Standard Setting and Waiver of Patent Rights

Qualcomm Inc. v. Broadcom Corp (Fed. Cir., Dec. 1, 2008)

“This patent infringement case involves the consequence of silence in the face of a duty to disclose patents in a standards-setting organization (“SSO”).”

Qualcomm participated in the “Joint Video Team” to set standards for video compression technology. During those meetings, Qualcomm did not disclose that it held two patents that covered technologies required to comply with the standards being developed.

Under participant agreements, however, disclosure was required to help ensure “a simple royalty free baseline profile.” And, under Rambus, even non-explicit disclosure requirements can create a duty to disclose patent rights during standard setting discussions.

Because the patentee intentionally failed to disclose its patents, the court agreed that the patents were unenforceable under the equitable doctrine of implied waiver. However, the court limited the scope of the waiver only to products that were compliant with the new (H.264) standard.

Notes:

  • The court cites Mark Lemley’s 2002 SSO paper

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

19 thoughts on “Standard Setting and Waiver of Patent Rights

  1. Don’t forget to vote for Professor Crouch’s Patently-O!

    link to patentlyo.com

    * * * * *

    Re: Qualcomm v Broadcom Opinion – the first time I saw that happen was in the early ’80s.

    Anybody know what company that made it big was silent about its proprietary software as it advanced its products back then?

  2. “iwasthere” is correct as to how votes can be stacked to SELECT a final standard, but I was referring to the setting up of the IP provisions of the standards setting organization itself to begin with, re David Stein’s input above.
    P.S. “iwasthere” also, and have been disturbed by the attitudes of some scientists who were far more concerned about adding standards setting participation to their personal C.V., for their personal benefit, than they were about the potential unknown damage that participation could do to their employer’s patent portfolio rights and values.

  3. What strikes me as most significant in this decision is the establishment of an “implied waver” defense for standards users, which is in addition to equitable estoppel, against patent holders who participated in that standard setting without disclosing patents that reasonably might be relevant thereto. [Which disclosure duty can shown to be implied and/or generally understood even if not contractually clear.]

  4. “. . . could all be avoided simply by standards setting organizations NOT being run by uncounseled or inadequately independently counseled and legally clueless scientists and engineers.”

    Actually, the opposite is true. These guys all jostle to stack the committee votes to get their IP adopted (and others excluded) as the standard. Its called the “go for the gold strategy.”

  5. I think that the unenforceability ruling is still overbroad. The ruling applies to “current or future H.264-compliant products.”

    I’m not familiar with this standard, but many products can comply with multiple standards. What if a product complies with another standard that also infringes? There isn’t waiver to the other standard.

  6. I stand corrected. I should have explained that I meant “common law” with witnesses, as opposed to “civil law” without. And there was me, thinking (based on experience of patent litigation in England) that what makes common law different and better than the world’s (civil law) default legal system is 1) the higher accuracy fact-finding afforded in particular by the cross-examination of witnesses, complete with body language and the smell of fear, right in front of the sensitive nose of the ultimate finder of fact and 2) the appeal instance is (more or less exclusively) for when the judge got the law wrong, and not for correction of botched first instance fact-finding. Respect for the first instance, quick justice and legal certainty are all vital public policy objectives in any jurisdiction, no?

  7. I don’t think de novo review is a burden. The patent law system in the U.S. is not a “common law” system but a statutory system. Quite the contrary; de novo review prevents the Federal Circuit from being unduly bound and prevents mistakes and rules spawned from factual anomalies from bubbling up. The Federal Circuit can always accept the lower fact finding.

  8. Nice way to put it,Eye. If the law today is half-baked, after all those years of CAFC jurisprudence, then if the dish is to be rescued at all it has to be handed over to the SC forthwith, without any further tinkering. What distresses me, in a so-called common law system dependent on evidence offered by real live witnesses, is fact-finding de novo by a Court of Appeal deprived of sight of those witnesses. The CAFC is burdened not only from above but also from below.

  9. David Stein,

    I don’t think its the CAFC (or, more properly, the Federal Circuit as they are wont to be called these days), that is anti-patent these days, they are just trying to head off appellate smack downs by the S.C. (nothing hurts more than having your precedent referred to as gobbledygook). At they same time, I think they are shifting some of the responsibility upstairs vis a vis the clear invitation for cert that was manifest in Bilski.

    As if to say to the S.C., “hey, we’ve been at this for 20 years or more as we were commissioned to do. We think we’ve been doing a pretty good job, but if you think you can do a better job, then fine. We will leave everything half-baked so you can step in and fix it the way you want it.”

  10. Thanks to the above commentator David Stein for re-demonstating how millions in legal battles, patent and antitust problems, product delays, higher costs, etc., could all be avoided simply by standards setting organizations NOT being run by uncounseled or inadequately independently counseled and legally clueless scientists and engineers.

  11. “Some of you may be a bit lazy with the research and facts.”

    Others are too anxious to jump to the conclusion that Rambus is being dissed.

    As a matter of law, the Rambus case supports the statement that “even non-explicit disclosure requirements can create a duty to disclose patent rights during standard setting discussions.” However, a legal conclusion that there is a duty does not mean that an accused has breached that duty. Thus, according to the CAFC, “substantial evidence does not support the jury’s verdict that Rambus breached its duties under the EIA/JEDEC policy.”

    Relax.

  12. Some of you may be a bit lazy with the research and facts.

    Reviewing the cases:

    – The weirdly (corruptly?) led Judge Payne trials in Virginia have been completely removed from the judicial record.

    – The weird FTC actions are about to be completely erased. (The FTC Admin Judge found for Rambus with a 300+ page initial opinion, to be reversed by the FTC board on the basis of what?)

    – Rambus has won infringement against Hynix et other crooks.

    – Samsung’s and Micron’s spoliation trials will not end well for them (Watch for it.)

    – The Antitrust trial will drive a stake throught the crooks’ hearts. (Hooray, the witches are dead!)

    – And you guys write hilarious poop inspired by the cartels’ PR – and you don’t even know it.

    – Within a year these crooks will be facing real judicial examination and you will finally get a clue as to what has happened here.

    – Disclosure: Of course I’m long Rambus!

  13. Some of you may be a bit lazy with the research and facts.

    Reviewing the cases:

    – The weirdly (corruptly?) led Judge Payne trials in Virginia have been completely removed from the judicial record.

    – The weird FTC actions are about to be completely erased. (The FTC Admin Judge found for Rambus with a 300+ page initial opinion, to be reversed by the FTC board on the basis of what?)

    – Rambus has won infringement against Hynix et other crooks.

    – Samsung’s and Micron’s spoliation trials will not end well for them (Watch for it.)

    – The Antitrust trial will drive a stake throught the crooks’ hearts. (Hooray, the witches are dead!)

    – And you guys write hilarious poop inspired by the cartels’ PR – and you don’t even know it.

    – Within a year these crooks will be facing real judicial examination and you will finally get a clue as to what has happened here.

    – Disclosure: Of course I’m long Rambus!

  14. The court’s citation to Prof. Lemley’s California Law Review article is indeed noteworthy. While I posted in an earlier thread about my disinclination to cite law review articles, it made a lot of sense here for Broadcom, since the article gives policy support for the Third Circuit’s decision involving the same parties.

  15. Wasn’t the CAFC’s reversal in part based upon a conclusion that the practitioners of the standard would not infringe Rambus’ patents?

    And the FTC is currently appealing the case to the SCOTUS, so I would not put them down on Rambus’ side. Rambus may not have been in violation of the agreement, but they were clearly up to shenanigans.

  16. “Why not reference the latest and relevant information? Otherwise this becomes extremely misleading to the novice.”

    Rolv, with all due respect, I think it’s a bit much to require that the planet’s leading patent law blog be crystal clear to novices.

    For what it’s worth, Dennis’ statement was entirely correct. As the court said in the present opinion, the CAFC held in Rambus v. Infineon that the JEDEC policy, although not very explicit, did impose a duty on Rambus to disclose certain information. However, the court also held that Rambus did not violate that duty.

  17. For the most part, this is patent-law softball. Easy case.

    One aspect is interesting, however. The reason this had to be litigated (up to the CAFC) was a complete failure of the attorney(s) who drafted the participant agreement.

    Look – it’s pretty easy:

    “Section (12) – IP Rights.
    The participants in this consortium agree that, with respect to any intellectual property rights (including patents, copyrights, and trademarks/servicemarks) owned by each participant, all other participants are hereby granted a worldwide, non-exclusive, non-transferable, fully-paid-up commercial license to use such intellectual property to the extent reasonably necessary to implement and commercialize any standard approved by this consortium.”

    Alternatively, the disclosure requirement could have been made mandatory:

    “Section (12) – IP Rights.
    Each participant hereby agree to disclose any and all intellectual property rights owned by the participant that may be reasonably necessary to use in order to implement and/or commercialize any standard approved by this consortium.

    Section (13) – Damages.
    If any participant violates the disclosure requirement of section (12), all other participants are granted a non-exclusive license [blah blah blah]…”

    (I could probably draft better language – given more time and better awareness of the consortium – but you get the idea.)

    In either case, this entire issue could have been resolved – in advance! – by the consortium agreement. If Qualcomm later pulled a Lemelson with its patent filings, the other participants could have pulled out the consortium agreement as proof of their free license.

    Unfortunately, the consortium agreement dropped the ball… just as in Rambus:

    “In the present case, the district court considered whether Qualcomm had a duty to disclose the ’104 and ’767 Patents to the JVT prior to the release of the H.264 standard. The district court first analyzed the written JVT IPR policies, and concluded that, “[s]imilar to Rambus, the JVT IPR Policy and Guidelines provide no express requirement to disclose patents unless a member submits a technical proposal.'”

    So instead of being able to rely on the consortium agreement, Broadcom et al. had to beg the courts for equitable relief. And the courts once again saw fit to rule on the “good faith” of the patentee, the standards of consortium arrangements, etc. … which, of course, was a costly, lengthy, and expensive process.

    There are two takeaway messages:

    1) Take IP agreements seriously. Either Qualcomm drafted this consortium agreement in bad faith, and/or some other party’s attorneys dropped the ball when they drafted or approved it.

    2) This case is yet another instance where the CAFC volunteered to rule on the equity of patent enforcement – on whether Qualcomm’s use of its patents was in good faith or bad faith. The CAFC is slowly developing sort of a “moral code” of patent use – of allowing courts to step into the shoes of patentees and restrict patent rights where they find evidence of “misconduct.” I think that this willingness is ominous… especially since the CAFC is not exactly pro-patentee these days.

    – David Stein

  18. I find it very interesting that the Rambus reference above links to a case in Virginia which was later reversed and remanded by the appeals court. Furthermore, Rambus was not in violation according to the FTC ALJ, the CAFC, a jury verdict in Hynix vs Rambus and according to the USSC.

    Why not reference the latest and relevant information? Otherwise this becomes extremely misleading to the novice.

Comments are closed.