By Tara Hoke
Scenario
With a history dating back to the earliest days of the electronics industry, the JEDEC Solid State Technology Association is a nonprofit trade association in the field of microelectronics. Membership in JEDEC affords member companies the opportunity to participate in the development of JEDEC’s numerous technical standards. In addition to safety and quality measures, one primary focus of these standards is interoperability. JEDEC’s standards aim to facilitate compatibility among products produced by market competitors and suppliers and encourage new products to support older devices.
JEDEC’s standards have had tremendous impact within the industry. At the time of the case reported in this column, JEDEC-compliant dynamic random-access memory, or DRAM, devices represented as much as 95% of the marketplace and were present in nearly all personal computers and similar equipment.
In keeping with its goal of interoperability, JEDEC has a stated policy of discouraging standards language mandating technologies or processes that are under patent, which might enable a patent owner to restrict or impose conditions on its use by other companies. If a standards committee is sure the use of patented technology is justified, JEDEC directs the committee first to ensure it has fully documented all areas covered by the patent.
It then seeks written assurance from the patent holder of its intent to license its patented technology on royalty-free or at least fair and nondiscriminatory terms. Members in a JEDEC standards committee are also required to disclose any patents they may possess that are relevant to the standard under development.
In the early 1990s, chip interface technology company Rambus was a member of JEDEC and served on the development committee for a particular type of DRAM device. At the same time, however, Rambus was in the process of applying for four separate patents related to this same type of DRAM equipment — patent applications that it failed to disclose to JEDEC. The nondisclosure was far from inadvertent, as at least one internal Rambus communication expressed an intent to delay asserting its patents until JEDEC’s standards development process “reached a point of no return.”
Rambus also repeatedly used information from JEDEC meetings to amend its patent applications so as to ensure greater coverage under the proposed language.
After four years of service on the standards committee, Rambus withdrew its membership from JEDEC, again without notice to JEDEC of its patent interests. Still believing its DRAM standard to be free of concerns over proprietary technologies, JEDEC issued the final standard and the new guidance was quickly taken up by members of the industry. Only then did Rambus take action; it asserted a patent claim on JEDEC’s prescribed DRAM interface technology and demanded royalties from every manufacturer seeking to comply with the standard.
While the gambit was initially lucrative for the patent owner, Rambus soon found itself embroiled in litigation with other major industry competitors who alleged fraud, unfair competition, and a variety of other claims related to Rambus’ actions as a member of the JEDEC standards committee. The litigation drew the attention of the Federal Trade Commission, which in turn deemed Rambus’ “patent ambush” tactics as an unlawful attempt to gain a monopoly and charged the company with violation of federal antitrust laws.
Question
If this case had involved an ASCE member working on an ASCE technical standard, would the member’s actions have violated the ASCE Code of Ethics?
Discussion
In cases involving a member’s service on a volunteer board or committee, ASCE’s Committee on Professional Conduct has commonly held that engineers have the same ethical duty to the volunteer organization as they would to an employer or client. In the prior Code of Ethics, this duty was outlined in Fundamental Canon 4: “Engineers shall act in professional matters for each employer or client as faithful agents or trustees, and shall avoid conflicts of interest.” Guideline a to that canon added, “Engineers shall avoid all known or potential conflicts of interest with their employers or clients and shall promptly inform their employers or clients of any business association, interests, or circumstances which could influence their judgment or the quality of their services.”
A close comparison of this language with the current code reveals one interesting distinction: Today’s code does not include an instruction to avoid conflicts of interest. Section IV.a directs engineers merely to “act as faithful agents of their clients and employers with integrity and professionalism,” while Section IV.b requires members to “make clear to clients and employers any real, potential, or perceived conflicts of interest.”
While it is undoubtedly good guidance to avoid situations that may threaten one’s professional judgment, all too often the prior code’s language was interpreted to suggest that conflicting interests were inherently unethical, meaning an engineer could only legitimately perform services where no other professional or personal interest was at stake. Of course, some degree of conflicting interest is inescapable in nearly all professional transactions, and indeed, there are times when competing interests are not only accepted but welcomed. Such is the case in standards development, in which organizations like ASCE solicit experts from a variety of interests, with the goal of reaching a standard reflecting the consensus of these disparate groups.
The new code, by contrast, chooses to focus its ethical directive solely on disclosure, recognizing that transparency affords clients or employers the chance to evaluate an engineer’s competing interests and make informed decisions on the basis of that evaluation. Such decisions may include continuing despite the conflict, imposing additional conditions to mitigate the risk posed by the conflict, or if the perceived threat to the engineer’s objectivity is too great, choosing to look elsewhere for engineering services.
If this case had involved an ASCE member, the CPC would have centered its investigation on the member’s obligation to disclose conflicts of interest. It would have noted that the member’s failure to disclose relevant patent information had undermined the stated goals of the standards organization and denied it the opportunity to consider the impacts of the individual’s patents until all the costs of standards development had been incurred and the final content had been published and implemented across the industry. As such, it is all but certain that the CPC would have found that the member’s conduct fell short of the ethical obligation to be a faithful agent while serving on the standards committee.
The CPC might also have considered Section III.d of the current code, which instructs engineers to “reject practices of unfair competition,” and found that the member had violated this provision by abusing a position on the standards committee to support patent applications mirroring the standard’s mandates and in so doing gaining an undue advantage over market competitors.
While the question of Rambus’ ethical culpability may seem clear-cut, it is interesting to note that the legal case against Rambus was not so unassailable. Though the FTC held that the company’s deception had harmed “competition and consumers alike” and “significantly contributed to its acquisition of monopoly power,” the agency’s verdict was subsequently overturned on appeal.
The court found that JEDEC’s policy was unclear on its members’ obligation to disclose pending patent applications and showed support for Rambus’ right to “vigorously protect” its trade secrets. Even more surprisingly, the court felt that — even assuming Rambus had violated a duty to disclose — the FTC had still not met the burden of proof for an antitrust violation. By JEDEC’s own admission, the organization may have chosen to proceed with the same language upon written assurances of Rambus’ intent to offer a fair license price, and the court deemed that JEDEC’s inability to negotiate an upfront commitment on license fees for its members was not by definition an “anticompetitive” result. ce
Tara Hoke is ASCE’s general counsel and a contributing editor to Civil Engineering.
This article first appeared in the May/June 2022 issue of Civil Engineering as “The Ethics of Disclosure.”
