fees award and remanded
to the district court to reconsider. Finally, reversed the fee award under Virginia common
law. The court further observed that the aforementioned holdings rendered the injunction and
the new trial issues infructuous. Accordingly, this court vacates-in-part, reverses-in-part,
affirms-in-part, and remands to the district court.

DISSENTING OPINION
ANALYSIS

According to the minority opinion given by J. Prost, in order to receive JMOL of no fraud,
Rambus must show that the legal conclusions arrived at by the jury, presumed or express,
could not be supported by any substantial evidence.11Furthermore, the law must presume the
existence of certain findings essential in supporting the jury’s conclusion because the jury
delivered a general verdict on the ultimate legal question as to whether or not Rambus
committed fraud by breaching its duty to disclose information under JEDEC policy.12

Reliance was placed on Hirschberg v. G.W. Motors, Inc. 13 to elaborate on the fact that in
order to determine whether fraud was committed or not, the jury must analyse the facts
specific to each case.Situations requiring theduty to disclose may arise in different ways in
diverse cases. With respect to Rambus’s duty to disclose its patents and patents application
as per JEDEC policy, the court in its dissenting opinion observed that that the evidence in this
case supports a broader duty than the one applied by the majority. According to J. Prost, the
duty to converse facts may ascend from the circumstance that one of the partieshas greater
access toinformation or means of information.

Reliance is also placed upon section 9.3.1 of the JEDEC handbook on procedure and
organization titled "Committee Responsibility Concerning Intellectual Property” in order to
elaborate its position that the language of the handbook clearly mandates all members to
disclose any and all information that could be related to the committees work on
standardization.Furthermore, this interpretation is dissimilarto the standardrelied upon by the
majority. The majority applies the duty to the final standard adopted by JEDEC, whereas

11
Perkin-Elmer Corp. v. Computervision Corp.,732 F.2d 888, 893, 221 USPQ 669, 673 (Fed. Cir. 1984).
12
Id. at 893, 221USPQ at 673.
13
34 Va. Cir. 55
themanual requires disclosure based on the "work they are undertaking," .The majority's
comparison of pending claims tothe final standard does not take into account the possibility
that, during the course of its work, the committeeconsiders, debates, rejects and amends
various proposals as the standard evolves.

CONCLUSION

With respect to fraud committed by Rambus the minority judgement held that the evidence
described in the casemust compel the court to determine that there existedenough evidence
for the jury to find that Rambus had a duty to disclose pending patent applications and issued
patentsthat might be related in any way in the development of the SDRAM standard, as stated
in section 9.3.1 of the JEDECmanual.JEDEC's disclosure policy required its members to
disclose patents and pending applications that might be involved in the standardization work
undertaken by the JEDEC.Although thein its majority opinion the court overruled this
standard as unbounded, according to J. Prost, the JEDEC did not need to formulate its policy
with absolute precision. He further stated that, even though the majority opinion believes the
“might be involved” standard established by JEDEC policy to be arbitrary and unstructured,
the majority’s interpretation and affirmation of the JEDEC policy would prove to be
impossibly complex.

Furthermore, the court in it dissenting opinion held that, “doctrine of equivalents” and
perhaps even a Johnson Johnston analysis would be necessary before one could affirmatively
say for sure whether a claim reads on a standard.

Finally in its minority opinion, the court observed that there is more than adequate evidence
to support the jury’s finding that Rambus breached its duty to disclose information on
pending and issued patents that might be involved in JEDEC'sdevelopment of the SDRAM
standard. In view thereof, the jury'sverdict mustprevail and would therefore affirm the district
court's denial of Rambus's motion for judgment asa matter of law.