Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-00244/USCOURTS-cand-5_06-cv-00244-37/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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United States District Court

For the Northern District of California

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF

United States District Court

For the Northern District of California

E-filed: 1/5/08 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

HYNIX SEMICONDUCTOR INC., HYNIX

SEMICONDUCTOR AMERICA INC.,

HYNIX SEMICONDUCTOR U.K. LTD., and

HYNIX SEMICONDUCTOR

DEUTSCHLAND GmbH,

Plaintiffs,

v.

RAMBUS INC.,

Defendant.

No. CV-00-20905 RMW

ORDER DENYING RAMBUS'S MOTION

FOR SUMMARY JUDGMENT NO. 1 ON

MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S

DAUBERT MOTION NO. 1 

[Re Docket Nos. 2623 and 2668]

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For the Northern District of California

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 2

RAMBUS INC.,

Plaintiff,

v.

HYNIX SEMICONDUCTOR INC., HYNIX

SEMICONDUCTOR AMERICA INC.,

HYNIX SEMICONDUCTOR

MANUFACTURING AMERICA INC., 

SAMSUNG ELECTRONICS CO., LTD.,

SAMSUNG ELECTRONICS AMERICA,

INC., SAMSUNG SEMICONDUCTOR, INC.,

SAMSUNG AUSTIN SEMICONDUCTOR,

L.P., 

NANYA TECHNOLOGY CORPORATION,

NANYA TECHNOLOGY CORPORATION

U.S.A.,

Defendants.

No. C-05-00334 RMW

[Re Docket Nos. 540 and 571]

RAMBUS INC.,

Plaintiff,

v.

SAMSUNG ELECTRONICS CO., LTD.,

SAMSUNG ELECTRONICS AMERICA,

INC., SAMSUNG SEMICONDUCTOR, INC.,

SAMSUNG AUSTIN SEMICONDUCTOR,

L.P.,

Defendants.

No. C-05-02298 RMW

[Re Docket Nos. 387 and 413]

RAMBUS INC.,

Plaintiff,

v.

MICRON TECHNOLOGY, INC., and

MICRON SEMICONDUCTOR PRODUCTS,

INC.

Defendants.

 No. C-06-00244 RMW

[Re Docket Nos. 229 and 255]

Case 5:06-cv-00244-RMW Document 642 Filed 01/05/08 Page 2 of 27
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For the Northern District of California

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1 For purposes of this order, the court collectively refers to all of the Micron, Nanya, and

Hynix entities as "the Manufacturers."

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 3

This order addresses two motions brought by Rambus related to the Manufacturers'1 antitrust

claims. Rambus's Summary Judgment No. 1 seeks summary judgment on the Manufacturers'

monopolization and attempted monopolization claims. Rambus's Daubert Motion No. 1 requests

that certain testimony of Dr. Gilbert be excluded from trial. The Manufacturers jointly oppose the

motions. The court has reviewed the papers and considered the arguments of counsel. For the

reasons set forth below, the court denies Rambus's Motion for Summary Judgment Number 1 on

Monopolization. The court grants in part and denies in part Rambus's Daubert Motion No. 1 to

exclude the opinions of Dr. Richard Gilbert.

I. MARKET DEFINITION

Rambus's motion for summary judgment challenges the Manufacturers' ability to define a

market for their claims of monopolization or attempted monopolization under Section 2 of the

Sherman Act, 15 U.S.C. § 2. A violation of Section 2 requires proof of a relevant product market

and geographic market. Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 459 (1993); Unitherm

Food Systems, Inc. v. Swift-Eckrich, Inc., 375 F.3d 1341, 1363 (Fed. Cir. 2004) (reversing an

antitrust verdict because no evidence supported the plaintiff's technology market definition), rev'd on

other grounds, 546 U.S. 394 (2006). The Supreme Court requires this showing because it can be

difficult to distinguish "robust competition" from anticompetitive conduct. Id. at 458-59. The

market definition requirement guards against overuse of Section 2 in ways that chill competition. Id.

at 459. While Rambus's motion raises a number of questions about the Manufacturers' contentions,

the motion is narrow. Its argument is that the Manufacturers cannot define a relevant technology

market as a matter of law, because the Manufacturers have no evidence of whether use of the alleged

substitute technologies comprising the various technology markets require royalties to be paid. As

discussed below, this failure to present evidence on royalties is relevant, but not fatal, to the

Manufacturers' attempts to define technology markets.

A. The Relevant Market Contentions

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 4

The Manufacturers' pleadings accuse Rambus of monopolizing a variety of markets. 

Micron's counterclaims accuse Rambus of monopolizing three alternative sets of technology

markets:

The relevant markets negatively affected by Rambus’s anticompetitive

misconduct are the markets for interface technologies for high performance DRAMs

(either generally or for computer main memory). The Federal Trade Commission

(“FTC”) in In the Matter of Rambus Inc., Federal Trade Commission Docket No.

9302, found that four such markets had been affected by Rambus’s misconduct: (1)

the market for latency technology; (2) the market for burst length technology; (3) the

market for data acceleration technology; and (4) the market for clock

synchronization technology. A fifth market exists for precharge technologies and

was negatively affected by Rambus’s misconduct, as the FTC found in its Opinion

on Remedy. As an alternative to these markets, another relevant market negatively

affected by Rambus’s anticompetitive misconduct can be defined as the market for

interface technologies for high–performance DRAMs (either generally or for

computer main memory).

As another alternative, the relevant markets are the technology markets that

are compliant with the adopted standards.

Micron's First Amended Answer and Counterclaims, C-06-00244 RMW, Docket No. 87, at ¶ 103

(N.D. Cal. May 30, 2007) (line breaks added).

Nanya's pleadings define the relevant market as the four technology markets considered in

the FTC's opinion. Nanya's First Amended Answer . . . And Counterclaims, C-05-00334 RMW,

Docket No. 253, at ¶ 193 (N.D. Cal. July 10, 2007). As alternative or additional markets, Nanya

alleges that Rambus has monopolized "the worldwide relevant market for interface technologies for

high performance DRAMs and the worldwide relevant market or markets for interface technology

for JEDEC-compliant DRAMs." Id. at ¶ 194.

Hynix's pleadings differ from Micron and Nanya's by alleging that Rambus has monopolized

product markets, in addition to technology markets. Hynix alleged that the relevant markets are:

"the market for synchronous DRAM interface technology; the market for synchronous DRAMs; and

the market for Logic Chips." Hynix's Answer to Rambus's Reply, C-05-00334 RMW, Docket No.

289, at ¶ 171 (N.D. Cal. July 30, 2007).

The day after Hynix filed its answer, Dr. Richard Gilbert, the Manufacturers' jointly retained

economics expert, filed his report. Dr. Gilbert identifies six specific technology markets that he

concludes Rambus has monopolized: latency technology, burst length technology, data acceleration

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2 If appealed, this case will be argued before the Federal Circuit. See 28 U.S.C. § 1295. As discussed in prior orders, Federal Circuit law governs whether a use of a patent constitutes

anticompetitive conduct. Regional circuit law, however, controls questions of "relevant market, market

power, damages, etc., as those issues are not unique to patent law." Nobelpharma AB v. Implant

Innovations, Inc., 141 F.3d 1059, 1068 (Fed. Cir. 1998) (en banc in relevant part). Therefore, where

it is applicable, the court applies Ninth Circuit law.

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 5

technology, clock synchronization technology, precharge technology, and write latency technology. 

See Luedtke Decl., Ex. A, at ¶ 60 (hereinafter "Gilbert report"). Despite Hynix's allegations that

Rambus monopolizes the markets for DRAM and logic chips, Dr. Gilbert does not identify any

relevant product markets. Dr. Gilbert also does not attest to any of the more general technology

market allegations made in the Manufacturers' pleadings.

After summarizing the Manufacturers' various pleadings, Rambus's motion for summary

judgment addresses Dr. Gilbert's report and these market definitions. In their opposition, the

Manufacturers do not contest that these six technology markets identified by Dr. Gilbert now

comprise their theory of the case.

B. Defining Technology Markets

Traditional antitrust theory focuses on product or goods markets. See U.S. Dept. of Justice &

Fed. Trade Comm'n, HORIZONTAL MERGER GUIDELINES § 1.1 (1992, rev. 1997) (hereinafter

"MERGER GUIDELINES"); see, e.g., Rebel Oil Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421, 1437 (9th

Cir. 1995) (considering market definition for retail gasoline markets).2 It does not appear that the

Manufacturers currently contend that Rambus has monopolized product markets. Instead, the

Manufacturers allege that Rambus has monopolized or attempted to monopolize various technology

markets, which "consist of [] intellectual property that is licensed." See U.S. Dept. of Justice & Fed.

Trade Comm'n, ANTITRUST GUIDELINES FOR THE LICENSING OF INTELLECTUAL PROPERTY § 3.2.2

(1995) (hereinafter "IP GUIDELINES"). Defining a technology market, as opposed to a product

market, makes sense where "rights to intellectual property are marketed separately from the products

in which they are used." Id.

While the possibility of applying antitrust law to markets for intellectual property rights has

existed for decades, see SCM Corp. v. Xerox Corp., 645 F.2d 1195 (2d Cir. 1981), the court is not

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3 The Guidelines' methodology is "the most authoritative statement of technology market

analysis to date." See Joshua A. Newberg, Antitrust for the Economy of Ideas: The Logic of Technology

Markets, 14 Harv. J. L. & Tech. 83. 100 (2000) (hereinafter "Newberg").

4 "In considering the likely reaction of buyers to a price increase, the Agency will take into

account all relevant evidence, including, but not limited to, the following: (1) evidence that buyers

have shifted or have considered shifting purchases between products in response to relative changes in

price or other competitive variables; (2) evidence that sellers base business decisions on the prospect

of buyer substitution between products in response to relative changes in price or other competitive

variables; (3) the influence of downstream competition faced by buyers in their output markets; and

(4) the timing and costs of switching products." MERGER GUIDELINES § 1.1.

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 6

aware of any case setting forth a methodology for defining a technology market. However, the

DOJ/FTC Guidelines suggest that to delineate a relevant technology market, one must identify "the

smallest group of technologies and goods over which a hypothetical monopolist of those

technologies and goods likely would exercise market power---for example, by imposing a small but

significant and nontransitory price increase." IP GUIDELINES, § 3.2.2.3

 This approach is

"conceptually analogous" to that used to define product markets under the agencies' merger

guidelines. Id.; see also Michael L. Katz & Howard A. Shelanski, Mergers and Innovation, 74

Antitrust L.J. 1, 39 (2007) (noting that "technology markets are---in the end---just product markets")

(hereinafter "Katz & Shelanski").

"There is a long-standing principle by which economists define the scope of a product

market: two goods or services are in the same relevant market if and only if consumers view them as

sufficiently close substitutes." Katz & Shelanski, 74 Antitrust L.J. at 31. Under the Horizontal

Merger Guidelines, this traditional product market definition of close economic substitutability is

developed by an iterative process. See MERGER GUIDELINES § 1.1. First, one considers the

narrowly defined product (or technology) and asks "what would happen if a hypothetical monopolist

of that product imposed at least a 'small but significant and nontransitory' increase in price, but the

terms of sale of all other products remained constant." Id. If the hypothetical monopolist would not

find this profitable (because consumers of the product or technology substitute away),4 one should

consider the next-best substitute for the product (or technology) and add it to the group of products

(or technologies). Id. Then, the test should be repeated "until a group of products is identified such

that a hypothetical monopolist over that group of products would profitably impose at least a 'small

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5 In this example, the agencies would also consider what effect competing drugs would

have on Alpha and Beta's ability to charge royalties on its processes. This caveat recognizes that

downstream competition between two end-products (A and B) could prevent an upstream supplier of

inputs for A from imposing a price increase because otherwise consumers would exclusively purchase

B. This consideration does not apply to the markets in this case because there do not appear to be any

substitutes for DRAMs in making electronics.

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 7

but significant and nontransitory' increase." Id. This final group of products (or technologies) is the

relevant market under the traditional market definition process.

In the context of technology markets, the DOJ and FTC recognize that data on technology

licensing is less likely to be available or quantifiable because licensing terms are often secret or

because licenses are granted in exchange for a cross-license, not a sum of money. IP GUIDELINES, §

3.2.2. The lack of such financial data is not fatal to a technology market definition. On the contrary,

where such data cannot be obtained, the agencies recommend defining a technology market by

including "other technologies and goods which buyers would substitute at a cost comparable to that

of using the licensed technology" if the hypothetical monopolist attempted to raise the price of its

technology. Id. For example, the IP Guidelines illustrate the technology market definition process

using Alpha and Beta, two pharmaceutical process developers. Id., example 2. The two firms have

invented competing methods for manufacturing an unpatented drug. To evaluate a possible joint

venture between Alpha and Beta, the Guidelines suggest that the agencies would examine a

technology market comprised of manufacturing processes that make the drug. Such a market would

include "other technologies that can be used to make the drug with levels of effectiveness and cost

per dose comparable to that of the technologies owned by Alpha and Beta." Id.5 The Guidelines do

not explicitly require knowing the royalty rates of the other technologies to determine whether the

technologies are substitutes (though "cost per dose" in example 2 could include a running royalty). 

Instead of requiring royalty calculations, the Guidelines acknowledge that such information may not

exist. In those situations, a technology market can still be defined by determining what other

technologies a buyer could switch to if necessary.

To be sure, the inquiry is always focused on the economic substitutability of the two

technologies, not just whether the technologies accomplish a similar function. See Unitherm, 375

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 8

F.3d at 1364. But while royalty rates inform the question of economic substitutability, determining

royalty rates is not the goal of this inquiry. The goal is always to determine whether consumers

would actually substitute between various technologies. This basket of substitute technologies

comprises the relevant technology market.

Finally, a flexible approach to defining technology markets accords with economic research

on technology markets. Commentators have recognized that creating a "bright-line" market

definition in innovative sectors of the economy is often difficult and can be counterproductive. Katz

& Shelanski, 74 Antitrust L.J. at 33-34 (criticizing market definition requirement where proof of

anticompetitive harm exists). Others have noted that "[m]arket definition is least useful when

market shares would not be strongly probative of market power or anticompetitive effect, while

direct evidence as to market power or anticompetitive effect is available and convincing." Jonathan

B. Baker, Market Definition: An Analytical Overview, 74 Antitrust L. J. 129, 131 (2007). As

discussed below, market share is not a particularly meaningful measure of market power in

technology markets affected by standard-setting. In situations where monopoly power can be

established by evidence other than market share, some authority suggests that market definition is

not a required element of an antitrust claim. See, e.g., FTC v. Indiana Fed'n of Dentists, 476 U.S.

447, 460-61 (1986); Re/Max Int'l v. Realty One, Inc., 173 F.3d 995, 1018-19 (6th Cir. 1999)

(collecting and discussing cases allowing direct evidence of harm to substitute for structural market

analysis). However, the court does not reach the issue of whether the Manufacturers must establish

a market in this case because it is not necessary to do so to resolve this motion for summary

judgment.

C. The Alleged Technology Markets

For each of the six technology markets, Dr. Gilbert identifies Rambus's patented technology

and various substitute technologies that he states comprise the relevant technology market. Rambus

challenges Dr. Gilbert's market definitions, arguing that Gilbert did not consider the costs of each

substitute technology and perform the iterative test laid out in the Merger Guidelines. Mot. In

Limine at 5-6; reply at 3-4. The Manufacturers respond that Dr. Gilbert has correctly defined the

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 9

markets by relying on the expert reports of Joseph McAlexander and Dr. Christopher McArdle. 

Opp. at 9.

Dr. Gilbert's report on relevant markets begins by stating that:

I have assumed for the sake of my analysis that for each of the Rambus technologies

there existed close substitutes at the time JEDEC was considering inclusion of the

technology in JEDEC standards. Furthermore, I assume that each of the Rambus

technologies and its close substitutes enable a function (such as latency) for which

there are no other close substitutes. As a result, a reasonable relevant market

definition consists of six relevant technology markets corresponding to the six

Rambus technologies, and the technologies that were close substitutes for each, for

use in high-speed DRAMs.

Gilbert report, ¶ 60. Rambus contends that Dr. Gilbert cannot "assume" that there exist close

substitutes; instead, Rambus argues that Dr. Gilbert must have performed the traditional iterative

process for determining whether two technologies are close enough substitutes that they comprise a

single technology market.

Dr. Gilbert's report later identifies a formula for determining whether two technologies are

substitutes. Gilbert report, ¶ 70. A technology has two characteristics to a consumer: its value (v)

and its associated royalty (r). Id. A consumer values two technologies equally if:

v1 - r1 = v2 - r2

Id. While Dr. Gilbert uses this formula to develop his testimony regarding Rambus's market power,

he does not use it in defining relevant technology markets.

I. Latency Technology

Dr. Gilbert's report first considers the market for latency technology. Gilbert report, ¶ 60(a). 

The JEDEC SDRAM standards "incorporate a latency technology known as programmable column

strobe ('CAS') latency." Id. Dr. Gilbert defines the latency technology market as also including:

"fixed CAS latency, setting latency with one or more fuses, setting latency by antifusing, identifying

CAS latency with pin voltage, and using an asynchronous DRAM design." Id. (citing Brewer Decl.,

Ex. 7 at 21-27 (hereinafter "McAlexander report")). Dr. Gilbert understands that these alternatives

are "close substitutes" for programmable CAS latency, and hence collectively form a market for

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6 As a preliminary matter, it is worth noting that the only alternatives to programmable

CAS latency are fixed CAS latency or developing an asynchronous DRAM design. See McAlexander

report, at 21-27. The various technologies listed by Dr. Gilbert – setting latency with one or more fuses,

setting latency by antifusing, or identifying CAS latency with pin voltage – are all methods of achieving

fixed CAS latency. Id. at 23-26.

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 10

latency technology.6 Id.

Dr. Gilbert's report does not contain any information on the costs of these various

technologies. The McAlexander report that Dr. Gilbert cites generally states that "[e]ach of the

viable alternatives mentioned below would have been a reasonable consideration at that time, either

alone or in combination, when assessed in view of the cost, feasibility, performance, and

acceptability to JC-42.3 subcommittee members." McAlexander report at 17. The McAlexander

report similarly lacks any specifics on the costs of alternative technologies.

In opposing Rambus's Daubert motion to prevent Dr. Gilbert from testifying on market

definition, the Manufacturers argue that Dr. Gilbert also relied on the report of Dr. Christopher

McArdle. Dr. Gilbert's report on market definition does not cite McArdle's reports. Nonetheless,

Dr. McArdle's reports do contain differential cost estimates for various alternative latency

technologies. See Brewer Decl. Ex. 2a, at 23-28 (hereinafter "McArdle report II"); Brewer Decl. Ex.

2b, at 21 (hereinafter "McArdle report III").

Rambus argues that the Manufacturers' failure to produce any evidence on the royalty rates

of the alternative technologies prevents the Manufacturers from defining a technology market, as a

matter of law. Rambus notes that Dr. Gilbert's report recognizes that one must know a technology's

royalty rate to determine if a consumer will value it equally to another technology. As discussed

above, courts must not be so rigorous in defining technology markets that they render the antitrust

laws meaningless. The Guidelines explicitly recognize that royalty information, while helpful, will

not always be available. Where it is not available, the plaintiffs (here, the Manufacturers) must still

demonstrate that the two technologies are "close substitutes" such that consumers would switch from

one to the other. However, they may demonstrate the economic substitutability of the technologies

by evidence that does not include royalty rates. The Manufacturers have introduced some evidence

that there is a relevant technology market for latency technologies. Accordingly, there is a genuine

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7 Setting burst length with fuses, setting burst length with a dedicated pin, and controlling

burst length with a burst terminate signal are all methods of fixing burst length; they are not alternatives

to fixing burst length. See McAlexander report at 28-30.

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 11

issue of material fact as to market definition and summary judgment cannot be entered as to latency

technology.

ii. Burst Length Technology

Dr. Gilbert next considers the market for burst length technology. See Gilbert report ¶ 60(b). 

The JEDEC standards use a programmable burst length technology. Id. Dr. Gilbert lists the

following alternatives which he argues comprise the market: "fixed burst length, setting burst length

with fuses, setting burst length with a dedicated pin, controlling burst length with a burst terminate

signal, and using an asynchronous DRAM design." Id. (citing McAlexander report at 29-31).7

 Dr.

Gilbert's report does not recite any data on the cost of these technology alternatives; neither does

McAlexander. Dr. McArdle's reports, however, contain cost estimates for various alternative burst

length technologies. See McArdle report II, at 28-29; McArdle report III, at 21. Accordingly, there

is some evidence to support a burst length technology market thus precluding the entry of summary

judgment.

iii. Data Acceleration Technology

Dr. Gilbert's proposed market for data acceleration technology includes the JEDEC-standard

dual-edge clocking and the alternative technologies of single-edge clocking with double clock

frequency and IBM's toggle mode. Gilbert report ¶ 60(c) (citing McAlexander report, at 34-35). 

McAlexander identifies two alternative technologies: single edge clocking and IBM's asynchronous

toggle mode. McAlexander report, at 33-34. Neither report discusses the costs of implementing

these technologies. The McArdle reports do estimate the costs of dual-edge clocking alternatives,

though it is not clear that McArdle estimates the costs of the same features that McAlexander

proposes as alternatives. See McArdle report II, at 21-22; McArdle report III, at 20. Nonetheless,

Rambus's motion for summary judgment is narrowly focused on the Manufacturers' failure to

demonstrate the royalty rates of these alternative technologies. As knowledge of the royalty rate is

not an absolute requirement for defining a technology market, Rambus's motion fails as to data

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C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 12

acceleration technology.

iv. Clock Synchronization Technology

Dr. Gilbert identifies a technology market comprised of the JEDEC standard on-chip

PLL/DLL, as well as "not using a PLL or DLL (either by relying on a single edge of a faster clock,

by relying on a strobe, or simply by eliminating the PLL/DLL without other changes to the DDR

design), using an off chip PLL or DLL (either on the memory module or memory controller), using

an echo clock instead of a PLL/DLL, using a vernier circuit instead of a PLL/DLL, using the DQS

strobe rather than the system clock to coordinate the timing of data transmissions, and using an

asynchronous DRAM design." Gilbert report ¶ 60(d) (citing McAlexander report at 31-34). 

McAlexander discusses the technological feasibility of these alternatives, but does not discuss their

costs. McAlexander report at 30-33. McArdle provides cost estimates for some of these features. 

See McArdle report II, at 22-24; McArdle report III, at 21. Again, the Manufacturers have produced

some evidence suggesting the existence of a market for clock synchronization technology. While

knowledge of the royalty rates covering these alternative technologies would assist in defining the

market, it is not absolutely required.

v. Precharge Technology

According to Dr. Gilbert, the precharge technology market consists of the JEDEC-standard

auto precharge and alternatives such as using an RAS level trigger, using a separate precharge

command, using a "hidden precharge" command, and eliminating the feature. Gilbert report ¶ 60(e)

(citing McAlexander report at 35-36). McAlexander suggests that these technology alternatives

were available, but does not provide any cost estimates for using them. McAlexander report at 34-

35. Dr. McArdle briefly suggests how much some of these features would cost to implement. See

McArdle report II, at 30; McArdle report III, at 21. On summary judgment, this showing suffices to

establish a genuine issue of material fact as to whether a market for precharge technology existed.

vi. Write Latency Technology

The final technology market proposed by Dr. Gilbert consists of write latency technologies. 

Gilbert report ¶ 60(f). Dr. Gilbert believes that the market is comprised of the JEDEC standard

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

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programmable write latency, as well as a variety of methods for fixing write latency or using an

asynchronous DRAM design. Id. (citing McAlexander report at 27-28). Again, the only cost

estimates for write latency technologies come from Dr. McArdle. See McArdle report III, at 21-22. 

While these estimates again do not include any possible royalties, they could establish that the

alternative technologies are economic substitutes for programmable write latency, and hence the

court cannot enter summary judgment as to whether there is a market for write latency technology.

vii. Additional Economic Considerations

Economic commentary on the problem of defining technology markets suggests a method for

providing a "backstop" or "checksum" to the market definition inquiry. See Joshua A. Newberg,

Antitrust for the Economy of Ideas: The Logic of Technology Markets, 14 Harv. J. L. & Tech. 83

(2000). The demand for licensed intellectual property, i.e., technology, stems from the need to use

intellectual property as a "legal" input for making traditional products. Id. at 104-05. The demand

for an intellectual property license is therefore similar to the demand for other manufacturing inputs

or raw materials. Id. at 104. For example, the demand for the DRAMs at issue in this case derives

from the consumer demand for the electronic devices that use them, hence the demand for DRAMs

is referred to as "derived demand." Id.; see, e.g., Hynix Semiconductor, Inc. v. United States, 474 F.

Supp. 2d 1338, 1343 (C.I.T. 2006). Accordingly, the demands for the various technologies at issue

in this case are also "derived demands."

Economic analysis suggests that antitrust law should be concerned about derived-demand

technology markets where the following characteristics are present: (1) the downstream product's

demand is inelastic; (2) the licensing fees are a small portion of the downstream product's cost; and

(3) the cost of switching between substitute technologies is high because of sunk costs associated

with adopting the technology. See id. at 107-08. These characteristics collectively suggest a market

where a hypothetical monopolist could more easily extract rents from downstream consumers

because (1) the consumers' demand for the downstream product is constant, (2) even a large increase

in the price of one of many inputs will result in only a small increase in the price of the final

product, and (3) manufacturers of the final product have no choice but to include the monopolized

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8 Prof. Newberg proposed an additional factor, namely that "substitute technologies are

either unavailable or not as efficient as the technology comprising the candidate relevant market."

Newberg, 14 Harv. J. L. & Tech. at 107. This factor duplicates the process of defining the relevant

technology market.

9 The court notes that the data Rambus relies on demonstrate Rambus's licensed share of

various DRAM markets, not necessarily the technology markets the Manufacturers now claim Rambus

has monopolized. No one appears to argue, however, that the relevant technologies have any

downstream use other than for manufacturing DRAMs.

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 14

technology in the final product.8 The record demonstrates that these factors are all present to

varying degrees in this case, which suggests that the Manufacturers may be able to establish the

relevant technology markets on this basis at trial.

For the foregoing reasons, the Manufacturers have introduced sufficient evidence to create

genuine issues of material fact regarding the existence of the six alleged technology markets. 

Rambus's arguments that the Manufacturers have no evidence regarding the royalty costs associated

with the alleged substitutes is persuasive. Nonetheless, the Guidelines suggest that market definition

can be done in the absence of quantifiable royalty rates. Accordingly, Rambus's motion that the

antitrust claims be dismissed because the Manufacturers have no evidence of royalty rates must be

denied.

II. MONOPOLY POWER

Rambus next moves for summary judgment on the grounds that it lacks sufficient market

share in the six relevant technology markets to support a finding that it possesses monopoly power,

and that therefore the Manufacturers' Section 2 claims must fail. To support this argument, Rambus

points to the market analysis prepared by one of Hynix's experts, Roy Weinstein. Weinstein's report

includes a chart of the sales volume of SDRAM, DDR SDRAM, and DDR2 SDRAM. See Perry

Decl., Ex. A. The chart shows that Rambus has only obtained licenses from 27.5% of the combined

SDRAM markets, while 72.5% of SDRAMs sales are unlicensed. Id. Rambus argues that because

only 27.5% of global SDRAM sales in 2006 were licensed, Rambus cannot have monopoly power in

the six technology markets as a matter of law.9

An essential element of a Section 2 claim is monopoly power. Eastman Kodak Co. v. Image

Tech. Servs., Inc., 504 U.S. 451, 481 (1992). Monopoly power refers to the "power to control prices

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PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

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or exclude competition." Id. Monopoly power is most often demonstrated by circumstantial

evidence, and is presumed where a defendant controls a dominant market share in a relevant market. 

See, e.g., Rebel Oil Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421, 1434 (9th Cir. 1995). Yet the

Supreme Court has long recognized that market share alone can be misleading, and will consider

other evidence to determine whether a company has the power to restrict output and raise prices, i.e.,

monopoly power. See, e.g., United States v. General Dynamics Corp., 415 U.S. 486 (1974)

(considering, in assessing a merger, whether a coal company could raise prices where long-term

supply contracts fixed coal prices). "Market share is just a way of estimating market power, which

is the ultimate consideration. When there are better ways to estimate market power, the court should

use them." Ball Mem'l Hosp., Inc. v. Mutual Hosp. Ins., Inc., 784 F.2d 1325, 1336 (7th Cir. 1986).

Rambus draws the court's attention to the Ninth Circuit's discussion of monopoly power in

Rebel Oil, and directly to the phrase that "most cases hold that a market share of 30 percent is

presumptively insufficient to establish the power to control price." 51 F.3d at 1438. As a

preliminary matter, this discussion is limited to proving monopoly power by circumstantial evidence

of a relevant market and market share. It has no bearing on proof of monopoly power by evidence

of direct competitive harm. Second, it only establishes a presumption against monopoly power that

can be rebutted. It does not establish a per se rule that immunizes Rambus from antitrust scrutiny in

the event Rambus had only 27.5% of each relevant technology market. Nonetheless, the court

cannot grant summary judgment for Rambus, even if market share alone were determinative,

because Rambus's share of the relevant technology markets is contested. Rambus argues that its

share of the technology markets is measured by the share of licensed users of the technologies,

which Weinstein suggests is 27.5% of the market in 2006. Mot. at 13. Yet Rambus has accused

Micron, Nanya, Hynix, and Samsung of infringing its patents on the technologies at issue. While

the Manufacturers vigorously deny that the patents are valid and that they infringe, they comprise

another 60.3% share of the various technology markets. Rambus cannot defeat the Manufacturers'

antitrust claims because of its limited market share, given that it may win at the patent trial (as it did

against Hynix) and establish a dominant share in the relevant technology markets.

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10 Scholarly economic and legal literature on technology, standard-setting, and antitrust is

growing. A general background is helpfully provided by Prof. Mark Lemley. Intellectual Property

Rights and Standard-Setting Organizations, 90 Calif. L. Rev. 1889 (2002). Others have highlighted the

risks of overzealous antitrust enforcement. David Teece & Edward Sherry, Standard Setting and

Antitrust, 87 Minn. L. Rev. 1913 (2003) (Teece is an expert witness for Rambus). The most recent

discussion of the topic is forthcoming in the Antitrust Law Journal. See Joseph Farrell, John Hayes, Carl

Shapiro, and Theresa Sullivan, Standard Setting, Patents, and Hold-Up, available at:

http://faculty.haas.berkeley.edu/shapiro/standards2007.pdf (August 13, 2007) (Farrell, Hayes, and

Sullivan have worked for Hynix in relation to this case).

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 16

Another difficulty with Rambus's market share argument is that it fundamentally overlooks

the nature of this antitrust case. This case involves technology markets tied up with standardsetting. The Manufacturers accuse Rambus of monopolizing or attempting to monopolize the

markets for six technologies, which in turn are inputs for making JEDEC-compliant SDRAMs. 

Prior to JEDEC's actions, the alternative technologies in the six markets competed for inclusion in

the standard. The purpose of standardization, however, is to pick one technology as a winner, and

most likely to confer 100% of the market to that technology.10 Under a presumption-approach to

demonstrating monopoly power, every successfully standardized technology would be presumed to

have monopoly power over its technology market. Such a presumption could breed ruinous and

unmerited litigation. Cf. Illinois Tool Works, Inc. v. Independent Ink, Inc., 547 U.S. 28, 43-45

(2006) (rejecting even a presumption that a patent confers market power). This is especially true

given that most standard-setting bodies require some sort of RAND ("reasonable and nondiscriminatory") licensing commitment. See generally Daniel G. Swanson & William J. Baumol,

Reasonable and Nondiscriminatory (RAND) Royalties, Standards Selection, and Control of Market

Power, 73 Antitrust L. J. 1 (2005). Where such a commitment exists, the patent owner likely has no

meaningful ability to raise the licensed technology's price or reduce its output, despite having 100%

market share. Hence, it would seem impossible to describe the patent owner in those contexts as

having "monopoly power" over the technology market. On the other hand, a patent owner whose

patent covers a standard and is not bound by RAND commitments or pre-existing licenses would

seem to have market power, i.e., the power to raise price or reduce output. If they obtained this

market power through anticompetitive conduct, they may have violated section 2.

Accordingly, the court cannot grant Rambus's motion for summary judgment on monopoly

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11 At oral argument, the Manufacturers suggested that Rambus has worldwide market power

because it requires licensees to pay royalties on DRAM sales everywhere in the world. Mr. Barza also

argued that Rambus has global market power because "if you cannot get into the U.S., then you're pretty

much out of the market[.]" While the arguments are probative as to global market power, the court has

not been able to find any evidence in the record to support them, nor do the Manufacturers raise them

in their opposition.

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 17

power because there are multiple issues of fact, including the size of Rambus's market share. Even

if Rambus's market share could be fixed, the court is doubtful that market share is a meaningful

indicator of monopoly power in a standardized technology market.

In the alternative, Rambus moves for summary judgment on the geographic dimension of the

Manufacturers' market definitions, arguing that it cannot have worldwide market power because the

Manufacturers have introduced no evidence that "Rambus has any issued patents that cover (or are

likely to be held to cover) the manufacture and sale of a DRAM that occurs entirely outside the

United States." Mot. at 14. The Manufacturers' opposition notes a Rambus press release stating that

it possesses U.S. and European patents covering Rambus's inventions. Brewer Decl., Ex. 63. The

Manufacturers have also submitted evidence of Rambus's patent applications from India, Taiwan,

Israel, Korea, Germany and Europe. See generally Brewer Decl., Exs. 45-56. The Manufacturers

have also produced evidence that Rambus has sued Micron in the Germany, France, Italy, and the

United Kingdom, though so far without success.11 While the Manufacturers bear the burden of

demonstrating a relevant market at trial, Rambus has the burden on summary judgment of

demonstrating that there is no genuine issue of material fact. Rambus's argument here is based

solely on whether it has issued foreign patents that arguably cover DRAM. To the extent Rambus's

motion is based solely on whether it owns any foreign patents, the Manufacturers have produced

enough evidence to raise a genuine issue of material fact as to Rambus's foreign patent rights.

To be clear, the relevant technology market may not be worldwide. As a technology market

consists of "intellectual property that is licensed," the territoriality of patent rights may preclude

defining a technology market broader than one country. Indeed, the Manufacturers' expert, Dr.

Gilbert, appears have some doubt as to whether there is a worldwide market. See Gilbert report, ¶¶

64, 65 (stating that the market is "at least the United States, and could be worldwide"). However,

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12 Rambus's Daubert motion does not attack Dr. Gilbert's qualifications as an economist.

13 Establishing market definition in this case likely requires expert testimony. The Ninth

Circuit has referred to market definition as a "highly technical economic question." Morgan, Strand,

Wheeler & Biggs v. Radiology, Ltd., 924 F.2d 1484, 1490 (9th Cir. 1991). Other courts have suggested

that, "[f]ailure to adduce expert testimony on competitive issues such as market definition augurs

strongly in favor of granting summary judgment against an antitrust plaintiff." Drs. Steuer and Latham,

P.A. v. National Medical Enterprises, Inc., 672 F. Supp. 1489, 1512 n. 25 (D.S.C. 1987), aff'd mem, 846

F.2d 70 (4th Cir. 1988). The Eleventh Circuit has gone farther and held that "[c]onstruction of the

relevant market and a showing of monopoly power must be based on expert testimony." Bailey v.

Allgas, Inc., 284 F.3d 1237, 1246 (11th Cir. 2002). While some courts have permitted plaintiffs to

establish market definitions without expert testimony, see, e.g., General Industries Corp. v. Hartz

Mountain Corp., 810 F.2d 795, 806 (1987), that is likely not appropriate in this case because while a

technology market is, in the end, just another product market, its contours are difficult to define, as the

DOJ and FTC have recognized. See IP GUIDELINES § 3.2.2 (noting the agencies will delineate

technology markets "if the data permit"). Given the complexity of the task, a jury likely cannot

conclude that two technologies are "close substitutes" and hence comprise a relevant technology market

without expert testimony.

ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 18

questions of fact exist, and, accordingly, the court cannot enter summary judgment on the

geographic scope of the relevant technology markets.

III. DR. GILBERT'S EXPERT TESTIMONY

Rambus moves under Rule 702 of the Federal Rules of Evidence to exclude various portions

of Dr. Gilbert's testimony. In general, expert testimony must be helpful to the trier of fact and the

expert must be qualified.12 FRE 702. If an expert is qualified and the expert's testimony would be

helpful, Rule 702 imposes three conditions to ensure that the expert's testimony is reliable. First, the

testimony must be based upon sufficient facts and data. Id. Second, the testimony must be the

product of reliable principles and methods. Id. Third, the expert must have reliably applied those

principles to the facts of the case. Id. Rambus argues that various aspects of Dr. Gilbert's testimony

fail to satisfy these criteria.

A. Market Definition

Dr. Gilbert's report on market definition begins by citing the FTC and DOJ IP GUIDELINES

discussed above, which Dr. Gilbert helped to write. Gilbert report ¶¶ 4, 60 & fn. 113. Rambus

argues that while Dr. Gilbert selected the reliable method for defining a market, he did not reliably

apply that method to the facts and data of this case, and that he should therefore be barred from

presenting his opinion regarding market definition.13

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C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

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By relying on the McAlexander report, Dr. Gilbert's report lays out why he believes the

various alternative technologies would be viewed as technological substitutes. It is less clear that

Dr. Gilbert adequately considered whether consumers would view the alternative technologies as

close economic substitutes, especially given the report's failure to cite to Dr. McArdle in his

discussion. See Unitherm, 375 F.3d at 1363. Rambus also correctly points out that Dr. Gilbert's

report does not mention using a "small but significant and non-transitory" price increase to

determine if the technologies are close economic substitutes such that they constitute a relevant

market. In Unitherm, the Federal Circuit held that an expert's testimony could not support a finding

of a market definition as a matter of law because the expert failed to address the ability of consumers

to substitute as an economic matter. Id. In that case, the expert had defined the technology market

as a single patented process because no other process had the same elements as the patented process. 

Id. The court explained that while nothing would be a perfect substitute as a technological matter,

the expert failed to provide evidence of what consumers would do as an economic matter. Id.

A court does not have to admit "opinion evidence that is connected to existing data only by

the ipse dixit of the expert." General Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). "A court may

conclude that there is simply too great an analytical gap between the data and the opinion proffered." 

Id. (emphasis added). Rambus's dissection of Gilbert's report suggests that there may be some gaps

in his reasoning that the various technologies are close economic substitutes and hence comprise

relevant technology markets. On the other hand, Dr. Gilbert's market definition appears more

substantial than the excluded expert's analysis in Unitherm. Given the complexity and significance

of this issue, the court does not believe these gaps are "simply too great" to prevent Dr. Gilbert from

testifying to market definition. Dr. Gilbert may testify to his conclusion (a), specifically that

A reasonable relevant market definition for purposes of assessing Rambus's

challenged conduct consists of six relevant technology markets corresponding to the

six Rambus technologies, and the set of technologies that were close substitutes for

each, for use in high-speed DRAMs. The geographic scope of the relevant markets is

the United States. If it were demonstrated that viable alternative interface

technologies were sufficiently close substitutes to constrain Rambus's pricing of the

individual technologies at issue, a reasonable market definition would also include

those alternative DRAM interface technologies.

Gilbert report ¶ 13(a). 

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PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

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B. Acquisition of Monopoly Power

Rambus next attacks two conclusions Dr. Gilbert makes in his report regarding monopoly

power. The first conclusion Rambus argues should not be heard by the jury is that "Rambus's 

market power in each of the six relevant markets would have been disciplined by viable alternative

technologies." Gilbert report, ¶ 13(b). Rambus argues that the conclusion "turns entirely" on Dr.

Gilbert's assumption that various alternative technologies were viable, which he concedes he

assumed based on the Manufacturers' other expert reports. Rambus then argues that if these

assumptions are undercut and there were no viable alternatives, then the conclusion on prestandardization market power would not follow. Rambus concludes that because Dr. Gilbert's

opinion rests on assumptions about alternative technologies, he should not be allowed to testify

because he has made no independent analysis and because the conclusion is beyond his expertise.

Dr. Gilbert does not offer an opinion on the viability of alternative technologies (which

would be beyond his expertise). He testifies to the effect alternative technologies would have had on

Rambus's ability to wield market power. This conclusion is within his economic expertise. 

Similarly, it is irrelevant that Dr. Gilbert has not independently analyzed whether the alternative

technologies were viable. He may properly rely on the Manufacturers' engineering experts for those

conclusions. See FRE 703. His independent analysis consists of the effect the alternative

technologies have on the market. Rambus correctly points out that if those assumptions turn out to

be false, Dr. Gilbert's testimony will likely be baseless. But such an argument goes to the weight of

Dr. Gilbert's testimony, not its validity, and should be evaluated based upon the foundational facts

presented at trial.

Dr. Gilbert's second conclusion is that "in early 2000, . . . the competitive viability of the

technological alternatives to the Rambus technologies was significantly weakened." Gilbert report,

¶ 13(c). Rambus repeats that this conclusion turns on the assumption that technological alternatives

were viable. Again, this argument attacks one of Dr. Gilbert's conclusions because some of his

assumed facts may not be true. This does not mean that Dr. Gilbert must be prevented from

testifying under Rule 702; it simply means that if the jury concludes that Dr. Gilbert's assumed facts

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

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C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

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are wrong, then his conclusion should be rejected.

C. Switching Costs

Rambus's motion next argues that Dr. Gilbert's conclusions on switching costs must be

excluded because he lacks sufficient expertise and has not performed an independent analysis of

switching costs. Dr. Gilbert's conclusions in short are that the cost of switching away from the

SDRAM standards enhanced Rambus's market power. See Gilbert report ¶ 13(c)-(e). Dr. Gilbert's

conclusions contain estimates of the switching costs the Manufacturers faced, yet Dr. Gilbert

concedes that he cannot estimate those switching costs. Id. at ¶ 86. Rambus argues that therefore

Dr. Gilbert should not be allowed to testify to his conclusions based on switching costs. Rambus's

argument seeks too much. Dr. Gilbert is qualified, has done the analysis, and made conclusions

about the effects of switching costs on market power. He may testify that "switching costs provide a

measure of enhancement to Rambus's market power that resulted from JEDEC's decision to

incorporate the Rambus technologies into the JEDEC DRAM standards." Id. at ¶ 13(d). 

Rambus's argument does have merit, however, if Dr. Gilbert intends to testify to that a

"reasonable estimate of switching costs totals billions of dollars" or any specific dollar amount for

switching costs. Id. at ¶ 13(d). Rambus may believe that the Manufacturers intend to have Dr.

Gilbert do so because Dr. Gilbert's "Summary of Conclusions" refers to "billions of dollars." This

estimate is not based on Dr. Gilbert's own research but on Dr. McArdle's analysis. See id. ¶¶ 87-89. 

Were Dr. Gilbert to attempt to testify to the amount of switching costs, it would be clearly improper

given that he concedes that "it is beyond my training and expertise to reach my own independent

conclusions regarding the specific costs that DRAM suppliers and other industry participants would

incur in conjunction with a switch to an interface technology that avoided Rambus's claimed patent

rights." Id. ¶ at 86. As with the technological viability of alternatives, it is beyond Dr. Gilbert's

expertise to testify to the amount of switching costs. Dr. Gilbert may, however, rely on other

evidence and testimony to draw conclusions about the economic effect of those costs.

D. Monopoly Power

Rambus next argues that Dr. Gilbert's conclusions that "Rambus has achieved a monopoly

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

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position in the relevant markets" and that "Rambus's monopoly position is durable" must be kept out

because these conclusions are based on "assumptions rather than expert economic analysis." Mot. In

Limine No. 1 at 9-10. Rambus also reiterates its argument that the Manufacturers (and Dr. Gilbert)

cannot argue that Rambus has power without conceding that Rambus's patents are valid and

infringed. The court has previously observed, and the Manufactures acknowledge, that Dr. Gilbert's

opinion will be predicated on the infringement and validity of Rambus patents. If it is later

determined that Rambus's patents are not infringed or are invalid, any verdict in favor of the

Manufacturers on their antitrust claims will have to be set aside. Rambus, of course, has

consistently and strenuously argued that its patents are valid and infringed. The "assumptions"

argument is based on the truth of the Manufacturers' allegations regarding relevant markets and

switching costs. These positions of course may be discredited at trial. That is not, however, a basis

for excluding Dr. Gilbert at this stage. If Rambus's argument were the law, no expert could testify to

any conclusion that did not rest on factual stipulations by the parties.

E. Anticompetitive Conduct

Rambus's Motion In Limine No. 1 has merit with respect to its challenge to Dr. Gilbert's

conclusions on anticompetitive conduct. Dr. Gilbert opines that:

In my opinion, Rambus's conduct should be deemed anticompetitive because

Rambus manipulated the expectations of JEDEC members and distorted the standard

setting process. My conclusion stands irrespective of whether Rambus violated a

specific JEDEC rule regarding disclosure. The relevant issue is whether Rambus

acquired heightened market power from conduct other than competition on the

merits.

Gilbert report, ¶ 13(f). Dr. Gilbert concedes he has no "special expertise to address whether

Rambus's conduct violated JEDEC's written rules." Id. ¶ 38. He also disclaims any expertise to

determine "the intent of Rambus and other participants in JEDEC" and "the appropriate legal

standard for evaluating Rambus's conduct in JEDEC." Id. ¶ 9. Dr. Gilbert "assume[s] for the

purpose of [his] analysis that during the time Rambus was a member of JEDEC and thereafter,

Rambus undertook a course of conduct that deceived and misled JEDEC member companies." Id. ¶

48. Dr. Gilbert's report then summarizes the conduct he assumed occurred. Id. ¶¶ 49-59.

Against this background of disclaimers and assumptions, Dr. Gilbert's proposed testimony

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

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and conclusion as to anticompetitive conduct are beyond his area of expertise and without

foundation. As Rambus correctly points out, Dr. Gilbert's report merely attaches the label

"anticompetitive" to the Manufacturers' pleadings. He has conducted no economic analysis to

explain why any assumed conduct should be deemed "anticompetitive." Putting aside whether the

testimony has any reliable basis, his testimony in this regard is simply not helpful to the trier of fact,

and therefore cannot be admitted. Even if Dr. Gilbert's opinion testimony regarding anticompetitive

conduct could be admitted under Rule 702, its prejudicial effect greatly outweighs any purported

relevance and is subject to exclusion under Rule 403. See, e.g., United States v. Dukagjini, 326 F.3d

45, 54-56 (2d Cir. 2002) (discussing the impropriety of allowing an expert witness to make

"sweeping conclusions," summarize the case, or stray from their expertise in the case of a drug

prosecution). Accordingly, Dr. Gilbert may not testify regarding Rambus's conduct at JEDEC. Dr.

Gilbert may not testify regarding whether such conduct is "anticompetitive." Dr. Gilbert's opinion

set forth in paragraph 13(f) of his summary of conclusions may not be presented to the jury.

F. Causation

Rambus's final challenge to the conclusions of Dr. Gilbert's report focuses on causation,

specifically Dr. Gilbert's conclusion that "Rambus's alleged course of conduct resulted in its ability

profitably to charge royalty rates in excess of the rate, if any, that it would have been able to charge

in the absence of its disputed behavior." Gilbert report ¶ 13(h). Dr. Gilbert discusses causation in

part VIII of his report. See id. ¶¶ 124-137. While part VIII is rich in assumed facts, it lacks any

expert analysis of why those assumed facts lead to a finding of causation. Dr. Gilbert's expertise

adds nothing to the facts the Manufacturers hope to prove that would be helpful to the jury. Nor

does Dr. Gilbert explain the "reliable methods" he applied to decide that Rambus's conduct caused

its increase in market power.

The Manufacturers argue that Dr. Gilbert's report "appl[ies] economic analysis," and

highlight Dr. Gilbert's discussion of reasonable royalty rates in paragraph 135 of his report. Opp. to

Mot. In Limine No. 1 at 16. Dr. Gilbert's recitation of an inequality does not convert a paragraph of

advocacy into "economic analysis." Paragraph 135 begins with a swipe at Rambus's legal arguments

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C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

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in prior cases, then discusses how Dr. Gilbert defines the amount of a RAND royalty. It is not

entirely clear how the paragraph relates to Dr. Gilbert's opinion on causation, and the Manufacturers'

reliance on it as particularly illustrative of Dr. Gilbert's expert reasoning seems misplaced.

At trial, the jury will be able to determine on the basis of the evidence of Rambus's conduct

and the expert testimony regarding market definition and monopoly power whether Rambus's

conduct caused its alleged acquisition of monopoly power. The jury does not need Dr. Gilbert's

personal opinion on the question to help them. See, e.g., Rottlund Co. v. Pinnacle Corp., 452 F.3d

726, 732 (8th Cir. 2006) (reversing district court's allowance of expert testimony on whether the

defendant independently created a work of authorship because jury did not need expert help on that

issue).

G. "Vouching"

Having challenged each of Dr. Gilbert's report's conclusions, Rambus next focuses its ire on

Dr. Gilbert's allegedly improper "vouching" for the quality of other experts' testimony. In particular,

Rambus points to long stretches of Dr. Gilbert's report wherein he summarizes the findings of the

other Manufacturers' expert witnesses. See, e.g., Gilbert report ¶¶ 83-121. Particularly troublesome

paragraphs include phrases like "[i]n my view, the foregoing testimony is consistent with Dr.

McArdle's overarching conclusion [regarding switching costs]." Id. ¶ 95. The Manufacturers argue

that Dr. Gilbert is not improperly vouching, but explaining the factual basis and underlying

assumptions of his later analysis.

Dr. Gilbert is allowed to explain the basis for his opinions. For example, Dr. Gilbert can

explain that he relied on Dr. McArdle's conclusions about the existence of switching costs and

McAlexander's analysis of technological alternatives. As the Manufacturers point out, this is

"absolutely necessary" for the jury to decide whether to accept or reject Dr. Gilbert's analysis. Dr.

Gilbert will not, however, be permitted to spruce up the Manufacturers' other experts' testimony at

trial by vouching for its consistency or accuracy. Such testimony would invade the province of the

jury, and it is also far afield from Dr. Gilbert's expertise given his professed lack of knowledge in the

subject areas covered by the other experts.

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28 ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

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C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

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Paragraph 95 of Dr. Gilbert's report is an illustrative example of how Dr. Gilbert vouches for

the testimony of other experts. Paragraph 95 follows a lengthy recitation of evidence elicited at the

FTC trial, which Dr. Gilbert then explains is "consistent" with Dr. McArdle's analysis. Dr. Gilbert

may explain that his opinions on monopoly power rest on the switching costs faced by the DRAM

industry, and he may cite to evidence in the record for testimony supporting a "lock-in." However,

he may not state that the testimony of one witness reinforces the testimony of another. As Dr.

Gilbert has conceded, he has no expertise to enable him to calculate switching costs. See id. at ¶ 86. 

Assertions that the testimony of one witness supports that of another is a proper subject of argument

but not a subject of expert testimony.

H. Additional Opinions

Rambus concludes by moving the court to exclude Dr. Gilbert's opinions on two issues:

whether JEDEC members should have known Rambus had relevant intellectual property and

whether JEDEC minutes were confidential. Rambus argues that Dr. Gilbert has no relevant

expertise (being an economist) to opine on these two subjects.

As a preliminary matter, it is not clear that the Manufacturers oppose Rambus's motion on

these points. See Opp. to Mot. in limine at 17-18. The Manufacturers appear to argue that Dr.

Gilbert is not offering opinions on these subjects, but that he has made assumptions regarding those

two issues that inform his expert opinions. Dr. Gilbert's report (sections IX.A and IX.C, ¶¶138-150)

recites some assumed facts and argument but contains no analysis. Putting that aside, these two

issues are questions of fact on which an economic expert's opinion is not helpful. Accordingly, Dr.

Gilbert may not testify as to his opinion on these two additional issues because they are beyond his

expertise and his opinions are not helpful. To the extent that these issues inform his expert opinions,

Dr. Gilbert may, however, explain that he assumed that JEDEC members should not have known

about Rambus's IP and that he assumed that JEDEC minutes were confidential but he cannot

comment on the accuracy of the assumptions.

IV. ORDER

For the foregoing reasons, the court denies Rambus's Motion for Summary Judgment No. 1

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ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

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on Monopolization. The court grants in part and denies in part Rambus's Daubert Motion No. 1:

1. Dr. Gilbert may testify as to his opinions set forth in his Summary of Conclusions

paragraphs 13(a), (b), (c) and (d) (to the extent of assuming that there were switching costs and, if

so, that those costs enhanced Rambus's market power) and (e); 

2. Dr. Gilbert may not testify to his conclusions in paragraph 13(d) that switching costs

would total "billions of dollars" or any other specific dollar amount, or to any conclusions in

paragraph 13(f), 13(g) and 13(h); and

3. Dr. Gilbert may not express an opinion on whether JEDEC members should have known

that Rambus had relevant intellectual property and whether JEDEC minutes were confidential (but

he can assume those alleged facts as part of the bases for his opinions). 

DATED: 1/5/08 

RONALD M. WHYTE

United States District Judge

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ORDER DENYING RAMBUS'S MOTION FOR SUMMARY JUDGMENT NO. 1 ON MONOPOLIZATION AND GRANTING IN

PART AND DENYING IN PART RAMBUS'S DAUBERT MOTION NO. 1 

C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

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Notice of this document has been electronically sent to:

Counsel for Plaintiff(s):

Craig N. Tolliver ctolliver@mckoolsmith.com 

Pierre J. Hubert phubert@mckoolsmith.com 

Brian K. Erickson berickson@dbllp.com, 

David C. Vondle dvondle@akingump.com 

Gregory P. Stone gregory.stone@mto.com 

Carolyn Hoecker Luedtke luedtkech@mto.com 

Peter A. Detre detrepa@mto.com 

Burton Alexander Gross burton.gross@mto.com, 

Steven McCall Perry steven.perry@mto.com

Jeannine Y. Sano sanoj@howrey.com 

Counsel for Defendant(s):

Matthew D. Powers matthew.powers@weil.com 

David J. Healey david.healey@weil.com 

Edward R. Reines Edward.Reines@weil.com

John D Beynon john.beynon@weil.com

Jared Bobrow jared.bobrow@weil.com

Leeron Kalay leeron.kalay@weil.com

Theodore G. Brown, III tgbrown@townsend.com

Daniel J. Furniss djfurniss@townsend.com

Jordan Trent Jones jtjones@townsend.com

Kenneth L. Nissly kennissly@thelenreid.com 

Geoffrey H. Yost gyost@thelenreid.com 

Susan Gregory van Keulen svankeulen@thelenreid.com

Patrick Lynch plynch@omm.com 

Jason Sheffield Angell jangell@orrick.com

Vickie L. Feeman vfeeman@orrick.com

Mark Shean mshean@orrick.com 

Kai Tseng hlee@orrick.com

Counsel are responsible for distributing copies of this document to co-counsel that have not registered

for e-filing under the court's CM/ECF program.

Dated: 1/5/08 TSF

Chambers of Judge Whyte

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