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January 31, 2008

Trustworthiness

In January 2005, Rambus sued memory chip makers Hynix, Micron, and Nanya for infringing more than a dozen patents. The defendants fought back with a goon ringer: the Federal Trade Commission (FTC). The FTC, among other things, produced a scathing 120-page liability opinion, which the memory makers wanted entered into evidence for their patent litigation. The judge said no, finding the report neither the product of an investigation nor reliable.

In a raucous roil, the FTC found Rambus illicitly anticompetitive, having been a member of the standard-setting body, JEDEC, that had incorporated Rambus' patents into memory standards. The FTC thereupon set maximum royalty rates for the Rambus patent portfolio, partly based upon the novel patent valuation technique of how thick the patents were. Rambus is appealing.

Presiding Northern California Judge Ronald Whyte, on the in limine motion to admit into evidence the FTC Rambus report:

The Administrative Law Judge ("ALJ") had previously decided in favor of Rambus, and the FTC appealed "challeng[ing] virtually all of the ALJ's rulings and ask[ing] that the Initial Decision be set aside in its entirety." In re Rambus, Inc., Docket No. 9302 at 16.1 The FTC's opinion granted this relief, reversed the ALJ's decision and found that Rambus had engaged in exclusionary conduct that significantly contributed to Rambus's acquisition of monopoly power. The opinion has now been stayed pending appeal to the D.C. Circuit. The Manufacturers seek to admit this opinion into evidence.

Federal Rule of Evidence ("FRE") 803 permits certain types of hearsay to be introduced as evidence. The Manufacturers invoke Rule 803(8)(C) to permit them to introduce the FTC opinion.

The first hurdle to admitting a public record into evidence is whether it "results from an investigation." The Fourth Circuit has held that "[a] judge in a civil trial is not an investigator, rather a judge." Nipper v. Snapes, 7 F.3d 415, 417 (1993). Accordingly, another judge's findings of fact were not made pursuant to an investigation, and it was reversible error for the district court to admit them into evidence. Id. at 417-18.

A second hurdle to admitting a public record under 803(8)(C) is whether "the sources of information or other circumstances indicate lack of trustworthiness." Rambus points to two factors indicating a lack of trustworthiness: (1) that the FTC had a "motivation problem" because the case presented the opportunity to make policy, and (2) that the pending appeal, coupled with the fact that the FTC largely reversed the ALJ's findings and conclusions, suggest that the opinion is not reliable.

Judge Whyte's ruling.

Previous Patent Prospector coverage on Rambus' patent ramblings: Troll This; FTC Reins in Rambus (which includes links to earlier coverage).

Posted by Patent Hawk at January 31, 2008 1:21 AM | Litigation

Comments

"that the FTC had a "motivation problem" because the case presented the opportunity to make policy"

Ya think the PTO leadership may have a similar motivation problem with the new continuation rules?

Posted by: anonymous at January 31, 2008 5:05 AM