To the delight of Rambus Inc.’s diehard investors, and groans from its many detractors, an U.S. International Trade Commission judge ruled in January 2010 that Nvidia infringed three Rambus computer chip patents. The ruling, which eventually led to a settlement with Nvidia, seemed to reinvigorate the licensing company, which has taken a lot of heat for its legal battles with computer chip manufacturers it accuses of copying its innovations.
Rambus and its lawyers at Finnegan, Henderson, Farabow, Garrett, & Dunner doubled down on the ITC strategy, bringing a second ITC case later in 2010 involving even more patents and even more computer chip manufacturers. The once-promising tactic now seems to be backfiring on Rambus, however.
In an order handed down on Wednesday, a full panel of ITC judges ruled that chip makers STMicroelectronics and LSI don’t infringe five Rambus patents relating to computer memory. The agency has yet to release its opinion, but Wednesday’s order states that it affirmed a ruling by a single ITC judge in March. The prior decision found all five patents in the case to be unenforceable under the “unclean hands” doctrine, because Rambus destroyed evidence when it held companywide “shred days” back in the late 1990s. The agency ruled the patents invalid on several other grounds as well. Perhaps most significantly, it ruled that Rambus failed to show that the patents concern a “domestic industry”–a requirement for bringing a case at the ITC.
Rambus originally brought the ITC case against six chipmakers–LSI, MediaTek, STMicroelectronics, NVidia, Broadcom, and Freescale–and 30 of their downstream customers. All but LSI and STMicro eventually settled, and a trial was held before ITC judge Theodore Essex in 2011. A team of Quinn Emanuel Urquhart & Sullivan lawyers led by William Price handled the crucial spoliation arguments for the defendants, reprising the firm’s role in several different cases, including Rambus’s billion-dollar antirust case that flopped last September after an excruciatingly long jury trial and deliberation.
Quinn Emanuel represented all six of the original respondents except for LSI, which had by Kilpatrick Stockton & Townsend. STMicroelectronics was also represented by K&L Gates.
The ITC trial couldn’t have ended better for the non-settling chip makers. As we reported, Essex’s March ruling described a Rambus executive that took the stand “dishonest” and “unreliable.” He wrote that “not since the long ago era of the Watergate hearings have the words ‘I don’t recall’ been used so regularly in answering questions under oath.” What made Essex’s opinion even more remarkable is that, in a different ITC case Rambus brought in 2008, the ITC had rejected the argument that Rambus’s conduct left it with unclean hands.
The ITC has now affirmed Essex’s unclean hands finding, though we won’t know its reasoning until the full opinion is released. “It would have been difficult for the Commission to reverse,” said Quinn Emanuel’s Price. “Judge Essex was in a fairly unique position, because he saw the live testimony.” Price told us more live witnesses were called in this case than in the prior ITC case. That, he said, may have made a big difference.
Interestingly, the ITC reversed Essex’s ruling that Rambus met the domestic industry requirement. The ITC’s forthcoming opinion could signal a shift by the agency in its view of what a licensing company needs to do to meet that requirement, said K&L Gates partner Michael Bettinger, who worked on domestic industry arguments. “I think some clarity may be coming to the issue,” he said.
Finnegan partner Doris Hines, who represents Rambus, did not immediately return a call seeking comment.
