Supreme Court of the United States

Transcription

1 No. 11- IN THE Supreme Court of the United States HYNIX SEMICONDUCTOR INC. et al., Petitioners, v. RAMBUS INC., Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Federal Circuit PETITION FOR A WRIT OF CERTIORARI KENNETH L. NISSLY SUSAN ROEDER O MELVENY & MYERS LLP 2765 Sand Hill Road Menlo Park, CA (650) THEODORE G. BROWN III JULIE J. HAN KILPATRICK TOWNSEND & STOCKTON LLP 1080 Marsh Road Menlo Park, CA (650) Attorneys for Petitioners WALTER DELLINGER (Counsel of Record) wdellinger@omm.com LOREN L. ALIKHAN MICAH W.J. SMITH O MELVENY & MYERS LLP 1625 Eye Street, N.W. Washington, D.C (202)

2 i QUESTIONS PRESENTED 1. Whether principles of equity recognized in Miller v. Brass Co., 104 U.S. 350 (1882), and Woodbridge v. United States, 263 U.S. 50 (1923), foreclose the infringement claims of a participant in a standard-setting organization that conceals its pending applications while secretly amending its claims to cover the emerging standard; delays the issuance of its amended claims until after it has exited the organization; and then alleges that standardcompliant products infringe claims descending from the concealed applications. 2. Whether the specification and the prosecution history of a patent are the principal guides to construction of the patent s claims, as the Federal Circuit held in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), or whether the specification and the prosecution history are relevant only if they amount to a clear disclaimer or disavowal of the dictionary meaning of claim terms, as the Federal Circuit held in this case.

3 ii PARTIES TO THE PROCEEDING Petitioners are Hynix Semiconductor Inc., Hynix Semiconductor America Inc., Hynix Semiconductor U.K. LTD., and Hynix Semiconductor Deutschland GmbH. Respondent is Rambus Inc. RULE 29.6 DISCLOSURE Hynix Semiconductor Inc. owns more than 10% of Hynix Semiconductor America Inc., Hynix Semiconductor U.K. LTD., and Hynix Semiconductor Deutschland GmbH. No other company owns 10% or more of the stock of any of the petitioner parties.

4 iii TABLE OF CONTENTS Page QUESTION PRESENTED... i PARTIES TO THE PROCEEDING... ii RULE 29.6 DISCLOSURE... ii PETITION FOR A WRIT OF CERTIORARI... 1 OPINIONS BELOW... 1 JURISDICTION... 1 STATUTORY PROVISIONS INVOLVED... 1 INTRODUCTION... 1 STATEMENT OF THE CASE... 4 REASONS FOR GRANTING THE PETITION I. THE FEDERAL CIRCUIT S EQUITABLE-ESTOPPEL RULING WARRANTS THIS COURT S REVIEW A. The Federal Circuit s Equitable- Estoppel Ruling Resolved An Exceptionally Important Question B. The Federal Circuit s Equitable- Estoppel Ruling Is Inconsistent With This Court s Precedents C. This Case Is A Suitable Vehicle For Resolving The Equitable- Estoppel Question II. THE FEDERAL CIRCUIT S CLAIM- CONSTRUCTION RULING WARRANTS THIS COURT S REVIEW... 22

5 iv TABLE OF CONTENTS (continued) Page A. The Federal Circuit s Claim- Construction Ruling Deepens An Entrenched Intra-Circuit Split On An Exceptionally Important Question B. The Federal Circuit s Intra- Circuit Split Threatens The Proper Functioning Of The Nation s Patent System CONCLUSION Appendix A: Federal Circuit Opinion, 645 F.3d 1336 (Fed. Cir. 2011)... 1a-43a Appendix B: Conduct Trial Findings and Conclusions of Law, 609 F. Supp. 2d 988 (N.D. Cal. 2009)... 44a-135a Appendix C: Claim Construction Order, No. C , 2004 WL (N.D. Cal. Nov. 15, 2004) a-186a Appendix D: Relevant Statutory Provisions a-189a

6 v TABLE OF AUTHORITIES Page(s) CASES Akamai Techs., Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010) Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988) Arlington Indus., Inc. v. Bridgeport Fittings, Inc., 632 F.3d 1246 (Fed. Cir. 2011) AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042 (Fed. Cir. 2010)... 23, 24 Comm r v. Standard Life & Accident Ins. Co., 433 U.S. 148 (1977) Edwards Lifesciences LLC v. Cook Inc., 582 F.3d 1322 (Fed. Cir. 2009) Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed. Cir. 2011) Fidelity Fed. Bank & Trust v. Kehoe, 547 U.S (2006) Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362 (Fed. Cir. 2001)... 18, 19 Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321 (Fed. Cir. 2010)... 21

7 vi TABLE OF AUTHORITIES (continued) Page(s) ICU Med., Inc. v. Alaris Med. Sys. Inc., 558 F.3d 1368 (Fed. Cir. 2009) Int l Nutrition Co. v. Horphag Research Ltd., 257 F.3d 1324 (Fed. Cir. 2001) Kara Tech., Inc. v. Stamps.com Inc., 582 F.3d 1341 (Fed. Cir. 2009) Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996)... 3, 25 Martek Biosciences Corp. v. Nutrinova, Inc., 579 F.3d 1363 (Fed. Cir. 2009) Miller v. Brass Co., 104 U.S. 350 (1882)...2, 10, 15, 16 Nat l Meat Ass n v. Brown, 599 F.3d 1093 (9th Cir. 2010) Nystrom v. Trex Co., 424 F.3d 1136 (Fed. Cir. 2005) Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005)...3, 11, 22, 23 Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004 (Fed. Cir. 2008)... 13, 14

8 vii TABLE OF AUTHORITIES (continued) Page(s) Rambus, Inc. v. Infineon Techs. AG, 318 F.3d 1081 (Fed. Cir. 2003)...passim Texas Digital Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193 (Fed. Cir. 2002) Trading Techs. Int l, Inc. v. espeed, Inc., 595 F.3d 1340 (Fed. Cir. 2010) Woodbridge v. United States, 263 U.S. 50 (1923)...passim STATUTES 28 U.S.C. 1254(1) U.S.C OTHER AUTHORITIES Diana ben-aaron & Kati Pohjanpalo, Nokia Wins Apple Patent-License Deal Cash, Settles Lawsuits, Bloomberg (June 14, 2011) Brief for the United States as Amicus Curiae Supporting Respondent, ebay Inc. v. MercExchange LLC, 547 U.S. 388 (2006) (No ) Lisa A. Dolak, The Ethics of Delaying Prosecution, 53 Am. U. L. Rev. 739 (2004)... 17

9 viii TABLE OF AUTHORITIES (continued) Page(s) Sandy Fitzgerald, RIM, Dolby Settle Patent Dispute, Mobiledia (Sept. 13, 2011) Eugene Gressman et al., Supreme Court Practice (9th ed. 2007) JEDEC History, available at 5 Asher Moses, CSIRO To Read Lazy Billion From World s Biggest Tech Companies, Sydney Morning Herald (June 1, 2010) Daniel G. Swanson & William J. Baumol, Reasonable and Nondiscriminatory (RAND) Royalties, Standards Selection, and Control of Market Power, 73 Antitrust L.J. 1 (2006)... 14, 15 R. Polk Wagner & Lee Petherbridge, Did Phillips Change Anything? Empirical Analysis of the Federal Circuit s Claim Construction Jurisprudence, available at 3

10 1 PETITION FOR A WRIT OF CERTIORARI Petitioners seek a writ of certiorari to review the judgment of the United States Court of Appeals for the Federal Circuit. OPINIONS BELOW The decision of the court of appeals is reported at 645 F.3d 1336, and is reprinted in the Appendix to the Petition ( App. ) at 1a-43a. The district court s opinion on the issue of equitable estoppel is reported at 609 F. Supp. 2d 988, and is reprinted at App. 44a- 135a. The district court s opinion on the issue of claim construction is unpublished, but is available at 2004 WL , and is reprinted at App. 136a- 86a. JURISDICTION The court of appeals issued its decision on May 13, 2011, and denied a petition for rehearing and rehearing en banc on July 29, This Court s jurisdiction is invoked pursuant to 28 U.S.C. 1254(1). STATUTORY PROVISIONS INVOLVED The questions presented are largely governed by federal common law. Relevant portions of the Patent Act, 35 U.S.C. 1 et seq., are reprinted at App. 187a- 89a. INTRODUCTION The Federal Circuit s decision in this case incorrectly and finally resolved two federal common-law questions of exceptional importance to the integrity and proper functioning of the Nation s patent sys-

11 2 tem. This Court should grant certiorari to review both questions. The first question concerns the equitable obligations of participants in standard-setting organizations (SSOs), the private associations that various industries use to develop common product standards and thus ensure the compatibility of products across a range of manufacturers. Common product standards offer a tremendous benefit to the economy and consumers by enabling competition in standardized products. The SSOs that create these standards often require their participants to disclose pending patent applications and patent claims that relate to the standard under discussion. The reason is simple: without disclosure protections, an entire industry could be held hostage by a participant that reveals its patents only after the industry has locked itself into an infringing standard. Despite the importance of disclosure obligations, the Federal Circuit in this case held that an SSO participant may evade them by simply waiting until after it has exited the SSO to amend its claims to cover standardcompliant products. The decision of the court of appeals thus authorizes an SSO participant to lay intellectual patent traps for other participants collaborating to develop open industry standards. This Court should grant certiorari to review the question whether principles of equity recognized in Miller v. Brass Co., 104 U.S. 350 (1882), and Woodbridge v. United States, 263 U.S. 50 (1923), foreclose the infringement claims of SSO participants that seek to reap undue awards through this inequitable course of conduct.

12 3 The second question implicates a longstanding and entrenched intra-circuit split over the basic manner by which industry participants and the public at large are able to determine the scope of existing patents and make investment decisions in light of those patents. In one line of Federal Circuit precedents, the court of appeals has held that the specification and the prosecution history of a patent are the starting points and principal guides to claim construction. See, e.g., Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). But the Federal Circuit s decision in this case revives a competing line of cases, under which the specification and the prosecution history are relevant only if they amount to a clear disclaimer or disavowal of the dictionary meaning of claim terms. App. 24a-26a. This deep, entrenched intra-circuit split has far-reaching consequences for the Nation s patent system: Claim construction is a key issue in virtually every patent case, and likely the dispositive issue in a majority of cases. R. Polk Wagner & Lee Petherbridge, Did Phillips Change Anything? Empirical Analysis of the Federal Circuit s Claim Construction Jurisprudence 4, available at And the Federal Circuit s failure to resolve the longstanding split in claim construction jurisprudence, id. at 33, has made it exceedingly difficult for inventors and businesses and the public at large to determine what a patent covers and what is still open to the public. Markman v. Westview Instruments, Inc., 517 U.S. 370, 373 (1996). The Court should grant review of this important question as well.

13 4 STATEMENT OF THE CASE 1. a. Modern computers possess both long-term and short-term memory systems. Long-term memory is typically provided through a hard drive. Short-term memory is generally provided through computer dynamic random access memory, or DRAM. C.A. App The DRAM interface, in turn, is the electronic circuitry that uses a set of signal lines or buses on a circuit board to transfer information from the DRAM to other parts of the computer memory system. C.A. App. 11. b. On April 18, 1990, Michael Farmwald and Mark Horowitz filed patent application 07/510,898 ( 898 application) entitled Integrated Circuit I/O Using A High Performance Bus Interface. App. 5a; C.A. App The application s Summary of the Invention describes a DRAM technology based on multiplexed buses a type of bus that carries substantially all the signals needed by the system. C.A. App. 545; see also C.A. App. 432 ( Virtually all of the signals needed by the system can be sent over the bus. ). The summary also describes the patented memory system as including a narrow bus. See C.A. App. 545 ( [T]he bus has substantially fewer bus lines than the number of bits in a single address. ). Soon after filing the 898 application, Farmwald and Horowitz founded Rambus to commercialize inventions related to features of [DRAM]. App. 5a. Specifically, Rambus s business aim was to license its particular DRAM and related interface technol- 1 C.A. App. refers to the joint appendix filed in the court of appeals.

14 5 ogy RDRAM to DRAM manufacturers. App. 5a. RDRAM is based on the narrow multiplexed busbased DRAM and interface technology described throughout the 898 application. C.A. App a. Two years after its founding, Rambus became a member of the Joint Electron Device Engineering Council (JEDEC), an SSO with a history dating to See JEDEC History, available at App. 6a. JEDEC aimed to develop open industry standards for a wide range of semiconductor products, including DRAM interfaces. App. 6a. Members of a JEDEC committee meet several times a year to hear presentations by other members on proposed features to be included in the standard. The members then vote for which features to include. App. 6a. b. At the time Rambus joined, JEDEC members were developing the next generation of DRAM interface standards. And during Rambus s membership in JEDEC, the organization adopted an SDRAM standard, which is distinct from the narrow multiplex bus-based RDRAM technology of the 898 application. SDRAM is a variety of DRAM that comes with a synchronous interface, the purpose of which is to increase a computer s overall performance by synchronizing short-term memory operations with the computer s system clock. App. 7a; C.A. App Rambus participated in JEDEC s standardsetting discussions, not with the goal of creating an open standard for JEDEC SDRAM, but to afford Rambus the opportunity to change[] its pending patent claims based on discussions at public JEDEC meetings. App. 7a (citation and internal quotation

15 6 marks omitted). After Rambus s representative at JEDEC heard presentations on features to be included in the standard at JEDEC, he would discuss the inventions with the attorneys prosecuting Rambus s patents, signaling them to direct Rambus s prosecution efforts to cover those features. App. 6a- 7a. For instance, during the time it was a JEDEC member, Rambus tailored the RDRAM claims in its pending 898 application to incorporate the SDRAM and related interface standard by deleting the limitations related to narrow multiplexed buses the core of the RDRAM, C.A. App thereby producing broad claims to these technologies regardless of the type of bus used. Rambus engaged in this claim adjusting precisely because it had a specific plan for using its pending patent applications against anyone using the SDRAM standard. Rambus, Inc. v. Infineon Techs. AG, 318 F.3d 1081, 1107 (Fed. Cir. 2003) (Prost, J., dissenting in part); see also id. at (majority opinion) (agreeing with these facts but holding that they did not support a state-law fraud verdict). As Rambus s JEDEC representative himself acknowledged at trial, he did not attend JEDEC in good faith. App. 7a. c. JEDEC policies, however, required all of its members to agree[] to participate in good faith under policies and procedures which will assure fairness and unrestricted participation. App. 7a. In addition, JEDEC policy required members to disclose patents and patent applications related to the standardization work of the committees. App. 7a (citation and internal quotation marks omitted). This disclosure policy reflected JEDEC s concern

16 7 that the entire semiconductor industry could be held up if a participant concealed patents until after the industry locked itself into an infringing standard. Rambus s own attorneys warned the company that its bad-faith tactic of amending the claims in its 898 application to cover JEDEC s emerging standards while refusing to disclose this information to other JEDEC participants might render its patents unenforceable. C.A. App But Rambus did not desist from its conduct. Rambus ultimately resigned from JEDEC in June App. 7a-8a. By using 35 U.S.C. 120 s continuation procedure (and requests for continuation of the prosecution procedure), Rambus succeeded in delaying the issuance of its amended claims for between seven and eleven years, until after Rambus had exited JEDEC. C.A. App , 62318, 62351, 62383, 62416, 62448, d. Rambus continued to engage in its bad-faith course of conduct even after exiting JEDEC. By the end of 1996, JEDEC was busy working on the successor to SDRAM, DDR SDRAM. App. 8a. And Rambus continued to furtively pursue its scheme to patent the evolving SDRAM standard by receiving reports from undisclosed attendees at JEDEC meetings named Deep Throat and Secret Squirrel. Infineon, 318 F.3d at 1108 (Prost, J., dissenting in part); see also App. 8a (noting that Rambus continued to receive reports from sources termed deep throat and secret squirrel regarding the progress of the JEDEC RAM committee through at least December 1997 ).

17 8 As Rambus turned its focus toward bringing patent infringement claims against various semiconductor manufacturers including Hynix Rambus saw clearly that the contents of its pending amended claims were secret[s] to be leveraged against the DRAM industry, C.A. App , and that it was laying a big intellectual patent trap, C.A. App ; see also C.A. App ( Rambus repeatedly delayed issuing its patents or informing others about them until the DRAM industry committed to making infringing products [i.e., SDRAM and DDR SDRAM]. ); C.A. App (Rambus continue[d] in stealth mode before asserting its patents covering SDRAM and DDR SDRAM until the RDRAM ramp reaches a point of no return ); C.A. App (internal instructing do *NOT* tell customers/partners that we feel DDR may infringe our leverage is better to wait ). Furthermore, to pave the way for its litigation against the DRAM industry, Rambus began to destroy documents in its possession. Rambus ultimately destroyed between 2.7 and 2.9 million pages of documents, in addition to more than 1,000 computer backup tapes. C.A. App ; see also App. 10a-12a. Some of the destroyed documents related to Rambus s participation in JEDEC. App. 11a-12a. 3. In August 2000, after Rambus demanded that Hynix obtain a license for use of SDRAM and DDR SDRAM, and after Rambus had already sued Hitachi and Infineon for infringing its patents on those standard-compliant technologies, Hynix filed this declaratory judgment action in district court. C.A. App ,

18 9 The case was tried in three phases. In the first phase, the district court considered whether Rambus had unlawfully destroyed documents in anticipation of litigation, and held that Rambus did not do so. App. 46a. In the second phase, Rambus alleged infringement of ten claims from six patents, all descending from the 898 application, App. 46a, and prevailed on all claims, C.A. App , In the third phase, the district court held, inter alia, that Rambus s infringement claims were not estopped or waived as a result of its inequitable conduct during and after its participation in JEDEC. App. 46a-47a. 4. On appeal, a five-judge panel of the Federal Circuit vacated the district court s judgment and remanded for further proceedings. App. 35a-36a. a. The court of appeals acknowledged that a member of an open standard setting organization may be equitably estopped or may have impliedly waived its right to assert infringement claims against standard-compliant products. App. 20a. The court further recognized that Rambus had a duty to disclose pending applications and issued patents with claims that a competitor or other JEDEC member reasonably would construe to cover the standardized technology. App. 21a (quoting Infineon, 318 F.3d at 1100). But the court ultimately rejected Hynix s argument that a patentee may not insist on the filing date of the original application for prior art purposes, while asking for the patents to be viewed as filed several years later for purposes of its equitable disclosure obligations. App. 22a (internal quotation

19 10 marks omitted). It noted that [w]ere this court writing on a clean slate, it would be tempted to agree that equity demands that Rambus s participation in JEDEC equitably estopped or waived its claims against standard-compliant products, notwithstanding its delay in amending its claims until after its exit from JEDEC. App. 23a. The court nonetheless concluded that its earlier decision in Infineon, 318 F.3d at 1103 in which it held that Rambus s conduct did not constitute state-law fraud required it to hold that Rambus successfully evaded federal common-law equitable principles by simply delaying the issuance of its amended claims until after its exit from JEDEC, App. 23a-24a. The court made no effort to reconcile its holding with Miller, 104 U.S. 350, or Woodbridge, 263 U.S. 50, despite Hynix s argument in its briefing that both cases rested on the fundamental understanding that profits must result from innovation, not from examining the innovations of others and then adjusting and effectively backdating patent claims. b. The court of appeals also embraced Infineon s interpretation of Rambus s patent claims as including any type of bus, not just the narrow multiplexed bus. App. 24a-25a. The Infineon court reached this interpretation by beginning with the dictionary definition of bus, and then looking to the specification and the prosecution history to determine whether they evidenced Rambus s intent to redefine the ordinary meaning through a clear disclaimer or disavowal. 318 F.3d at Hynix had argued on appeal that it was error to rely on Infineon s claim construction because that

20 11 case s methodology was no longer appropriate in light of Phillips v. AWH Corp., 415 F.3d 1303, 1320 (Fed. Cir. 2005) (en banc), in which the court of appeals held that the specification and the prosecution history are the touchstones of claim construction, and are significant even if they do not reveal that dictionary definitions have been clearly disavowed, id. at But the court held that it was not writing on a clean slate and was bound by the claim construction of this court in Infineon for the term bus, App. 26a, which was founded upon the fact that the dictionary definition of bus is not limited to narrow multiplexed buses. As a result, the court of appeals held that Rambus s amended patent claims covered SDRAM and related interface technology. App. 26a. c. The court of appeals did, however, agree with Hynix that the district court applied an improperly narrow standard for determining whether Rambus s document destruction foreclosed the enforcement of its patents. App. 4a-5a, 16a-18a. It therefore vacated the district court s findings of fact and conclusions of law and remand[ed] for further proceedings consistent with its opinion. App. 35a. 5. The court of appeals denied Hynix s petition for panel rehearing or rehearing en banc on July 29, Hynix filed this petition for certiorari 90 days later, on October 27, 2011.

21 12 REASONS FOR GRANTING THE PETITION The Federal Circuit incorrectly and conclusively resolved two federal common-law questions of exceptional importance to the proper functioning of the Nation s patent system. First, the court held that a participant in an SSO may conceal its pending patent applications; wait until it has exited the SSO to amend its claims to cover the SSO s emerging standard; and then allege that standard-compliant products infringe claims descending from its undisclosed applications. Second, the court revived an approach to claim construction that has been repudiated in other circuit precedents thereby deepening an entrenched intra-circuit split on the elemental question of how patent claims should be interpreted. This case is a suitable vehicle for this Court to resolve these questions. And the $400 million award at stake exemplifies the serious threat that the Federal Circuit s rulings have created for SSOs and their participants. Indeed, the Federal Circuit s rulings make it significantly easier for participants in SSOs to set intellectual property traps for industry actors who participate in good faith in the development of common standards, yet at the same time make it significantly harder for inventors, investors, and the public at large to determine the scope of patent claims. This Court should review both of the Federal Circuit s rulings. I. THE FEDERAL CIRCUIT S EQUITABLE- ESTOPPEL RULING WARRANTS THIS COURT S REVIEW The Federal Circuit held that a participant in an SSO may evade its disclosure obligations by simply

22 13 waiting until after it has exited the SSO to amend its patent claims to cover standard-compliant products. This holding is exceptionally important; indeed, the Federal Circuit s decision amounts to a road map for reaping outsized awards through manipulation and exploitation of the cooperative efforts of SSOs. The holding is also in tension with this Court s precedents. This case, moreover, presents a suitable vehicle for reviewing the issue. Certiorari is warranted. A. The Federal Circuit s Equitable-Estoppel Ruling Resolved An Exceptionally Important Question Whether SSO participants may evade their disclosure obligations by simply delaying the issuance of their amended claims until they have exited the SSO is a question of exceptional importance to the patent system and to the critical work of industryled SSOs. 1. The question is important because federal common-law principles of equitable estoppel play an essential role in facilitating the beneficial work of SSOs. SSOs are highly vulnerable to the misconduct of their members. By failing to disclose relevant intellectual property rights prior to the adoption of a standard, a patent holder is in a position to hold up industry participants from implementing the standard. Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1010 (Fed. Cir. 2008) (internal quotation marks omitted). When that happens, [i]ndustry participants who have invested significant resources developing products and technologies that conform to the standard will find it prohibitively expensive to

23 14 abandon their investment and switch to another standard. Id. The $400 million award in this case illustrates the significance of the Federal Circuit s ruling and underscores the need for this Court s review. See Fidelity Fed. Bank & Trust v. Kehoe, 547 U.S (2006) (Scalia, J., concurring in the denial of certiorari) (recognizing that enormous potential liability is a strong factor in deciding whether to grant certiorari ). 2 Manipulation of the SSO process can be an enormously lucrative endeavor. An SSO participant that successfully holds an entire industry hostage stands to gain outsized rewards for its bad-faith course of conduct. That is what Rambus obtained in this case. See supra p. 8 (Rambus recognizes that it was laying a big intellectual patent trap ). And it is what SSO participants will be tempted to seek in future cases if the Federal Circuit s ruling is allowed to stand. 2. Moreover, by undermining the integrity of the SSO process, the Federal Circuit s decision would have other dramatic and unfortunate consequences. As commentators have recognized, the legal rules that govern private SSOs are critical for the long- 2 See also Eugene Gressman et al., Supreme Court Practice 269 (9th ed. 2007) (explaining that [t]he fact that especially large amounts of money are involved in litigation is a persuasive factor, even if it is not always sufficient by itself unless the amount is enormous ); Comm r v. Standard Life & Accident Ins. Co., 433 U.S. 148, 151 n.5 (1977) (noting that certiorari was granted because substantially more than $100 million is in dispute ).

24 15 run prospects of the economy. Daniel G. Swanson & William J. Baumol, Reasonable and Nondiscriminatory (RAND) Royalties, Standards Selection, and Control of Market Power, 73 Antitrust L.J. 1, 1 (2006). That is because when private associations promulgate standards based on the merits of objective expert judgments and through procedures that prevent the standard-setting process from being biased by members with economic interests in stifling product competition, those private standards can have significant procompetitive advantages. Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 501 (1988) (internal citations omitted). But these benefits cannot be fully realized if, as the Federal Circuit held in this case, any SSO participant is free to exploit the industry s joint efforts by surreptitiously amending its patents to cover the emerging industry standard. If the Federal Circuit s decision stands, SSOs will have no way to protect themselves against a participant s bad-faith conduct after it has already taken place. * * * * In light of the exceptional importance and farreaching consequences of the question presented, this Court s review is warranted. B. The Federal Circuit s Equitable-Estoppel Ruling Is Inconsistent With This Court s Precedents This Court s review is warranted for the further reason that the Federal Circuit s cramped approach to equitable estoppel is in tension with this Court s flexible application of principles of equity in Miller v. Brass Co., 104 U.S. 350 (1882), and Woodbridge v.

25 16 United States, 263 U.S. 50 (1923). Indeed, as Hynix argued in the Federal Circuit, Rambus s conduct in this case is essentially a modern-day version of the patent schemes that this Court s precedents foreclose. 1. In Miller, this Court invoked equity principles to prevent holdups by patent owners that exploited the patent reissue process. Congress had authorized the reissue of a patent for the correction of errors, but that authorization had been abused and come to be principally resorted to for the purpose of enlarging and expanding patent claims. 104 U.S. at 352, Expanding patents years after their first issue, the Court explained, thwarted the reasonable reliance of hundreds and thousands of mechanics and manufacture[r]s who justly assumed that the field of action was open, forcing them either to discontinue their employments, or to pay an enormous tax for continuing them. Id. The Court again applied equity flexibly and aggressively in Woodbridge, in which an inventor sought a patent related to improving projectiles for rifled cannons. The patent office allowed the claim, but upon the inventor s request, did not issue the patent. The inventor waited nine years to request issuance, by which time the Civil War had begun and created a strong demand for rifled cannon. 263 U.S. at 56. Other inventors by then had made advances in the art, and the inventor became aware that his specifications and claims had not covered the real advance made by his unconscious competitors, an advance he subsequently tried to claim by seeking to broaden his original claims. Id. at 53, 57. This Court held that the inventor s designed de-

26 17 lay, which was motivated to make the term of the monopoly square with the period when the commercial profit from it would be highest, amounted to abandonment by conduct. Id. at 56, Rambus s bad-faith course of conduct in this case is nothing but a modern replay of the conduct decried in Miller and Woodbridge. Just as the Miller patentee sought to revise patent claims based on the improvement of others and the Woodbridge patentee sought to revise claims to cover the advances of his unconscious competitors, Rambus has acknowledged revising its claims based on JEDEC s work. The patentees in Miller and Woodbridge, like Rambus, sought to take advantage of a statutory scheme by which the patent laws enable an applicant to derive an earlier filing date for later claims. See supra pp ; see also Lisa A. Dolak, The Ethics of Delaying Prosecution, 53 Am. U. L. Rev. 739, 771 n.48 (2004) (Woodbridge proceeding is analogous to the procurement of patent rights by way of continuation applications ). And just like the patentee in Woodbridge, Rambus aimed to make the term of the monopoly square with the period when the commercial product from it would be highest. 263 U.S. at 56; accord Br. for the United States as Amicus Curiae Supporting Respondent at 21 & n.19, ebay Inc. v. MercExchange LLC, 547 U.S. 388 (2006) (No ) (calling Rambus s activities an example of an improper patent hold-up scheme whereby an opportunistic patentee can extract windfall or in terrorem settlements far out of proportion to the value of the patent at issue ).

27 18 In the court of appeals, Rambus argued that its conduct was sanctioned by Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 874 (Fed. Cir. 1988), in which the Federal Circuit addressed whether an inventor s adjustment of his claims to cover related products that he discovers in the market is evidence of deceitful intent for purposes of assessing whether a patent should be declared unenforceable due to inequitable conduct before the Patent and Trademark Office. But whatever the merits of Kingsdown, it has no bearing here. Regardless of whether a patentee s amendment of its patent claims to cover products in the marketplace amounts to inequitable conduct before the PTO, Miller and Woodbridge strongly suggest that the patentee has no right to manipulate the cooperative efforts of industry SSOs to reap awards based on the innovations of others. Accordingly, the Federal Circuit s decision to allow Rambus to profit from this patent trap stands in tension with this Court s aggressive and flexible application of equitable principles. Tellingly, the Federal Circuit s opinion did not even mention Miller or Woodbridge, let alone try to reconcile those precedents with its holding in this case. This Court s review is warranted. 3 3 The lack of a circuit split is no reason to deny certiorari. The equitable principles that govern estoppel and waiver of patent claims pertain to patent law, Int l Nutrition Co. v. Horphag Research Ltd., 257 F.3d 1324, 1328 (Fed. Cir. 2001), and the Federal Circuit applies its own law to procedural issues intimately involved in the sub-

28 19 C. This Case Is A Suitable Vehicle For Resolving The Equitable-Estoppel Question Finally, the Court should grant certiorari because this case is an ideal vehicle for reviewing the question presented. First, the question is squarely presented on the facts in this case: the Federal Circuit rejected Hynix s equitable-estoppel argument despite agreeing with Hynix s view of the record. Second, if the Court leaves the Federal Circuit s ruling undisturbed, a similarly suitable vehicle for reviewing the question is unlikely to be presented. 1. As the record in this case demonstrates, and as the Federal Circuit recognized, see App. 6a-8a, 23a, Rambus concealed its pending continuations of the 898 application from JEDEC in a bad-faith effort to set what Rambus itself described as a big intellectual property trap. C.A. App While concealing its pending 898 application, Rambus secretly expanded its claims to cover JEDEC s emerging standards. And in order to evade its disclosure obligations to other JEDEC participants, Rambus schemed to ensure that its amended claims would not issue until after it had exited JEDEC. Through this bad-faith course of conduct, Rambus methodically sought to profit from the industry s collaborative, fair-minded selection of standards invented by others. The Federal Circuit recognized that if it were writing on a clean slate, it would be tempted to agree that equity demands that Rambus s participastance of enforcement of the patent right, Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362, 1365 (Fed. Cir. 2001).

29 20 tion in JEDEC equitably estopped or waived its claims against standard-compliant products, notwithstanding its delay in amending its claims until after its exit from JEDEC. App. 23a. But the court ultimately concluded that prior circuit precedent required it to hold that Rambus s course of conduct did not give rise to equitable estoppel. Thus, the question of SSO manipulation is cleanly presented on the facts and record of this case. To be sure, the Federal Circuit remanded the case for consideration of whether Rambus s infringement claims should be barred because of its destruction of relevant evidence in the lead-up to litigation against the DRAM industry. See supra p. 11. But the outcome of the proceedings on remand is far from certain. What is certain is that those proceedings and the appeals that would be likely to follow could take years to resolve. This Court should grant certiorari, reverse the Federal Circuit s judgment on equitable estoppel, and end this decadelong litigation now Certiorari is particularly warranted because the equitable-estoppel question presented here is not likely to be presented in future cases. Although the Federal Circuit s ruling will have sweeping practical consequences for SSOs and their participants, there 4 The Court has taken this approach in the past. Indeed, as recently as this Term, the Court granted certiorari to review a court of appeals decision that both finally resolved an important legal question and remanded other parts of the case for further proceedings. See Nat l Meat Ass n v. Brown, 599 F.3d 1093 (9th Cir. 2010), cert. granted, 131 S. Ct (June 27, 2011) (No ).

30 21 is enormous pressure on industry actors to reach global settlements whenever an industry is ensnared in the intellectual property trap of a dishonest SSO participant. Examples of settlements in cases where patents are asserted against industry-standard products abound. 5 They are in part driven by the magnitude of potential liability which is exemplified by the $400 million award in this case. But they are also driven by the costly nature of patent litigation, see, e.g., Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1327 (Fed. Cir. 2011), as well as the Federal Circuit precedents that facilitate a patentee s efforts to litigate infringement claims against an entire industry. For instance, under Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321, 1327 (Fed. Cir. 2010), a patentee may prove that standard-compliant products infringe its claims merely by showing that the claims cover all implementations of the industry standard and that the industry s products comply with that standard and without demonstrating separately that each infringer s product infringes. And settlements will become all the more likely if this Court allows the decision below to stand. Given the enormity of potential liability, future parties are unlikely to litigate the equitable-estoppel issue if 5 See, e.g., Diana ben-aaron & Kati Pohjanpalo, Nokia Wins Apple Patent-License Deal Cash, Settles Lawsuits, Bloomberg (June 14, 2011); Sandy Fitzgerald, RIM, Dolby Settle Patent Dispute, Mobiledia (Sept. 13, 2011); Asher Moses, CSIRO To Read Lazy Billion From World s Biggest Tech Companies, The Sydney Morning Herald (June 1, 2010).

31 22 this Court has already declined to review the Federal Circuit s approach in this case. As a consequence, if the Court denies certiorari in this case, the Federal Circuit s equitable-estoppel ruling and departure from this Court s approach in Miller and Woodbridge threatens to become a fait accompli. Certiorari should be granted. II. THE FEDERAL CIRCUIT S CLAIM- CONSTRUCTION RULING WARRANTS THIS COURT S REVIEW This Court should also grant certiorari to review the question whether construction of a patent claim begins with the specification and the prosecution history, or whether it instead begins and ends with dictionary definitions of words unless contextual evidence clearly disavows those definitions. A. The Federal Circuit s Claim-Construction Ruling Deepens An Entrenched Intra- Circuit Split On An Exceptionally Important Question The Federal Circuit s claim-construction ruling in this case has further exacerbated an intra-circuit conflict concerning the proper methodology for claim construction. And it has demonstrated that the Federal Circuit remains intractably divided on this elemental question and that this Court s resolution of the question is urgently needed. 1. In Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), the Federal Circuit considered the appropriate roles in claim construction of intrinsic evidence (such as the specification and the prosecution history) and extrinsic evidence (such as dic-

32 23 tionaries, treatises, and encyclopedias). It held that intrinsic evidence, and particularly the specification, was of primary importance in construing disputed terms in the asserted claim. See id. at Recognizing that the specification is [u]sually dispositive and is the single best guide to the meaning of a disputed term, the Phillips Court rejected an alternate form of claim construction, known as the Texas Digital approach (see Texas Digital Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193 (Fed. Cir. 2002)), which had limit[ed] the role of the specification in claim construction to serving as a check on the dictionary meaning of a claim term, such as where the specification represent[ed] a clear disavowal of claim scope. 415 F.3d at 1320 (internal quotation marks omitted). While Phillips recognized that extrinsic sources like dictionaries may have a place in interpreting disputed claim terms, it made clear that such external sources must be considered in the context of the intrinsic evidence of the specification and the prosecution history. Id. at In the years since Phillips was decided, panels of the Federal Circuit have continued to disagree about the appropriate methodology for interpreting patent claims. a. One line of cases holds that claim terms must be read in the context of the entire patent, including the specification, and where the specification reveals a special definition given to a claim term the inventor s lexicography governs. Astra- Zeneca LP v. Apotex, Inc., 633 F.3d 1042, (Fed. Cir. 2010) (internal quotation marks omitted). The specification need not reveal such a definition

33 24 explicitly, id., and no clear disavowal of claim scope is required, Nystrom v. Trex Co., 424 F.3d 1136, 1145 (Fed. Cir. 2005); see also, e.g., ICU Med., Inc. v. Alaris Med. Sys. Inc., 558 F.3d 1368, 1375 (Fed. Cir. 2009). Thus, where, as here, the specification clearly defines the invention, it governs the claim construction, see Akamai Techs., Inc. v. Limelight Networks, Inc., 629 F.3d 1311, (Fed. Cir. 2010), reh g en banc granted on other grounds; Edwards Lifesciences LLC v. Cook Inc., 582 F.3d 1322, , (Fed. Cir. 2009); Trading Techs. Int l, Inc. v. espeed, Inc., 595 F.3d 1340, 1353 (Fed. Cir. 2010). The other line of cases, exemplified by Infineon (and now the Federal Circuit s decision in this case), reverts to an outmoded claim construction methodology akin to that in Texas Digital. This line of cases requires a clear disavowal of claim scope in the specification before the plain and ordinary meaning of a claim term can be limited at all by the teachings of the intrinsic evidence the specification and file history. See Infineon, 318 F.3d at The Texas Digital approach, resurrected in the current plain meaning line of cases, does not treat the specification as defining the outer limit of the claim unless the specification us[es] words or expressions of manifest exclusion or restriction. Martek Biosciences Corp. v. Nutrinova, Inc., 579 F.3d 1363, 1381 (Fed. Cir. 2009); see also Arlington Indus., Inc. v. Bridgeport Fittings, Inc., 632 F.3d 1246, 1254 (Fed. Cir. 2011); Kara Tech., Inc. v. Stamps.com Inc., 582 F.3d 1341, 1347 (Fed. Cir. 2009). b. This intractable intra-circuit conflict, which persists despite the Federal Circuit s en banc deci-

34 25 sion in Phillips, makes it exceedingly difficult for inventors, investors, and the public at large to determine the meaning of a claim term, and ultimately undermines the very goals of patent law to secure to [the patentee] all to which he is entitled, [and] to apprise the public of what is still open to them. Markman v. Westview Instruments, Inc., 517 U.S. 370, 373 (1996) (internal quotation marks omitted). This Court should grant the petition for certiorari and announce a clear rule regarding the role of the specification in the claim-construction analysis. B. The Federal Circuit s Intra-Circuit Split Threatens The Proper Functioning Of The Nation s Patent System This case is a highly suitable vehicle for reviewing the claim-construction question. In construing the term bus in Rambus s patents, the district court adopted the claim construction from Infineon, a pre-phillips decision that employed the outmoded Texas Digital approach. In particular, Infineon began with the dictionary definition of bus, and then looked to the specification and the prosecution history to determine whether they evidenced Rambus s intent to redefine the ordinary meaning through a clear disclaimer or disavowal. 318 F.3d at On appeal, Hynix argued that it was error to rely on Infineon s claim construction because that case s methodology was no longer appropriate in light of Phillips. But the court held that it was not writing on a clean slate and was bound by the claim construction of this court in Infineon for the term bus. App. 26a. This case therefore presents a suitable vehicle for this Court to resolve whether the Texas Digital-like plain meaning approach should be re-

35 26 jected in favor of the alternative approach that requires the true consideration of what the inventors actually contributed to the useful arts. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted, KENNETH L. NISSLY SUSAN ROEDER O MELVENY & MYERS LLP 2765 Sand Hill Road Menlo Park, CA (650) THEODORE G. BROWN III JULIE J. HAN KILPATRICK TOWNSEND & STOCKTON LLP 1080 Marsh Road Menlo Park, CA (650) WALTER DELLINGER (Counsel of Record) wdellinger@omm.com LOREN L. ALIKHAN MICAH W.J. SMITH O MELVENY & MYERS LLP 1625 Eye Street, N.W. Washington, D.C (202) October 27, 2011

36 1a APPENDIX A UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD.; and HYNIX SEMICONDUCTOR DEUTSCHLAND GMBH, Plaintiffs-Appellants, v. RAMBUS INC., Defendant-Cross Appellant , Appeal from the United States District Court for the Northern District of California in Case No. 00-CV , Senior Judge Ronald M. Whyte. Decided: May 13, 2011 SRI SRINIVASAN, O Melveny & Myers LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief were WALTER DELLINGER, MARK S. DAVIES, MEAGHAN E.M. VERGOW, KATHRYN E. TARBERT, MICAH W.J. SMITH, LOREN L. ALIKHAN; and KENNETH L. NISSLY and SUSAN ROEDER, of Menlo Park, California. Of counsel on the brief were THEODORE G. BROWN, III and JULIE J. HAN, Townsend and Townsend and Crew LLP, of Palo Alto, California.

37 2a RICHARD G. TARANTO, Farr & Taranto, of Washington, DC, argued for defendant-cross appellant. Of counsel on the brief were MICHAEL J. SCHAENGOLD, Patton Boggs LLP, of Washington, DC; and GREGORY P. STONE, FRED A. ROWLEY, JR., and JEFFREY Y. WU, Munger, Tolles & Olson LLP, of Los Angeles, California; and CARTER G. PHILLIPS, ROLLIN A. RANSOM, ERIC A. SHUMSKY, Sidley Austin LLP, of Washington, DC. Of counsel were RYAN C. MORRIS, ERIC M. SOLOVY and RACHEL H. TOWNSEND, of Sidley Austin LLP, of Washington, DC; and MARK REMY YOHALEM, Munger, Tolles & Olson LLP, of Los Angeles, California. ROBERT E. FREITAS, Orrick, Herrington & Sutcliffe LLP, of Menlo Park, California, for amicus curiae Nanya Technology Corporation, et al. With him on the brief were JASON S. ANGELL and CRAIG R. KAUFMAN. Before NEWMAN, LOURIE, BRYSON, GAJARSA and LINN, Circuit Judges. Opinion for the court filed by Circuit Judge LINN, with whom LOURIE and BRYSON, Circuit Judges, join. Concurring-in-part, dissenting-in-part opinion filed by Circuit Judge GAJARSA, with whom NEWMAN, Circuit Judge, joins. LINN, Circuit Judge.

38 3a This patent infringement action concerns Synchronous Dynamic Random Access Memory ( SDRAM ) and Double Data Rate SDRAM memory ( DDR SDRAM ), in standard use in many computers beginning in the 1990s. The district court entered a final judgment of infringement and noninvalidity of claim 33 of Rambus Inc. s ( Rambus ) U.S. Patent No. 6,324,120 ( 120 patent ); claims 32 and 36 of U.S. Patent No. 6,378,020 ( 020 patent ); claims 9, 28, and 40 of U.S. Patent No. 6,426,916 ( 916 patent ); claim 16 of U.S. Patent No. 6,452,863 ( 863 patent ); claim 34 of U.S. Patent No. 5,915,105 ( 105 patent ); and claims 24 and 33 of U.S. Patent No. 6,034,918 ( 918 patent ); entered judgment in the amount of $349,035,842; required Hynix to pay prejudgment interest; and set a royalty rate for infringing products. Hynix Semiconductor, Inc. v. Rambus Inc., No. 00-CV (N.D. Cal. Mar. 10, 2009) ( Judgment ). Hynix Semiconductor Inc., Hynix Semiconductor America Inc., Hynix Semiconductor U.K. LTD, and Hynix Semiconductor Deutschland (collectively, Hynix ) appeal the district court s: (1) denial of Hynix s motion to dismiss due to unenforceability arising from Rambus s alleged spoliation of documents, Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 2d 1038 (N.D. Cal. 2006) (Whyte, J.) ( Spo-liation ); (2) claim construction, Hynix Semiconductor Inc. v. Rambus Inc., No. 00-CV (N.D. Cal. Nov. 15, 2004) ( Claim Construction ); (3) denial of Hynix s motion for judgment as a matter of law or for a new trial on the basis of written description, Hynix Semiconductor Inc. v. Rambus Inc., No. 00-CV (N.D. Cal. Jan. 27, 2009) ( Written Description ); (4) denial of Hynix s motion for a new trial on obviousness, Hynix Semiconductor Inc. v. Rambus