No.

08-694

IN THE

Supreme Court of the United States

-----------------------------
FEDERAL TRADE COMMISSION,
Petitioner,
v.
RAMBUS INCORPORATED,
Respondent.
-----------------------------
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

-----------------------------
BRIEF FOR HEWLETT-PACKARD COMPANY, CISCO SYSTEMS,
INC., SUN MICROSYSTEMS, INC., AND ORACLE CORPORATION
AS AMICI CURIAE IN SUPPORT OF PETITIONER

-----------------------------

ROBERT A. SKITOL
Counsel of Record
KENNETH M. VORRASI
DRINKER BIDDLE & REATH LLP
1500 K Street, N.W.
Washington, DC 20005
(202) 842-8800

Counsel for Amici Curiae

 QUESTIONS PRESENTED
1. Whether deceptive conduct that significantly con-
tributes to a defendant’s acquisition of monopoly power
violates Section 2 of the Sherman Act, 15 U.S.C. § 2.
2. Whether deceptive conduct that distorts the com-
petitive process in a market, with the effect of avoiding
the imposition of pricing constraints that would other-
wise exist because of that process, is anticompetitive un-
der Section 2 of the Sherman Act, 15 U.S.C. § 2.
 ii

TABLE OF CONTENTS
Page

Questions Presented ............................................................ i

Table of Contents ................................................................ ii
Table of Authorities ........................................................... iii
Interest of Amici Curiae..................................................... 1
Summary of Argument ....................................................... 2
Reasons for Granting the Petition..................................... 3
A. The Court of Appeals’ Decision Under-
mines Core Safeguards Against Anti-
competitive Abuse of Standards Devel-
opment Processes................................................. 3
B. The Court of Appeals’ Decision Conflicts
with Third Circuit Precedent.............................. 8
C. The Court of Appeals Adopted a Causa-
tion Standard Tantamount to Antitrust
Immunity for Anticompetitive Conduct
of the Kind Found in this Case ......................... 10
D. The Court of Appeals Interpreted this
Court’s Discon Decision in a Manner
that Precludes Use of the Sherman Act
Against Acts of Monopolization in Stan-
dards Development Processes .......................... 14
Conclusion .......................................................................... 17
 iii

TABLE OF AUTHORITIES

Cases: Page

Alabama Ambulance Serv. v. City of Phenix

City, Alabama, 71 F. Supp. 2d 1188 (M.D.
Ala. 1999) ................................................................ 15
Barry Wright Corp. v. ITT Grinnell Corp.,
724 F.2d 227 (1st Cir. 1983) .................................. 12
Broadcom Corp. v. Qualcomm Inc., 501 F.3d
297 (3d Cir. 2007) ........................................7, 8, 9, 15
Instructional Sys. Dev. Corp. v. Aetna Cas. &
Sur. Co., 817 F.2d 639 (10th Cir. 1987) ............... 12
Kirk-Mayer, Inc v. Pac Ord, Inc., 626 F.
Supp. 1168 (C.D. Cal. 1986) .................................. 15
Morgan v. Ponder, 892 F.2d 1355 (8th Cir.
1989) ........................................................................ 12
Nat’l Reporting Co. v. Alderson Reporting
Co., 763 F.2d 1020 (8th Cir. 1985) ........................ 15
NYNEX Corp. v. Discon, Inc., 525 U.S. 128
(1998)................................................................. 14, 16
PSI Repair Servs. v. Honeywell, Inc., 104
F.3d 811 (6th Cir. 1997) ........................................ 12
Taylor Publ’g Co. v. Jostens, Inc., 216 F.3d
465 (5th Cir. 2000) ................................................. 11
Ticketmaster Corp. v. Tickets.Com, Inc., 2003
U.S. Dist. LEXIS 6484 (C.D. Cal. 2003) ............. 15
Town of Concord, Massachusetts v. Boston
Edison Co., 915 F.2d 17 (1st Cir. 1990)............... 12
 iv

Cases—continued: Page

United States v. E.I. duPont de Nemours &

Co., 351 U.S. 377 (1956)......................................... 15
United States v. Gen. Dynamics Corp., 415
U.S. 486 (1974) ....................................................... 15
United States v. Microsoft Corp., 253 F.3d 34
(D.C. Cir. 2001) ...................................................... 10

Miscellaneous:
III Phillip E. Areeda & Herbert Hovenkamp,
Antitrust Law (3d ed. 2008) .....................11, 12, 13
Business Review Letter from Thomas O. Bar-
nett, Assistant Attorney Gen., U.S. Dep’t.
of Justice, to Michael A. Lindsay, Dorsey
& Whitney LLP (Apr. 30, 2007), available
at http://www.usdoj.gov/atr/public/
busrview/222978.pdf................................................ 5
Business Review Letter from Thomas O. Bar-
nett, Assistant Attorney Gen., U.S. Dep’t.
of Justice, to Robert A. Skitol, Drinker
Biddle & Reath LLP (Oct. 30, 2006), avail-
able at http://www.usdoj.gov/atr/public/
busreview/ 219380.pdf............................................. 5
Complaint, In re Rambus Inc., 2002 FTC
LEXIS 31 (F.T.C. 2002) (No. 9302), avail-
able at http://www.ftc.gov/os/adjpro/d9302/
020618admincmp.pdf............................................. 16
 v

Miscellaneous—continued: Page

Joseph Farrell et al., Standard Setting, Pat-

ents and Hold-Up: A Troublesome Mix, 74
Antitrust L.J. 603 (2007)................................... 6, 11
Mark A. Lemley, Intellectual Property Rights
and Standard-Setting Organizations, 90
Cal. L. Rev. 1889 (2002) .......................................... 4
David G. Swanson & William J. Baumol, Rea-
sonable and Nondiscriminatory (RAND)
Royalties, Standards Selection, and Con-
trol of Market Power, 73 Antitrust L.J. 1
(2005)......................................................................... 7
U.S. Dep’t of Justice & Fed. Trade Comm’n,
Antitrust Enforcement and Intellectual
Property Rights: Promoting Innovation
and Competition (2007), available at
http://www.usdoj.gov/atr/public/hearings/
ip/222655.pdf ............................................................ 4
 INTEREST OF AMICI CURIAE1
Hewlett-Packard Company (“HP”) is a provider of
information technology (“IT”) products, software, solu-
tions and services to consumers, small and medium-sized
businesses and large enterprises. Cisco Systems, Inc.
(“Cisco”) designs, manufactures and sells Internet Pro-
tocol-based networking and other products related to
the communications and IT sectors and provides ser-
vices associated with their products. Sun Microsystems,
Inc. (“Sun”) provides network computing infrastructure
products and service solutions used in a wide range of
industries. Oracle Corporation (“Oracle”) develops,
manufactures, distributes and services database and
middleware software as well as applications software de-
signed to help customers manage and grow their busi-
ness operations.
All four firms participate in many standards devel-
opment processes of the kind at the heart of this litiga-
tion between the Federal Trade Commission (“Commis-
sion”) and Rambus Incorporated (“Rambus”). More
specifically, HP, Cisco, Sun and Oracle (collectively,
“Amici”) are among many companies throughout the IT
and communications sectors whose ability to innovate
and succeed in new markets depends on broad accep-

1
Pursuant to this Court’s Rule 37, amici state that no counsel
for any party authored this brief in whole or in part, and no person
or entity other than amici made a monetary contribution to the
preparation or submission of the brief. Counsel of record for all
parties were timely notified more than 10 days prior to filing and
have consented to the filing of this brief. Letters of consent have
been filed with the Clerk of the Court.
 2

tance of open industry standards for interoperability

among both competing and complementary products.
Amici are concerned that the court of appeals’ decision
in this case rests on serious misunderstandings about
the manner in which patent-related deception in the
course of standards development can undermine the
success of open standards efforts to Amici’s great detri-
ment and with resulting harm to competition and to the
consuming public.
Amici are thus among many parties with a vital in-
terest in the ability of antitrust enforcement authorities
to act against abusive circumventions of the policies that
standards development organizations (“SDOs”) adopt to
protect their processes from various kinds of anticom-
petitive patent holdup conduct. Two holdings on which
the court of appeals’ decision in this case rests foreclose
any meaningful antitrust presence in this area: the
court’s narrow view of what constitutes monopolizing
conduct in a standard-setting context, in sharp contrast
to the view of the Third Circuit; and its adoption of a vir-
tually insurmountable causation standard, with broad
ramifications both for and beyond the standard-setting
context.
For these reasons, Amici submit this brief in support
of the Commission’s petition for certiorari.
SUMMARY OF ARGUMENT
Recognizing both the positive and negative effects of
including patented technologies in standards, SDOs
adopt various disclosure and licensing policies designed
to prevent patent owners from acquiring monopoly
power over standardized markets. Deceptive conduct of
the kind the Commission found in this case, enabling
evasion of the SDO’s policy of requiring an ex ante com-
mitment to license on reasonable and non-discriminatory
 3

(“RAND”) terms, results in the acquisition of monopoly

power that would not otherwise have been acquired.
The court of appeals’ holding that such an evasion did
not constitute unlawful monopolization under Section 2
of the Sherman Act undermines the entire “open” stan-
dards effort. Withholding patent-related information in
the manner found in this case distorts the competitive
process for technology selection during standards devel-
opment, precluding SDO participants from considering
price-quality tradeoffs between competing technology
alternatives. It thereby enables the patent owner to ob-
tain monopoly power through means other than competi-
tion on the merits of its technology offering.
The court of appeals’ decision conflicts with the law
of the Third Circuit, which expressly holds that a patent
owner’s circumvention of a RAND license requirement
of the same kind as involved in this case can constitute
unlawful monopolization for Sherman Act purposes. The
court of appeals’ holding that unlawful monopolization
did not occur here because the Commission failed to
prove precisely what would have happened “but for” the
deception found to have occurred creates an unprece-
dented and insurmountable burden of proof that is tan-
tamount to antitrust immunity for such conduct. If al-
lowed to stand, the holding below will preclude use of the
Sherman Act against acts of monopolization in standards
development processes.
REASONS FOR GRANTING THE PETITION
A. The Court of Appeals’ Decision Undermines
Core Safeguards Against Anticompetitive
Abuse of Standards Development Processes.
SDOs often incorporate technologies subject to pat-
ent protection in their standards. Participants have long
 4

recognized the potential for both positive and negative

effects from this practice. On the one hand, patented
technologies can enhance the quality of a standard, or
add valuable capabilities to it, and thereby promote both
competition and innovation in affected new markets. On
the other hand, a patent’s incorporation in a standard
can enable the patent owner to obtain monopoly power
over the affected market. When a standard is designed
such that a license to a particular patent is essential to
complying with the standard, the owner of that patent
can control access to that standard. Especially in mar-
kets with significant network effects, that control can
leverage the collective investments of many competitors
in the standardized technology, not merely the invention
for which the patent was granted.
SDOs employ a variety of disclosure and licensing
policies aimed at facilitating informed consideration of
these technologies during standards development to
maximize the potential for positive effects and minimize
the potential for negative effects. Many SDOs employ
policies similar to the JEDEC policies at issue in this
case;2 some SDOs are experimenting with new policies

2
See, e.g., U.S. Dep’t of Justice & Fed. Trade Comm’n, Anti-
trust Enforcement and Intellectual Property Rights: Promoting
Innovation and Competition 36, 42 (2007) (“To mitigate this type of
hold up, some SSOs require participants to disclose the existence of
IP rights that may be infringed by the potential users of a standard
in development. SSOs also may require SSO members to commit to
license any of their IP that is essential to an SSO standard on ‘rea-
sonable and nondiscriminatory’ (‘RAND’) terms. Some SSOs and
SSO members would like to further mitigate hold up by requiring
IP holders to commit to specific licensing terms before selecting a
particular technology as part of a standard.”), available at
http://www.usdoj.gov/atr/public/hearings/ip/222655.pdf; Mark A.
 5

entailing additional requirements but all in furtherance

of the same objectives.3 SDOs depend on participants’
good-faith, voluntary compliance with these policies but
also upon the availability of antitrust consequences when
violations threaten anticompetitive effects. The court of
appeals decision in this case addressed a critical issue in
this regard: the proper treatment under antitrust law of
a patent owner’s deceptive circumvention of these poli-
cies.
Amici take no position on whether Rambus did en-
gage in deception in the course of the relevant JEDEC
proceedings. But the court of appeals accepted for its
analysis the Commission’s conclusions that “willful” de-
ception occurred; that it thus enabled Rambus to evade
both JEDEC’s policy on ex ante disclosure of patent
claims and JEDEC’s policy on ex ante license commit-
ments; that it thereby resulted in withholding from the
decision-makers the fact that the proposed standard
may infringe Rambus’s evolving patent rights as well as

Lemley, Intellectual Property Rights and Standard-Setting Or-

ganizations, 90 Cal. L. Rev. 1889, 1904-06, 1973-75 (2002) (examin-
ing various disclosure and licensing policies SDOs have adopted
concerning the inclusion of intellectual property rights in standards
development).
3
See, e.g., Business Review Letter from Thomas O. Barnett, As-
sistant Attorney Gen., U.S. Dep’t. of Justice, to Michael A. Lindsay,
Dorsey & Whitney LLP (Apr. 30, 2007) (SDO adopting a policy of
voluntary disclosure of proposed licensing terms), available at
http://www.usdoj.gov/atr/public/busreview/222978.pdf; Business
Review Letter from Thomas O. Barnett, Assistant Attorney Gen.,
U.S. Dep’t. of Justice, to Robert A. Skitol, Drinker Biddle & Reath
LLP (Oct. 30, 2006) (SDO adopting a policy on mandatory disclo-
sure of proposed licensing terms), available at http://
www.usdoj.gov/atr/public/busreview/219380.pdf.
 6

precluding participants from obtaining ex ante commit-

ments on license terms. See Pet. App. 8a-14a. The panel
also did not dispute the Commission’s determination
that Rambus thereby obtained the ex post ability to
charge higher royalties than it otherwise could have
charged. The heart of the problem is the panel’s holding
that none of this matters because the Commission did
not precisely delineate the “but-for” world, specifically
whether JEDEC would have adopted a different stan-
dard had the deception not occurred. Id. at 18a-20a.
Withholding patent-related information in the man-
ner found in this case corrupts the competitive process
for technology selection during standards development.
It thereby precludes any reliable determination of
whether the same or a different standard would have
emerged had the information been disclosed. More fun-
damentally, deception of this kind wholly forecloses in-
formed consideration of cost-quality tradeoffs among
competing technology options, enabling the patent
owner to win and thereby obtain monopoly power
through means other than competition on the merits of
its technology offering.4

4
See Joseph Farrell et al., Standard Setting, Patents, and
Hold-Up: A Troublesome Mix, 74 Antitrust L.J. 603, 657 (2007) (“A
defendant may argue that deception is harmless if its effect is to
cause the patented technology to be adopted and if that technology
is superior to the alternatives. But this argument is flawed, for two
fundamental reasons . . . . First, deception undermines the process
of technology competition as a means of selecting the best technol-
ogy at a competitive price . . . even if, after the market test is sub-
verted, there are other reasons to hope that the best technology was
adopted. Second, deception typically enriches the deceptive party
at the expense of others, even if it does not alter the technology that
is selected for the standard. A rule under which there would be no
 7

The Commission found that “but for” Rambus’s de-

ception JEDEC “either would have excluded Rambus’s
patented technologies” from its DRAM standards “or
would have demanded RAND assurances, with an op-
portunity for ex ante licensing negotiations.” Pet. App.
9a-10a. The court of appeals erred in rejecting the latter
scenario as one resulting in acquisition of monopoly
power that would not otherwise be obtained. The fun-
damental purpose of policies that seek license commit-
ments regarding patents essential to proposed specifica-
tions before the standard is adopted is to prevent patent
owners from obtaining monopoly power they would not
otherwise obtain, power to engage in patent holdup con-
duct against locked-in standards implementers.5 De-
ception that enables evasion of those policies under-
mines the entire open standards effort, threatening mo-

antitrust liability if the defendant’s patent covered the best technol-

ogy would effectively allow any owner of superior technology to en-
gage in deceptive behavior to augment its market power through
opportunism.”).
5
See Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 314 (3d
Cir. 2007) (“Firms may become locked in to a standard requiring
the use of a competitor’s patented technology. The patent holder’s
[intellectual property rights], if unconstrained, may permit it to de-
mand supracompetitive royalties. It is in such circumstances that
measures such as FRAND commitments become important safe-
guards against monopoly power.”). See also David G. Swanson &
William J. Baumol, Reasonable and Nondiscriminatory (RAND)
Royalties, Standards Selection, and Control of Market Power, 73
Antitrust L.J. 1, 15 (2005) (“One natural solution to the problem of
ex post market power is for prospective licensees to negotiate con-
tracts in advance of standard selection, when the market is at its
most competitive and proponents of alternative technology are ac-
tively vying with each other for advantage.”).
 8

nopolization of what would otherwise be a robustly com-

petitive standardized market.
The court of appeals incorrectly concluded that the
deception found in this case “cannot be said to have had
an effect on competition” if the sole consequence was
“JEDEC’s loss of an opportunity to seek favorable li-
censing terms . . . .” Pet. App. 20a. As indicated above,
evasion of ex ante protections against ex post patent
holdup can defeat the whole procompetitive objective of
an open standards effort. And, more specifically, supra-
competitive royalties translate into costs and prices of
standardized products that could preclude wide accep-
tance of the adopted standard and exclude many firms
from the standardized market. There is also potential
for discriminatory royalties that could undercut the vi-
ability of disfavored licensees. Finally, the ability of
patent owners to evade these ex ante protections against
ex post holdup outcomes and to do so without antitrust
consequence would inevitably diminish confidence in and
thus support for otherwise procompetitive standards de-
velopment processes generally.
B. The Court of Appeals’ Decision Conflicts with
Third Circuit Precedent.
The court of appeals completely disregarded the
connection between ex ante deception and the acquisi-
tion as well as exercise of ex post monopoly power in a
scenario where the “only” effect of the ex ante deception
is to enable evasion of ex ante RAND license require-
ments. That disregard stands in sharp contrast to the
Third Circuit’s holding in Broadcom Corp. v. Qualcomm
Inc., 501 F.3d 297, 314 (3d Cir. 2007), that allegations of
a patent owner’s evasion of ex ante RAND license poli-
cies state a claim under Section 2 of the Sherman Act for
unlawful monopolization. As the Third Circuit empha-
 9

sized therein, such license policies are “important safe-

guards against monopoly power”; deceptive evasion of
them “harms the competitive process by obscuring the
costs of including proprietary technology in a standard
and increasing the likelihood that patent rights will con-
fer monopoly power on the patent holder.” Id. at 314.
The court of appeals’ decision in this case flatly rejects
these propositions, thereby creating a serious circuit
conflict.
The Broadcom court observed that, “even if” Qual-
comm’s technology “was the only candidate for inclusion
in the standards, it still would not have been selected by
the relevant SDOs absent a FRAND commitment”; in
short, the allegations of Broadcom’s complaint “fore-
close[d] the possibility” that the Qualcomm technology’s
“inclusion in the standard was inevitable.” Id. at 316.
That is in essence another way of describing the second
but-for scenario that the D.C. Circuit rejected as an
unlawful monopolization result: had JEDEC known of
Rambus’s patent position, it would not have adopted
Rambus technologies into its standards absent Ram-
bus’s acceptance of license strictures required under
JEDEC’s RAND policy.
As the Third Circuit recognized, “most SDOs require
firms supplying essential technologies for inclusion in a
prospective standard to commit” to RAND license
terms; and this is both to “guard against anticompetitive
patent holdup” and because the presence or lack of such
a commitment is “a key indicator of the cost of imple-
menting a potential technology.” Id. at 313. We respect-
fully submit that this pervasive use of RAND policies for
these central purposes throughout the standards devel-
opment community highlights the mischief of the D.C.
Circuit’s failure to recognize the role of these policies in
 10

avoiding monopoly outcomes and thus the importance of

resolving the circuit conflict in this respect.
C. The Court of Appeals Adopted a Causation
Standard Tantamount to Antitrust Immunity
for Anticompetitive Conduct of the Kind
Found in this Case.
Where deception has corrupted a standards devel-
opment decision-making process in the manner found in
this case, requiring the Commission or any other anti-
trust plaintiff to prove what the decision would have
been but for the deception as a condition to any remedy
has the effect of placing anticompetitive conduct of this
kind beyond the practical reach of the antitrust laws. It
is a burden that could rarely be met in light of inherent
problems in predicting how a variety of considerations
would have influenced a variety of participants in the af-
fected proceedings. On the other hand, the patent
owner that deliberately deceives a standards body in the
manner found here is engaging in conduct that can be
presumed to contribute to the owner’s acquisition of mo-
nopoly power it would not otherwise obtain; and the
party engaging in such conduct can be presumed to be-
lieve it will do so. Thus, upon plaintiff’s proof of the de-
ception, the burden should shift to the patent owner to
prove the absence of materiality.6

6
An example of allocating burdens in that manner is United
States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001). There, on
findings that the defendant engaged in deceptive conduct to main-
tain monopoly power, the D.C Circuit declined to require the plain-
tiff “to reconstruct the hypothetical marketplace absent” the decep-
tion; instead, to “some degree,” the defendant should “suffer the
uncertain consequences of its own undesirable conduct.” Id. at 79
(quoting III Phillip E. Areeda & Herbert Hovenkamp, Antitrust
 11

The leading antitrust treatise explains that requiring

a plaintiff to submit “strict” proof of what would have
occurred in the marketplace absent the alleged anticom-
petitive conduct would establish an insurmountable bur-
den. As the authors explain, “Many exclusionary prac-
tices . . . are one-of-a-kind situations in which it is impos-
sible to prove that . . . without the defendant’s anticom-
petitive destruction of its rival the market would have
become more competitive. Once the challenged events
have occurred, the alternative reality can never be rec-
reated.” III Phillip E. Areeda & Herbert Hovenkamp,
Antitrust Law ¶ 657a at 162 (3d ed. 2008) (emphasis
added). Because of this impossibility, the authors con-
tinue, “[i]t is enough [for plaintiffs] to show that anti-
competitive consequences are a naturally-to-be-expected
outcome of the challenged conduct.” Id.
That causation standard is entirely consistent with
what five other courts of appeals have required of plain-
tiffs asserting monopolization claims. See, e.g., Taylor
Publ’g Co. v. Jostens, Inc., 216 F.3d 465, 475 (5th Cir.
2000) (“‘Exclusionary’ conduct is conduct, other than
competition on the merits or restraints reasonably ‘nec-
essary’ to competition on the merits, that reasonably ap-

Law ¶ 650c at 69 (2d ed. 1996)). “It is inherently difficult to deter-

mine how [a standards development body] would have behaved in a
but-for world” and “a burden of proof regarding what would have
happened in the absence of deceptive conduct by the patent holder
may be hard for either party to meet.” Farrell, supra note 4, at 653-
54 (emphasis in original). But “[a] firm’s actions can illuminate
what it thought the effects of its choices would be, and this can offer
substantial evidence on causation. For instance, the patent holder
may have delayed asserting its patents . . . until switching costs
grew. Such conduct may be hard to explain if the patent holder
were confident that full disclosure would have no effect.” Id. at 654.
 12

pears capable of making a significant contribution to

creating or maintaining monopoly power.” (citation omit-
ted)); PSI Repair Servs. v. Honeywell, Inc., 104 F.3d
811, 822 (6th Cir. 1997) (citing III Phillip E. Areeda &
Herbert Hovenkamp, Antitrust Law ¶ 626c (1978));
Morgan v. Ponder, 892 F.2d 1355, 1363 (8th Cir. 1989)
(exclusionary conduct must be “capable of materially
impacting on an equally efficient plaintiff’s viability.”);
Instructional Sys. Dev. Corp. v. Aetna Cas. & Sur. Co.,
817 F.2d 639, 649 (10th Cir. 1987) (“In order to raise a
section 2 violation, . . . the exclusionary conduct must
appear reasonably capable of contributing significantly
to creating or maintaining monopoly power.” (citation
omitted)); Barry Wright Corp. v. ITT Grinnell Corp.,
724 F.2d 227, 230 (1st Cir. 1983) (Breyer, J.) (citing III
Phillip E. Areeda & Herbert Hovenkamp, Antitrust
Law ¶ 626 at 83 (1978)). See also, e.g., Town of Concord,
Massachusetts v. Boston Edison Co., 915 F.2d 17, 21 (1st
Cir. 1990) (Breyer, J.) (quoting Barry Wright, 724 F.2d
at 230).7
In sum, the causation standard the court of appeals
applied in this case is contrary to the precedent within
five other circuits. The court of appeals held that the

7
In the latest version of the Areeda antitrust treatise, the au-
thors’ causation standard for monopolization remains unchanged:
“In order to satisfy any conduct component of the monopolizing of-
fense, the conduct in question must be capable of making a signifi-
cant contribution to the creation, maintenance, or expansion of
monopoly power.” III Phillip E. Areeda & Herbert Hovenkamp,
Antitrust Law ¶ 650 at 90 (3d ed. 2008) (emphasis added). See also
id. ¶ 650c at 92-93 (“[P]laintiff generally has the burden of pleading,
introducing evidence, and presumably proving by a preponderance
of the evidence that anticompetitive behavior has contributed sig-
nificantly to the achievement or maintenance of the monopoly.”).
 13

Commission failed to establish that Rambus engaged in

exclusionary conduct because the Commission could only
delineate in the alternative what would have occurred
but for the deception: “JEDEC either would have ex-
cluded Rambus’s patented technologies from the
JEDEC DRAM standards, or [JEDEC] would have de-
manded RAND assurances, with an opportunity for ex
ante licensing negotiations.” Pet. App. 9a-10a. The
court held the Commission’s inability to exclude the pos-
sibility that JEDEC would have sought RAND licensing
terms from Rambus absent the deception to be fatal to
its monopolization claim. Id. at 20a. As the court ex-
plained, “[I]f JEDEC, in the world that would have ex-
isted but for Rambus’s deception, would have standard-
ized the very same technologies, Rambus’s alleged de-
ception cannot be said to have had an effect on competi-
tion in violation of the antitrust laws.” Id.
As explained above, requiring a plaintiff to establish
what would have occurred absent the alleged misconduct
is tantamount to antitrust immunity for antitrust defen-
dants that engage in the types of deceptive conduct
found by the Commission to have occurred in this case.
The court of appeals’ adoption of a heightened burden of
proof – one that compels a plaintiff to recreate the com-
petitive conditions “but for” the challenged conduct – is
an “impossible” burden for any antitrust plaintiff to
meet. III Areeda & Hovenkamp, Antitrust Law ¶ 657a
at 162. In the context of standard setting, moreover, the
court of appeals’ causation standard is all the more oner-
ous given the confluence of ever-evolving circumstances
surrounding a standard’s development and the complex-
ity of predicting the decision making of SDO partici-
pants in the absence of the deception.
 14

D. The Court of Appeals Interpreted this Court’s

Discon Decision in a Manner that Precludes
Use of the Sherman Act Against Acts of Mo-
nopolization in Standards Development
Processes.
The court of appeals held that if the deception at is-
sue “merely” enabled Rambus to avoid compliance with
JEDEC’s RAND policy, it could not constitute unlawful
monopolization because “an otherwise lawful monopo-
list’s end-run around price constraints . . . does not alone
present a harm to competition in the monopolized mar-
ket.” Pet. App. 20a. In so holding, the court relied heav-
ily on this Court’s opinion in NYNEX Corp. v. Discon,
Inc., 525 U.S. 128 (1998), and particularly on the rejec-
tion therein of Discon’s argument that consumer harm
from higher telephone service rates as a result of a chal-
lenged fraudulent scheme could suffice to prove an anti-
competitive effect for Sherman Act purposes. The fea-
tured quote from the Discon opinion was as follows:
We concede Discon’s claim that the [defendants’]
behavior hurt consumers by raising telephone
service rates. But that consumer injury natu-
rally flowed not so much from a less competitive
market for removal services, as from the exercise
of market power that is lawfully in the hands of a
monopolist, namely, New York Telephone, com-
bined with a deception worked upon the regula-
tory agency that prevented the agency from con-
trolling New York Telephone’s exercise of its
monopoly power.
Id. at 136 (emphasis in original).
The court of appeals thereby seriously misused the
Discon decision in two respects. First, unlike New York
Telephone, Rambus was not a “lawful monopolist” at the
 15

time of its deception – it obtained monopoly power as a

direct result of evading JEDEC’s RAND policy. Sec-
ond, in contrast to Discon’s failure to present evidence or
even a plausible story of competitive harm, the Commis-
sion in this case found the deceptive conduct at issue to
present “grave implications for competition” in its sub-
version of JEDEC’s standard-setting process and re-
sulting monopolization of markets for four technologies
incorporated into the JEDEC standards. Pet. App. 31a.
As already discussed above, supra at 7, the funda-
mental purpose of JEDEC’s RAND policy was to pre-
vent a patent holder from obtaining monopoly power as
a result of the incorporation of the patent holder’s tech-
nology into a final standard. So, even if the “but for”
scenario would have been the same incorporation of
Rambus technologies into JEDEC standards but subject
to RAND license commitments, Rambus would not have
thereby acquired monopoly power. The classic definition
of monopoly power is “the power to control prices or ex-
clude competition.” United States v. E.I. duPont de
Nemours & Co., 351 U.S. 377, 391 (1956). A RAND li-
cense commitment would have prevented Rambus from
possessing that kind of power.8 Conversely, the avoid-

8
Monopoly is not a “natural consequence” of the standardi-
zation of a patented technology. Broadcom, 502 F.3d at 317. A high
market share does not alone confer market power when pricing dis-
cretion is contractually constrained. See, e.g., United States v. Gen.
Dynamics Corp., 415 U.S. 486, 498 (1974); Nat’l Reporting Co. v.
Alderson Reporting Co., 763 F.2d 1020, 1024-25 (8th Cir. 1985);
Ticketmaster Corp. v. Tickets.Com, Inc., 2003 U.S. Dist. LEXIS
6484, at *11 (C.D. Cal. 2003); Alabama Ambulance Serv. v. City of
Phenix City, Alabama, 71 F. Supp. 2d 1188, 1195-96 (M.D. Ala.
1999); Kirk-Mayer, Inc v. Pac Ord, Inc., 626 F. Supp. 1168, 1170-71
(C.D. Cal. 1986).
 16

ance of any such commitment has enabled Rambus to

impose supra-competitive royalties; it has also enabled
Rambus to impose discriminatory license terms or in-
deed even to deny licenses altogether, thereby effec-
tively blocking entry into the standardized markets and
excluding or impeding competition generally. In short,
even if the “but for” scenario would have been stan-
dardization of the Rambus technologies subject to
RAND commitments, deception enabling Rambus to
avoid those commitments is properly deemed to consti-
tute unlawful monopolization. In that scenario, Rambus
never was a “lawful” monopolist in the way New York
Telephone was before as well as after the events giving
rise to the Discon litigation.
The sole question addressed in Discon was “whether
the antitrust rule that group boycotts are illegal per
se . . . applies to a buyer’s decision to buy from one seller
rather than another, when that decision cannot be justi-
fied in terms of ordinary competitive objectives.” Dis-
con, 525 U.S. at 130; see also id. at 133. The core holding
was that the per se rule did not apply to that situation;
and, as a result, “plaintiff here must allege and prove
harm, not just to a single competitor, but to the competi-
tive process, i.e., to competition itself.” Id. at 135. The
Court declined to consider whether Discon’s complaint
should be dismissed altogether for failure to allege any
harm to competition generally. See id. at 140. Herein
lies the second reason why Discon is completely inappo-
site to the Commission’s case against Rambus.
The Commission never asserted any argument that
the Rambus conduct at issue should be subject to a rule
of per se illegality. The Commission’s complaint in-
cluded extensive allegations of anticompetitive effects,
see, e.g., Complaint ¶¶ 119-20, In re Rambus Inc., 2002
FTC LEXIS 31 (F.T.C. 2002) (No. 9302), available at
 17

http://www.ftc.gov/os/adjpro/d9302/020618admincmp
.pdf, and the Commission’s opinion on liability found
such effects to have occurred, Pet. App. 136a-140a. As
detailed earlier in this amicus brief, supra at 6-8, decep-
tion that enables evasion of ex ante RAND license stric-
tures can be expected to harm competition in a multi-
tude of ways: undermining the whole competitive proc-
ess for technology selection during the standards devel-
opment process; enabling the patent owner to win and
thereby obtain monopoly power through means other
than competition on the merits of its technology offering;
allowing monopolization of what would otherwise be
robustly competitive standardized markets; raising bar-
riers to entry and thereby excluding many firms from
the affected markets altogether; and diminishing confi-
dence in and thus support for otherwise procompetitive
standards development processes generally.
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted,

ROBERT A. SKITOL
Counsel of Record
KENNETH M. VORRASI
DRINKER BIDDLE & REATH LLP
1500 K Street, N.W.
Washington, DC 20005
December 23, 2008 (202) 842-8800