Response Brief in Support of Rambus Inc.'S Proposed Findings of Fact and Conclusions of Law

Case5:00-cv-20905-RMW Document4088
Filed12/05/11 Page1 of 58
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Gregory P. Stone (SBN 078329) Fred A. Rowley, Jr. (SBN 192298) MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, 35th Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 Email: Gregory.Stone@mto.com Email: Fred.Rowley@mto.com Peter A. Detre (SBN 182619) Carolyn Hoecker Luedtke (SBN 207976) MUNGER, TOLLES & OLSON LLP 560 Mission Street, 27th Floor San Francisco,CA 94105-2907 Telephone: (415) 512-4000 Facsimile: (415) 512-4077 Email: peter.detre@mto.com Email: carolyn.luedtke@mto.com Attorneys for RAMBUS INC.
Rollin A. Ransom (SBN 196192) SIDLEY AUSTIN LLP 555 West Fifth Street, Suite 4000 Los Angeles, CA 90013-1010 Telephone: (213) 896-6000 Facsimile: (213) 896-6600 Email: rransom@sidley.com Pierre J. Hubert (Pro Hac Vice) Craig N. Tolliver (Pro Hac Vice) MCKOOL SMITH PC 300 West 6th Street, Suite 1700 Austin, TX 78701 Telephone: (512) 692-8700 Facsimile: (512) 692-8744 Email: phubert@mckoolsmith.com Email: ctolliver@mckoolsmith.com
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION
HYNIX SEMICONDUCTOR, INC., et al., Plaintiffs, vs. RAMBUS INC., Defendant.
CASE NO. CV 00-20905 RMW RESPONSE BRIEF IN SUPPORT OF RAMBUS INC.S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW Date: Time: Ctrm: Judge: December 16, 2011 9:00 AM 6 Honorable Ronald M. Whyte
RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 2. 18 19 B. 20 21 22 23 24 25 26 5. 27 28 C. 4. III. II.
TABLE OF CONTENTS Page INTRODUCTION .......................................................................................................................... 1 ARGUMENT .................................................................................................................................. 1 I. This Court Should Reject Hynixs Multi-Front Campaign to Avoid an Adjudication on the Merits ..................................................................................... 1 A. B. C. A. B. Hynixs Challenge to the Courts Briefing Approach is Baseless .............. 2 The Court Should Adhere to Its Discretionary Decision Not to Give Micron Collateral Estoppel Effect .............................................................. 3 The Court Should Adhere to its Decision Not to Reopen the Record ........ 6 Unclean Hands Requires a Showing of Both Bad Faith and Prejudice in This Case............................................................................... 11 A Dismissal on Inherent Authority Grounds Requires a Showing of Both Bad Faith and Prejudice in this Case................................................ 15
Hynixs New Challenge to the Courts Legal Framework is Baseless ................. 11
Hynixs Proposed Findings on Spoliation, Bad Faith, and Prejudice Should be Rejected ............................................................................................................ 19 A. Neither Hynixs Brief Nor Its Proposed Findings and Conclusions Demonstrate the Onset of a Preservation Duty By March 1998............... 20 1. The Evidence Shows that Rambuss Implementation of a Licensing Strategy Was Not Reasonably Foreseeable in Early 1998, and Would Remain Speculative Well into 1999 ....... 21 None of the Other Contingencies Underlying Rambuss Licensing Strategy Weighs in Favor of a March 1998 Duty Date ............................................................................................... 27
Hynix Has Not Proven Bad Faith By Clear And Convincing Evidence.................................................................................................... 30 1. 2. 3. Rambus Did Not Intend to Hide Harmful Information................. 31 The Policy Was Not Intended to Stymie Opponents As Part of a Firm Litigation Plan ........................................................... 34 Rambus Did Not Deliberately Breach a Known Preservation Duty and Considered Its Policy a Legitimate Business Practice.......................................................................................... 35 Rambus Did Not Conceal the Adoption and Implementation of its Document Retention Policy ................................................. 36 Rambus Did Not Waive Its Ability to Use Communications with Counsel to Rebut Allegations of Bad Faith .......................... 38
The Record Evidence Does Not Establish Prejudice to Hynix ................. 38 -iRESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5. 6. 7. 1. 2. 3. 4.
TABLE OF CONTENTS (continued) Page JEDEC-Related Documents .......................................................... 40 Hynix and Rambus Licensing Negotiation ................................... 41 Patent-Related Documents ............................................................ 43 Documents Regarding SDRAM and DDR Datasheets, Reverse Engineering, and Claim Charts ....................................... 46 Intel Contract Materials ................................................................ 47 Board Materials............................................................................. 47 Hynixs Remaining Prejudice Arguments Are Baseless ........... 48
CONCLUSION ............................................................................................................................. 49
-ii-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FEDERAL CASES
TABLE OF AUTHORITIES Page(s)
Adler v. Federal Republic of Nigeria, 219 F.3d 869 (9th Cir. 2000)................................................................................................... 12 Advanced Cardiovascular Sys., Inc. v. C.R. Bard, Inc., 144 F.R.D. 372 (N.D. Cal. 1992) ............................................................................................ 45 Anheuser-Busch Inc. v. Natural Beverage Distrib., 69 F.3d 337 (9th Cir. 1995)............................................................................................... 17, 18 Aptix Corp. v. Quickturn Design Sys. Inc., 269 F.3d 1369 (Fed. Cir. 2001)......................................................................................... 14, 15 Arthur Anderson LLP v. U.S., 544 U.S. 696 (2005) .................................................................................................... 19, 34, 35 Blonder-Tongue Labs., Inc. v. University of Illinois Found., 402 U.S. 313 (1971) .................................................................................................................. 5 California Dental Assn v. FTC, 224 F.3d 942 (9th Cir. 2000)........................................................................................... 7, 8, 32 Carpet Seaming Tape Licensing Corp. v. Best Seam Inc., 616 F.2d 1133 (9th Cir. 1980)................................................................................................. 13 Cleveland v. Piper Aircraft Corp., 985 F.2d 1438 (10th Cir. 1993)....................................................................................... 8, 9, 10 Columbia Pictures Television, Inc. v. Krypton Broad. Corp., 259 F.3d 1186 (9th Cir. 2001)................................................................................................. 38 Combs v. Rockwell Intl Corp., 927 F.2d 486 (9th Cir. 1991)................................................................................................... 18 Dolan v. U.S. Postal Serv., 546 U.S. 481 (2006) ................................................................................................................ 21 Dollar Sys. v. Avcar Leasing Sys., 890 F.2d 165 (9th Cir. 1989)................................................................................................... 11 Dream Games of Ariz. v. PC Onsite, 561 F.3d 983 (9th Cir. 2009)................................................................................................... 14 Dyer v. Cenex Harvest States Co-Op, 563 F.3d 1044 (9th Cir. 2009)................................................................................................. 21 -iiiRESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
TABLE OF AUTHORITIES (continued) Page(s) Ellenburg v. Brockway, Inc., 763 F.2d 1091 (9th Cir. 1985)................................................................................................. 12 Falko-Gunter Falkner v. Inglis, 448 F.3d 1357 (Fed. Cir. 2006)............................................................................................... 44 Fortlage v. Heller Ehrman, LLP, No. C 08-3406 VRW, 2010 WL 1729462 (N.D. Cal. Apr. 27, 2010) .................................... 11 Foster Poultry Farms, Inc. v. Suntrust Bank, No. 104-CV-5513 OWW SMS, 2008 WL 1970823 (E.D. Cal. May 5, 2008) ......................... 8 Halaco Engg Co. v. Costle, 843 F.2d 376 (9th Cir.1988).............................................................................................. 17, 18 Hoffman v. Tonnemacher, No. CIV F 04-5714 AWI DLB, 2006 WL 3457201 (E.D. Cal. Nov. 30, 2006) ......................................................................................................... 8 Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 1038 (N.D. Cal. 2006) ................................................................................ passim Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011)........................................................................................ passim In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060 (N.D. Cal. 2006) .................................................................................. 18 In re Spalding Sports Worldwide, Inc., 203 F.3d 800 (Fed. Cir. 2000)................................................................................................. 45 Insituform Techs., Inc. v. Cat Contracting, Inc., 161 F.3d 688 (Fed. Cir. 1998)............................................................................................... 8, 9 Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829 (9th Cir. 2002)................................................................................................... 12 Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933) .......................................................................................................... 14, 15 KSR Intl Co. v. Teleflex Inc., 550 U.S. 398 (2007) ................................................................................................................ 44 Leon v. IDX Sys. Corp., 464 F.3d 951 (9th Cir. 2006)............................................................................................. 17, 18
-iv-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
TABLE OF AUTHORITIES (continued) Page(s) Lorenz v. Valley Forge Ins. Co., 815 F.2d 1095 (7th Cir. 1987)................................................................................................. 38 Los Angeles County v. Davis, 440 U.S. 625 (1979) ................................................................................................................ 49 Martins Herend Imports, Inc. v. Diamond & Gem Trading U.S. Co., 195 F.3d 765 (5th Cir. 1999)..................................................................................................... 8 MercExchange LLC v. eBay, Inc., 467 F. Supp. 2d 608 (E.D. Va. 2006)........................................................................................ 9 Micron Tech., Inc. v. Rambus Inc., 255 F.R.D. 135 (D. Del. 2009).................................................................................... 16, 44, 45 Micron Tech. Inc. v. Rambus Inc., 645 F.3d 1311 (Fed Cir. 2011)......................................................................................... passim Millenkamp v. Davisco Foods Intl, No. CV03-439-S-EJL, 2009 WL 3430180 (D. Idaho Oct. 22, 2009) ........................................................................................................... 9 Nelson v. Original Smith & Wesson Bus. Entities, No. 10-35562, 2011 WL 3855852 (9th Cir. Sept. 1, 2011)............................................................................................................ 39 Norton v. Curtiss, 433 F.2d 779 (C.C.P.A. 1970) ................................................................................................ 13 Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) .......................................................................................................... 4, 5, 6 Perfumebay.com v. eBay, Inc., 506 F.3d 1165 (9th Cir. 2007)................................................................................................. 12 Pfizer Inc. v. Intl Rectifier Corp., 685 F.2d 357 (9th Cir. 1982)................................................................................................... 13 Powers v. Boston Cooper Corp., 926 F.2d 109 (1st Cir. 1991) ..................................................................................................... 7 Precision Instrument Mfg. Co. v. Auto Maintenance Mach. Co., 324 U.S. 806 (1945) ................................................................................................................ 13 Rent-A-Center, Inc. v. Canyon Television Appliance Rental, Inc., 944 F.2d 597 (9th Cir. 1991)................................................................................................... 12 -vRESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
TABLE OF AUTHORITIES (continued) Page(s) Republic Molding Corp. v. B.W. Photo Utils., 319 F.2d 347 (9th Cir. 1963)............................................................................................. 13, 14 Seymour v. Summa Vista Cinema, Inc., 809 F.2d 1385 (9th Cir. 1987)................................................................................................. 10 Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir. 2001)............................................................................................. 16, 17 Southard v. Russell, 57 U.S. 547 (1853) .................................................................................................................... 7 State Indus. Inc. v. Mor-Flo Indus., Inc., 948 F.2d 1573 (Fed. Cir. 1991)................................................................................................. 9 Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011)........................................................................................ passim U.S. v. Olano, 507 U.S. 725 (1993) ................................................................................................................ 39 United States v. 1.377 Acres of Land, 352 F.3d 1259 (9th Cir. 2003)................................................................................................. 21 Vignelli v. United States, 992 F.2d 449 (2d Cir. 1993).................................................................................................... 38 Ward v. Succession of Freeman, 854 F.2d 780 (5th Cir. 1988)................................................................................................... 38 Wood v. Mann, 2 Sumn 316, 30 F. Cas. 451 (C.C. Mass. 1836)........................................................................ 7 FEDERAL RULES AND STATUTES Fed. R. Civ. P. 16(e)........................................................................................................................ 8 Fed. R. Civ. P. 30(b)(6)................................................................................................................. 37 Fed. R. Civ. P. 52(b) ..................................................................................................................... 10 Fed. R. Civ. P. 52(b) ....................................................................................................................... 8
26 27 28 Fed. R. Civ. P. 56(f) ........................................................................................................................ 8 Fed. R. Civ. P. 59 ...................................................................................................................... 8, 10 -viRESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
TABLE OF AUTHORITIES (continued) Page(s) Fed. R. Civ. P. 60 ...................................................................................................................... 8, 10 Patent Act 102(f) ........................................................................................................................ 44 TREATISES 18A Wright & Miller, Federal Practice & Procedure 4465 (2d ed. 2011)................................. 4 Currie, Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine, 9 Stan. L. Rev. 281, 303 (1957) ......................................................................................................................... 6 Restatement (Second) of Judgments 29 (1982) ........................................................................... 4 18A Wright & Miller, Federal Practice & Procedure 4465.1 (2d ed. 2011).............................. 6
-vii-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I.
INTRODUCTION This brief responds to Hynixs Opening Pre-Hearing Brief on Remand (Hynix 11/14/11 Br.), and its proposed findings of fact and conclusions of law. We first address Hynixs overarching legal arguments: that the Court should stay this matter and apply collateral estoppel; that it erred in requesting that the parties propose modifications to its prior order; and that the Court can dismiss Rambuss patent claims without even finding bad faith or prejudice. We then turn to the key factual issues raised by Hynix, organized along the legal requirements of spoliation, bad faith, and prejudice. Where appropriate, we address the evidence Hynix has cited from other cases, even though Hynix has failed to justify reopening the record. We take this approach in an abundance of caution, and in case the Court wishes to rule alternatively that the evidence should not be considered and would not affect the outcome anyway. For the Courts convenience, we also propose some additional findings and conclusions reflecting the responses in this brief. ARGUMENT This Court Should Reject Hynixs Multi-Front Campaign to Avoid an Adjudication on the Merits It was Hynix, not Rambus, that filed this action. It was Hynix, not Rambus, that insisted on trying its unclean hands defense separately from the other patent issues that had already been slated for trial. And it was Hynix that successfully moved to try the unclean hands defense first, before any of the parties other claims and defensesand before the Delaware Court tried Microns spoliation theory. Having made strategic choices that framed the litigation of Rambuss alleged spoliation, Hynix now labors to prevent this Court from adjudicating its unclean hands defense on remand, as the Federal Circuits mandate requires. Hynix has asked the Court to stay its hand in deference to the Delaware Court, even though (1) this court issued its decision three years before the Delaware Court, (2) the Federal Circuit reversed that court on more spoliation-related issues, leaving it with more issues to decide on remand, and (3) this Court has already adjudicated, and been affirmed on, the parties substantive claims and defenses. Hynix has asked this Court to give preclusive effect to the -1RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Delaware Courts determinations instead of adjudicating them itself, even though (1) that litigation was initiated as part of a coordinated, dual-front litigation against Rambus (Order Denying Hynixs Mot. for Summ. J. of Unclean Hands, Feb. 3, 2009 (CE Order) at 7), and (2) the application of collateral estoppel here would advance none of the efficiency considerations that ground that doctrine. Hynix also argues that the Court should use the record developed by parties in other cases, and adopt some (but not all) of the conclusions reached by the courts in those cases, even though Hynix had every opportunity to advance that evidence and make its arguments to this Court. Having failed to persuade the Court on any of these points, Hynix now takes the position that the Court should not use its prior findings as a baseline for its remand order, even though the Federal Circuit left untouched its factual findings and analysis of both bad faith and prejudice. That argument should be rejected, as should Hynixs arguments on proceeding with the remand, collateral estoppel, and reopening the record. Hynix has made no new arguments supporting a stay, and both Hynixs and Nanyas preclusion arguments are meritless. On reopening the record, Hynix has only weakened its position, having refused the opportunity to explain why its new evidence is, in fact, new. A. Hynixs Challenge to the Courts Briefing Approach is Baseless
The Courts approach of having the parties propose findings of fact and conclusions of law based upon its prior order works no unfairness to Hynix. (Cf. Hynix 11/14/11 Br. 3-4.) This approach gives the parties the opportunity to specifically comment on the Courts prior findings and to explain the changes that the party believes should be made. And despite Hynixs failure to justify reopening the record, the Court permitted Hynix to propose findings and conclusions reflecting additional evidence provided that Hynix indicate specifically why the alleged new evidence was not previously available. (Civil Minutes, Oct. 21, 2011.) Having relied on extrarecord evidence without even meeting its attendant obligation to explain why the evidence was unavailable (see infra at 6-11), Hynix can hardly complain about the Courts remand procedures. It also makes sense to use the prior order as a baseline given the narrowness of the Federal Circuits holding in Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011) -2RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14
(Hynix II). Hynix stresses the Federal Circuits vacatur, but, as we have explained (Rambus 11/14/11 Br. 10-22; Rambus 9/30/11 Br. 13-20), its holding was limited to the standard for anticipation of litigation. Because the Federal Circuit did not address this Courts findings of no bad faith and no spoliation or disturb the factual findings underlying its determinations, Hynix II, 645 F.3d at 1347 n.2, the prior order is a reasonable and legitimate starting point for crafting a remand rulingregardless of the result this Court ultimately reaches. Hynix is again mistaken in arguing that the Court should apply the analysis of its privilege-piercing order to Hynixs unclean hands defense. (Hynix 11/14/11 Br. 4.) That order applied only a reasonable cause standard and did not adjudicate Hynixs defense on the merits. (Order Compelling Production of Documents, Jan. 31, 2005, at 4.) The Courts prior unclean hands decision is a far more appropriate starting point for resolution of the merits issues on remand. B. The Court Should Adhere to Its Discretionary Decision Not to Give Micron Collateral Estoppel Effect
Hynix offers no new argument regarding the application of collateral estoppel to Micron 15 Tech. Inc. v. Rambus Inc., 645 F.3d 1311, 1329 (Fed Cir. 2011) (Micron II), and has instead 16 chosen to rest on its prior briefing. (Hynix 11/14/11 Br. at 8 n.2.) The Court should accordingly 17 adhere to its tentative ruling to deny preclusion. (Cf. Civil Minutes, Oct. 21, 2011; Rambus 18 10/14/11 Br. at 11-15.) 19 Nanya, a non-party DRAM manufacturer involved in other related litigation with Rambus, 20 has moved for leave to submit an amicus brief in support of Hynixs request for collateral 21 estoppel. (Nanya Mot. for Leave to File Amicus Br., Nov. 11, 2011 (Nanya Mot.).) Nanya 22 argues that the Court lacks broad discretion to deny non-mutual, defensive collateral estoppel. 23 24 stated in Rambuss opposition thereto (Rambuss Oppn to Nanya Mot., Nov. 28, 2011), Nanyas 25 argument is meritless in any event: 26 27 28
1
(See Nanya Mot. Ex. A)1 While the Court should deny Nanyas request for leave for reasons
Nanys proposed brief does not take issue with Rambuss argument that Hynix has failed to satisfy the necessity requirement for applying collateral estoppel to the myriad particularized facts identified by Hynix. (Cf. Rambus 10/14/11 Br. at 11-15.) -3RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
First, although the Supreme Court flatly stated that there is no intrinsic difference between offensive as distinct from defensive issue preclusion, Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 n.16 (1979), Nanya still contends that the discretionary considerations for determining preclusion set forth in Parklane apply only to offensive, as opposed to defensive, estoppel. As this Court held, the rigorous inquiry required for non-mutual preclusion cannot be reduce[d] .. to a collection of labels, but that is precisely what Nanya seeks to do. (CE Order at 2.) Parklane set forth a number of factors to consider in deciding a request for non-mutual preclusion. The Supreme Court expressed concern that application of preclusion could undermine judicial efficiency if litigants are rewarded for taking a wait and see attitude and not joining prior actions despite the opportunity to do so. 439 U.S. at 329. The Court also cautioned that preclusion would be unfair to the estopped party if it had little incentive to litigate the first action, if it lacked procedural opportunities in the first action, or if there had been inconsistent prior determinations. Id. at 330-31. There is no reason why these efficiency and fairness considerations should apply only to offensive estoppel, such that courts must mechanically impose preclusion in the defensive context no matter how unfair or inefficient the outcome. The factors that make estoppel inefficient or unfair in cases of offensive estoppel clearly also apply to defensive estoppel. The Supreme Court recognized as much when it observed that [t]he problem of unfairness is particularly acute in cases of offensive estoppel, id. at 331 n.15, which presupposes that the same discretionary considerations factor into both situations. The Restatement of Judgments is in accord, enumerating various efficiency and fairness considerations for non-mutual preclusion without regard to the offensive or defensive label. See Restatement (Second) of Judgments 29 (1982). Likewise, the leading treatise on Federal Procedure explains that there is discretion to deny nonmutual preclusion when preclusion would not be fair in order to achieve justice and equity, without limitation to offensive assertions of preclusion. 18A Wright & Miller, Federal Practice & Procedure 4465 (2d ed. 2011). Nanya argues that because the Parklane Court made its statement on the lack of intrinsic difference between offensive and defensive preclusion in the context of a case regarding the -4RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
former, the statement has no application to the latter. (Cf. Nanya Mot. Ex. A at 7, citing Parklane, 439 U.S. at 331 n.16.) That makes no sense. That there is no intrinsic difference only confirms that the efficiency and fairness should be considered in both situations. Hynixs preclusion strategy illustrates this well. As this Court held, because Hynix coordinated with Micron to launch dual-front litigation against Rambus, applying preclusion would be rewarding Hynixs efforts to multiply the scope of this conflict, thus confirming the Supreme Courts fear that improper use of non-mutual issue preclusion will likely increase rather than decrease the total amount of litigation (CE Order at 7-8.) Nanya offers no plausible reason why consideration of the inefficiency generated by such tactics should depend on the label offensive or defensive. Efficiency is a key objective of defensive non-mutual preclusion, no less than it is for offensive preclusion. See, e.g., Blonder-Tongue Labs., Inc. v. University of Illinois Found., 402 U.S. 313, 328 (1971). The Supreme Court has repeatedly cautioned that non-mutual preclusion is an equitable doctrine that must be carefully applied in consideration of its efficiency and fairness objectives. Id. at 333-34 ([N]o one set of facts, no one collection of words or phrases, will provide an automatic formula for proper rulings on estoppel pleas. In the end, decision will necessarily rest upon the trial courts sense of justice and equity.); CE Order at 2 (same). Nanyas formalistic approach is fundamentally incompatible with the flexible, equitable nature of non-mutual preclusion doctrine. Second, Nanya is wrong to assume that Hynixs preclusion request is defensive. While this Court reached this conclusion in its prior CE order, the distinction was not load-bearing given the Courts correct focus on the Parklane factors. But if the Court reaches this issue, Rambus respectfully submits that Parklanes analysis demonstrates that Hynixs assertion of estoppel here is offensive in nature. Whether preclusion is offensive or defensive depends on whether the party against whom it is asserted was plaintiff or defendant in the first action. See Parklane, 439 U.S. at 331 n.15 (noting that in cases of offensive estoppel the defendant against whom estoppel is asserted typically will not have chosen the forum in the first action). Since Rambus is the defendant in -5RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
the Micron action in Delaware and was forced to defend its patents in the forum chosen by Micron, Hynixs assertion of preclusion on the basis of Micron II is offensive. As Parklane reveals, almost every fairness and efficiency concern goes not to incentives and fairness issues occasioned by the parties identities in the second action, but rather to those issues in the first action. Parklane, 439 U.S. at 329-31. Thus, Parklane distinguishes offensive from defensive preclusion in that defensive preclusion encourages the plaintiff to sue all possible defendants in the first suit, while offensive preclusion creates an incentive for plaintiffs to hang back and wait. Id. at 329-30 & n.13. Likewise, the Parklane Court focuses on whether the defendant in the first action had all the procedural options available in the second suit, whether it might have had reasons to not vigorously defend itself, or whether defendant in the first action was forced to defend in an inconvenient forum. Id. at 329-31 & n.15. The first action is properly the focus of analysis because [o]ne of the most general concerns attending the abandonment of mutuality has been that it may be unfair to bind a party who did not take the initiative in the first action. 18A Wright & Miller, Federal Practice & Procedure 4465.1 (2d ed. 2011); see also Currie, Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine, 9 Stan. L. Rev. 281, 303 (1957) ([T]here is a significant difference between the situation of a party who has lost a case after choosing the time and place for action, and that of a party who has lost a case in which he had no control over such factors.). If the offensive and defensive labels were to make a material difference as to the scope of judicial discretion, it only makes sense for the label itself to turn on the action that is the locus of the fairness and efficiency concernsthe first action. Because Rambus is the defendant and did not take the initiative in Micron, Hynixs preclusion request is properly considered offensive. That Rambus is again the defendant, and Hynix the plaintiff, in the present action further confirms the offensive posture of Hynixs assertion of preclusion. C. The Court Should Adhere to its Decision Not to Reopen the Record
The Court has ruled that the record should not be reopened, but allowed Hynix to propose additional findings based upon evidence that was not available at the time of trial, directing it to indicate specifically what that evidence is and why it was not available to them. -6RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
(Civil Minutes, Oct. 21, 2011.) Despite the Courts clear instruction, Hynix made no effort to explain how any of the new evidence it offers was not available before the 2005 spoliation trial. This failure of proof confirms that all of the evidence was available to Hynix and could have been adduced at the trial. The Court should accordingly reject Hynixs bid to take an unwarranted second bite at the [evidentiary] apple. California Dental Assn v. FTC, 224 F.3d 942, 959 (9th Cir. 2000). Hynix claims that evidence from other proceedings will help uncover the truth. (Hynix 11/14/11 Br. 4.) But Hynix has had every opportunity in this case to uncover the truth by taking discovery and presenting evidence. Cf. Micron II, 645 F.3d at 1329 (noting that the record is lengthy but uncomplicated). Under the Courts cross-production orders, Hynix had the additional benefit of the discovery taken by Rambuss other litigation opponents in related proceedings. (See Order re Plaintiffs Motion to Compel Discovery, Jan. 21, 2003 [requiring production of spoliation evidence from Micron and Infineon]; Order re Deadline for Production of FTC Documents, June 13, 2003.) The fact that some related cases, like the San Francisco Superior Court and ITC proceedings, continued to be litigated after the spoliation trial cannot itself justify reopening the record. If the mere presence of related proceedings suffices to reopen the record, this litigationand indeed all parallel litigationswould never end. That result would set at naught the finality principles that have been at the heart of Anglo-American jurisprudence for centuries. As the Supreme Court observed over a century and a half ago, limits on admitting additional evidence after trial and decision are essential to the proper administration of the law, and to a reasonable termination of litigation between parties . Southard v. Russell, 57 U.S. 547, 571 (1853) (citing English practice). Justice Story explained that discretion to allow new evidence must be exercised cautiously and sparingly, and only under circumstances which render it indispensable to the merits and justice of the cause. Wood v. Mann, 2 Sumn. 316, 30 F. Cas. 451, 458 (C.C. D. Mass. 1836). Finality is a critically important concept in our system of jurisprudence, Powers v. Boston Cooper Corp., 926 F.2d 109, 112 (1st Cir. 1991), and there is nothing in the Anglo-American concept of procedure or due process that guarantees a party the chance to keep re-doing its case until it is satisfied. -7RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
As Rambus has discussed at length, the current Federal Rules of Civil Procedure give effect to traditional finality principles by placing strict limits on the consideration of additional evidence in a variety of contexts. These limitations include the requirement that the proffered evidence must not have been previously available. (See Rambus 11/14/11 Br. 25-26, discussing standards for modifying the pre-trial conference order (Rule 16(e)); requests for additional discovery on summary judgment (Rule 56(f)); motions for new trial (Rule 59); and motions for relief from a prior order (Rule 60).) Rule 52(b)s provision for amending findings of fact after a bench trial is similarly circumscribed with respect to new evidence. See Foster Poultry Farms, Inc. v. Suntrust Bank, No. 104-CV-5513 OWW SMS, 2008 WL 1970823, at *2 (E.D. Cal. May 5, 2008) (on Rule 52(b) motion, declining to consider evidence that was available at trial but was not proffered, because [t]o do otherwise would defeat the compelling interest in the finality of litigation) (citation omited). To give Hynix the relief it seeks, this Court would need to cast aside multiple bars and ignore the numerous opportunities Hynix has had to request consideration of this evidence. Between the 2005 spoliation trial and the entry of judgment in 2009, Hynix made no effort to raise the evidence it now claims was outcome determinative. Hynixs current effort comes far too late. And Hynix cannot possibly justify its dilatoriness in light of the manifest injustice standard that applies here. See, e.g., Cleveland v. Piper Aircraft Corp., 985 F.2d 1438, 1449-50 (10th Cir. 1993); Martins Herend Imports, Inc. v. Diamond & Gem Trading U.S. Co., 195 F.3d 765, 775 (5th Cir. 1999); Hoffman v. Tonnemacher, No. CIV F 04-5714 AWI DLB, 2006 WL 3457201, at *2 (E.D. Cal. Nov. 30, 2006); Rambus 11/14/11 Br. 26. The Ninth and the Federal Circuits as well as other courts have repeatedly held that the previous availability of the proffered evidence suffices, without more, to bar consideration of that evidence on remand. California Dental, 224 F.3d at 959; Insituform Techs., Inc. v. Cat Contracting, Inc., 161 F.3d 688, 694-95 (Fed. Cir. 1998) (affirming refus[al] on remand to consider new evidence where the defendant failed to show[] that the evidence could not have been found and submitted at the first trial); Martins Herend Imports, 195 F.3d at 776 (If the defendants knew or should have known that the witnesses were necessary, then the exclusion of those witnesses was not manifestly unjust.). After three rounds of briefing, Hynix -8RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
is still unable to distinguish these authorities. (Cf. Hynix 11/14/11 Br. 4-6.) Even Hynixs own authority weighs against reopening. In MercExchange LLC v. eBay, Inc., 467 F. Supp. 2d 608 (E.D. Va. 2006), the court actually prohibited the parties on remand from trying to backfill the record by presenting evidence that was previously available yet not advanced at trial, id. at 613. That court further forbade efforts to recast the prior record in a manner inconsistent with this courts [prior] findings of fact. Id. While the eBay court allowed the parties to supplement the record to update the court on factual developments occurring subsequent to this courts [prior] order, id., it did so only because the issue on remand was injunctive relief, the prospective nature [of which] requires the court to consider present circumstances, id. at 610 (original emphasis). Here, Hynixs unclean hands defense rests solely on events that occurred over a decade ago. Hynixs attempt to backfill the record with previously available evidence is precisely what the eBay court rejected. Id. at 613; accord Millenkamp v. Davisco Foods Intl, No. CV03-439-S-EJL, 2009 WL 3430180, at *3 (D. Idaho Oct. 22, 2009) (Cases are not ordinarily remanded in order to give a party the opportunity to supply evidence missing from the first trial.). Hynixs other authority, State Indus. Inc. v. MorFlo Indus., Inc., 948 F.2d 1573 (Fed. Cir. 1991), merely states the undisputed proposition that district courts have discretion to reopen the record, and provides no reason why that discretion should be exercised in Hynixs favor now. (See Rambus 11/14/11 Br. 26-27.) Hynix has not shown that its proposed evidence could not have been found and submitted at the first trial, Insituform, 161 F.3d at 694-95, or is material and non-cumulative, Cleveland, 985 F.2d at 1450. (Cf. Hynix 11/14/11 Br. 4-6.) All the out-of-record testimony Hynix now cites is from witnesses available to it at the time of trial. Hynix had the opportunity to depose and examine those same witnesses and ask them whatever questions it wished. It had the benefit of deposition and trial testimony produced by Rambus from the Micron, Infineon, and FTC proceedings. And Hynix in fact used prior deposition testimony in cross-examining witnesses at the spoliation trial. (E.g., Trial Tr. 211, 212, 275 (Karp).) The fact that Rambus witnesses also testified subsequently to the unclean hands trial is no reason to reopen the record. Again, parallel litigations often require witnesses to testify multiple -9RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
times, but the opportunity to compare and contrast testimony does not justify keeping a case open indefinitely. Hynixs gotcha claims are overwrought anyway, because the differences in testimony it cites are immaterial. This is true of both Hynixs claim that Rambus witnesses gave inconsistent testimony about the meaning of the phrase battle ready in the notes on the February 12, 1998 meeting (see infra at 33-35), and its argument that Karp changed his account of what the phrase stealth mode meant (see infra at 26). If the supposedly different testimony were truly material, Hynix might have tried to utilize the panoply of procedural vehicles available for seeking post-trial relief on the basis of significant, previously unavailable evidence. See Fed. R. Civ. P. 52(b), 59, 60. Hynix did not do so, and indeed made no mention at all of this allegedly material change in testimony in its motion for reconsideration of unclean hands filed in the wake of the Micron I decision. (See Hynix Mot. for Summ. J. of Unclean Hands, Jan. 19, 2009.) That Hynix never sought relief in the years since the unclean hands trial itself suggests that the additional evidence Hynix now identifies is immaterial. See Cleveland, 985 F.2d 1450 (cumulative evidence should not be considered); cf. Seymour v. Summa Vista Cinema, Inc., 809 F.2d 1385, 1388 (9th Cir. 1987) (excluding proposed new evidence as immaterial). Karps discovery of additional documents in his home in 2007 is likewise immaterial. (Hynix 11/14/11 Br. 5.) The only evidence from that production Hynix seeks to offer is a reverse engineering report for the purpose of showing that Rambus expended considerable effort on reverse engineering. (Hynix Proposed Finding (Hynix F.) 115-16.) Karp already testified as to Rambuss reverse engineering efforts in the fall of 1998. (Trial Tr. 284.) Hynix hardly needs the report to argue that Rambus engaged in reverse engineering. Hynixs waiver argument with respect to the Micron record also fails. In the Federal Circuit, Micron had tried to distinguish this Courts unclean hands ruling on the basis of certain record differences between the Hynix and Micron proceedings, and Rambus responded that the specific evidence cited by Micron was cumulative of the record in this case, insignificant, and did not show spoliation. (See Reply Brief of Rambus Inc., at 2-3, Micron Tech. Inc. v. Rambus Inc., No. 2009-1263 (Fed. Cir. Oct. 14, 2009), available at 2009 WL 3657821.) On the basis of this response, the Federal Circuit stated in Hynix II that Rambus waived the argument -10RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
that those specific differences in the record compelled different outcomes in the two appeals. See Hynix II, 645 F.3d at 1342 n.1. That is an entirely different issue from whether Hynix has shown the manifest injustice required to reopen the record on remand. Rambuss argument in the Micron appeal regarding the weight of specific evidence is not a waiver of Rambuss objection to reopening the record, nor is it a concession that the cases have to be resolved the same way on remand. If anything, the cumulative and insignificant nature of the record differences is another factor weighing against allowing Hynix to introduce that evidence at this late hour. Cf. Fortlage v. Heller Ehrman, LLP, No. C 08-3406 VRW, 2010 WL 1729462 (N.D. Cal. Apr. 27, 2010) (declining to consider immaterial new evidence). Even if the Federal Circuits statement regarding waiver somehow applies to Hynixs bid to reopen the record, it must be limited to the Micron evidence cited in the Hynix II opinion regarding when the preservation duty arose, because the Federal Circuit identified no waiver as to any other evidence or any other issue. II. Hynixs New Challenge to the Courts Legal Framework is Baseless After two rounds of briefing in which the parties took as a given that bad faith and prejudice were required for a dismissal on spoliation grounds, Hynix now argues that this is actually not so. According to Hynixs latest brief, neither bad faith nor prejudice is required for dismissal whether spoliation is analyzed under the framework of Hynixs unclean hands defense or the inherent authority ground that was the focus of Micron II. This argument is meritless. A. Unclean Hands Requires a Showing of Both Bad Faith and Prejudice in This Case
In its 2006 ruling, Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 1038 (N.D. 21 Cal. 2006) (Hynix I), this Court noted that, under Ninth Circuit law, Hynixs unclean hands 22 defense had three elements: (1) spoliation, id. at 1060; (2) bad faith, the essence of the defense 23 of unclean hands, id. at 1065 (quoting Dollar Sys. v. Avcar Leasing Sys., 890 F.2d 165, 173 (9th 24 Cir. 1989)); and (3) proof that the offending conduct materially prejudiced a partys ability to 25 defend itself, id. at 1067. In its Hynix II decision, the Federal Circuit nowhere cast doubt on 26 these elements. Although it reviewed only a single issue subsidiary to the spoliation element, the 27 Court specifically noted this Courts determinations on prejudice and good faith and held that 28 -11RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
these issues remain for consideration by the district court on remand. Hynix II, 645 F.3d at 1347 n.2. And in Micron II, the Federal Circuit imposed the very same requirements where a claimant sought comparable reliefa declaration of unenforceabilityon inherent authority grounds. The Court reasoned that such sanctions should not be imposed unless there is clear and convincing evidence of both bad-faith spoliation and prejudice to the opposing party. Micron II, 645 F.3d at 1328-29. Hynix glosses over the clear unclean hands principles applied by this Court and the Federal Circuits consistent treatment of the prerequisites for spoliation-based dismissal sanctions. It maintains that unclean hands does not require Hyix to make any explicit showing of bad faith, and that a showing of prejudice is not required. (Hynix 11/14/11 Br. 20.) The argument reprises positions that Hynix unsuccessfully took in the 2005 spoliation trial, and they are no more meritorious on remand. The Ninth Circuit has repeatedly held that unclean hands requires a showing of bad faith. See, e.g., Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 841-42 (9th Cir. 2002) (rejecting unclean hands because the court was not left with a firm conviction that the defendant acted with a fraudulent intent in making the challenged claims); Adler v. Federal Republic of Nigeria, 219 F.3d 869, 876-77 (9th Cir. 2000) (plaintiffs seeking equitable relief must have acted fairly and without fraud or deceit as to the controversy in issue) (emphasis added; quoting Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir. 1985)); Rent-A-Center, Inc. v. Canyon Television Appliance Rental, Inc., 944 F.2d 597, 602 (9th Cir. 1991) (Application of the unclean hands doctrine requires a finding of inequitableness or bad faith by the party to be dismissed.). Indeed, the Ninth Circuit has reconfirmed that fraudulent intent is the essence of the defense of unclean hands, Perfumebay.com v. eBay, Inc., 506 F.3d 1165, 1177 (9th Cir. 2007) (trademark suit), which parallels the Federal Circuits own observation that the unclean hands cases grounding the inequitable conduct defense involved deliberately planned and carefully executed scheme[s] to defraud, Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285 (Fed. Cir. 2011) (en banc). On appeal, Hynix did not dispute that it had to make a showing of bad faith in order to -12RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
make out its unclean hands defense. (Hynixs Opening Br. 28-30, Hynix Semiconductor Inc. v. Rambus Inc., No. 2009-1299 (Fed. Cir. Aug. 31, 2009), available at 2009 WL 3186084.) It now reverts to its position that a less culpable mental state suffices on the basis of Precision Instrument Mfg. Co. v. Auto Maintenance Mach. Co., 324 U.S. 806 (1945). But this Court itself cited Precision Instrument in support of its bad faith standard, see Hynix I, 591 F. Supp. 2d at 1060 , and the decision states clearly that unclean hands requires inequitableness or bad faith relative to the matter in which [the plaintiff] seeks relief, Precision Instrument, 324 U.S. at 814. The other case that Hynix cites, Pfizer Inc. v. Intl Rectifier Corp., 685 F.2d 357 (9th Cir. 1982), is off the mark for many reasons. That case involved the application of unclean hands to purportedly fraudulent dealings with the PTOviz., the defendant interposed the inequitable conduct species of unclean hands. Id. at 359. The Ninth Circuit therefore drew its standard of wrongfulness, willfulness, bad faith, or gross negligence from a Court of Customs and Patent Appeals decision on inequitable conduct. Id. (citing Carpet Seaming Tape Licensing Corp. v. Best Seam Inc., 616 F.2d 1133, 1138-39 (9th Cir. 1980), which in turn, cited Norton v. Curtiss, 433 F.2d 779, 795-96 (C.C.P.A. 1970) for the proposition that gross negligence could suffice as a sufficiently culpable state of mind). Needless to say, that standard is no longer good law after Therasense, which tighten[ed] the standards for finding both intent and materiality. 649 F.3d at 1290. Its requirement of deliberately planned and carefully executed schemes to defraud is not only the same standard applied by this court, but also the same standard applied in more recent Ninth Circuit authorities on unclean hands. What is more, in evaluating the unclean hands theory before it, the Pfizer Court itself applied a standard that is much closer to bad faith than its broad language suggests. Specifically, it held that the defendants failed to show by clear and convincing evidence that Pfizer misrepresented or concealed prior art, facts or information. 685 F.2d at 359 (emphasis added). Hynix is equally wrong in suggesting that it need not show prejudice. (Hynix 11/14/11 Br. 20.) As this Court noted, see Hynix I, 591 F. Supp. 2d at 1067, the Ninth Circuit has long held that the extent of actual harm caused by the conduct in question is a highly relevant consideration, Republic Molding Corp. v. B.W. Photo Utils., 319 F.2d 347, 349-50 (9th Cir. -13RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
1963). And the Ninth Circuit recently reconfirmed that unclean hands is inapplicable unless the defendant can show that he has personally been injured by the plaintiffs conduct. Dream Games of Ariz. v. PC Onsite, 561 F.3d 983, 990 (9th Cir. 2009) (unclean hands interposed as a defense to copyright infringement claim) (citation omitted). Hynix contends that the unclean hands doctrine protects the public interest (Hynix 11/14/11 Br. 20 (quoting Republic Molding, 319 F.2d at 349-50), but the very precedent Hynix cites makes clear that the harm to the public cannot be presumed from the very fact of violation, Republic Molding, 319 F.2d at 350. In the context of the alleged violation here, Rambuss spoliation, the dichotomy Hynix posits between harm to its defenses and to the public interest is entirely imagined. The only harm that Hynix has alleged is that Rambuss spoliation compromised the integrity of Rambus patent litigation and subvert[ed] the judicial process. (Hynix 11/14/11 Br. 18.) But this purported harm only obtains if Hynix suffered individualized prejudice to the judicial processi.e., if the spoliation undercut Hynixs ability to mount its defenses. Hynixs position on prejudice not only contravenes controlling precedent, but also is fundamentally at odds with the Federal Circuits reasoning in Therasense and Micron II. While the holdings in these cases did not address unclean hands simpliciter, both analyzed in detail the showing required to impose the ultimate sanctions of dismissal or a declaration of unenforceability. Therasense stressed, in the context of inequitable conduct, that the defendant must show that the patentee received the unfair benefit of receiving an unwarranted [patent] claim. 649 F.3d at 1292. If the concealed art was immaterial, the patentee obtains no advantage from misconduct, the public cannot be deemed harmed, and unenforceability is unwarranted. Id. In the same vein, Micron II made clear that because [d]ismissal is a harsh sanction, it should not be imposed unless there is clear and convincing evidence of both badfaith spoliation and prejudice to the opposing party. 645 F.3d at 1328-29 (citation omitted). The same reasoning applies where, as here, the alleged infringer invokes unclean hands to dismiss patent claims on the basis of spoliation. Neither Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933), nor Aptix Corp. v. Quickturn Design Sys. Inc., 269 F.3d 1369 (Fed. Cir. 2001), supports the -14RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13
proposition that prejudice is not required in this case. To begin with, the Supreme Court specifically noted in Keystone Driller that the defendant suffered prejudice as a result of the plaintiff patentees concealment of a prior use. See 290 U.S. at 247 (noting that the defendant was forced to post a bond due to the injunction unfairly obtained by the patentee). At most, cases like Keystone Driller and Aptix carve out an exception for particularly egregious misconduct, such as the manufacture of false evidence. Cf. Therasense, 649 F.3d at 1287; see also Aptix, 269 F.3d at 1376 (patentee forged pages in inventor notebook and submitted them to court as originals). Whatever the contours of any such exception, it does not fit the allegations in this case, which on Hynixs own theory involve selective application of a document retention policy that Hynix has conceded was not on its face or in the abstract illegal or inappropriate or contrary to industry custom. (Trial Tr. 7.) B. A Dismissal on Inherent Authority Grounds Requires a Showing of Both Bad Faith and Prejudice in this Case
In its first two briefs on remand, Hynix never disputed that both bad faith and prejudice 14 were required for the dismissal sanction it seeks. To the contrary, Hynix specifically invoked 15 Micron IIs standards for bad faith and prejudicestandards that, again, mirror those applied by 16 this Court in adjudicating Hynixs unclean hands defense. Hynix acknowledged that its defense 17 required determinations as to whether Rambus intended to impair the ability of the potential 18 defendant to defend itself (Hynix 9/30/11 Br. 4 (quoting Micron II, 645 F.3d at 1326-27)), and 19 whether Rambuss alleged spoliation materially affect[s] the substantial rights of the adverse 20 party and is prejudicial to the presentation of his case (id. at 6 (quoting Micron II, 645 F.3d at 21 1328)). Far from taking the position that these elements were not require[d] (Hynix 11/14/11 22 Br. 16), Hynix insisted that this Court must revisit the bad faith and prejudice issues in order to 23 carry out the Federal Circuits mandate (Hynix 10/14/11 Br. 3). 24 Hynixs latest brief takes an about-face turn on these standards. After having framed its 25 spoliation appeal entirely in terms of unclean hands, Hynix now insists that the governing law is 26 provided by inherent authority principles, with unclean hands a mere alternative defense. (Hynix 27 11/14/11 Br. 19.) That change in position should be immaterial, since bad faith and prejudice are 28 -15RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
required under both unclean hands principles and Micron IIs inherent authority analysis. But Hynix uses its shift to inherent authority as grounds to argue that it need not prove either bad faith or prejudice for a dismissal sanction. This is an extraordinary position, for it would permit a court to impose the harshest sanction available in the absence of any showing that the spoliating party acted with fraudulent intent or actually hindered its litigation opponents defenses. That position goes directly against the teachings of Micron II. And it is unsupported by the Circuit cases that Hynix cites. Hynix seizes on Micron IIs observation that bad faith is normally a prerequisite to the imposition of dispositive sanctions for spoliation under the district courts inherent power. (Hynixs 11/14/11 Br. 15 (quoting Micron II, 645 F.3d at 1327).) But even assuming this language allows for exceptional circumstances, the Federal Circuit plainly determined that this was not such an exceptional case, and that the general requirement applied there. The Court specifically said that dismissal should not be be imposed unless there is clear and convincing evidence of both bad-faith spoliation and prejudice to the opposing party. Micron II, 645 F.3d at 1328-29 (emphasis added). It is also apparent in the Federal Circuits decision to vacate the district courts bad faith determination and its directive to focus, on remand, on whether Rambus intended to impair the ability of the potential defendant to defend itself. Id. at 1327 (citation omitted). Each of these holdings would have been unnecessary if bad faith were not an essential element in the Micron case. Indeed, though its bad faith analysis was erroneous, the Delaware Court itself recognized that terminating sanctions are not warranted in the absence of demonstrated bad faith ... and prejudice, Micron Tech., Inc. v. Rambus Inc., 255 F.R.D. 135, 149 (D. Del. 2009) (Micron I). Because neither Micron II nor Hynix II had occasion to explore the scope of an exception to the requirement of bad faith, the Federal Circuits citation to Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir. 2001), does not, as Hynix suggests (11/14/11 Br. 15), provide standards for such an exception. But even if it did, Silvestri would simply confirm that the exception is wholly inapplicable to Rambuss spoliation. The Silvestri Court upheld a dismissal sanction apart from bad faith only because the prejudice to the defendant was extraordinary, denying it the -16RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
ability to adequately defend its case. 271 F.3d at 593. In particular, the plaintiff had destroyed the central piece of evidence to her product liability actionthe allegedly defective automobilebefore the defendant could even inspect it. Id. Silvestris application of unclean hands to remedy the defendants denial of access to the only evidence from which it could develop its defenses adequately, id. at 594, has no possible application here. Rambus produced over 1.2 million pages of documents to Hynix. Hynix does not dispute that this large volume of documents included documents in each category of potentially relevant documents it identified. While the Ninth Circuit has sometimes broadly characterized the state of mind required for dismissal as willfulness, fault, or bad faith, e.g., Leon v. IDX Sys. Corp., 464 F.3d 951 (9th Cir. 2006), none of the cases Hynix cites supports the proposition that mere fault suffices in the absence of exceptional circumstances. Leon noted that dismissal is an available sanction when a party has engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings, id. at 958, a standard that Micron II cited for the intent required for dismssal, Micron II, 645 F.3d at 1328; see also id. at 1326 (requiring fraud and a desire to suppress the truth) (citation omitted). Indeed, Leon affirmed dismissal on the basis of bad faith and intentional breach of a known duty to preserve. 464 F.3d at 959. Another case Hynix cites involved deceptive practices that undermine the integrity of judicial proceedings, AnheuserBusch Inc. v. Natural Beverage Distrib., 69 F.3d 337, 348, 349-51 (9th Cir. 1995). In the one case where the district court imposed a terminating sanction for non-willful conduct, the Ninth Circuit reversed the sanction as an abuse of discretion. Halaco Engg Co. v. Costle, 843 F.2d 376, 382 (9th Cir.1988). [F]or such a dismissal to be justified, the court explained, the district court must find extraordinary circumstances and a nexus between the misconduct and the matter in controversy. Id. The fact that the defendant may have been minimally at fault was not enough, especially given that the plaintiff had not made an effective showing that its position was prejudiced. Id. Whatever the circumstances in which a bad faith finding would prove unnecessary for a dismissal, Halaco shows that they would have to be extraordinaryperhaps along the lines of Silvestri. Hynix is flatly wrong when it asserts that the Ninth Circuit case law does not require an -17RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
explicit showing of prejudice for terminating sanctions. (Hynix 11/14/11 Br. 16.) The Ninth Circuit has candidly acknowledged that the decisions of this Circuit send conflicting signals as to whether prejudice to the party moving for dismissal must be demonstrated for dismissal to be considered an appropriate sanction pursuant to the courts inherent power. Anheuser-Busch, 69 F.3d at 353. While some cases treat prejudice as optional, id., others characterize it as a key factor and essential, id. (citation omitted). The case relied upon by Micron II, Leon, examines prejudice in detail, treating it as one of the factors weigh[ing] heavily in favor of dismissal. Leon, 464 F.3d at 959-60. The Ninth Circuit identified both the types of documents that were destroyed and how their destruction materially impaired defendant IDXs defense. Id. Indeed, after reciting these findings, the Circuit affirmed the district courts conclusion that the destroyed documents would likely be at the heart of IDXs defense were [the files] available. Id. at 960; see also id. at 959 (noting that personal files destroyed by plaintiff in employment discrimination and retaliation case are highly relevant to an employment discrimination claim, including destruction of documents that would have demonstrated plaintiffs violation of company policy, thereby justifying termination). In any event, Hynix cites no case holding that a court is precluded from considering prejudice where appropriate, Halaco, 843 F.2d at 382. Halaco certainly does not since, as noted, it reversed the terminating sanction imposed by the district court, and went out of its way to note the absence of prejudice. Id. Neither does In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060 (N.D. Cal. 2006). There, the district court refused to impose a terminating sanction, despite characterizing prejudice as optional, in part because plaintiffs have not produced sufficient evidence of prejudice to justify default sanctions. Id. at 1077. The decision in Combs v. Rockwell Intl Corp., 927 F.2d 486 (9th Cir. 1991), at most suggests that dismissal may be appropriate notwithstanding a lack of prejudice if a partys conduct was particularly egregious. See id. at 488 (falsifying deposition testimony). Even that reading of Combs would be a stretch, though, because the misconduct dealt with issues of central importance in the upcoming summary judgment hearing, and thus foreclosed a valid adjudication of that motion. Id. at 488-89. -18RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Any prejudice exception for egregious misconduct would be inapplicable here for the same reason unclean hands cases like Precision Investments and Aptix are inapposite. This case simply does not involve the sort of forgery, fabrication, or wanton fraud that would obviate the need for a prejudice showing. Even if Hynixs spoliation theory was borne out by the evidence and it is notit would establish only that Rambus failed to put its litigation hold in place earlier. That is different in kind from the sort of conduct that would, by itself, justify a dismissal. Document retention polices are a necessary part of modern business, and one of their recognized purposes is to avoid permanently retaining documents that would be burdensome and potentially damaging in indeterminate future litigation. Arthur Anderson LLP v. U.S., 544 U.S. 696, 704 (2005). Although the Ninth Circuit precedents on inherent authority are not a model of clarity, they are uniform on one point, and it suffices to dispatch Hynixs inherent-authority argument: not a single case supports the application of terminating sanctions in the absence of both bad faith and prejudice. That only makes sense. Exercising a courts inherent authority to dismiss an action in such circumstances would be a windfall to the moving party and violate the strong policies favoring adjudication of claims and defenses on the merits. III. Hynixs Proposed Findings on Spoliation, Bad Faith, and Prejudice Should be Rejected Hynixs proposed findings of fact and conclusions of law essentially rewrite this Courts
19 2006 ruling. As to each of the requirements for unclean hands (or inherent-authority spoliation), 20 Hynixs draft order departs radically from this Courts analysis of the admitted evidence and the 21 trial testimony. It also repeatedly invokes evidence from other proceedings despite its failure 22 even to try to justify reopening the record. Yet, even taking the entire universe of evidence 23 reflected in Hynixs draft orderincluding the improper extra-record evidencethe record 24 cannot support the findings Hynix proposes or the conclusions it draws. The facts refute the 25 notion that Rambus reasonably anticipated litigation in early 1998. Hynix has still failed to meet 26 its burden to show that Rambus destroyed documents in bad faith. And regardless of who bears 27 the burden, the evidence continues to firmly refute the notion that Hynix suffered material 28 -19RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3
prejudice. A. Neither Hynixs Brief Nor Its Proposed Findings and Conclusions Demonstrate the Onset of a Preservation Duty By March 1998
Hynix argues that Rambus incurred a preservation duty before the first shred day. 4 According to Hynix, the contingencies underlying Rambuss licensing plan were not only 5 reasonably foreseeable, but also in fact identified and their outcomes foreseen by Rambus by 6 March 1998. (Hynix 11/14/11 Br. 10.) At the heart of this argument is Hynixs insistence that 7 Rambuss licensing plan, and hence litigation, was a question of when and not if. (Hynix F. 8 248.) But as the proposed findings show, that argument rests on a skewed interpretation of the 9 contemporaneous documents and the trial testimony about those documents. To make out its 10 theory of inevitability, Hynix must take the 1998 presentations, emails, and internal planning 11 documentsmany of which are outside the recordand read them out of context. It also must 12 ignore the language of speculation and hypothesis that pervades the discussion of licensing in 13 these documents. 14 This approach is well illustrated by Hynixs proposed findings about the so-called 15 Nuclear Winter Scenario memorandum. Hynix proposes that the Court make the following 16 finding of fact: 17 18 19 20 Memorandum treated Rambuss plans for suing Intel and SDRAM manufacturers as firm, with 21 only the targets left to resolve. The problem is that Hynix has badly misquoted the 22 Memorandum, omitting the important qualifier hopefully never without even indicating it was 23 modifying the text. The correct text reads: by the time we actually do this (hopefully never) the 24 proper litigants will be obvious. (HTX 004.005 (emphasis added).) This phrase that Hynix 25 wants to ignorealong with the complete context of the memorandum, including the discussion 26 of Black Forest elves and hypothetical scenariosunderscores the uncertainty and contingency of 27 any licensing-related litigation. 28 -20RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
The Nuclear Winter Scenario memorandum outlined plans for suing Intel and SDRAM manufacturers, concluding that by the time we do this, the proper litigants will be obvious. HTX004.005. (Hynix F. 119.) The proposed finding suggests that, consistent with Hynixs theory, the
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
The contemporaneous documents surrounding Rambuss document retention plan, its business strategies, and its intentions regarding these matters must be construed fairly and reasonably. Rather than ignoringindeed, deleting!text, as does Hynix, the Court must give meaning to the words in the documents. Cf. Dyer v. Cenex Harvest States Co-Op, 563 F.3d 1044, 1049 (9th Cir. 2009) (We try to avoid, where possible, an interpretation of a statute that renders any part of it superfluous and does not give effect to all of the words used by Congress.) (citation omitted); United States v. 1.377 Acres of Land, 352 F.3d 1259, 1265 (9th Cir. 2003) (Under California law, contracts are to be interpreted as a unified whole, with effect given to each provision to the greatest extent possible.). And rather than reading the documents in isolation, as does Hynix, the Court should construe them in context and as a whole. Cf. Dolan v. U.S. Postal Serv., 546 U.S. 481, 486 (2006) (Interpretation of a word or phrase depends upon reading the whole statutory text [and other factors].). To understand the 1998 documents that Hynix invokes in support of its early 1998 duty date, they must be read against the background of the documents where Rambus first proposes exploring a licensing plan and the Nuclear Winter Scenario memorandum, which reflects Rambuss business planning at the end of 1998. Read in this context, the language in the 1998 documents shows that Rambus did not make, or believe it necessary to make, a decision about whether to pursue non-compatible licensing. The documents and related trial testimony make clear that throughout this period, Rambus believed that RDRAM would be successful and that it might never need to implement a backup licensing strategy. While Rambus began working on the foundation of a licensing strategy in case it became necessary, the companys efforts were focused on developing and promoting RDRAM. These efforts were consistent with the provisional nature of the licensing plan, and did not make its implementation reasonably foreseeable. 1. The Evidence Shows that Rambuss Implementation of a Licensing Strategy Was Not Reasonably Foreseeable in Early 1998, and Would Remain Speculative Well into 1999
The bookend documents for Rambuss 1998 licensing planning are the October 1997 email from Tate announcing that Rambus had hired Joel Karp (RTX 80), and the Nuclear Winter Scenario memorandum (HTX 4), which was drafted in late 1998 or early 1999 (Trial Tr. 295). -21RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
The October 1997 Tate email states explicitly that patents are really just a backup line of defense. (RTX 80.) RDRAM, Tate stressed, was Rambuss business focus: the #1 strategy for winning must continue to be having the best solution and delivering it on time, on spec, within cost commitments and satisfying our customers needs better than the competitors. (Id.) Nothing in this email suggests Rambus had reservations about its focus on RDRAM. Tate says, in fact, I think we are well positioned to do this but we have a lot to do to complete our programs/commitments on Direct Rambus... (Id. (emphasis added).) In this critical respect whether Rambus intended or expected to embark on licensingnothing materially changed between the fall of 1997 and winter of 1998. The Nuclear Winter Scenario memorandum shows that. Hynixs proposed findings fail to address, or even acknowledge, language in the Nuclear Winter Scenario memorandum setting out its premise. That language frames the memos discussion as a thoughtpiece on possible strategies for a situation Rambus thought manifestly unlikelyhence, the reference to Nuclear Winter planning. The Court has previously addressed this language in detail. E.g., Hynix I, 591 F. Supp.2d at 1049; CE Order at 9. Hynix does not and cannot call these prior findings into doubt. It is a rare memo that sets forth a companys policy and anticipated court actions and also begins its first sentence with an off-thecuff reference to Black Forest elves. (CE Order at 10.) The Nuclear Winter memo is also replete with other cautionary language about the hypothetical and speculative nature of the analysis it sets out. In the opening paragraph, Karp goes out of his way to point out at this time that this is a very unlikely scenario, even for something thats purely hypothetical. (HTX 004.001 (emphasis added).) The possible litigation strategies discussed in the memo were predicated on this scenario, which is why Karp said Rambus would hopefully never have to undertake it. (Id.) Consistent with Tates initial discussion of licensing, Rambus continued to believe at this point that RDRAM was the best way to win, and that a licensing strategy was something to be avoided. This is corroborated by the trial testimony about Rambuss business strategies and priorities at that time. Allen Roberts, Rambuss Vice President of Engineering, testified that as of late 1998, he believed Rambus[s] product was headed to be a majority player -22RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
in the PC main memory market. (Trial Tr. 1566-67.) Because Rambus management expected to be very successful with our product, it did not really make sense to implement a noncompatible licensing plan. (Id.) Tate similarly felt that we might never need to have that [licensing] negotiation, because RDRAM could be by far the bulk of the market. (Trial Tr. 1321-22.) Viewed in this light, none of the documents and testimony relied upon by Hynix, including its extra-record evidence, demonstrates that the implementation of licensing was reasonably foreseeable as of March 1998 (or, indeed, at any time in 1998): 5% Royalty Discussion: Hynix contends that Rambus knew that the licensing overtures it planned to make would produce litigation and planned for that inevitability. (Hynix 11/14/11 Br. 10.) In this vein, Hynix proposes multiple findings about the 5% running royalty discussed at the February 12, 1998 meeting between Rambus and Cooley. (Hynix FF. 62-66.) These proposed findings emphasize the observation by Johnson and others that a 5% royalty demand could lead to litigation, citing testimony from the Delaware and San Francisco Superior Court trials that is duplicative of Karps notes on the meeting. (Id. at 64-66.) The evidence shows, however, that Rambus would only have made a royalty demand after deciding to pursue noncompatible licensing, a scenario that remained hypothetical throughout 1998. The entire point of the early meetings between Rambus and Cooley was to work through how a non-compatible licensing plan might work, so it is unsurprising that Rambus and its outside counsel discussed possible terms. Rambus always understood that such a licensing demand would merely be an opening salvo in a negotiation. When asked if he considered whether Rambus might have to lower its royalty rate request from what it asked for initially, Tate testified that his view was that we would do that. (Trial Tr. 1399-1400.) Indeed, Hynix offered no evidence that Rambus in fact demanded a 5% royalty for any DRAM license. April 1998 Email from Tate to Karp (Conduct Trial Ex. 3151 (Roeder 11/14/11 Decl.(Roeder Decl.) Ex. 9)): Hynix points to this email, which was not introduced in the spoliation trial, as evidence that Rambus had decided to pursue licensing after Karps March 1998 Board presentation and that the question at Rambus was not if it would litigate, but when. -23RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
(Hynix F. 100.) But this email memorialized a discussion with Intel about a possible future state of affairs in which Intel decided to use next generation interface[s] without Rambus. (Conduct Trial Ex. 3151 at 6.) The big issue was what might be next for memory interface/what Rambus role is/2002 or 2005/, 4-7 years from that point. (Id. at 4.) The email expressly characterizes this timeframe as long term. (Id.) Intel had made no decision about what its approach to nextgeneration DRAMs would be: the Intel representative had said that Intel would give Rambus every opportunity to be the next generation interface, but also was not going to defacto assume next generation is [R]ambus biz model. (Id. at 4.) The concerns expressed about being force[d] to play our IP card in response to any Intel shift is similar to, and in keeping with, Rambuss contingency planning for a nuclear winter scenario in which Intel moves away from RDRAM. The speculative nature of this scenario is highlighted by Intels suggestion that it might invest $500M-ish/company and in return get commitments [from DRAM companies]. (Id. at 2.) In fact, Intel did make a substantial investment in an RDRAM manufacturer later in 1998. In the same trial where this document was admitted (the conduct trial), the evidence showed that Intel made a very large investment in Micron for the purpose of Micron ... accelerating their capacity of Rambus DRAMs. (Conduct Trial Tr. 3038.) Rambus took this as a [p]ositive sign for their commitment to the RDRAM product. (Id.) June 1998 Email from Mooring to Rambus Executives (SF Trial Ex. 10093 (Roeder Decl. Ex. 33)): Hynix reads this email, which it also failed to introduce at trial here, to mean that Rambus was proceeding under the litigation strategy presented by Karp at the March 1998 meeting. (Hynix F. 101.) Hynix argues that the emails reference to IP battle shows that Rambus knew it would end up in litigation. (Id.) But this is another instance in which Hynix has isolated language and stripped it from its surrounding context. The email shows that the companys focus was on its own technologies, which remained its consistent strategy throughout 1998 and indeed 1999. Mooring notes, at the outset of his email, that [w]e have done a great job creating an image of success and technical leadership over the years. (SF Trial Ex. 10093.) Mooring then expresses concern over the effect that any licensing strategy aimed at other designs might have on Rambuss technical leadership: Much -24RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
of this could be permanently damaged by how our first IP battle is publicized. (Id.) These are the same sorts of reservations that Karp and Tate express in other 1998 documents, including the Nuclear Winter memorandum, in explaining why non-compatible licensing is a backup strategy, to be avoided if possible. The specific public relations ideas and tactics Mooring explores are framed in contingent terms, as something that should be considered in advance of us taking any type of IP action. (Id.) The point decidedly is not that Rambus should or will engage in an IP battle; it is what Rambus should say if and when it must defend its standard. Reflecting the inchoate nature of his ideas, Mooring cautioned that they were made in brainstorming mode, were marginal and half-baked, and further noted you can probably tell I am sitting idle in an airport after having drank too much coffee. (Id.) October 1998 Strategy Update: Hynix attempts to characterize the language in Karps October 1998 Strategy Update, again, as the language of when and not if. (Hynix FF. 108110.) But these slides do not relegate Rambuss RDRAM strategy to a good business reason[] for the delay in bringing suit (Hynix F. 108); they are, instead, consistent with Rambuss view that RDRAMs success would justify forgoing licensing altogether. That view, after all, is prominent in the Nuclear Winter memorandum which shortly followed this presentation. As this Courts prior findings reflect, the slide that addresses Rambuss overall business strategy is Slide 1. See Hynix I, 591 F. Supp. 2d at 1049-50. That slide states: the Big Question Is WHATS THE RUSH? (HTX 128.003.) And what Karp indicates by this rhetorical question is that there is no point in pushing forward with a licensing strategy: What is compelling business reason? Karp asks, I cant think of any. (Id.) Keeping the Maytag repairman busy is not a valid reason. (Id.) This question and the response resonates with the view Karp expresses just a few weeks later in characterizing a scenario where licensing would become necessaryIntel adopting a new technologyas a very unlikely scenario, even for something thats purely hypothetical. (HTX 004.002.) It is because RDRAM was Rambuss top priority and headed to be a majority player (Trial Tr. 1567 (Roberts)) that Karp stressed the importance of not alienating RDRAM manufacturers and Rock[ing] the Direct Boat (HTX 128.003). The document therefore reflects Karps view that Rambus should avoid doing anything -25RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
that might disrupt its RDRAM product, not that Rambus will necessarily implement licensing, which at that time didnt really make sense. (Trial Tr. 1565 (Roberts).) Rambus could not even consider such a decision until the Ramp reaches the point of no return, [p]robably not until Q1 00. (HTX 128.003.) The other language Hynix highlights is on Slide 2, where Karp details patent prosecution and reverse engineering efforts and recommends Continue in Stealth Mode During 99. (HTX 128.002.) Read in context, the reason Karp emphasized the need to stay in Stealth Mode about Rambuss IP priorities and plans is because Rambus did not want to alienate its RDRAM partners. It is undisputed that many of the same manufacturers slated to build RDRAM were also developing competing and infringing designs. The public disclosure of Rambuss patent prosecution efforts would only complicate this relationship. That is why Karp urged Rambus not to Rock the Direct Boat, just as Tate had expressed concerns a year earlier about how Karps hiring would be perceived. As Karp explained, going public with the fact that we had this IP, which we were working on getting ... would have been very upsetting to our partners. (Trial Tr. 428.) Karp further testified that the potential for declaratory judgment actions was also a concern, albeit a less significant one. (Id. at 427-28.) Hynix argues that Karp departed from this testimony in subsequent trials. (Hynix FF. 110-11.) But even if the Court considered Karps testimony in these other actions, it would not change the apparent meaning and purpose of stealth mode. In Micron, Karp said his main concern was that we didnt want people to slow down their activities on building the Rambus parts, (Micron Trial Tr. 407 (Roeder Decl. Ex. 10)), but he also acknowledged the concern[] about getting declaratory judgments (id.). These concerns were related because, again, the same manufacturers building RDRAM were also manufacturing industry-standard designs. And so Hynix relies on a false dichotomy when it cites Karps San Francisco trial testimony, where he said that Rambus wanted to keep its IP plans secret [f]rom the world. I still dont want to get declaratory judgments. (SF Trial Tr. 5161 (Roeder Decl. Ex. 31).) Karp elsewhere noted that asserting IP rights would create waves with its RDRAM partners, and that the main goal of the company was to make RDRAM successful. (SF Trial Tr. 5159-60 (Wu 12/5/11 Decl. (Wu -26RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Decl.) Ex. A).) November 1998 Chaminade Retreat Notes (Micron Trial Ex. MTX 947 (Roeder Decl. 28)): Hynix proposes findings that summarize an isolated passage from some 25 pages of notes on presentations made by Rambus management at a multi-day retreat in November 1998. (Hynix F. 274.) Hynix never saw fit to introduce these notes at the spoliation trial, even though they were undisputedly available to Hynix at that time. In any event, the Chaminade notes cannot bear the weight Hynix places on them. Like the other documents in this timeframe, they use the language of contingency in discussing licensing, treating it as a backup plan. The Chaminade presentations covered a wide range of topics, including technology and design issues, the relationship with Intel, the DRAM marketplace, and Rambuss finances. (Micron Trial Ex. MTX 947.) The notes Hynix cites summarize discussions of different possible scenarios, many of which were three or more years out. (Id.) The particular passage cited by Hynix indicates that Tate discussed the possibility of a 2002 scenario in which RDRAM would occupy 66% of the market and Rambus would obtain $375 million per year in royalties for infringing DRAMsa scenario that, on its face, was highly speculative. (Id. at 1.) As reflected in another set of notes from the same meeting, Tate acknowledged in his presentation that it may prove unnecessary to pursue licensing: Fundamental IP + enforcement if needed. (Micron Trial Tr. MTX 946 (Wu Decl. Ex. B) at 3 (emphasis added).) Tates projections posited a scenario four years in the future, without any reference to specific technology. (Id.) In the shortterm, through 1999, Tate stressed the need for technical leadership and operational excellencei.e., success with RDRAM. (Id. at 2.) Not only is there no evidence that Rambus reduced Tates long-term projections to corporate strategy, but the Nuclear Winter Scenario memorandumwritten within a few weeks of the retreatexpressly pegged licensing to a situation where Intel began using competing designs conjured by elves in the Black Forest. (HTX 004.002.) 2. None of the Other Contingencies Underlying Rambuss Licensing Strategy Weighs in Favor of a March 1998 Duty Date
Hynix takes aim at the other licensing and litigation contingencies identified by this Court, 28 -27RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
but most of its arguments are both familiar and familiarly unavailing. (See Hynix 11/14/11 Br. 27; Rambus 11/14/11 Br. 4-7.) Hynix cites evidence from other cases in an attempt to shore up its position on two contingencies: (1) the uncertainty surrounding Rambuss patent portfolio and any infringement by DDR and SDRAM; and (2) the absence of Board approval for Rambuss backup licensing strategy. None of the new evidence that Hynix touts is actually new, and it would not be enough to make the contingencies resolution reasonably foreseeable. Rambuss Patents Covering Industry Standard Designs and its Reverse Engineering Efforts: As this Court has noted, one of the critical issues that had to be resolved before Rambus could consider implementing licensing was whether the company had claims reading on SDRAM and DDR. See Hynix, 591 F. Supp. 2d at 1065-66. We have previously explained why Rambus could not reasonably foresee that it would have the necessary patents before the summer of 1999. (Rambus 11/14/11 Br. 5.) And we have proposed findings and conclusions that supplement this Courts already-thorough analysis. (Rambus Supplemental Findings (Rambus Supp. F.) 29, 36, 71; Rambus Supplemental Conclusions at 60-61.) Hynixs main rejoinder is that Rambus had received notices of allowance of the patents in suit beginning [o]n February 4, 1999. (Hynix F. 281.) These notices are yet another example of evidence Hynix could have introduced, but failed to offer, at trial. And even if they are considered, the notices do not support the early 1998 duty date Hynix urges. The notices of allowance did not begin to issue until February 1999, nearly a year after Hynix claims Rambus reasonably anticipated litigation. The 1998 documents and the trial testimony about that period demonstrate that Rambus did not believe it had patents covering SDRAM, or that it could establish that DDR infringed its patents. As of the end of 1998, Rambus did not have sufficient information about DDR parts to show infringement. (HTX 004.002.) Tate testified that as of the end of 1997, he did not believe that in that timeframe we thought we had patent claims which were clearly infringed by SDRAM. (Trial Tr. 1254.) Hynixs counsel acknowledged that Rambus did not believe it had a patent that [] could read on single data rate SDRAM. (Trial Tr. 26.) Throughout 1998, and well into 1999, Rambus continued to express uncertainty and -28RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
concern about both the state of its patent portfolio and infringement analysis. Karps October 1998 Strategy Update devoted a slide to strengthening of [Rambuss] portfolio. (HTX 128.002.) Consistent with that presentation, Tate testified that he remained frustrated with the progress on the portfolio as of the fall of 1998, expressing disappointment that we had been unable to get patent claims, which cover[ed] our inventions. (Trial Tr. 1258.) In addition to obtaining patents, Rambus needed to undertake infringement analyses to determine whether commercial DRAM parts infringed. The early meeting documents with Cooley recognized that Rambus will purchase the competing product before determining next steps. (HTX 098.002.) Acquiring commercial products was essential because reverse engineering required real products that were in production since prototypes can change. (Trial Tr. 1392.) As of October 1998, Rambus still needed to undertake reverse engineering efforts, and Karp was still budgeting for those future efforts. (HTX 128.005-006.) The testimony was that Rambus did not come to believe that it could show actual infringement until sometime in 1999. (Trial Tr. 1391.) The reverse engineering efforts detailed in the Nuclear Winter Scenario memorandum confirm, rather than raise doubts about, this state of affairs. Although Karp surmised that three of Rambuss existing patents (the 327, 481, and 580 patents) covered competing designs, he noted that we have very limited information about DDR parts so we will not be able to produce actual claim charts based on information gleaned from real designs. (HTX 004.002.) After Rambus completed its reverse engineering efforts, Karp concluded that it did not have strong claims based on any of the patents. (Trial Tr. 510-517.) That is consistent with the testimony of Roberts and Tate that Rambuss patent claims and infringement by DDR and SDRAM remained uncertain well after shred day one. In the face of this evidence, Hynixs argument ultimately requires the Court to assume, with no factual basis, that Rambus expected these patent portfolio and infringement factors to resolve in favor of litigation. That assumption is wholly at odds with the concern and frustration reflected in the documents and testimony about Rambuss patent situation in the late 1998 time period, and Hynix offers no explanation as to why it would have been reasonable for Rambus to expect it would obtain all the claims it sought. And even if Rambus could foresee obtain[ing] -29RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
product samples (Hynix F. 283), that does not answer the key question posed by infringement analysis: do the commercial parts infringe? As the Nuclear Winter memorandum illustrates, the process of answering that question remained fluid throughout 1998 and into 1999. Board Approval: Hynix cites the April 1998 email from Tate to Karp (referencing our IP card) and the June 1998 Mooring email (referencing IP Battle) to argue that Rambuss Board had adopted and were proceeding under the litigation plan presented by Karp at the March 1998 meeting. (Hynix F. 100.) This assertion is inconsistent with much later documentsignored for this purpose by Hynixthat reflect that executive and Board approval was still required. (See, e.g., HTX 140.001.) In any event, as noted above, both of these emails involved brainstorming about a possible future scenario in which Intel turned away from Rambus. Given Intels importance, it only made sense for Rambus to speculate about how it would respond if, in the future, Intel took an adversarial role. (Conduct Trial Ex. 3151 (Roeder Decl. Ex. 9) at C.) This was in the nature of Nuclear Winter planning, and did not make the responsive strategy that Rambus was exploring reasonably foreseeable in 1998. B. Hynix Has Not Proven Bad Faith By Clear And Convincing Evidence
As the Court already found, Rambuss industry-standard document policy was adopted at the behest of outside counsel, and was content-neutral in both its express terms and the way it was implemented. No harmful documents were targeted for destruction. There was no desire to suppress the truth, to hid[e] adverse information, or to impair the ability of the potential defendant to defend itself. Micron II, 645 F.3d at 1326-27. Nor is there evidence of a deliberately planned and carefully executed scheme to defraud, as is required to support the defense of unclean hands. Therasense, 649 F.3d at 1287, 1290 (citation omitted). Hynix offers no persuasive reason to draw the opposite conclusion now. Hynixs approach is to seize on snippets of documents in isolation, ignoring their context, and ignoring the overall purpose and operation of Rambuss counsel-initiated and counsel-guided policy. Even if evidence outside of the record is considered, Hynixs arguments cannot be squared with the evidence, and certainly cannot satisfy the exacting, clear and convincing standard that applies to bad faith. Micron II, 645 F.3d at 1327. -30RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
1.
Rambus Did Not Intend to Hide Harmful Information
[B]ad faith means destruction for the purpose of hiding adverse information. Micron II, 645 F.3d at 1327. Despite having expressly disavowed any challenge to the written terms of Rambuss document retention policy (Trial Tr. 8 (Hynix does not attack the writing in the context of a general document retention policy) (Hynix counsel)), Hynix now argues that both Rambuss written policy and the manner of its implementation reflect bad faith. The evidence shows otherwise. First, with respect to the Rambus policys express terms, Hynix does not dispute that the policy contained no directive to destroy harmful information. It now suggests, however, that the policy somehow contemplates selective preservation because it specified that conception documents were to be retained. This provision is nothing more than a general instruction to keep important intellectual property information. It tracked Cooleys generic template for documents relating to intellectual property and trade secrets, which Cooley recognized could be valuable for any company. (Cf. RTX 091, at 5-6 (Cooley template), with HTX 023 (Rambus policy).) Hynix has offered no explanation as to why Rambus employees would have understood this as a directive to selectively preserve documents that would aid Rambuss potential claims against DDR and SDRAM. Most Rambus employees were engineers who focused on developing RDRAM and had nothing to do with potential litigation over DDR or SDRAM. Second, with respect to the policys implementation, there is likewise no evidence that Rambus instructed employees to selectively destroy harmful information. Hynix treats Karps instruction to look for things to keep as though it were a policy addendum identifying information that would be helpful to Rambus in patent litigation. That is not what the slides say, and Karp gave no follow-up guidance beyond general categories of important documents. (Trial. Tr. 540.) Johnsons concern with this instruction was it would lead to the manifestly untargeted retention of documents. (Id. at 1700-01.) That is precisely what happened. On each of the two shred days, Rambus destroyed on average only 2-3 banker boxes per employee, a relatively small amount. (Rambus Supp. FF. 106, 107.) The retained documents include documents used against Rambus. Richard Crisp, for example, kept his JEDEC-related emails and trip reports because he -31RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
was told to look for things to keep. (Trial Tr. 1211-12.) Since then, the documents have been used against Rambus in litigation over JEDEC issues. Other evidence relied on by Hynix further confirms that Rambuss document disposal was content-neutral. Hynix emphasizes that Karp retrieved certain conception date data from a backup tape before the policys implementation (Hynix F. 304), but the fact that Karp had to retrieve information that would have been slated for destruction shows that the policy was content neutral. Moreover, retrieving conception date data was consistent with Cooleys template and the policys imperative about preserving intellectual property information (which may or may not be helpful). (See RTX 091, at 5-6; HTX 023.) There is no evidence that the retrieved information, which related to engineer Barths Direct Rambus materials, was for use in potential litigation against DRAM companies. (Trial Tr. 224-26.) Hynix also points to evidence showing that Tate and Crisp could not find documents they needed for business purposes. (Hynix F. 311; Trial Tr. 1177-80, 1331-33.) To the extent those documents were destroyed pursuant to the document retention policy, that only demonstrates that Rambus implemented its industry-standard policy in a non-discriminatory manner, applying it even to documents that Rambus later needed. Unable to identify any record evidence to show selective suppression of harmful information, Hynix is forced to reach for evidence from other proceedings. (Hynix F. 302 (citing Micron Trial Tr. 1300-03 (Roeder Decl. Ex. 10) (2001 Hampel deposition testimony).) Hynix does not dispute that Hampels testimony was available at the time of trial. Hynix simply chose not to use it. That, without more, precludes Hynix from taking an unwarranted second bite at the evidentiary apple. California Dental, 224 F.3d at 959. In any event, Hampels testimony shows no bad faith. Hampel testified that he heard it[]s not a good idea to have the discussion with a hypothetical third party to question the patentability of unspecified, hypothetical Rambus inventions. (Micron Trial Tr. at 1303-04 (Roeder Decl. Ex. 10).) There is no evidence that documents reflecting third-party patentability discussions were ever created, let alone destroyed, with respect to any Rambus invention, including inventions covering SDRAM and DDR. There is also nothing wrong with providing guidance on appropriate communications, which was one of the goals of Rambuss document policy. (Cf. HTX 111.011 (stating that employees should not -32RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
author emails that contain [i]nsults against persons age, sex, race, among other traits).)2 Third, without evidence of bad faith as to either the policys terms or implementation, Hynix is left arguing about Rambuss intent regarding its backup licensing strategy. Hynix seizes on a Cooley memorandums reference to gaining an advantage over [Rambuss] competitors, but omits the fact that the term advantage referred to choosing a court such as the eastern district of Virginia, not the disposal of documents. (Hynix F. 294; HTX 098.003.) Hynix also makes much of the phrase battle ready from notes of the Rambus-Cooley meeting on February 12, 1998. There is no evidence that the phrase expressed a desire to suppress the truth. Micron II, 645 F.3d at 1327 (citation omited). At the February 1998 meeting, Johnson initiated discussions of the document retention policy and advised Rambus that companies needed to be battle ready with a formal policy in order to reduce the amount of information available, limit the costs of searching old data, and defend against spoliation accusations arising from ad hoc document disposal. (Trial Tr. 1675-78.) This was standard advice that Johnson gave to other clients, and his concerns were legitimate and commonplace. Id.; cf., e.g., Federal Circuit Advisory Committee, An E-Discovery Model Order: Introduction, at 2 (issued Sept. 27, 2011) (recognizing that [e]xcessive e-discovery, including disproportionate, overbroad email production requests, carry staggering time and production costs that have a debilitating effect on litigation.).3 Hynixs reliance on testimony about this point from other proceedings should be rejected, but it is besides the point regardless. (Cf. Hynix FF. 73-75.) While Hynix disputes whether Johnson came up with the phrase battle ready, Johnson testified consistently in Micron regarding the rationale for his advice. He talk[ed] about making sure that they have a system in place, so if they ever get involved in litigation, theyre not going to be spending a fortune. (Micron Trial Tr. 1494 (Roeder Decl. Ex. 10) (Johnson).) Johnsons recommendation, which Rambus followed, had nothing to do with selectively hiding harmful Despite the effort of Rambuss adversaries to twist its meaning, the discussion of horror stories caused by deleted emails in Johnsons presentation slides likewise addressed content creation, not document destruction. (HTX 111.006.) Johnson emphasized that special care must be taken with emails because they are generally less formal and thoughtful than written correspondence, and deleted emails can often be retrieved by experts. (HTX 111.005.) 3 Available at http://www.cafc.uscourts.gov/images/stories/thecourt/Ediscovery_Model_Order.pdf. -33RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
2
1 2 3
information. 2. The Policy Was Not Intended to Stymie Opponents As Part of a Firm Litigation Plan
As we have explained, the evidence is clear that Rambus had no firm litigation plan at 4 the time of the document policys adoption. Instituting a document policy in the context of a 5 speculative, backup business strategy cannot be evidence of bad faith. After all, businesses are in 6 a constant state of provisional planning, and [d]ocument retention policies reflect[] the fact 7 that litigation is an ever-present possibility in American life. Micron II, 645 F.3d at 1322. It is 8 perfectly legitimate to establish a document retention policy out of general concern for the 9 possibility of litigation, id., including to keep certain information from getting into the hands 10 of others, Arthur Anderson, 544 U.S. at 704. For the policy to be in bad faith, there must be 11 knowledge that the document policy would undermine and corrupt a judicial proceeding. Cf. id. 12 at 708. ([I]f the defendant lacks knowledge that his actions are likely to affect the judicial 13 proceeding, he lacks the requisite intent to obstruct.) 14 Rambus began considering a document retention policy at a time when the possibility of 15 litigation was remote and speculative. Rambus did not consider such a policy until Johnson 16 proposed it at the February 12, 1998 meeting regarding Rambuss backup licensing strategy. This 17 was the first meeting Johnson had with Rambus, which he considered a meet and greet. (Trial 18 Tr. 1672.) Johnson proposed the document policy because it was standard, commonplace advice 19 he gave to Silicon Valley companies (Id. at 1678-79), not because of any specific, definite plan 20 Rambus had to sue. Johnson discussed litigation as a typical follow-on litigation issue that you 21 need to address if and when you need to implement a licensing plan, indicating that the policy 22 was not proposed as part of a firm plan to sue. (Id. at 1674 (emphasis added).) The out-of23 record material Hynix cites on this scorewhich should not be considered at allmakes no 24 difference. Hynix again tries to attribute a nefarious meaning to the phrase battle ready from 25 the February 12 meeting notes, but the out-of-record testimony Hynix cites merely stated: I think 26 its well understood that litigation is something that can be an outcome from licensing 27 discussions. (Hynix F. 74; Micron Trial Tr. 212 (Roeder Decl. Ex. 10) (Karp).) Hynix also cites 28 -34RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9
Karps testimony in San Francisco (Hynix F. 73), but there Karp testified that battle ready meant to do all your homework when and if you had to go to battle . (SF Trial Tr. 5134:25-5135:3 (Wu Decl. Ex. A).) That is completely consistent with Johnsons testimony in this Court. That Johnson and Rambus discussed how its possible you may end up having to litigate at some point in order to collect licensing revenue (Trial Tr. 1680) does not mean Rambus had already decided to implement its backup licensing plan or that implementation was reasonably foreseeable (cf. HTX 004.005). 3. Rambus Did Not Deliberately Breach a Known Preservation Duty and Considered Its Policy a Legitimate Business Practice
Hynix has not shown, and cannot show, that Rambus made a deliberate decision to 10 breach a known duty to preserve evidence when it adopted and implemented its document 11 retention policy. Cf. Therasense, 749 F.3d at 1290; Arthur Anderson, 544 U.S. at 708. Johnson 12 advised Rambus to adopt one at the very meeting where he also gave advice on a backup 13 licensing strategy. In July 1998, Johnson reviewed Rambuss document retention policy as well 14 as the presentation slides that Karp planned to use to roll out the policy to Rambus employees. 15 Johnson himself co-presented the policy to Rambus managers. In the summer of 1999, Johnson 16 again advised Rambus regarding potential litigation issues, and prepared a timeline with October 17 1999 as the hypothetical complaint filing date. At no point did Johnson inform Rambus that its 18 contemplation of a backup licensing plan had already triggered a preservation duty and made 19 implementation of its document policy improper. Even if a duty did attach before either of the 20 challenged shred days, Rambus implemented its policy in good faith, despite the reasonable 21 foreseeability of litigation. Micron II, 645 F.3d at 1327. 22 The record does not show misgivings within Rambus regarding the propriety of its 23 document retention policy. Rambus disseminated its document policy openly and broadly, using 24 company-wide emails and presentations to managers and employees. It drew heavily on its 25 counsels advice throughout this process. Rambus conducted the shred day events as company26 wide events known to all employees, served food and beverages, and retained an arms-length, 27 third party vendor to shred unneeded documents. This is conduct one would expect of a 28 -35RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
company implementing what it believed to be a legitimate business decision. The evidence does not support Hynixs contention that Rambus acknowledged the policys impropriety. Hynix relies on a May 1998 email regarding Karps discussions with Johnson and representatives of Rambuss operating divisions on what Rambuss policy for backup tapes should be. (RTX 104.) Hynix seizes on Karps comment that he would prefer to discuss [the] issue face to face, but the most reasonable inference from the record is that Karp sought to communicate efficiently through direct discussion (such as the prior discussions referenced in Karps email). Nor is there anything untoward about Karps request to keep the distribution of emails narrow (RTX 104); the document policy was still in development and there was no business reason for Rambus to involve personnel beyond those helping Karp develop the terms of the policy. That Johnson was copied on the email further shows Rambuss good faith in working with counsel to develop its policy. Hynix errs again in claiming that CFO Harmon was critical of the document destruction. (Hynix F. 315 (citing HTX 330, HTX 331).) Harmon had discarded draft contracts with Intel because he personally determined, at that time, that there was no business need to retain them. (Trial Tr. 1411 (I didnt see any business need for those since there was a final [contract].) He did not discard any documents that he had a business reason to keep. (Id. at 1412.) 4. Rambus Did Not Conceal the Adoption and Implementation of its Document Retention Policy
Hynixs last ditch effort is to infer a conspiracy to defraud from any argument, litigation 20 move, or witness testimony with which it disagrees. As Hynix would have it, for example, the 21 fact that Rambus has fought against the application of collateral estoppel amounts to litigation 22 misconduct, part of an effort to conceal the full scope of [Rambuss] spoliation. (Hynix 23 Proposed Conclusion (Hynix C.) 57 (emphasis added).) This despite the fact that this Court 24 agreed with Rambuss arguments when Hynix previously sought preclusion based on the 25 Delaware ruling. Hynixs arguments on this score are pure rhetoric, and ought to be summarily 26 dispatched. 27 Hynix claims that Rambuss discovery and production of information from its backup 28 -36RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
tapes in 2005 is evidence of a nefarious plot to conceal its document retention and destruction program. Of course, it was Rambus that alerted the parties and the court to the tapes and produced their contents. Rambus provided Hynix with a detailed declaration explaining the circumstances of the discovery of the backup tapes (HTX 090), and Hynix had the opportunity to question Kramer regarding the subject matter at trial. The uncontradicted evidence shows that Rambus promptly produced relevant information from the tapes. That is the opposite of bad-faith concealment. Hynixs reliance on the deposition testimony of Kramer, a Rule 30(b)(6) witness, is likewise unavailing. Although Kramer had not learned about Shred Day 1999 at the time of his 2003 deposition, he testified as to Shred Day 1998, which is hardly what one would expect if Rambus had some master plan to cover up the document retention policy. Next, relying on out-of-record evidence, Hynix contends that Karp tried to conceal the link between the shred day events and Rambuss backup licensing planning by editing the language regarding document destruction in drafts of his Q3 1999 goals. (Hynix FF. 208, 323 (citing Karp Micron testimony regarding different versions of 1999 goal documents).) Karp changed the term shred day to document retention compliance event, and moved this action item out of the Licensing/Litigation Readiness category. As elsewhere, Hynixs bid to reach beyond the record must be rejected, because Hynix failed to comply with the Courts order to explain how the new evidence it cites was not previously available. But Hynixs argument fails in an event. Karps change more accurately captured how the shred day, which was indeed a compliance event for the document policy, fit into the companys goals and plans. And there was obviously no concealment of the change, since Rambus retained and produced the earlier, supposedly more damaging iterations of the goals document, which Hynix used at trial. (See HTX 139; HTX 140.) Nor can bad faith concealment be inferred from Rambuss assertion of the attorney-client privilege over some evidence regarding the document retention policy. Hynix has not shown, and cannot show, that Rambuss assertion of privilege was legally frivolous or made without subjective belief in its merits. A party is entitled to protect its privileged communications from disclosure. Hynixs effort to infer bad faith concealment from the mere assertion of privilege is -37RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5
not just wrong as a factual matter, but potentially dangerous. If followed, it would have an undesirable chilling effect on litigants exercise of this most ancient of the common law privileges, Vignelli v. United States, 992 F.2d 449, 452 (2d Cir. 1993). 5. Rambus Did Not Waive Its Ability to Use Communications with Counsel to Rebut Allegations of Bad Faith
Hynix is wrong to argue that Rambus waived its ability to use communications with 6 counsel to show its state of mind. (Hynix C. 72.) The cases Hynix cites merely support the 7 proposition that a party that refuses to reveal privileged communications should not be allowed to 8 use them at trial. See, e.g., Columbia Pictures Television, Inc. v. Krypton Broad. Corp., 259 F.3d 9 1186 (9th Cir. 2001) (party sought to argue that he continued his infringing activities based on 10 the advice of his attorney, while at the same time refusing to answer questions regarding relevant 11 communications with counsel until the eleventh hour, i.e., until after trial). Here, Rambuss 12 attorney-client privilege was pierced over its objections. Once Rambuss privilege was pierced 13 and Hynix allowed to use Rambuss privileged communications against Rambus, Rambus was 14 entitled to defend itself with the documents and testimony that have been the subject of the 15 piercing orders. The law does not require that Rambus stand trial with its hands tied behind its 16 back while its litigation opponent presents an inaccurate and misleading story using some, but not 17 all, of Rambuss privileged documents and testimony. See Ward v. Succession of Freeman, 854 18 F.2d 780, 788 (5th Cir. 1988) (holding that a defendant does not waive his privilege by using 19 privileged communications to negate claims raised by the plaintiff when it is the plaintiff who 20 seeks to rely on attorney-client communications and work product to prove its claim) (citation 21 omitted); see also Lorenz v. Valley Forge Ins. Co., 815 F.2d 1095, 1098 (7th Cir. 1987) (finding 22 that the privilege had not been waived where a defendant simply responded to the use of 23 privileged materials by an adversary, holding that such use was merely a new form of evidence 24 to counter an issue injected by the plaintiffs, and explaining that waiver requires more than 25 merely deny[ing] a plaintiffs allegations, but in addition requires voluntarily injecting . . . a new 26
factual or legal issue into the case).
27 28 -38RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
C.
The Record Evidence Does Not Establish Prejudice to Hynix
Because Hynix has not proven, and cannot prove, that Rambus acted in bad faith, the burden remains with Hynix to prove prejudice, i.e., that the destruction of documents materially affect[ed] Hynixs substantial rights. Micron II, 645 F.3d at 1328 (internal quotations omitted) (emphasis added). Hynix has not even attempted to meet this standard. Instead, Hynix repeatedly invokes the mantra that Rambus destroyed relevant documents, as if that were sufficient to establish prejudice. In so doing, Hynix confuses the standard for spoliation, which requires a showing that relevant documents were destroyed, with the standard for prejudice, which clearly requires more. That is, if the destroyed documents were not relevant, then their destruction did not constitute spoliation in the first instance. See Hynix II, 645 F.3d at 1344-45 (Spoliation refers to the destruction or material alteration of evidence or to the failure to preserve property for anothers use as evidence in pending or reasonably foreseeable litigation.) (emphasis added). It is not enough, then, to show that relevant documents (or even millions of relevant documents) were destroyed; the inquiry is whether the destruction prejudiced Hynixs ability to prove its claims or defenses. See Micron II, 645 F.3d 1328 (the spoliation must materially affect[] the substantial rights of the adverse party and be prejudicial to the presentation of his case); cf. U.S. v. Olano, 507 U.S. 725, 734 (1993) (affects substantial rights is harmless error standard: [I]n most cases it means that the error . . . must have affected the outcome of the district court proceedings.); Nelson v. Original Smith & Wesson Bus. Entities, No. 10-35562, 2011 WL 3855852, at *3 (9th Cir. Sept. 1, 2011) (noting requirement that one of [the adverse partys] underlying, viable claims was prejudiced by the alleged spoliation).4 In its proposed findings, Hynix has identified a number of categories of documents that it contends were destroyed. However, Hynix has articulated no coherent theory as to how Rambuss alleged destruction of these documents prejudiced any of Hynixs claims or defenses, Hynix also suggests that Rambus must prove that all destroyed documents were either redundant or irrelevant to the trial. (Hynix 11/14/11 Br. 14 (quoting Micron II, 645 F.3d at 1328).) But as Rambus has previously noted, this language from Micron II does not purport to establish a standard for prejudice (which is clearly stated elsewhere in the opinion); on the contrary, for the reasons described above, it would collapse the spoliation and prejudice inquiries, even though the Federal Circuit clearly made them separate elements with distinct standards. (Rambus 11/14/11 Br. 18.) -39RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
4
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
and its abject failure to even attempt to sustain its burden defeats its claim of prejudice. In any event, the Court has previously considered and rejected Hynixs assertions of prejudice as to most of these categories, and should do so again. And this is true regardless of whether Hynix bears the burden, or whether the burden has shifted to Rambus to disprove prejudice. For the reasons the Court previously found, and as discussed further below, there is no basis for any finding that Rambuss destruction of documents materially affected any of Hynixs substantial rights. 1. JEDEC-Related Documents
First, Hynix contends that Rambus destroyed JEDEC-related documents. It concedes, as it must, that Richard Crisp, Rambuss primary JEDEC representative, preserved his JEDEC-related e-mails. Faced with the Courts earlier finding that essentially the material JEDEC materials are available, Hynix now asserts that there must have been additional JEDEC documents that would shed additional light on Hynixs JEDEC-related claims. This argument fails on every score. First, Hynix concedes that Crisps JEDEC mailbox includes not only his outgoing e-mails, but also embedded responses. (Hynix F. 366.) It also concedes that Rambus produced numerous other documents relating to JEDEC, including documents that Hynix itself offered during the Conduct Trial. (See, e.g., Hynix F. 364.) Nor can Hynix dispute that Lester Vincent preserved all of his JEDEC-related documents, as this Court previously found. See Hynix I, 591 F. Supp. 2d at 1054 (finding 87). Indeed, although Hynix now claims that Rambuss retention and production of JEDEC-related documents was somehow insufficient, it has offered no evidence that any person other than Richard Crisp destroyed such documents, and as to Crisp, it is undisputed that the only documents he destroyed were publicly available. Id. at 1057 (finding 108). Moreover, in other proceedings in this Court, Hynix itself has touted the extensive nature of the documentary evidence that Rambus produced relating to JEDEC. In its closing argument in the Conduct Trial, Hynixs own counsel said, no less than three times, that there is a pretty good written recordwhats called a contemporaneous recordof Rambuss involvement at JEDEC and what people were saying at the time. (Conduct Trial. Tr. 5912.) For Hynix to now claim that its JEDEC-based claims and defenses were somehow prejudiced is inconsistent with both the record of Rambuss JEDEC-related production and Hynixs own characterization of that -40RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
record. But none of this ultimately matters. As set forth in greater detail in Rambuss Brief In Support Of Rambuss Proposed Findings Of Fact And Conclusions of Law, the Federal Circuits analysis has eliminated the possibility of any prejudice associated with Hynixs JEDEC claim. (See Rambus 11/14/11 Br. 19.) In Hynix II, the Federal Circuit treated the question of what Rambuss JEDEC duty was as resolved in Infineon. See Hynix, 645 F.3d at 1348 (The determination that there was a dutyand the categorization of its scope as extending to all pending or issued claims that were reasonably necessary to practice the standardis dispositive in this case and should never have been submitted to the jury.) (citing Infineon, 318 F.3d at 1100). And in Infineon, the Federal Circuit held that whether Rambus breached its disclosure duty was a purely objective inquiry, and went on to conclude that Rambus did not breach it. Infineon, 318 F.3d at 1104 (JEDECs disclosure duty erects an objective standard. It does not depend on a members subjective belief that its patents do or do not read on the proposed standard.). Id.; see also id. (The record shows that Rambuss claimed technology did not fall within the JEDEC disclosure duty.). Accordingly, even if Rambus had destroyed every JEDECrelated document that it possessed, Hynix could not have been prejudiced by that destruction.5 2. Hynix and Rambus Licensing Negotiation
Next, Hynix claims prejudice resulting from the alleged destruction of documents relating to its 1998 negotiations with Rambus over the Other DRAM clause. At trial, Hynixs witness, Ted Brown, conceded that Rambus had retained and produced a fairly complete record of external communications between the parties on the issue. (Trial. Tr. 981-83.) However, he asserted that except for one internal e-mail, Hynix had not been able to locate any internal Rambus documents regarding those negotiations. Mr. Brown was then forced to recant that Rambus acknowledges that the Micron II court suggested that [d]ocuments relating to Rambuss conduct at JEDEC, together with documents reflecting Rambuss instructions to its patent prosecution counsel concerning its conduct at JEDEC, could have helped resolve Microns claims relating to patent misuse, antitrust violations, and unfair competition. Micron II, 645 F.3d at 1328. However, the Federal Circuits statement is both conditional and qualified. See id. (could have helped resolve) (emphasis added); see also id. (noting that it may be, as Rambus argues, that all the documents destroyed were either redundant or irrelevant to the trial). More importantly, this statement fails to acknowledge both the content and the import of the holdings in Hynix II and Infineon, whichas discussed abovecompel a contrary conclusion. -41RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
5
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
testimony after Rambus demonstrated that numerous such internal documents were preserved and produced. See Hynix I, 591 F. Supp. 2d at 1057-58 (findings 114(a)-(g)). Hynix now contends that the missing documents are more limited, namely, internal communications reflecting Rambuss reaction to Hynixs denial that its SDRAM product used Rambus Interface Technology, or evidencing the process of reviewing the details of Hynixs letter. (Hynix F. 378.) But this newfound argument fares no better than the original. As an initial matter, Hynixs characterization of its position as a clear denial that its SDRAM used Rambuss technology is wholly unsupported by the record. Hynix does not cite to the letter that it now contends contained that clear denial. (Hynix F. 375.) That letter is Exhibit HTX 341 (see Trial Tr. 1064:15-24),6 and it does not say anything about whether SDRAMs do or do not use Rambus technology. Instead, Hynix merely expressed concern that some controversies might take place in the future as to whether [Hynix] has utilized Rambus Interface Technology in [Hynix]s own DRAM products, and that it would be inevitable for [Hynix] to always bear the burden to prove that it has not done so. (HTX 341 (Conduct Trial Ex. 6384) at 1.) Accordingly, Hynixs entire argument is based upon a fundamental mischaracterization of the record. In any event, Rambus proved that it did preserve and produce the documents reflecting its reaction to Hynixs position, and the Court previously quoted from those in rejecting Hynixs claim. Specifically, Rambus preserved and produced an e-mail from Tate regarding his subsequent call from K.H. Oh, who runs all chip biz at [Hynix]. ( Trial Tr. 1051.) As the Court previously found, that e-mail addressed Rambuss request for [Hyundai] to take goodie out of the contract, and reflecting Tates agreement to hold off on our concurrent/contract issues pending agreement from Hyundai on marketing commitments (Trial Tr. 1051:3-1052:5). Hynix I, 591 F. Supp. 2d at 1058 (finding 114(g)). The Court also noted a later internal meeting report from [Rambus Business Development Director] Mithani stating that Hyundai had a
26 change in attitude and appeared to be 100 percent behind Rambus in marketing (Trial Tr. 27 28
6
HTX 341was admitted in the conduct trial as Conduct Trial Ex. 6384. -42RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
1055:3-1056:11). Id. Hynix has offered no reason to believe that other documents on these issues existed, or were destroyed. Hynixs claim of nonproduction or destruction of relevant documents on this issue therefore fails. But even if documents regarding these negotiations had been destroyed, Hynixs ability to prove its claims or defenses has not been compromised. That is, Hynixs litigation position has not been prejudiced by the destruction. Hynixs sole theory of prejudice is that, in the face of Rambuss (alleged) non-response to Hynixs clear denial of the use of Rambus Interface Technology, Hynix could reasonably understand that Rambuss silence ... was a concession that Hynix was correct in such denial. (Hynix F. 376.) As discussed above, Hynixs characterization of its communication as clear denial of the use of Rambuss technology is simply inaccurate, which alone disposes of Hynixs claim of prejudice. In any event, no document that Rambus had or destroyed would materially affect Hynixs ability to prove anything about what Hynix reasonably underst[ood] regarding the Other DRAM clause or whether Rambuss alleged silence in the face of Hynixs statement of position was a concession. Hynix was free to make that argument to the jury or the Court in the Conduct Trial, and nothing about Rambuss production or destruction of documents would have affected it.7 3. Patent-Related Documents
Third, Hynix claims that Rambus destroyed patent-related documents, namely, inventor materials, prior art materials, and other patent-related documents. The Courts earlier rejection of Hynixs claim of prejudice as to these materials is well-founded. As to inventor materials, Hynixs claim fails before it beginsHynix has not even established spoliation as to such materials. The Court previously found that Rambus preserved and produced numerous such materials, including inventor notes (Trial Tr. 932:24-933:15; Hynix also continues to assert that Rambus destroyed documents relating to the Hyundai-LG merger and Rambuss treatment of the LG RDRAM license agreement as the surviving agreement governing the parties relations. The Court has previously recognized that Rambus preserved privileged documents relating to this issue (see Hynix I, 591 F. Supp. 2d at 1058 (finding 114(i)(j)), and Hynix has not offered any plausible, concrete suggestions as to what additional evidence on this issue might have existed or been destroyed. See Micron II, 645 F.3d at 1328 (internal quotations and citation omitted). In all events, Hynix has not even attempted to articulate a theory of prejudice to its claims or defenses resulting from any such destruction, and none is readily apparent. -43RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
7
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
935:12-16; 1003:2-23), computer simulations (Trial Tr. 1004:19-1005:19), drafts of patent applications (Trial Tr. 1045:22-1046:4), and technical presentations given by the inventors. Trial Tr. 1046:20-24. Hynix I, 591 F. Supp. 2d at 1058 (second finding 114). Although Hynix suggests that there were other such inventor materials, Hynix has offered no evidence that any such materials, to the extent they ever existed, were destroyed at a time when Rambus had a duty to preserve them.8 In fact, the record evidence establishes the oppositethe document retention policy required the preservation of such materials. See id. at 1051 (finding 65). Because Hynix cannot demonstrate spoliation as to the inventor materials, the Court need not even consider the question of prejudice as to them. See id. at 1067-68 (surveying, and rejecting, Hynix claims of prejudice associated with inventor materials: it does not appear that Hynix has been deprived of material, non-privileged, and non-cumulative documents). In any event, there is no prejudice. Hynix summarily asserts that [i]nventor documents would be highly material to issues of invalidity, inventorship, and adequacy of the written description. But even the Delaware court rejected such an argument as to invalidity and written description defenses. See Micron I, 255 F.R.D. at 151 n.59; see also KSR Intl Co. v. Teleflex Inc., 550 U.S. 398, 419 (2007) (In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the patentee controls. What matters is the objective reach of the claim.); Falko-Gunter Falkner v. Inglis, 448 F.3d 1357, 1363 (Fed. Cir. 2006) (written description requirement must be judged from the perspective of one of ordinary skill in the art). And Hynix has never pursued a defense under section 102(f) of the Patent Act, (see, e.g., Joint Pretrial Statement for the Patent Trial, Feb. 2, 2006, omitting any reference to a 35 U.S.C. 102(f) defense), rendering its claim of prejudice as to inventorship specious. Hynixs claim as to prior art fares no better. Although Hynix asserts that documents
8
Indeed, the only claim that Hynix makes regarding timing was the destruction of certain originals of Mark Horowitzs early slide presentations during the first Shred Day, before any duty to preserve arose. See Hynix F.390. In any event, as the Court previously found, Horowitz explained . . . that these presentations had been made publicly and copies were available elsewhere. Because duplicates remained available, no unique evidence was lost, and no conceivable prejudice exists. -44RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
reflecting [Horowitzs] search of prior artconducted over twenty years agowere not produced, there is no reason to believe that such documents (if they ever existed) were destroyed pursuant to the document retention policy. On the contrary, the uniform, undisputed evidence was that all prior art was preserved. See Hynix I, 591 F. Supp. 2d at 1058-59 (All witnesses who testified on the matter confirmed that they had retained prior art and that they did not destroy it in implementing the Document Retention Policy.). Hynix also complains that outside counsel Lester Vincent was instructed to conform his prosecution files to match the official PTO file upon patent issuance (in addition to retaining conception and reduction to practice documents and prior art); however, the Court has already considered and rejected any claim of prejudice from this practice, noting that those documents would probably be privileged and not . . . discoverable. Id. at 1068 (citing In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 805-06 (Fed. Cir. 2000); Advanced Cardiovascular Sys., Inc. v. C.R. Bard, Inc., 144 F.R.D. 372, 378 (N.D. Cal. 1992)).9 Even if those documents were not privileged, Hynix cannot point to any claim or defense that has been prejudiced by the conforming of the Rambus patent prosecution files. As noted above, internal Rambus documents relating to patent prosecution would not be material to the obviousness, anticipation, and written description defenses that Hynix mounted at trial because, as the Delaware Court noted, these defenses do not seem likely to depend from evidence internal to Rambus. Micron I, 255 F.R.D. at 151 n.59. Moreover, the Federal Circuit has already affirmed this Courts rejection of these defenses, and Hynix never argued on appeal that its ability to mount these defenses was compromised by the document destruction. And Hynixs inequitable conduct claim was inadequately pled in the first instance, is legally untenable in light of Therasense, and was abandoned by Hynix in any event. (Rambus 11/14/11 Br. 20-22.) Finally, Hynix claims prejudice through the alleged destruction of other patent-related documents, namely documents questioning the patentability of Rambuss inventions (based on 2001 Hampel deposition testimony and certain documents of Rick Barth, another Rambus
9
Hynix also asserts that Rambus cleansed the patent files kept at Rambus. Hynix F.352. However, Hynix fails to note that this effort was undertaken before April 1999, and therefore long before Rambus had any duty to preserve documents. And as the Court already found, Hynix does not challenge the practice of conforming [patent] files when no duty to preserve has arisen. Hynix I, 591 F. Supp. 2d at 1066. -45RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
employee). As Hynix concedes, none of this evidence is in the record, although Hampel and Barth were each deposed at least three times prior to the unclean hands trial, and Hynix had access to all of that testimony. But even if the Court were to consider it, Hynixs argument fails. As noted above, the cited Hampel testimony pertained to the creation of such documents, not their destruction, and there is no evidence that any such documents were ever created, let alone destroyed, in any event. And as to Barth, Hynix has offered no evidence that any destruction of Barths materials took place after a duty to preserve arose; perhaps more fundamentally, Hynix ignores the fact that the ITC concluded that the conceptual tree upon which Hynix focuses was in fact preserved and produced. (See Rambus 10/14/11 Br., Ex. A (ITC, Rule 28(j) Letter, May 16, 2011, at 2) (Rambus demonstrated that the supposedly destroyed evidence was actually produced.).) Finally, even if these documents existed and were destroyed in violation of a duty to preserve, such destruction could not have materially affected Hynixs substantial rights, given the objective nature of the infringement and validity issues in this case. 4. Documents Regarding SDRAM and DDR Datasheets, Reverse Engineering, and Claim Charts
Hynix next asserts that certain datasheets, a reverse engineering report, and claim charts 16 were never produced. As to the data sheets, there can be no prejudice, because they are not 17 internal Rambus documents, but instead are publicly available documents published by DRAM 18 manufacturers. (See Trial Tr. 1177-78 (Hynix counsel Ken Nissly: Q: And just so that were 19 clear, a data sheet is a publication thats put out by a manufacturer that describes the technical 20 characteristics of a particular product, right? A: Yes, sir, thats accurate.).) As to the reverse 21 engineering report, there can be no prejudice, because even Hynix concedes that a copy was 22 preserved and produced in this action. (See Hynix FF.115, 476.) And as to the claim charts, 23 Hynixs assertion of non-production is utterly unsupportedHynixs proposed finding that 24 certain claim charts were not produced includes no citation. (See Hynix F. 417.) Had Hynix 25 raised this argument at trial, Rambus could have demonstrated that it produced numerous claim 26 charts in this action (see, e.g., Patent Trial Tr. 770-71 (Hynix counsel Ken Nissly discussing 27 claim chart produced by Rambus)), and that it logged others as privileged (see, e.g., HTX 216.022 28 -46RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
(entries 344, 345) (Wu Decl. Ex. C)). In all events, Hynix has not even attempted to articulate a theory of prejudice with respect to the alleged destruction of these documents. 5. Intel Contract Materials
Hynix next claims prejudice associated with the alleged destruction of documents relating to Rambuss contract negotiations with Intel. As with most of Hynixs other categories, Hynix has failed to establish spoliation of these documents in the first instance. For example, Gary Harmon testified that he disposed of his Intel-related materials in the summer of 1998, incident to the roll-out of the document retention policy. (See Trial Tr. 1405-06, 1410-11.) Because Rambus was not under a duty to preserve documents at that time, the Court need not even consider the question of prejudice. But even if it did so, Hynixs claim would fail. Hynix conclusorily asserts that such documents could be at least potentially relevant to Hynixs equitable estoppel claim. (Hynix F. 421.) As an initial matter, at least potentially relevant is not standard for prejudice the question is whether the destruction of these documents materially affected Hynixs substantial rights. Even apart from this problem, there is no reason to believe that anything said in connection with Rambuss contract negotiations with Intel led Hynix to reasonably infer that [Rambus did] not intend to enforce its patent against [Hynix]. Hynix II, 645 F.3d at 1348. 6. Board Materials
Hynix claims prejudice from the alleged destruction of Board of Directors presentations. Hynix has again failed to even establish spoliation, much less prejudice. Hynix concedes, as it must, that Rambus produced multiple Board presentations, including various presentations that Hynix used in an attempt to prove its claims. (Hynix F. 423; see also Hynix FF. 19, 91, 114 (identifying and discussing various Board presentations).) However, it then argues that certain Board minutes refer to additional presentations that should have been produced. (Hynix F.424.) This claim is belied by the very minutes upon which Hynix relies. None of the entries makes reference to a written presentation; instead, they reflect that certain items were reviewed, discussed, presented, or summarized. (See Hynix FF. 424, 425.) Accordingly, there is no reason to believe that any written presentations of the type identified by Hynix ever existed. Nor is there any reason to believe that, if such presentations existed, they would have been -47RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
destroyed. The document retention policy specifically calls for the permanent retention of Board minutes, and further provides that Rambus keeps copies of other Board materials for no less than 3 years, but Rambus may choose to keep such materials longer. (HTX 023.002.) Because the Board minutes upon which Hynix relies related to meetings in 1998 (see Hynix FF. 424, 425), any materials associated with those meetings would have been preserved under the plain terms of the document retention policy, and Hynix has not demonstrated otherwise. Finally, Hynix cannot show prejudice in any event. The supposed presentations identified by Hynix include discussion of such topics as the status of 16/18 MC, 64M and RDRAM-D projects, issues relating to Intel, and a long range forecast for the Company. Hynixs bare assertion that these issues are key to Hynixs antitrust, estoppel and fraud claims is both unsupported and unsupportable. 7. Hynixs Remaining Prejudice Arguments Are Baseless
Hynix also interposes a host of miscellaneous findings that it contends support its claim of prejudice. None is meritorious. Hynix contends that Rambus itself suffered prejudice as a result of the document retention policy, because documents that were potentially helpful to Rambus were also destroyed. (See Hynix FF. 431-37.) Far from establishing prejudice to Hynix, this argument actually establishes Rambuss good faith. That is, the fact that documents potentially helpful to Rambus were destroyed confirms the content-neutral nature of the document retention policy, and further confirms that the policy was not adopted or implemented in bad faith. Hynix also asserts that its ability to examine witnesses regarding allegedly destroyed documents has been prejudiced. But where documents are legitimately destroyed (e.g., before a duty to preserve has arisen), there is no spoliation, and thus no spoliation-related prejudice. And where Hynix cannot otherwise demonstrate that its ability to prove its claims or defenses has been impaired (as discussed above), this assertion does not establish prejudice within the meaning of Micron II. Instead, it appears that Hynixs motivation in making this argument is a back-door effort to assert a claim of litigation misconduct. Because Hynix did not pursue such a claim in support of its unclean hands defense, either at trial or on appeal, it is now waived. (See Rambus -48RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
11/14/11 Br. at 22-25 (discussing application of waiver and mandate rules).) In all events, Hynixs attack on the credibility of Rambuss witnesses is baseless. For example, Hynix contends that Tate denied hiring Karp for the purpose of suing infringers, and then capitulated when he was shown his own e-mail describing Karps role. (Hynix F. 439.) This is simply wrong. The testimony cited by Hynix (Trial Tr. at 1248) and the corresponding email (HTX 091) say nothing about suing infringers, and instead reflect that Karps role was to prepare and then to negotiate to license our patents. Hynix likewise attacks the credibility of Karp, Steinberg, and Crisp, relying either on its own unsupported assertions (see, e.g., Hynix FF. 446, 458 (asserting, without citation, that Karp and Crisp took certain positions)), or on a combination of extra-record materials and now-vacated findings of Judge Payne (see, e.g., Hynix FF. 453-457). As to the former, Hynixs failure to provide evidentiary support alone justifies rejection of the claims. As to the latter, Hynixs proposed findings are inappropriate for multiple reasons. First, the Court has already concluded that the findings of other district courts regarding witness credibility constitute inadmissible hearsay. (See Ruling on Rambuss Motions in Limine [Conduct Phase], Feb. 3, 2008, at 5.) Second, reliance on a vacated opinion is clearly improper: [o]f necessity [a] decision vacating the judgment of the Court of Appeals deprives that courts opinion of precedential effect. Los Angeles County v. Davis, 440 U.S. 625, 634 n.6 (1979) (internal quotations omitted). Finally, Hynix has offered no justification for its failure to raise these arguments or introduce its extra-record evidence earlier (see supra at 6-11), and its failure to do so has prejudiced Rambus by preventing it from demonstrating that the allegedly false statements are nothing of the sort. For all of these reasons, Hynixs prejudice arguments fail. CONCLUSION For all of the foregoing reasons, the Court should reject Hynixs unclean hands defense, deny inherent authority sanctions, and enter judgment in Rambuss favor.
-49-
1 Dated: December 5, 2011 2 SIDLEY AUSTIN LLP 3 McKOOL SMITH PC 4 5 By: 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -50RESPONSE BRIEF ISO RAMBUS PROPOSED FINDINGS OF FACT ETC. CASE NO. 00-20905 RMW
MUNGER, TOLLES & OLSON LLP
/s/ Gregory P. Stone Gregory P. Stone
Attorneys for RAMBUS INC.

Response Brief in Support of Rambus Inc.'S Proposed Findings of Fact and Conclusions of Law

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Response Brief in Support of Rambus Inc.'S Proposed Findings of Fact and Conclusions of Law

Uploaded by

Copyright:

Available Formats

Case5:00-cv-20905-RMW Document4088

HYNIX SEMICONDUCTOR, INC., et al., Plaintiffs, vs. RAMBUS INC., Defendant.

Hynixs New Challenge to the Courts Legal Framework is Baseless ................. 11

TABLE OF AUTHORITIES Page(s)

Rambus Did Not Intend to Hide Harmful Information

The Record Evidence Does Not Establish Prejudice to Hynix

MUNGER, TOLLES & OLSON LLP

/s/ Gregory P. Stone Gregory P. Stone

Attorneys for RAMBUS INC.

You might also like