ORDER OF THE PRESIDENT OF THE SECOND CHAMBER OF THE GENERAL COURT
1 February 2012 (*)
(Intervention – Interest in the result of the case)
In Case T‑148/10,
Hynix Semiconductor, Inc., established in Gyeonggi-do (South Korea), represented by A. Woodgate and O. Heinisch, Solicitors,
applicant,
v
European Commission, represented by S. Noë, A. Antoniadis, J. Bourke and F. Castillo de la Torre, acting as Agents,
defendant,
supported by
Rambus, Inc., established in Los Altos, California (United States), represented by I. Forrester QC, J. Killick, Barrister, and P. Berghe, lawyer,
intervener,
APPLICATION for the annulment of the Commission’s decision of 9 December 2009 relating to a proceeding pursuant to Articles 102 TFEU and 54 EEA (Case COMP/38.636 – Rambus), making binding the commitments by Rambus, Inc. to limit, for a period of five years, its royalty rates on certain patents for semiconductors for dynamic RAM (DRAM) chips and bringing the procedure to an end, in accordance with Article 9 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 [EC] and 82 [EC] (OJ 2003 L 1, p. 1),
THE PRESIDENT OF THE SECOND CHAMBER OF THE GENERAL COURT
makes the following
Order
Background to the dispute and the administrative procedure
1 Rambus, Inc. (‘Rambus’) designs and develops high bandwidth chip connection technologies for computers, consumer electronic and communication products (including systems memory, PC graphics, multimedia, workstations, video game consoles and network switches), which it also licences.
2 On 18 December 2002, the applicant, Hynix Semiconductor, Inc. (‘Hynix’), filed a complaint with the European Commission regarding Rambus, pursuant to Article 3 of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959‑1962, p. 87). In particular, it accused Rambus of charging abusive royalties for the use of certain patents for Dynamic Random Access Memory (‘DRAM’) chips. DRAM chips are a type of electronic memory primarily used in computer systems, but also used in a wide range of other products which need to temporarily store data, such as servers, workstations, printers, PDAs and cameras. According to the complainant, Rambus was engaged in intentional deceptive conduct in the standard setting procedure in relation to those chips undertaken by the American JEDEC organisation, by not disclosing the existence of the patents and patent applications which it later claimed were relevant to the adopted standard. Such behaviour is known as a ‘patent ambush’. DRAM chips which meet the JEDEC standard make up approximately 95% of the market and are used in almost all personal computers. In 2008, worldwide DRAM sales exceeded USD 34 billion (more than EUR 23 billion).
3 On 27 July 2007, the Commission initiated a procedure with a view to adopting a decision under Chapter III of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ 2003 L 1, p. 1), and it adopted a statement of objections setting out the problems in terms of competition which it had identified. In its view, that statement of objections also constitutes a preliminary assessment within the meaning of Article 9 of Regulation No 1/2003.
4 In its statement of objections, the Commission came to the provisional conclusion that, at the time it started to assert its patents, that is in January 2000, Rambus held a dominant position on the world DRAM interface technology market, which it has held ever since. The Commission also considered, first of all, that Rambus’ practice of claiming royalties from manufacturers of DRAM in conformity with industry standards, for the use of its patents, which were higher than it would have been able to claim had it not undertaken the alleged intentional deceptive conduct, was questionable in terms of its compatibility with Article 82 EC. In addition, the Commission came to the provisional conclusion that Rambus’ conduct undermined confidence in the standard-setting process given that in the sector in question an effective standard-setting process is a precondition to technical development and the development of the market in general to the benefit of consumers.
5 The statement of objections was notified to Rambus on 30 July 2007. Rambus responded to it on 31 October 2007. A hearing was held on 4 and 5 December 2007 at Rambus’ request. Five undertakings were admitted as interested third parties and submitted observations on the statement of objections.
6 On 8 June 2009, Rambus submitted to the Commission preliminary commitments in response to the allegations set out in the statement of objections (‘the initial commitments’), while disputing the provisional conclusions set out therein.
7 Rambus’ initial commitments had three sections: (i) a general section which provided for a five-year worldwide licence for future DRAM products for all of its patents; (ii) a section providing for the licensing of DRAM chips and for the maximum royalty rates to be charged; and (iii) a section providing for the licensing of memory controllers and the maximum royalty rates.
8 On 12 June 2009, a notice was published in the Official Journal of the European Union, in accordance with Article 27(4) of Regulation No 1/2003. That communication summarised the case and the initial commitments and invited interested third parties to submit their observations.
9 Among the interested third parties, Nvidia Corporation (‘Nvidia’) submitted observations to the Commission in relation to memory controllers.
10 On 23 July 2009, the Commission informed Rambus of the observations on the initial commitments received from Nvidia and other interested third parties. On 14 August 2009, Rambus submitted its revised commitments (‘revised commitments’ or ‘commitments’).
11 In its revised commitments, Rambus agreed, first, not to charge royalties for the SDRAM and DDR standards that were adopted by JEDEC during the time in which Rambus was a member and engaged in the allegedly intentional deceptive conduct. Second, Rambus committed to a maximum royalty rate of 1.5% for the later generations of standards adopted by JEDEC after Rambus’ resignation. Third, Rambus offered that maximum rate to all market participants and guaranteed that the industry would not have to pay more.
12 Nvidia requested authorisation to examine and comment on the revised commitments in so far as they concerned memory controllers but the Commission refused that request.
13 On 13 October 2009, in accordance with Article 7(1) of Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (OJ 2004 L 123, p. 18), the Commission informed Hynix that it had adopted the preliminary position that the European Union’s degree of interest was insufficient to pursue the investigation into the alleged infringement. Hynix submitted additional comments on 12 November 2009.
14 By decision of 9 December 2009, relating to a proceeding pursuant to Articles 102 TFEU and 54 EEA (Case COMP/38.636 – Rambus), the Commission accepted and made binding Rambus’ revised commitments, in accordance with Article 9 of Regulation No 1/2003, and concluded that there were no longer grounds for action in the case (‘the decision on the commitments’).
15 By decision of 15 January 2010, the Commission rejected the complaint lodged by Hynix against Rambus, in accordance with Article 7(2) of Regulation No 1/2003 (‘the rejection decision’).
The procedure before the General Court
16 By application lodged at the Registry of the General Court on 25 March 2010, Hynix brought an action seeking the annulment of the decision on the commitments.
17 The notice relating to that action, which is referred to in Article 24(6) of the Rules of Procedure of the General Court, was published in the Official Journal of the European Union on 5 June 2010.
18 By order of the President of the Second Chamber of the General Court of 30 September 2010, Rambus was granted leave to intervene in the present case in support of the form of order sought by the Commission.
19 By document lodged at the Court Registry on 12 July 2010, Nvidia, represented by D. Lahnborg and E. Turner, Solicitors, sought leave to intervene in the present case in support of the form of order sought by Hynix.
20 The application to intervene was served on the applicant and the defendant, pursuant to Article 116(1) of the Rules of Procedure of the General Court.
21 By document lodged at the Court Registry on 27 September 2010, the Commission objected to that application. Hynix did not file observations within the period prescribed.
22 By documents lodged at the Court Registry on 26 October and 4 November 2010 respectively, Nvidia and Hynix submitted observations in response to the Commission’s observations.
23 None of the parties requested confidential treatment in accordance with Article 116(2) of the Rules of Procedure.
The application to intervene
Arguments of the applicant to intervene and of the parties
24 Nvidia submits that it satisfies the requirements for an individual to be able to intervene and that it must, therefore, be granted leave to intervene in the present case in support of the form of order sought by Hynix.
25 It submits, first of all, that it designs, manufactures and supplies visual computing technologies, including the graphic processing unit (‘GPU’), a high-performance processor that generates graphics on workstations, personal computers, games consoles and mobile devices. The systems and components Nvidia develops include embedded memory controllers. These memory controllers are designed to connect to memory devices, such as DRAM chips, in order to assist in the storage of information on the memory devices. Memory controllers are often integrated or inserted into another chip such as the GPU.
26 Next, Nvidia asserts, in the first place, that, in submitting written observations to the Commission, it took a very active leading role in identifying critical issues affecting memory controllers raised by the initial commitments.
27 In the second place, Nvidia submits that the importance and relevance of the issues which it raised are reflected in the decision on the commitments.
28 In the third place, Nvidia asserts that its rights and interests have been directly and adversely affected by the decision on the commitments. It states, in particular, that it and Rambus have been involved in protracted licensing negotiations and patent infringement litigation related to technology claimed by Rambus. In that regard, Nvidia accuses the Commission of having failed to correctly investigate the impact of Rambus’ ‘patent ambush’ and the adequacy of the commitments concerning the licensing of memory controllers. While DRAMs and memory controllers are separate products, the impact of Rambus’ alleged abusive conduct is felt across industries using these integrally related technologies. As a result, the decision on the commitments has detrimentally affected the market and the interests of Nvidia. It will allow Rambus to continue to benefit from its abusive practices by ‘locking in’ the anti‑competitive effects and excessive royalty rates resulting from its ‘patent ambush’, in particular as towards Nvidia.
29 In the fourth place, Nvidia considers that it brings to the case knowledge of both DRAM and memory controller technologies, which is not held by any other party to the proceedings.
30 The Commission considers that Nvidia cannot be granted leave to intervene in the dispute. In its view, unlike what was found in relation to Alrosa in the case which gave rise to the judgment in Case T‑170/06 Alrosa v Commission [2007] ECR II‑2601, paragraph 39, neither the decision on the commitments, nor its possible annulment, has a direct and immediate effect on Nvidia’s legal position.
31 First, the Commission submits that the decision on the commitments does not oblige Nvidia to use Rambus’ services or deprive it of the opportunity to do so. Nor does it require Nvidia to accept the maximum royalty rates set out in the commitments, since Nvidia remains free to negotiate better terms. Finally, Nvidia, which is not a complainant, has no right to require the Commission to carry out and pursue the investigation.
32 Second, if the decision on the commitments were annulled, the commitments would no longer be binding on Rambus. However, Nvidia does not explain how such a result would be of interest to it, in particular in so far as concerns the patent licence agreement which it entered into with Rambus in August 2010, with respect to technology used in certain memory controllers. As regards the fact that the Commission would need to take appropriate action under Article 266 TFEU to comply with the General Court’s judgment, this would not lead to an automatic finding of abusive behaviour by Rambus regarding memory controllers, as sought by Nvidia. In that regard, the Commission states that the seven‑year investigation into Rambus’ conduct concerned DRAM chips, not memory controllers. The initiation of a new investigation into memory controllers would thus not necessarily result from the annulment of the decision on the commitments.
33 As to the remainder, the Commission submits, in the first place, that Nvidia got involved in the procedure at a late stage, namely after the publication of the market notice on 12 June 2009, which is not sufficient to establish that it has an interest in intervening. In the Commission’s view, that can be explained by the fact that its investigation concerned Rambus’ conduct in relation to DRAM chips, and not memory controllers. Memory controllers were referred to but only incidentally in the statement of objections. That said, the Commission admits that memory controllers need to interoperate with DRAM chips and therefore need to comply with the standards in place for the latter. Consequently, Rambus’ behaviour may have had a spillover effect on memory controllers, which explains why it also provided commitments in relation to them.
34 The Commission argues, in the second place, that the alleged influence of Nvidia’s contribution on the content of the decision on the commitments is not sufficient to justify its intervention. In the present case, Nvidia’s submissions did not have a significant or decisive impact on the decision on the commitments. In addition, its name was not mentioned once in that decision.
35 The Commission submits, in the third place, that the possibility of an investigation into the, separate, memory controllers market is too remote from the result of this case to ground a direct interest in intervening. In reality, Nvidia appears to be attempting to change the object and the context of the action for annulment, as defined by Hynix. The present case does not concern memory controllers, which are mentioned only twice, and incidentally, in the application for annulment (paragraphs 154 and 198).
36 In the fourth place, the Commission considers the expertise which Nvidia claims to have in the field of memory controllers to be irrelevant.
Assessment of the President
37 By virtue of the second paragraph of Article 40 of the Statute of the Court of Justice, which applies to proceedings before the General Court by virtue of the first paragraph of Article 53 of that Statute, any person which can establish an interest in the result of a case, except in cases between Member States, between institutions of the European Union or between Member States and institutions of the European Union, may intervene in that case.
38 It is settled case‑law that the concept of an interest in the result of the case, within the meaning of the second paragraph of Article 40 of the Statute of the Court of Justice, must be defined in the light of the precise subject-matter of the dispute and be understood as meaning a direct, existing interest in the ruling on the forms of order sought and not as an interest in relation to the pleas in law or arguments put forward. The expression ‘result’ is to be understood as meaning the operative part of the final judgment which the parties ask the Court to deliver. It is necessary, in particular, to ascertain whether the intervener is directly affected by the contested act and whether its interest in the result of the case is established (see the order of the President of the Grand Chamber of the Court of First Instance (now the General Court) of 28 November 2005 in Case T‑201/04 Microsoft v Commission, not published in the ECR, paragraph 44 and the case‑law cited).
39 Moreover, a decision taken under Article 9 of Regulation No 1/2003, which has the effect of bringing to an end the proceedings to establish and penalise an infringement of the competition rules, cannot be considered as being a mere acceptance on the Commission’s part of a proposal that has been freely put forward by a negotiating partner, but constitutes a binding measure which puts an end to an infringement or a potential infringement, as regards which the Commission exercises all the prerogatives conferred on it by Articles 81 EC and 82 EC, with the only distinctive feature being that the submission of offers of commitments by the undertakings concerned means that the Commission is not required to pursue the regulatory procedure laid down under Article 85 EC and, in particular, to prove the infringement (Alrosa v Commission, paragraph 87).
40 By making a particular type of conduct of an operator in relation to third parties binding, a decision adopted under Article 9 of Regulation No 1/2003 may indirectly have legal effects erga omnes, which the undertaking concerned would not have been in a position to create on its own; the Commission is thus their sole author from the time at which it makes binding the commitments offered by the undertaking concerned and accordingly assumes sole responsibility for them (Alrosa v Commission, paragraph 88).
41 In addition, it is possible to reopen the proceedings in accordance with Article 9(2) of Regulation No 1/2003 in only three cases: where there has been a material change in any of the facts on which the decision was based; where the undertakings concerned act contrary to their commitments; and where the decision was based on incomplete, incorrect or misleading information. Since the situations justifying a reopening are thus exhaustively listed, a third party could not request that the proceedings be reopened on the basis that the principle of proportionality had been infringed. Furthermore, the Commission would have discretion to refuse to reopen proceedings (Alrosa v Commission, paragraph 155).
42 That case‑law makes it possible to reject, from the outset, all of the Commission’s arguments summarised in paragraphs 30 and 31 above, in so far as its arguments are based on the premiss that a third company is not, except in exceptional circumstances such as those at the origin of the judgment in Alrosa v Commission, sufficiently affected by a decision adopted under Article 9 of Regulation No 1/2003 to be able to obtain intervener status in proceedings seeking the annulment of that decision. The Court of Justice has also held, in a general manner and unreservedly, that it is permissible for a third undertaking which regards itself as affected by such a decision to protect its rights by bringing an action against it (Case C‑441/07 P Commission v Alrosa [2010] ECR I‑5949, paragraph 90). The same must apply, by analogy, to intervention in such an action.
43 In the present case, the issue arises, inter alia, as to what constitutes an abusive practice with respect to standardisation, in particular so far as concerns ‘patent ambushing’ by an undertaking in a dominant position. More specifically, the present case raises the issue whether the commitments by Rambus, in particular in the form of royalty caps, are sufficient to eradicate the problems in terms of competition found by the Commission, which may also involve an assessment of the extent to which and the conditions under which Rambus is entitled to charge royalties on its patents for semiconductors for DRAM chips, without that giving rise to reasonable doubts on the part of the Commission.
44 In so far as, in accordance with Article 9(2) of Regulation No 1/2003, a corollary of the decision on the commitments is that, in principle, the Commission has refrained from still finding that the charging by Rambus of capped royalties for the use of its patents by manufacturers of DRAMS and memory controllers in accordance with industry standards is incompatible with Article 82 EC, even though, in its preliminary evaluation, the Commission envisaged making such a finding and did not rule out imposing zero royalties on Rambus, that decision produces direct and immediate effects on Nvidia’s situation, since that undertaking is present and active in the downstream sector of DRAM memory controllers, which is directly affected by the conduct of Rambus of which Hynix complains (see, by analogy, Alrosa v Commission, paragraph 39). Both Nvidia’s legal position and its economic and commercial interests may thus be affected by the outcome of the case before the Court (see, by analogy, the order in Microsoft v Commission, paragraphs 46 and 47).
45 In that regard, Nvidia states that it incorporates technology claimed by Rambus in the manufacture of its graphics processors and that it has been, and continues to be, in negotiations with Rambus for a licence relating to that technology. The decision on the commitments is, in its view, a fundamental part of those negotiations, since it determines the basic conditions of any agreement resulting from the negotiations. Consequently, the Commission’s alleged failure to impose adequate corrective measures on Rambus places Nvidia in a worse position than it would have been in had the Commission carried out a correct and detailed analysis of the case.
46 Nvidia notes that, following the exclusion order issued against it by the United States International Trade Commission on 27 July 2010 at Rambus’ request, it was left with no real choice but to enter into a patent licensing agreement with Rambus, to enable it to continue to sell its products in the United States. In the context of the negotiations of that agreement, Rambus referred to the decision on the commitments (including the part relating to royalty rates) as defining the non‑negotiable, standard and unique conditions, pursuant to which Nvidia could take out a licence for the technology at issue.
47 It must be found, in the light of those arguments and the other factors to which they refer, that, as a manufacturer of DRAM memory controllers in conformity with industry standards, and in the light of Rambus’ position on the market concerned as a result of its patents, Nvidia has no choice but to be a current or potential contracting partner of Rambus, in a commercial relationship whose content is defined, in part, by the decision on the commitments. That decision is thus capable of substantially affecting Nvidia’s economic and financial position in its relations with Rambus.
48 As regards the Commission’s argument that Hynix’s complaint, as well as its investigation, related to DRAM chips and not memory controllers (see paragraphs 32, 33 and 35 above), it should be added that the decision on the commitments in fact relates to both of those products. As pointed out by Hynix, JEDEC-standardised DRAM interface technology is relevant for both DRAMs and DRAM memory controllers. Since DRAM memory controllers have to be conceived specifically to interact with a DRAM chip, and their interface thus has to be compatible with that standardised technology, the argument that they are different products is irrelevant. The repercussions of Rambus’ conduct are in fact identical, for both products, since it concerns their interface technology. In its statement of objections (paragraph 574), the Commission set out, moreover, its intention ‘to order Rambus to provide a licence … to companies producing or selling DRAM and non‑DRAM products that comply with all or any generation of the JEDEC DRAM standards …’, that is to say, according to footnote 901 of the statement of objections, ‘memory controllers or other non‑memory-chip components’. Moreover, the Commission itself recognises, in its observations on the application for intervention, that memory controllers need to interoperate with DRAM chips and therefore need to comply with the standards in place for the latter (see paragraph 33 above).
49 In addition, Nvidia actively participated in the administrative procedure which led to the adoption of the decision on the commitments.
50 It should be noted, in that regard, that Nvidia submitted written observations to the Commission on 3, 10 and 17 July 2009, that is after it learned that the Commission’s investigation and Rambus’ commitments also concerned the memory controller sector. As Nvidia sets out in its application for intervention, those observations related, in particular, to Rambus’ alleged ‘patent ambush’, the business relations between the interested parties, the litigation in progress between them in the United States, the appropriate legal standard by which to assess the commitments, the proposed scope and terms of the default licence, the royalty rates and royalty base, the ‘most favoured licensee clause’, and the licensees’ reservation of rights. Nvidia also made an attempt to show what it considered to be serious faults affecting the proposed commitments and how those commitments did not, in its view, redress the abusive conduct identified by the Commission. Moreover, on 7 September 2009, Nvidia submitted additional written observations and requested, in vain, to be consulted on the revised commitments. Finally, Nvidia submits, without being contradicted, that its representatives participated, on 29 June 2009, in an important conference with the Commission’s agents in charge of the file, and that they met the Commission’s agents in Brussels on 27 August 2009.
51 As a result of that participation in the procedure, the decision on the commitments refers (in particular in paragraphs 52, 53, 54, 56, 59 and 60), in order to reject them, to facts and arguments raised by Nvidia in its written observations, even though, admittedly, its name is not mentioned in that decision.
52 It follows from all of the above considerations that Nvidia is financially and legally affected by the contested decision.
53 As regards the Commission’s argument summarised in paragraph 32 above, although it is not disputed that Nvidia has no right to obtain a decision in line with Hynix’s complaint if the administrative procedure were to be reinitiated following the delivery of a judgment declaring annulment in the present case, or even any guarantee to that effect, the fact remains, none the less, that it had a direct interest in the adoption of such a decision and, consequently, a direct interest in intervening in support of Hynix’s action contesting the rejection of that complaint, which itself is the corollary of the adoption of the decision on the commitments. If the decision were to be annulled, the Commission would be required to reconsider Hynix’s complaint, taking account of the assessment made by the Court, which would give Nvidia an additional chance of seeing an outcome to that complaint that was favourable to it (see, by analogy, Case T‑351/05 Provincia di Imperia v Commission [2008] ECR II‑241, paragraph 33, upheld on appeal by order of the Court of Justice of 5 March 2009 in Case C‑183/08 P Commission v Provincia di Imperia, not published in the ECR, paragraph 20).
54 It necessarily follows that Nvidia has a direct and certain interest in the granting of the form of order sought by Hynix, seeking the annulment of the contested decision.
55 Since the application to intervene was made in accordance with Article 115 of the Rules of Procedure and Nvidia has justified its interest in the result of the case, that application must be granted, in accordance with the second paragraph of Article 40 of the Statute of the Court of Justice. As the notice in the Official Journal of the European Union provided for in Article 24(6) of the Rules of Procedure was published on 5 June 2010, the application to intervene was submitted within the time-limit prescribed in Article 115(1) of the Rules of Procedure, and the intervener’s rights will be those provided for in Article 116(2) to (4) of those rules.
On those grounds,
THE PRESIDENT OF THE SECOND CHAMBER OF THE GENERAL COURT
hereby orders:
1. Nvidia Corporation is granted leave to intervene in Case T‑148/10 in support of the form of order sought by Hynix Semiconductor, Inc.
2. A copy of all the procedural documents shall be served on the intervener by the Registrar.
3. A time-limit shall be given to the intervener to set out, in writing, its pleas in support of the form of order which it seeks.
4. Costs are reserved.
Luxembourg, 1 February 2012.