25 Pages Posted: 8 Apr 2010 Last revised: 25 May 2014
Date Written: April 8, 2010
In the most important ruling ever on causation and standard-setting, In re Rambus, the D.C. Circuit made it unnecessarily difficult to demonstrate causation. It erected roadblock after roadblock in front of legitimate cases alleging monopolization in the standard-setting context.
The primary hurdle took the form of a dichotomy. The court reasoned that Rambus’s nondisclosure of its patents was responsible for the standard-setting organization (SSO) either (1) adopting its technology or (2) failing to obtain reasonable-and-nondiscriminatory (RAND) royalties. But its reasoning on each prong of the dichotomy cut off legitimate claims.
The first prong, of adoption, received a strict “but for” causation standard that is essentially impossible for a plaintiff to show. The FTC was punished for not “eliminating the possibility” that the SSO might have included Rambus’s technology even if it had been disclosed. But the difficulties of proving a sole cause and predicting a counterfactual setting are extremely difficult. The challenges are even higher in the standard-setting context, in which there are numerous potential technologies, including many that are unpatented and less expensive.
The second prong, addressing RAND royalties, suffered from an excessive reliance on the case of NYNEX Corp. v. Discon, Inc., which presented a far different factual scenario than Rambus. The D.C. Circuit imbued one line in the case, on monopoly pricing, with far more weight than was warranted. In addition, unlike Rambus, the case dealt with the conduct of a party that already had monopoly power.
Keywords: Antitrust, Standard-Setting, Causation, Rambus, Monopolization, Discon
JEL Classification: K21, L12, L41, L63, O31, O34
Suggested Citation: Suggested Citation