Rambus (RMBS)

[Threejack]

Scruffy's Account at TMF


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Scruffy Here…..

My apologies for the delay. Waskilroyhere is doing such a superb job I'll be hard pressed to add anything.

After idiotically arriving at the wrong airport, I found myself relieved that the hearing wasn't starting until 10:00 AM!

I arrived at the FTC building at approximately 9:20 Am. Just in time to meet up with none other than Jack Robertson at the sign-in desk. He was actually dressed up this time around. I greeted him with a “look who it is, Mr. Robertson.”
He stared at me as he was trying to figure who I was, so I added,
“Last time I met you at the final oral arguments, you left at 5:00PM; McGuire didn't get cooking until about 5:15. You missed the whole thing”. Then I just walked by him and hopped on the open elevator.

When I got to the hearing room it was pretty packed. Lots of attorneys, a few known Rambus investors, the Rambus legal eagles, Danforth, Horowitz , Stone, Perry , Melamed, Sean Royall, and I can only assume attorneys representing all of Rambus adversaries. The room was pretty much divided with the Hatfields (Rambus) on the left and the McCoys on the right (anti-Rambus).

Joe, one of the yahoo/chat regulars saved me a great seat in the back row, which was right next to the door. It allowed me to leave a few times and make a couple of phone calls.

The hearing started just after 10:00 AM. Deborah Majoras commented on the rather large turnout, set the time rules, and called Oliver to the stand.

Oliver started with the usual Rambus deceived everybody stuff. A couple of minutes into it, Deborah interrupted him and rattled off a few quick questions.
(I liked her no-nonsense clear as day style.)

“What if the organization has no rules?”
“What happens then?”
“How can the FTC remedy the situation?”

(These were great questions to start things up.)

Oliver stammered away with his usual blithering babble of answers.

As I had commented in my earlier posts, I thought the best question of all was DM's zinger about “What would prevent group from gathering and doing other things such as……fixing prices”
(A nice hush swept over the room)
During this part of the testimony, Oliver ranted on about the Allied Tube Case again. As has been discussed here a thousand times, that case simply does not apply to the Rambus case.

Comm. Jon Leibowitz cut in and asked Oliver;

“Did all parties know to disclose”?
“Did all follow the policy?”

JL then refers to an IBM patent list he has with him. It has 60 plus patents and 3 patent applications listed. He goes on to say that there appears to be a 19:1 ratio of Patents to Patent Applications on this list. His point (I believe, perhaps someone else could elaborate) was that certainly IBM was not disclosing all their patent applications – or not many of them.

On the same token, I thought that an argument could have been made here that IBM only disclosed patent applications that might end up in the standard. Oliver didn't go there.
This did not seem to be Commissioner JL's point at all anyway. His point seemed to be that if what the CC was saying is true, that all members did in fact disclose patent applications, why does IBM not list many more?

NOTE: I didn't bother too much with writing down Oliver's idiotic answers. Oliver basically says the same five or six things over and over. Rambus stole. Rambus schemed. Rambus is very bad. Rambus plotted. (Rambus blah, blah freaking blah). I think the valuable info for us is in the questions.

JL persisted to Oliver, “Should I simply ignore this ratio?”
JL “so…All knew to disclose?' “Did all follow this policy?”

NOTE: I thought we were off to a great start.

FTC Comm. Thomas B. Leary…..

TL: “JEDEC members have to have been reasonable in believing that Rambus had an IP interest. IF JEDEC WASN'T MISLED, THEN THE PROCESS WASN'T TAINTED.”

Deborah Majoras is shakes her head in what I think is in agreement with TL. Heads shake all over the 'dark side' of the room as well. As if to influence the track that TL and DM are heading down.

TL “Do you conclude that the decision makers on the whole were actually reasonable when deciding collectively if Rambus was included in the proposed standard?”

NOTE: I wrote down in my notes to self….Buy options, leaps, and shares!
Joe nudged me and said, No need to write and notes just “BUY!”

OLIVER: Basically here, Oliver did not want to admit that the JEDEC members were reasonable people! He babbled away saying “whether or not they were reasonable is not the issue here”.

Needless to say, this answer was not well received by the commissioners

Then SWINDLE

My notes are not clear but he began speaking about a 'Line Drawing Expectation'

Oliver now rambles on that this case isn't even close to the line. He went into a Sean Royal-like tirade about how Rambus plotted and schemed from the time they joined JEDEC etc.
(This is so annoyingly old. Through the largest case in FTC history, Oliver has never mentioned the elusive inventor of all these technologies! As if it was JEDEC!!!)

Q. If viable alternatives existed, why did Rambus decline RAND?

Gap in my notes…..but IMO the Commission did not buy the CC's nonsense here.
(I believe I steeped out of the room at this time)

Com. Pamela Harbour,

PM. “If alternatives truly existed…….If JEDEC had received RAND from Rambus, then would there have been an alternative?”

Oliver stammered on but Commissioner Majoras doesn't seem to buy the answer...at all.

Someone else asked CC about Section 2 violations……”Would CC have to prove that Rambus rates were extraordinary?” CC said No babble babble.

Oliver says they would not have paid Rambus rates. JEDEC would have designed around them. Oliver says that 'clearly an alternative was chosen relating to the 703 patent on one occasion. NEC recognized it and later chose an alternate technology.

STONE began at 10:50 AM

Stone started with a short history.

Says that CC says that Rambus didn't follow the rules. Stone says that Rambus did follow the rules.

Deborah Marjorie (in the same firm tone she had previously used on Oliver) asks:
“Why do the anti-trust laws care what the JEDEC rules were?”

Stone: “They don't care. I believe there is a balance of competitive interests. Different Standards Setting organizations have different guidelines”

**Gap in My Notes as I strained to follow this line of questioning.

Then Com. Pamela from left field….”It can not be okay for a company to hijack the standard and receive economic benefit”

Stone: “the results would have been the same. JEDEC would have gotten RAND letters and the standard would have remained the same.

Com. Swindle: “If that were really true, why didn't Rambus put all the cards on the table from the start…if the technology was so great?” (This was a good question)

Com. Leary chimes in: “It would have made more sense! Wouldn't it now be true, if Rambus position makes more sense, then follow that all companies in SSO's should not reveal a thing?”

(I didn't write it down and don't remember. It's the questions that stick in my mind.)

Hurricane Pamela: She mentions Judge Payne specifically as she opens the spoliation questioning. “Did Rambus intentionally destroy documents?”

Stone: Rambus instituted a document retention program. They were told to “KEEP what is important. Trash what you do not need.”

Comm. Leary: It's a tremendous burden for the complaint counsel to prove that the documents were relevant. (The dark side of the room laughs)

Com. Pamela: “Is it Rambus position that they did NOT destroy anything relevant to Scope of Claims and Relevance of Patents?”

Comm. Majoras: (loud, clear and almost jokingly)
“HOW DO YOU KNOW COUNSEL? HOW DO YOU KNOW???”

Com. Pamela: “There were almost 10000 pounds of documents (aid in a tone of disbelief. Not in the amount of docs destroyed but in Stones ability to assure the panel that nothing important was destroyed)

STONE: Goes on to explain that it's really not that much per employee per month.
This didn't sway the disbelieving stance of the commissioners on this issue.


Now it was Melemed's turn. he is the anti-trust expert….who unfortunately does not come across very clearly; I have no doubt that he knows his stuff. I just find it difficult to follow him.

(I took this opportunity to step out for a few minutes)

Now…I believe Waskilroyhere addressed the following exchange earlier this evening.
I scribbled only a few notes down.

Comm. Majoras 'Lets say I don't agree with you, and the 'Refusal to Deal' rule does not apply here, then does the Sacrifice Test apply instead?”

Another Random Note of mine…..”As per NDD, this Commission cares little about JEDEC policy. We are focused on Anti-TrustLaws! re: Aspenski (sp) , Microsoft


Stone took the last 10 minutes for our side:

Stone: In summary (I think) “The consumer was not harmed.”

Com. Majoras “How do you know?”

Com. Pamela (again- she is tough cookie): asks 'Weren't these patents related to RDRAM? How was JEDEC to know that Rambus would go after SDRAM?

STONE: We have Willie Meyer, Kellogg, Kelly and the Mitsubishi Documents.

Comm. Majoras: Frowning and squinting away.

Comm. Pamela discusses Kingsdown………..

Majoras still squinting……..

(Sorry guys that's all I have here. I refer you to Waskilroyhere)


Oliver Rebuttal

Oliver appears to be referring to an FTC Policy Report as to why Rambus is a very bad boy. This is just like Payne citing his own rulings!

Comm. Majoras: Thankfully, she is just as animated when trying to swallow Oliver's nonsense! She is not buying it. the report was written last fall. it really has nothing to do with this case.

Com. Pamela: If we found that the JEDEC did not have a policy should we re-open the case? Is there still grounds for anti-trust?

Oliver: Purpose of JEDEC blah. blah blah.

(my note….Is commission going to try and enforce Rand here?) I don't know why I even wrote this down)

Oliver: Shows Townsend testimony where he states that policy was to disclose. (Townsend is dead and can not be questioned about this and the documents cited are not that solid. Stone had pointed to a Townsend further on in the very same document that Oliver cited and shows a conflicting statement. Oliver is using a Sean Royall / Judge Payne specialty…..you know…just take the words you need!!!!!)

Comm. Leibowitz: What changed in the policy from the early 90's thru the late 90's?
Oliver: “Nothing….The policy was always to disclose”

Comm. Majoras: (Still frowning)

Comm. Leibowitz begins questioning about Microns disclosure practices.
Oliver talks about how they always disclosed but in bringing up a 2000 paten where they disclosed 'late' he states that micron was confused.

LEARY” INTERJECTS (my paraphrase) …”HOW CAN YOU FAIL TO CRITISIZE MICRON FOR BEING CONFUSED IN 2000 YET Criticize RAMBUS FOR BEING CONFUSED FIVE YEARS EALIER! IT SEEMS COUNTER INTUITIVE!”

(This was a good one for our side)


MORE LEARY: “Something has been bugging me. You are asking us to establish rules – but you are asking us to do much more than “Go forward and sin no more”.
It's a draconian, backward thinking remedy rather than a forward looking remedy.
You are asking us to strip Rambus of a significant asset. This is a harsh remedy. relief is not consistent to strip Rambus” (this is close enough)

Leary (I think): “Hypothetically, if we were to find that no reasonable person would have been misled after 1995, what would be a remedy?

Oliver: (I'm pretty sure) He gives his usual strip Rambus of everything answer.

Comm.?? Q. Is there a clear statement from Rambus that says they would not disclose?

??????????????????


SWINDLE: Asks about the economic harm to the consumer because of Rambus royalties.

Comm. Pamela: Asks about “RECORD EVIDENCE” that Rambus technology would have been used?

Oliver: It would not have been used. JEDEC would have designed around it.Comm.

Comm. Leibowitz: talks about the 3rd cause? of the case???? “Unfair Method of Competition” Assuming you haven't proven your case; can we still find a SECTION 5 Violation?

?????????????????

Comm. Majoras: What's the clear anti-competitive harm?

Oliver: Higher royalty would be passed on to consumers.

OLIVERS last line was a little confusing to me….the largest case in FTC History ended with these words from Oliver.
'Under any theory we do not have to prove fraud”
(Is Oliver saying to the panel that they can do whatever they want with that one???????)


Anyway, That's about it. the meeting broke up and we huddled around outside the court room for about 15 minutes. there were quite few introductions and various huddles. Everyone was trying to get a handle on what had just gone down. Some in our circle were very encouraged by what they had heard. Some said they'd really need to see a transcript.

Here is something interesting, I saw two of the Commissioners along with I believe two their aides getting off the elevators as we were mulling around. It was around 12:20PM.
They appeared to be coming from the cafeteria and were heading into one of the Commissioners offices. Remember. I have bar owner ears…I very clearly heard somebody say, "It's down 0.41 cents." I can not say they were talking about the price of Rambus stock because we were up at that point but we could very well have been 41 cents off the high of the day…or they could have been talking about a different stock altogether. What I find interesting is that they were talking about the price of a stock period!


I spoke briefly with Danforth and I chatted with Stone in the elevator. Joe and I went across the road to the Capital grill. Joe bought the lunch and we called some of you guys.

And that's the way it was.

PS. There were a few laughs at Rambus expense regarding the document destruction stuff. I want to think that we'll get the last laugh on that. I don't really know what the FTC can do about it. Stone did say that he couldn't reveal the contents of some of the alleged documents that will be admitted with the piercing of ACP in the Virginia case, but he is on record as saying that they do not contain anything relating to “Scope of Claims and Relevance of Patents”

Stone acknowledged when mistakes were made with Rambus in the past and he stated that had he been counsel some things would have been done differently…Pamela chimed in 'Like that Document Destruction Policy!” This got the biggest laugh of the day from the dark side. I'll try and get as many of their names as possible so that we can send them all post cards from CABO!

http://boards.fool.com/Message.asp?mid=21739016&sort=postdate

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Thanks, Pat.

Threejack