3012[1] Rambus Brief On Trial Procedures

Case 5:05-cv-00334-RMW

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Gregory P. Stone (SBN 078329) Andrea Weiss Jeifries (SBN 183408) 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.stonemto.com Email: andrea.jeffriesmto.com Email: [email protected]

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Peter A. Detre (SBN 182619) Rosemarie T. Ring (SBN 220769) Jennifer L. Poise (SBN 219202) MUNGER, TOLLES & OLSON LLP 560 Mission Street, 27th Floor San Francisco, CA 94105 Telephone: (415) 512-4000 Facsimile: (415) 512-4077 Email: [email protected] Email: [email protected] Email: [email protected]

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Attorneys for RAMBUS iNC.

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Rollin A. Ransom (SBN 196126) SIDLEY AUSTiN LLP 555 West Fifth Street, Suite 4000 Los Angeles, California 90013-1010 Telephone: (213) 896-6000 Facsimile: (213) 896-6600 Email: rransomsidley.com Pierre J. Hubert (Pro Hac Vice) Craig N. Tolliver (Pro Hac Vice) McKOOL SMITH PC th Street, Suite 1700 300 West 6 Austin, Texas 78701 Telephone: (512) 692-8700 Facsimile: (512) 692-8744 Email: [email protected]; Email: [email protected]

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION

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CASE NO.: C 05-00334 RMW

RAMBUS INC., Plaintiff,

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RAMBUS INC.’S BRIEF ON TRIAL PROCEDURES

vs. HYNIX SEMICONDUCTOR INC., et al., Defendants.

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Date: Time: Courtroom: Judge:

January 6, 2009 9:00 a.m. 6 Hon. Ronald M. Whyte

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Plaintiff,

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CASE NO.: C 05-02298 RMW

RAMBUS INC.,

vs. SAMSUNG ELECTRONICS CO., LTD., et ai., Defendants.

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1 CASE NO.: C 06-00244 RMW

RAMBUS INC., 2 Plaintiff, 3 vs. 4 MICRON TECHNOLOGY INC., et al., 5 Defendants. 6

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RAMBUS INC.’S BRIEF ON TRIAL PROCEDURES CV 00-20905 RMW; C 05-334 RMW; C-06-244 RMW

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TABLE OF CONTENTS

1 2

Page

3

I.

INTRODUCTION

1

4

II.

ARGUMENT

4

A. 6

B.

7 8

C.

11

If the Manufacturers Properly Concede Infringement, the Court Should Instruct the Jury on Infringement, and Rambus Must be Permitted to Argue Infringement to the Jury

9

If the Manufacturers Properly Concede Infringement, Such That It Need Not Be Tried, Validity and Damages Should Be Tried Together, and Rambus Should Prove Damages First

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There are Compelling Reasons for Trying Damages and Validity Together, and Little Reason to Try Them Separately

13

In Any Event Rambus Should Argue First

16

2.

12

D.

13

15

4

1.

10

14

The Manufacturers’ Proposal “Not to Contest Infringement” Is Legally Inadequate To Support Any of the Procedural Changes They Seek

III. IV.

Micron Cannot Be Permitted to Stand in for the Other Manufacturers Under the Conditions Proposed by the Manufacturers

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RAMBUS’S COUI’JTER-PROPOSAL AND ITS OTHER EFFORTS TO STREAMLINE TRIAL

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CONCLUSION

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TABLE OF AUTHORITIES

2

Page(s) FEDERAL CASES

3

7

Altris, Inc. v. Symantec Corp., 318 F.3d 1363 (Fed. Cir. 2003) Angelo v. Armstrong World Indus., inc., F.3d 957 (10th Cir. 1993) Big Horn Coal Co. v. Office of Workers’ Comp. Prog., 55 F.3d 545 (10th Cir. 1995)

8

Booker v. City ofChicago, 2006 WL 4071596 (N.D. Iii. 2006)

4

6

9 10 11 12 13 14 15

7, 8 16 8 6, 8

Brydges v. Lewis, 18 F.3d 651 (9th Cir. 1994) Budde v. Harley-Davison, inc., 250F.3d1369(Fed.Cir.2001) Cristobal v. Siegel, 26 F.3d 1488 (9th Cir. 1994)

5 5,6 5

Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962) de Graffenried v. United States, 20 C1.Ct. 458 (1990)

6 10

17

Foster v. Halico Mfg. Co., 947 F.2d 469 (Fed. Cir. 1991) Georgia- Pacfic v. US. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970)

14

18

Greenleafv. Garlock, Inc., 174 F.3d 352 (3d Cir. 1999)

16

16

19 20 21 22 23 24 25

7

Henry v. Gill Indus., 983 F.2d 943 (9th Cir. 1993) Howmedica Osteonic Corp. v. Wright Med. Tech., Inc., 540F.3d1337(Fed.Cir.2008) In re Air Crash Disaster Near Chicago, ill., On May 25, 1979, 803F.2d304(7thCir. 1986) In re Diet Drugs (Phentermine/Fenfluramine/Dexfenfluramine) Products Liability, 369 F.3d 293 (3d Cir. 2004) Innovative Office Prods., Inc. v. SpaceCo, Inc., 2006 WL 1340865 (E.D. Pa. 2006)

5 5 11,12 4, 6, 11 13

Iron Grip Barbell Co., Inc. v. USA Sports, Inc., 392F.3d1317(Fed.Cir.2004)

9

27

Jang v. Boston ScientUic Corp., 532F.3d1330(Fed.Cir.2008)

7

28

Johnson v. Mortham, 915 F. Supp. 1574 (N.D. Fla. 1996)

26

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Page(s)

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Lava Trading, Inc. v. Sonic Trading Mgmt., LLC, 445 F.3d 1348 (Fed. Cir. 2006)

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Lux v. McDonnell Douglas Corp., 608F.Supp.98(D.Il1. 1984) Massachusetts Inst. of Tech. v. Abacus Software, 462 F.3d 1344 (Fed. Cir. 2006)

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TABLE OF AUTHORITIES (continued)

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Filed 01/05/2009

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Seachange mt ‘1, Inc. v. C-COR, Inc., 413 F.3d 1361 (Fed. Cir. 2005)

6

Teleflex, Inc. v. Ficosa North America Corp., 299 F.3d 1313 (Fed. Cir. 2002)

8

Warldorfv. Shuta, 142F.3d601 (3dCir. 1998)

6 TREATISES

Wright & Miller, Federal Practice & Procedure: Civil 3d

§ 2651

(1990)

5, 6, 13

13 14

15 16 17 18 19 20 21

OTHER AUTHORITIES

Lu Wang and Ian King, Micron Will Need to Raise Money Soon, Wachovia Says (Dec. 29, 2008), available at http://www.bloomberg.comlapps/news?pid=2060 1 087&sid azuVdPEu8.kg&refer=home Manufacturers’ Letter Brief, Dec. 29, 2008, Dkt. No. 3003 Micron Mot. for Separate Trials, Aug. 1, 2008, Dkt. No. 2005 Micron Press Release, Dec. 23, 2008, available at http://download.micron.comlpdf/financials/Release_Q 1 -2009.pdf Nanya Mot. to Sever, Aug. 1, 2008, Dkt. No. 2006 Rambus’s Motion in Limine No. 12, Dec. 3, 2008, Dkt. No. 2713 Samsung Mot. for Separate Trials, Aug. 1, 2008, Dkt. No. 2016

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INTRODUCTION

I.

Rambus shares the Manufacturers’ stated objective of streamlining the trial and focusing it

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on the factual issues that are a matter of actual dispute. There are, Rambus believes, proper and

4

reliable ways of structuring the trial to achieve that objective—methods grounded in the

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framework of our adversary system, the limitations ofjusticiability and the practical requirements

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of appellate review, and that also are consistent with due process. But the Manufacturers’ novel

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trial proposal veers from these established methods and contravenes their underlying principles

8

and structures. The Manufacturers’ proposal would gamble the resources of the Court and the

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parties on irregular procedures without any concrete benefit in the way of efficiency, and with the

10

calculated effect of unfairly restricting Rambus from presenting its evidence to the jury , it must j t Any effort to pare infringement from this case must satisfy four principles. 1

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resolve the factual issue of infringement in a manner that will support a valid judgment having the

13

same force and effect as one entered after trial or upon summary judgment. Second, it must

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provide the Federal Circuit with an adequate record upon which to review this Court’s claim

15

construction ruling and the concession of infringement. This means that the record should

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contain sufficient facts to allow the Federal Circuit to determine the issue of infringement, if

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appropriate, even if this Court’s claim construction is modified. Failure to satisfy this principle

18

would unnecessarily risk time-consuming proceedings on remand. Third, the jury must be

19

advised that the Manufacturers have infringed. That instruction is proper and necessary, both

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because Rambus is entitled to argue infringement in connection with its secondary considerations

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proofs, and because the jury will otherwise be left questioning why it is being asked to decide the

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validity of Rambus’s patents. Fourth, the trial on the remaining issues—damages and the

23

affirmative defense of invalidity—should be structured so as to protect Rambus’s right, as the

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plaintiff and patentholder, to present first its evidence and its argument to the jury. A streamlined trial, structured in accordance with these basic principles, would take the

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following, familiar form: •

The Manufacturers would concede infringement, as a matter of fact, under this Court’s claim construction, or they would enter into with Rambus a stipulated order of 1 -

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infringement along those lines. The Manufacturers would preserve their right to appeal

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the Court’s claim construction order and the Court’s grant of partial summary judgment

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for Rambus. Because a full record is essential to any appeal, and because the current

4

summary judgment record on infringement is inadequate, at least in part, the concessions

5

or stipulation would include the facts and evidence necessary to support the claim

6

construction and the judgment of infringement.’ The most efficient way to create this

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factual record would be through an offer of proof, which would provide the Federal

8

Circuit with nearly the same evidence to review as it would have if infringement were

9

tried to the jury. The parties also would stipulate that the judgment of infringement would

10

have the same force and effect, including for res judicata and collateral estoppel purposes,

11

as ajudgment entered after trial or upon summary judgment.

12

•

At trial, the jury would be told, in straightforward fashion, that they need not decide

13

infringement because the Manufacturers have conceded that issue. This instruction would

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provide the proof necessary to establish certain of the important secondary considerations.

15

This proof otherwise would be presented to the jury during the trial of the infringement

16

issue, but if that issue is taken from the jury, an appropriate and effectively equivalent

17

instruction must replace it.

18

•

Since Rambus must still bear the burden of proof on damages—an issue that overlaps

19

substantially with validity issues—Rambus would prove its case first, as any plaintiff

20

ordinarily would in a civil trial.

21

What the Manufacturers have offered is an animal of an altogether different stripe. Rather

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than having infringement determined on a full factual record, they seek to proceed to judgment on

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a record that lacks sufficient evidentiary support. Rather than heeding the Federal Circuit’s

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caution about ensuring an adequate appellate record, the Manufacturers—citing no legal

25

authority—rejected Rambus’s proposal to stipulate to a sufficient factual record on the very issues

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The Manufacturers’ suggestion that the summary judgment papers provide such a factual basis is incorrect. For example, Rambus did not seek summary judgment of infringement on all of the claims in dispute, and thus there is no summary judgment record whatsoever as to those claims. -

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2 And, rather than informing the jury of what would be a they purportedly “do not contest.”

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conceded fact that is both relevant to the validity issues joined for trial and essential to an

3

objective understanding of this case, the Manufacturers seek to conceal any infringement

4

determination from the jury. If these were not enough, there are still more anomalies. With infringement off the table,

5 6

the Manufacturers’ claimed need for bifurcated and seriatim trials would no longer obtain. The

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risk of prejudice or confusion that the Manufacturers have been arguing would arise if there is a

8

joint infringement trial would evaporate. At the same time, the development of the

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Manufacturers’ common damages theories since the severance hearings in September shows that

10

even if infringement remains in the case there is no reason to bifurcate damages from liability.

11

Much of the same evidence that will be introduced on damages will also be introduced in

12

connection with the validity issues. The simplest and best way to promote efficiency, especially

13

if infringement is conceded, would be to try these issues together in the ordinary course, with the

14

plaintiff going first. Instead, however, the Manufacturers want to usurp Rambus’s role as

15

plaintiff, dictate the order of issues and proof, and in the process deny Rambus access to key

16

witnesses on invalidity. The only countervailing justification the Manufacturers offer is that

17

Manufacturers prevail on invalidity with respect to every asserted claim—a result that their

18

proposal is designed to advance—then damages will be mooted. On top of this, the

19

Manufacturers seek to force Rambus involuntarily to try the Manufacturers’ invalidity case

20

against the defendant of their choosing, Micron, even though it would deny Rambus access to

21

critical witnesses. Efficiency, indeed. The courts have steadfastly rejected such efforts to stack the deck against plaintiffs, and

22 23

the reasons for their skepticism apply with full force to the Manufacturers’ proposal: [Rjestricting plaintiff to a sterile concession and the right to litigate two particularized questions would seriously disadvantage her at trial (as skilled

24 25 26 27 28

f the

The Manufacturers ignore the issue, first raised with the Court at the hearing on December 19, 2008, and again in the December 24 meet-and-confer, that the Federal Circuit should be provided with a full factual record on which to review their infringement concession, including to enable that Court to affirm the determination of infringement in the event this Court’s claim construction order is modified. 2

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...

In re Diet Drugs (Phentermine/Fenfluramine/Dexfenfluramine) Products Liability, 369 F.3d 293, 3 14-15 (3d Cir. 2004) (Chertoff, J.) (internal citation and quotation marks omitted). Indeed, in that tort case, the Third Circuit noted that it was entirely appropriate for the plaintiff to reject the “illusory” offer from the defendant, which would have consisted of defendant “not contesting” breach of duty but without conceding negligence, while restricting the jury to answering special interrogatories on damages and causation. Id. at 314. There can be no doubt that the Manufacturers, like the defendant in In re Diet Drugs, seek to suspend conventional trial procedures, not to simplify the case, but rather to tie Rambus’s hands and prevent it from presenting its story to the jury. The result would be a trial so fundamentally unfair as to deny Rambus due process.

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counsel for [defendant] surely recognized). Jurors might well wonder at the fairness of determining causation and damages in a vacuum devoid of any Moreover, removing critical issues of fact suggestion of liability or negligence runs the risk of distorting jury explanation adequate an without from the jury normally be expected can cause would that of proof absence The . deliberations for evidence in all need the lies “[T]here inferences. unwarranted draw the jury to proof should proper what about jurors’ expectations the satisfy to its particularity this reason, For (1997)]. 188 [172, 519 U.S. States], United be.” Old Chief[v. the prejudice it can proof, of element an concedes adequately unless a stipulation by concession proposed the case, this In proof. of burden the party carrying would jurors more one that or possibility a substantial raise [defendant] would be influenced by the lack of evidence and the lack of explanation.

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This Court should hold the Manufacturers to the procedural requirements and safeguards for entering a valid judgment on infringement and conducting a fair trial on the remaining issues. Saving that, the trial should go forward as planned.

20 II.

ARGUMENT

21 22

The Manufacturers’ Proposal “Not to Contest Infringement” Is Legally Inadequate To Support Any of the Procedural Changes They Seek

23

The Manufacturers’ proposal “not to contest infringement”—while not admitting or

A.

24

stipulating to the facts of infringement—is legally inadequate to support the judgment of

25

3 Although it is well established that a defendant infringement they purport to be willing to bear.

26

Rambus has repeatedly pointed out to the Manufacturers that a judgment of infringement needs to be supported by factual concessions and an evidentiary record. The Manufacturers ignore this point and cite no authority whatsoever to support their contention that a concession “not to contest” is legally sufficient.

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may and, in some circumstances, should stipulate to liability in order to avoid a trial it knows it

2

cannot win, the Manufacturers have identified no precedent for “not contesting” (Letter at 2) but

3

“not conceding” (id.at 3) liability, for having a “final judgment” (Id. at 3) that lacks “the same

4

force and effect as if it had been entered after a full trial” (id. at 4), or for trying an affirmative

5

defense without permitting the jury to know why the defendants are before them in the first place

6

(id. at 4-5). In effect, the Manufacturers insist that Rambus should not be allowed to have its

7

infringement claims resolved in the traditional manner: an actual and factual determination of

8

infringement. They propose, as a substitute, the civil equivalent of a nob contendere plea: no

9

trial on infringement, but no concession of infringement. The case law shows that the

10

Manufacturers have no right to force a hollow “no contest,” without legal or factual weight, on

11

Rambus.

12

A party can only remove an issue from trial with a full and factual concession, because a

13

court may not enter judgment when there remain unresolved issues of fact joined by the

14

pleadings. “A judgment in its usual, conventional sense imports the use of the judicial process.

15

It involves a claim pressed and resisted (or the opportunity for resistance) by adversaries in a

16

court, a hearing and an adjudication.” Wright & Miller, Federal Practice & Procedure: Civil 3d

17

2651(1990) (citation omitted) [hereinafter Wright & Miller]. The standard for summary

18

judgment itself makes that crystal clear. Accordingly, the fact that the defendant has taken the

19

position that it will not oppose the presentation of proofs is not enough; there must be adjudicated

20

facts sufficient to support whatever legal determination is required for judgment. See, e.g.,

21

Brydges v. Lewis, 18 F.3d 651, 652 (9th Cir. 1994) (court may not grant summary judgment

22

motion merely because it is not opposed); Cristobal v. Siegel, 26 F.3d 1488, 1495 (9th Cir. 1994)

23

(same); Henry v. Gill Indus., 983 F.2d 943, 950 (9th Cir. 1993) (same). Thus, in the cases cited

24

by the Manufacturers, Howmedica Osteonic Corp. v. Wright Med. Tech., Inc., 540 F.3d 1337

25

(Fed. Cir. 2008), and Budde v. Harley-Davison, Inc., 250 F.3d 1369 (Fed. Cir. 2001), the

26

plaintiffs did not merely “not contest” non-infringement; they stipulated to it—in one case jointly

27

Manufacturers’ Letter Brief, Dec. 29, 2008, Dkt. No. 3003. All docket numbers cited in this brief are from the No. C 05-00334 action.

28

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the parties

1

with defendant. 540 F.3d at 1339 (“Under the district court’s claim construction

2

stipulated that the accused product did not infringe the asserted patent claims.”); 250 F.3d at 1371

3

(“This judgment [of non-infringement] was entered at Budde’s request

4

approach taken in the sole patent case Rambus found in which a defendant stipulated to

5

infringement in order to avoid a trial on the issue. See Seachange Int’l, Inc. v. C-CUR, Inc., 413

6

F.3d 1361, 1366 (Fed. Cir. 2005) (“In light of the claim construction order, C-COR stipulated to

7

infringement.”). In none of these cases did the other party protest the stipulation or concession,

8

presumably because it did not result in the prejudice that the Manufacturers’ proposal will here.

9

When a party does contest such a stipulation, the stipulation must be adequately factual

....“).

...,

That was also the

10

and detailed to give the court the authority to enter judgment. See Wright & Miller

§ 2724 (“Of

11

course, even if some facts are stipulated, summary judgment must be denied if the stipulation is

12

equivocal.”). That is, the party contesting the stipulation is entitled to a judgment as complete

13

and valid as it would have received if it had proceeded to trial and prevailed, or had prevailed on

14

summary judgment. Among other things, the judgment must be sufficiently broad as to resolve

15

all of the issues that would otherwise be resolved by a trial. Thus, courts have rejected efforts to

16

avoid a trial where a party offers a “sterile concession” that does not “adequately concede[] an

17

element of proof,” In re Diet Drugs, 369 F.3d at 314, or offers a stipulation that is “too vague” to

18

assure the other party will receive the full benefits of adjudication through trial, Booker v. City of

19

Chicago, 2006 WL 4071596 at *5 (N.D. Ill. 2006). If a court accepts a “no contest” stipulation,

20

it should do so by construing it as “an open-ended concession of liability,” see Warldorfv. Shuta,

21

142 F.3d 601, 617 (3d Cir. 1998) (emphasis added), which is precisely what the Manufacturers

22

insist they will not provide. (Letter at 3 (“The Manufacturers do not ‘concede’ infringement

23 24

Judged against these standards, the judgment contemplated by the Manufacturers would

25

be highly exotic. The Manufacturers ask the Court to enter judgment on a record lacking a

26

complete factual determination of infringement. The Court would essentially be resolving these

27

open factual issues itself, something the Seventh Amendment and the Rules themselves plainly

28

bar. See, e.g., Dairy Queen, Inc. v. Wood, 369 U.S. 469, 479 (1962) (explaining that the Seventh -

“

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I

Amendment requires submission to a jury of all factual raised by legal claims, barring court

2

determination of issues common to legal and equitable claims). At the same time, the

3

Manufacturers appear to contemplate that the purported judgment would not give rise to res

4

judicata consequences, as would a judgment entered after a full trial. (Letter at 4.) But even a

5

stipulated judgment ordinarily has claim preclusive effect. See Foster v. Hailco Mfg Co., 947

6

F.2d 469, 476 (Fed. Cir. 1991) (“[C]laim preclusion[] applies whether the judgment of the court is

7

rendered after trial and imposed by the court or the judgment is entered upon the consent of the

8

parties.”). The Manufacturers seem to think that the judgment they propose will not, because

9

they indicate that they will only dismiss their counterclaims for a declaratory judgment of non-

10

infringement without prejudice. (Letter at 4.) There is no precedent for such a non-binding

11

judgment as envisioned by the Manufacturers.

12

A more robust concession is also necessary to provide the Federal Circuit the appellate

13

record it prefers when reviewing infringement determinations and related claim construction

14

issues. In Jang v. Boston Scientfic Corp., 532 F.3d 1330 (Fed. Cir. 2008), the Court refused to

15

review a jointly-stipulated order of non-infringement. While “a judgment entered based on a

16

stipulation of the parties may in appropriate circumstances be reviewed on appeal,” the Federal

17

Circuit has shown a willingness to remand if “[t]he lack of information concerning infringement

18

makes it difficult to comprehend the claim construction issues.” Id. at 1338. The Court explained

19

that, on the record before it, there was “no explanation in the stipulation as to why the accused

20

products would not infringe under the district court’s claim construction or why they would

21

infringe under the alternative claim constructions offered by [the patentee],” and therefore there

22

was inadequate context for deciding the claim construction issue. Id. Accordingly, the Court

23

remanded for clarification. Id.; see also Lava Trading, Inc. v. Sonic Trading Mgmt., LLC, 445

24

F.3d 1348, 1350 (Fed. Cir. 2006) (“Without knowledge of the accused products, this court cannot

25

assess the accuracy of the infringement judgment under review and lacks a proper context for an

26

accurate claim construction.”); Massachusetts Inst. of Tech. v. Abacus Software, 462 F.3d 1344,

27

1350 (Fed. Cir. 2006) (similar).

28

For this reason, the preferred practice, demonstrated in Altris, Inc. v. Symantec Corp., 318 7 -

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F.3d 1363 (Fed. Cir. 2003), is for the parties jointly to stipulate to the facts underlying the

2

judgment. See id. at 1368. Such a stipulation (or an equivalent concession) is critical here,

3

because the existing summary judgment record is inadequate to support a judgment of

4

infringement as to all of the asserted claims. Rambus did not move on all of its claims, and thus

5

the record on those claims remains undeveloped. Even on those claims that were the subject of

6

briefing, the “sterile concession” offered by the Manufacturers is inadequate to provide the

7

Federal Circuit with an explanation of why the accused products infringe under the Court’s claim

8

construction, and may well result in the Federal Circuit remanding for clarification, which in turn

9

may lead to more protracted trial court proceedings in the future. Cf Booker, 2006 WL 4071596

10

at *6 (“While the [Defendant] claims that the Stipulation is motivated by a desire to conserve

11

resources, accepting the Stipulation creates more potential for protracted litigation than allowing

12

the parties to proceed with adjudication

13

necessary and would further judicial economy by giving the Federal Circuit the evidentiary record

14

it would need to affirm the judgment of infringement even if it modifies this Court’s claim

15

construction. See Teleflex, Inc. v. Ficosa North America Corp., 299 F.3d 1313, 1328-29 (Fed.

16

Cir. 2002) (affirming judgment of infringement after altering claim construction on appeal).

17

....“).

Moreover, a more fully developed factual record is

Finally, the Manufacturers need to stipulate that the finding of infringement will have the

18

same collateral estoppel effect as a finding of infringement made on summary judgment or by a

19

jury after trial. Under the Manufacturers’ current proposal, the judgment might later be argued to

20

deny Rambus the certain issue-preclusion benefits it would receive if it prevailed at trial or on

21

5 If infringement were actually litigated here, the resulting judgment would summary judgment.

22

have preclusive effects, including on many of the features in Samsung’s and Nanya’s SDR and

23 24 25 26 27 28

Similarly, the Manufacturers cannot maintain their “summary [judgment] motions currently pending that relate to infringement (in particular, Samsung’s and Nanya’s separate motions for summary judgment of non-infringement. . .)“ while “not contesting” infringement at trial. It is self-contradictory for the Manufacturers to insist that no reasonable jury can find infringement— the essential premise of their pending summary judgment motions—and at the same time promise to “not contest” infringement. If they intend to preserve the right to appeal those motions, but will concede infringement at trial, they seek what is procedurally impossible. “[T]he admission of liability constitutes a waiver of the defense” on appeal. See Big Horn Coal Co. v. Office of Workers’ Comp. Prog., 55 F.3d 545, 550-55 1 (10th Cir. 1995) (declining to review the merits of the liability issue after defendant conceded it below). 2 -

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1

DDR products. But the collateral estoppel consequences of the Manufacturers’ no-contest

2

judgment are murky at best, and need to be clarified by including a stipulation that the judgment

3

will carry the preclusion consequences of a fully-adjudicated judgment.

4

Rambus is willing to accept a true concession of infringement. But Rambus cannot, and

5

this Court should not, accept the Manufacturers’ sterile and legally and procedurally improper

6

“no contest” approach. The result of the Manufacturers’ proposal can only be a “non-judgment”

7

of infringement.

8

B.

9 10

If the Manufacturers Properly Concede Infringement, the Court Should Instruct the Jury on Infringement, and Rambus Must be Permitted to Argue Infringement to the Jury

Asserting that “[i]nfringement is simply not relevant to the validity determination,” the

11

Manufacturers argue that “[t]he jury need not be told, and should not be told, during its

12

determination of validity that the Manufacturers are not contesting infringement.” (Letter at 4.)

13

It is sufficient, in their view, if the jury is told “that it is only being asked to determine the validity

14

of the claims at issue.” (Id.) An instruction directing the jury to “assume” infringement (id.)

15

would not even be correct on the current record, as this Court already has found infringement as a

16

matter of law on one of Rambus’s claims. But the proposed instruction suffers from a more

17

fundamental defect, for it is flatly wrong in assuming that infringement is irrelevant to invalidity.

18

The law is clear that infringement is critically relevant to secondary considerations. Furthermore,

19

taking infringement away from the jury without some explanation of why it is not at issue will

20

confuse the jury and prejudice Rambus, as the Third Circuit recognized in In re Diet Drugs. In

21

this respect, the Manufacturers’ position makes clear that they do not want Rambus to be in as

22

good a position as it would be if infringement were tried: in that event, Rambus would be able to

23

argue infringement to the jury and, if the jury found infringement, it would be entitled to apply

24

those particularized findings to its determination on validity, including, particularly, its weighing

25

of secondary considerations of non-obviousness.

26

Evidence of the Manufacturers’ infringement is relevant to at least three of the secondary

27

considerations of non-obviousness: copying, commercial success, and industry acceptance.

28

Although infringement, standing alone, does not prove copying, see Iron Grip Barbell Co., Inc. v. -

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1

USA Sports, Inc., 392 F.3d 1317, 1325 (Fed. Cir. 2004), it proves one element: utilization of the

2

invention. The connection to commercial success is even more pronounced. Infringement,

3

especially where there is a nexus between the infringed invention and a product’s success, is

4

potent evidence of commercial success. See, e.g., de Graffenried v. United States, 20 C1.Ct. 458,

5

474-75 (1990) (finding adequate evidence of commercial success where “the sole alleged

6

commercial success of the controller patent [was] the alleged infringement of the patent” by the

7

defendant). And, the fact that nearly 100% of the DRAMs sold today, and for many years prior,

8

infringe Rambus’s patents, and that new designs of DRAMs continued to use Rambus’s patented

9

inventions and, at various times, to use more of Rambus’s inventions that had been used in earlier and the fact that the

10

designs, is compelling evidence of industry acceptance. But the key fact

11

Manufacturers seek to avoid and obscure

12

order to appreciate the significance of the industry’s acceptance of Rambus’s inventions, the jury

13

must understand that these market-dominating products infringe and that the products were

14

designed and manufactured knowing that they infringed. That evidence shows that the industry

15

not only accepted these inventions, but did so appreciating that they were infringing on Rambus’s

16

patents. Despite the purported existence of numerous alternatives, the Manufacturers chose

17

Rambus’s inventions, and did so repeatedly. What stronger evidence could there be of industry

18

acceptance than repeated and knowing infringement?

—

—

is that all of these DRAMs do in fact infringe. In

19

To the extent the Manufacturers attempt to show, and are permitted to argue, that

20

Rambus’s revenues are inconsistent with commercial success, the Manufacturers’ unlicensed use

21

of Rambus’s inventions explain why Rambus’s revenues were not higher, despite its

22

revolutionary technology: namely, that technology was taken without permission and without

23

compensation. Because telling the jury that the accused devices “practice the claims at issue”

24

would highlight, rather than explain, Rambus’s lack of revenues from the products, that

25

instruction is not sufficient to permit Rambus to press its legitimate commercial success

26

argument. Further, the fact of infringement, as opposed to mere utilization, explains why there

27

was not wider industry acclamation of the inventions: the Manufacturers, dominant players in the

28

industry, had an incentive to downplay and discredit Rambus’s technology in order to distract -

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1

from the fact that they were using it unlawfully and in order to undermine and devalue the patents

2

they would not pay to license.

3

The Manufacturers’ suggested jury instruction would also deny the jury a basic

4

understanding of the reality of how Rambus’s inventions were received and treated in the DRAM

5

industry. “A trial is more than a matter of presenting a series of individual fact questions in arid

6

fashion to a jury.” In re Diet Drugs, 369 F.3d at 314. “The jury properly weighs fact questions in

7

the context of a coherent picture of the way the world works.” Id. The Manufacturers’ approach

8

not only would withhold from the jury a coherent picture of how the DRAM industry operated,

9

but it also would create vacuums in Rambus’s evidence that might lead to jurors assuming,

10

erroneously, that Rambus is unable to prove infringement. As the Third Circuit explained, a

11

“sterile concession,” coupled with “[t]he absence of proof that would normally be expected” may

12

“cause the jury to draw unwarranted inferences.” 369 F.3d at 315. Here, the “sterile concession”

13

proposed by the Manufacturers might lead the jury to wonder why a company with such a popular

14

and revolutionary technology could not show commercial success in the simplest of ways:

15

revenue and licenses. The jury might be confused as to why Rambus would permit companies to

16

use its inventions without securing a license and charging them royalties if Rambus truly believed

17

the inventions were worthwhile. Thus, as in In re Diet Drugs, “[i]n this case, the proposed

18

concession by [defendant] would

19

be influenced by the lack of evidence and the lack of explanation.” Id. (quotation marks omitted).

20

And members of the jury are likely to know that one of the key issues in every patent

21

infringement trial is infringement, and to wonder and speculate on why that issue is not being

22

presented.

23

...

raise a substantial possibility that one or more jurors would

If the Manufacturers provide a stipulation or concession of infringement sufficient to

24

obviate a trial, the Court should instruct the jury that they need not decide infringement because

25

the Manufacturers have already conceded it. In In re Air Crash Disaster Near Chicago, ill., On

26

May 25, 1979, 803 F.2d 304 (7th Cir. 1986), the Seventh Circuit rejected a defendant’s argument

27

that because it had stipulated to liability, the issue was off the table and should not have been the

28

subject of a jury instruction: -

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[Defendant] asserts, without citation to authority that, since [it] had admitted liability, the district court should not have informed the jury of the plaintiffs theory of liability. We disagree. The district court’s instructions did not delve into the details of the plaintiff’s theory of liability or suggest that [defendant] had agreed to the plaintiff’s theory of recovery. Instead, they fairly and accurately informed the jury of the broad nature of the plaintff’s claim and of the fact that [defendant] had admitted liability. The court’s statements, which simply told the jury why they were called upon to decide this case, were entirely proper. Id. at 317 (emphasis added). Here, as there, the Manufacturers’ concession does not mean the jury should not know how liability was resolved. The jury is entitled to know, and should be told, “why they were called upon to decide [the validity of Rambus’ s patents].” Cf id. Furthermore, Rambus should be able to argue the fact of infringement in support of its secondary-consideration evidence, just as it would be able to if infringement were tried. The Seventh Circuit so held in In re Air Crash Disaster, id.; as the district court explained in that case, “plaintiffs argument to the jury simply stated that defendant had admitted liability for damages, a fact which defendant stipulated before trial.” Lux v. McDonnell Douglas Corp., 608 F.Supp. 98, 102 (D. Iii. 1984). If the trial proceeds on validity and damages, the Manufacturers will have conceded infringement. Given that concession, and given that the jury is entitled to be instructed about the determination of infringement, the Manufacturers could hardly claim prejudice were Rambus to argue that point as relevant to its secondary considerations arguments. Indeed, to put Rambus in the same position as it would be in if it prevailed on infringement at trial and in order to allow the jury to properly consider the secondary considerations, the jury must be told which specific products infringe which claims. Were summary judgment of infringement to have been found as to each of the claims in suit, the findings supporting that judgment would necessarily have just this detail and specificity. By excluding evidence of their infringement from the jury, the Manufacturers seek to undercut Rambus’s ability to demonstrate secondary considerations supporting non-obviousness. Even as to the secondary consideration of commercial success, the Manufacturers would simply have the jury told “it should assume that the Manufacturers [sic] products practice the claims at issue.” (Letter at 5.) And the effect of the Manufacturers’ proposal may also be to mislead and confuse the jury about why infringement is not being tried. But the cases make clear that

28 -

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1

concessions—or the non-concessions the Manufacturers offer—cannot be used as an artifice for

2

denying a plaintiffs legitimate argument on live issues of fact.

3 4

If the Manufacturers Properly Concede Infringement, Such That It Need Not Be Tried, Validity and Damages Should Be Tried Together, and Rambus Should Prove Damages First

5

Assuming the Manufacturers offer a legally adequate and fair concession of infringement,

C.

6

a consolidated trial on damages and validity would be the most appropriate and efficient way to

7

reach final judgment. There would no longer be reason for concern that the jury might be

8

overburdened or confused by the complexity of having to decide both infringement and damages.

9

Moreover, the substantial overlap between the evidence for validity and damages, as well as the

10

commonality of damages evidence as to each Manufacturer, weigh in favor of keeping these

11

issues together for a single trial. In such a proceeding—indeed no matter how this case is

12

configured for trial—Rambus should be accorded its traditional prerogative, as the plaintiff with

13

the ultimate burden of proof, of presenting and arguing its case first.

14

1.

15 16 17 18 19 20 21 22 23 24 25

Because Rambus expects to rebut the Manufacturers’ invalidity contentions in part through secondary-consideration evidence relating to commercial success, there will be significant overlap between the facts relevant to validity and those relevant to damages. With respect to each issue, Rambus will offer evidence of licenses it successfully entered into, evidence of the Manufacturers’ sales and the price of their products, and evidence of the role Rambus’ s inventions played in the success of those products. Contrary to the Manufacturers’ assertions, then, efficiency would not be served by bifurcation. It is true that if the Manufacturers prevail on their affirmative defenses, trying damages will prove unnecessary. (Letter at 7.) But that is true in every case, yet the norm—even in patent cases—is to try damages together with liability. Cf Innovative Office Prods., Inc. v. SpaceCo, Inc., 2006 WL 1340865, at * 1 (E.D. Pa. 2006) (“[B]ifurcation in [patent] cases remain[s] the exception rather than the rule.”); accord Wright &

26 Miller 27

There are Compelling Reasons for Trying Damages and Validity Together, and Little Reason to Try Them Separately

§ 2389, at

132 & n.h. Here, trying the two together is especially sensible because much

of the evidence on commercial success and damages will be the same. The upshot of the

28 -

11 -

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1

Manufacturers’ proposal is that this evidence would be presented or argued to the jury at least

2

twice, and possibly even more often if the Manufacturers’ request for seriatim damage trials were

3

to be granted. Such redundancy would be neither efficient nor straightforward for the jury. The Manufacturers’ proposal that damages would be tried on a company-by-company

4 5

basis would be similarly inefficient, particularly in light of the commonalities cutting across each

6

side’s damages contentions. Although the Court had expressed a tentative view in favor of such a

7

procedure at the September 24, 2008 severance hearing (RT 30), subsequent development of the

8

parties’ damages theories now makes clear that the fairest and most efficient procedure will be to

9

try all the damages issues as one. Rambus’ s damages case against all the Manufacturers is based

10

on the analysis of Dr. Teece. He uses the same analytic framework, as set forth in Georgia

11

Pac,fIc v. US. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), in the same way, as to each

12

Manufacturer, and concludes that the same reasonable royalty rate of 7% should apply to each

13

Manufacturer’s infringing DDR2+ products. Similar overlap also marks the Manufacturers’

14

damages contentions, even though they have retained different damages experts. (See Rambus’s

15

Motion in Limine No. 12, Dec. 3, 2008, Dkt. No. 2713.) All the Manufacturers are in the same

16

industry and make the same standardized products; the shared economic conditions that affected

17

the DRAM industry and its products form a significant part of each Manufacturer’s damages

18

analysis. Specifically, the opinions and expected testimony of the Manufacturers’ “separate”

19

damages experts overlap extensively, and in at least the following respects:

20

•

patent portfolio;

21 22

That each contends that the asserted patent claims form a subset of Rambus’s “broad”

•

That each relies on Rambus’s historical licensing practices with regard to SDRAM and DDR SDRAM;

23 24

•

That each relies on Rambus’ s historical licensing practices with regard to RDRAM;

25

•

That each relies on the amount of royalties Rambus has received under its SDRAM and DDR SDRAM licenses;

26 27 28

•

That each contends there is reduced value from a US-only license and that this reduced value should be reflected in the hypothetical negotiation as compared to Rambus’s 1A -

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worldwide SDRAM, DDR SDRAM and RDRAM licenses; and

1 2

Document 3012

•

That each relies on various economic characteristics of the DRAM industry and market,

3

including that it is cyclical, that 2001 was a “low point” in the business cycle, that

4

DRAMs are expensive to manufacture and that DRAMs are commodities with thin profit

5

margins.

6

Moreover, each of the Manufacturers’ damages experts offers essentially the same

7

criticism of Dr. Teece’ s analysis and advocates that essentially the same rate—less than 1% for

8

DDR2+—would be the result of the hypothetical negotiation each postulates would have

9

occurred. There is little to gain, and much to lose in terms of efficiency and economy, from

10

seriatim damages trials that require repetition of the same evidence. A single consolidated trial is

11

the simplest, most straightforward way to proceed.

12

The Manufacturers conclusorily assert that the prejudice identified in their earlier motions

13

“also supports damages trials separate from [validity].” (Letter at 8.) But the Manufacturers

14

focused heavily on the purported prejudice that would result from trying infringement together

15

with damages, and on the confusion that purportedly would result from having to consider

16

multiple accused products and features. (See, e.g., Nanya Mot. to Sever, at 10-11, Aug. 1, 2008,

17

Dkt. No. 2006 (contending that it would be difficult “for the jury to keep track of which products

18

are accused of infringing which patents,” and that “the infringing acts of one Manufacturer may

19

be wrongly attributed to another”); Micron Mot. for Separate Trials at 14, Aug. 1, 2008, Dkt. No.

20

2005 (“A consolidated patent trial would present an unnecessary and prejudicial risk ofjury

21

confusion on the issue of infringement, because the Micron products that Rambus has accused of

22

infringement are not the same as the products of Hynix, Samsung, and Nanya.”); Samsung Mot.

23

for Separate Trials at 6, Aug. 1, 2008, Dkt. No. 2016 (“A consolidated patent trial would present

24

an unnecessary and prejudicial risk ofjury confusion on the issue of infringement, because the

25

Samsung products that Rambus has accused of infringement are products distinct from the

26

accused products of the other manufacturers.”).) If the Manufacturers properly concede

27

infringement, much of the supposed complexity disappears. The jury would not need to parse the

28

various accused products and infringing features—they would be told which products infringe 1 -

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1

which patents—and they would simply be asked to determine the royalty rates applicable to a set

2

of predominantly industry-standard products, subject to common economic conditions and

3

industry trends, and subject to the same Georgia-Pacific framework. If the Manufacturers offer a proper and legally sufficient concession of infringement, then

4 5

the efficiency concerns that they tout would weigh in favor of maintaining the natural

6

consolidation of the remaining issues for a single trial, not the inversion of trial order they

7

propose. Rather than forcing the parties to present their evidence, and the jury to weigh that

8

evidence, multiple times, the Court should order that validity and damages be tried together.

9

2.

Whether validity and damages are tried together or separately, Rambus should be

10 11

In Any Event Rambus Should Argue First

permitted to present its case first. A plaintiff, bearing the burden of proof, traditionally has the right to present its evidence

12 13

and argument first. “Ordinarily the order of presentation at trial requires plaintiffs to present their

14

cases first, followed by the defendants (including the presentation of any affirmative defenses),

15

and concluded by the plaintiffs’ rebuttal.” Johnson v. Mortham, 915 F. Supp. 1574, 1581 (N.D.

16

Fla. 1996) (three-judge panel). Indeed, but for the Manufacturers’ proposal to “not contest”

17

infringement, there would be no question but that this would be the way in which the trial would

18

proceed. Even if the Manufacturers were to make a legally proper concession of infringement,

19

there would be no reason to depart from the longstanding practice, which flows directly from the

20

structure of our adversary system. Rambus is the plaintiff here. It would still bear the burden on

21

damages. The evidence it would introduce on that key issue overlaps with the invalidity defenses

22

6 that the Manufacturers seek to use as a fulcrum for leveraging a favorable order of proof.

23

Adopting the Manufacturers’ order of proof, in contrast, would seriously prejudice

24 25 26 27 28

6

The Manufacturers argue that if damages and validity are tried separately, damages should be tried second. (Letter at 8.) Rambus notes that reverse-bifurcation, in which damages are tried first, is not uncommon in complex multiparty litigation. See Angelo v. Armstrong World Indus., Inc., 11 F.3d 957, 964-65 (10th Cir. 1993); Greenleafv. Garlock, Inc., 174 F.3d 352 (3d Cir. 1999). Indeed, in most patent cases, as in Hynix I, the plaintiff’s evidence of damages is presented along with its infringement case and before evidence of invalidity is offered by the defendant. -

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1

Rambus’s ability to present its case. The Manufacturers might take the position that they need

2

not make their witnesses available for live testimony until such time as they need those witnesses,

3

say to testify to damages or willfulness. The effect of a bifurcated trial in which invalidity were

4

litigated first would be to deny Rambus access to key witnesses on that issue. This is because

5

many of the company witnesses who the Manufacturers have identified as witnesses they will or

6

may call are also witnesses Rambus will or may call to give relevant testimony on secondary

7

considerations, among other topics. These include Graham Allan, DS. Chung, Jon Kang, J.B.

8

Lee, Jae Park, Gilbert Russell, Brian Shirley, David Taylor, and Steve Wang.

9

Rambus intends to call, and should be entitled to call, the Manufacturers’ witnesses slated

10

to otherwise testify live. Yet, if the trial is divided into separate phases, the Manufacturers may

11

hold back their witnesses until after Rambus has had to rest its case on certain issues, such as

12

secondary considerations, and thus effectively bar Rambus from calling them. A validity-first

13

trial would therefore effectively undercut Rambus’s ability to prove up secondary considerations

14

and defend the validity of its patents. At the same time, because the Manufacturers’ witness list

15

includes mostly Rambus witnesses, the Manufacturers would have the advantage of examining

16

Rambus’s witnesses before Rambus itself does.

17 18 19 20 21 22 23 24 25 26 27

D.

Micron Cannot Be Permitted to Stand in for the Other Manufacturers Under the Conditions Proposed by the Manufacturers

The Manufacturers’ unprecedented request to have Micron, and Micron alone, sit as defendant in the proposed bifurcated validity trial must be denied. As a threshold matter, Micron plainly cannot stand in for Hynix and Samsung if damages are tried with validity, as Rambus suggests they should. But even if validity were tried on its own, there is simply no precedent for forcing a plaintiff to try its case against only one of several distinct defendants. Doing so would potentially deny Rambus access to critical witnesses and distort the trial narrative in the Manufacturers’ favor. Moreover, the proposal, if adopted, would negate the efficiency the Court sought to realize by ordering a consolidated trial. Because Nanya has not joined in the proposal, the Court would still need to separately try Nanya’s invalidity claims in the future, even though all the Manufacturers, including Nanya, make the same invalidity contentions and share the same

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1

invalidity expert. Even as to the Manufacturers who joined in the proposal, the proposed Micron-

2

only trial presents significant practical risks, including the possibility of restarting the trial from

3

scratch if Micron settles with Rambus or declares bankruptcy, or if the results of this case were to

4

be impacted, as they conceivably might be for Micron but not for the other defendants, by the

5

7 rulings from the Micron spoliation trial that was conducted in the District of Delaware action.

6

For at least these reasons, the Manufacturers’ suggestion of trial by proxy must be denied.

7

The Manufacturers have cited no authority for the proposition that Rambus can be forced

8

to try the validity case against only Micron. To be sure, parties can stipulate to such a course

9

when they agree that it is a fair and equitable way of trying a case; but a group of defendants

10

cannot, over plaintiff’s objection, select a proxy to stand in their stead and thereby excuse

11

8 Excusing the other Manufacturers also would complicate themselves from appearing in the trial.

12

Ra.mbus’s access to important witnesses, effectively permitting the Manufacturers, again, to seize

13

control of Rambus’s case. A trial against only Micron, and not its larger co-defendants, would

14

distort the jury’s impression of the secondary considerations in a case where many of the greatest

15

users of Rambus’s technology are the same parties seeking to invalidate Rambus’s patents.

16

Tellingly, the Manufacturers do not explain how this proposal would further judicial economy or

17

convenience. The only apparent purpose of the proposal is to skew the proceedings to make it

18

more difficult for Rambus to present the facts in the manner of its choosing.

19

The proposal also is imprudent because it could hinder efficient resolution of this case in

20

multiple ways. With only Micron in the trial, Rambus would be prevented from reaching a

21

settlement with Micron unless it wished to start the trial over from scratch as to the other

22

Manufacturers. Restarting the trial might prove necessary, regardless, if Micron goes bankrupt

23

and is unable to proceed. Given that Micron’s losses in the last quarter apparently were

24

25 26 27 28

Appellate review also might be impacted by Micron’s unique “standing” or “license” defense that would prevent a final judgment from being affirmed as to Hynix, Samsung and Nanya if Micron were to succeed in some fashion on this unique defense. 8 For example, Hynix and Samsung has each asserted invalidity counterclaims against Rambus’s patents. They, no less so than Micron, bear the burden of demonstrating their entitlement to the declaratory judgment of invalidity that they seek. As a matter of basic fairness, Rambus should be permitted to try the invalidity counterclaims against each party that has asserted them. -

18 -

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1

9 there is a palpable risk that exactly substantially more than 50% of its remaining cash reserves,

2

such a scenario might soon occur. The Court would then be forced to start all over, with nothing

3

gained and much time, money, and judicial resources wasted. Finally, a ruling could issue from

4

the Delaware District Court that might alter the trial dynamic as between Micron and Rambus,

5

but not with respect to the other parties. This, too, might necessitate a new trial. And, Micron’s

6

unique “standing” defense, on the basis of which Micron contends it is licensed and therefore is

7

not an infringer, might result in an outcome, perhaps on appeal, that would be unique to Micron.

8

And, with complete certainty, the proposal advocated by the Manufacturers would mean two

9

nearly identical trials because Nanya wants to be tried separately on all the issues—the common

10

issues—that are currently scheduled for a common trial. Rather than promoting efficiency, that

11

aspect of the Manufacturers’ proposal ensures that one trial will be replaced with two. A

12

proceeding with just Micron as the proxy for Hynix and Samsung and a separate trial on the same

13

issues with Nanya makes no sense and would subject Rambus to unnecessary expense and would

14

inappropriately require it to face multiple attacks on the validity of its patents. Because there is no legal basis for forcing Rambus to accept the Micron-only trial, and

15 16

because such a trial would be both inefficient and unfair to Rambus, the Manufacturers’ proposal

17

should be denied.

18

ill.

19 20 21

RAMBUS’S COUNTER-PROPOSAL AND ITS OTHER EFFORTS TO STREAMLINE TRIAL In view of the foregoing principles and discussion, Rambus respectfully submits that the

counter-proposal Rambus has made to the Manufacturers presents a proper and fair way to stipulate to infringement and try damages and validity. The counter-proposal included the

22 following elements: 23

1. The Court would enter a final order determining that various and specifically identified

24 25 26 27 28

See Lu Wang and Ian King, Micron Will Need to Raise Money Soon, Wachovia Says (Dec. 29, 2008), available at http://www.bloomberg.comlapps/news?pid=2060 1 087&sid=azuVdPEu8 .kg&refer’=home (“Micron had about $1 billion of cash and short-term investments at the end of November and debt of $2.9 billion. The company reported a net loss of $706 million in its most recent quarter, its eighth money-losing quarter in a row.”); Micron Press Release, Dec. 23, 2008, available at http://download.micron.comlpdf/financials/Release_Q 1 -2009.pdf. -

10 -

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1

products infringe the claims in suit, with the specification of which products infringe which

2

claims to be consistent with Mr. Murphy’s infringement report and Rambus’s infringement

3

contentions. This order would be based on the Court’s claim construction order, its Order of

4

November 24, 2008, the additional factual submission to be made by Rambus as described in

5

paragraph 4 below, and the Manufacturers’ statement that they will no longer contest

6

infringement. An appeal with regard to this finding of infringement could be taken to the extent

7

the finding depends upon the claim construction order, the November 24, 2008 Order, or both. 2. The Court’s final order adjudicating infringement will have the same force and effect

8 9

as if it had been entered after a full trial and jury verdict determining Rambus’s infringement

10

claims in Rambus’s favor and shall also compel a dismissal on the merits and with prejudice of

11

the Manufacturers’ counterclaims for a declaratory judgment of non-infringement. In other

12

words, the parties would agree, to eliminate any later dispute, that the order would have the same

13

res judicata and collateral estoppel effect as if it had been entered after a full trial on the issues, or

14

on summary judgment. This would mean, for instance, that it would extend to the SDR and DDR

15

products of Samsung and Nanya that are accused in this case to the extent they incorporate the

16

0 same features as are in DDR2+ and are found to infringe) 3. For purposes of an appeal from the final determination of infringement, the record that

17 18

was developed in connection with the summary judgment motions would be supplemented by Mr.

19

Murphy’s reports regarding infringement and such other evidence, including exhibits, designated

20

written discovery responses, and designated prior testimony as Rambus may choose to submit as

21

part of an offer of proof. This will ensure a full evidentiary record for appellate review

22

approximately the same record that would be available to the Federal Circuit if the case were to

23

proceed to trial on infringement.

at least

4. The trial would proceed with Rambus as the plaintiff and the first issue to be tried

24 25

—

would be damages. This is consistent with the trial protocol followed in Hynix I. The

26 27 28

10

The patent claims to be adjudicated as infringed by these SDR and DDR parts would be the same claims asserted against the DDR2+ products. The parties would need to reach agreement on which of these claims would be found to be infringed by which specific SDR and DDR products. -

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Manufacturers’ claim that Rambus’s patents are not valid would be the second issue tried. 5. The jury would be instructed, consistent with the specifics of the order to be entered, as

2 3

Document 3012

to which specific products have been found to infringe which specific patent claims. 6. If Rambus requests that a witness employed by or under the control of one of more of

4 5

the Manufacturers testify live at trial, and if the witness is not produced as and at the time

6

requested, the Manufacturers would not be able to call that witness to testify live during any of

7

the remaining proceedings in these coordinated actions, including during the trial on willfulness.

8

7. All of the Manufacturers would remain as parties in the upcoming trial.

9

The counter-proposal reflects the core procedural principles outlined above (see

10

discussion infra at 1) and that the Manufacturers’ proposal fails to satisfy. It would ensure a valid

11

judgment of infringement, backed by an adequate factual record; ensure that the jury is properly

12

informed about the infringement determination; ensure that Rambus has both the access to

13

witnesses and the ability to present its case that due process and federal law require; and

14

maximize efficiency by consolidating, for a single trial, issues on which the proofs substantially

15

overlap. Even if the Court does not adopt Rambus’s proposal for adjudicating infringement short of

16 17

trial, there are other, straightforward ways in which the upcoming trial might be streamlined.

18

Rambus has presented to the Manufacturers numerous proposals for simplifying the evidence that

19

must be presented and the issues that must be resolved by the jury. In response, however, the

20

Manufacturers have refused to take even the most uncontroversial steps toward a more efficient

21

trial.

22

First, Rambus has proposed repeatedly that the parties agree on representative parts,

23

which only makes sense in a case involving standardized products. These proposals were either

24

ignored or rejected until the Court directed the parties to reach such an agreement in its order

25

granting in part and denying in part Rambus’s motion for summary judgment of infringement,

26

dated November 24, 2008. As set forth in correspondence from Rambus’s and Micron’s counsel

27

to the Court on December 17, 2008, the parties have reached agreement in principle, but, as of the

28

date of this filing, this agreement has yet to be finalized. -

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1

Second, in the November 24, 2008 Order, the Court itself suggested ways in which the

2

parties might streamline the infringement case: “The court anticipates that Nanya and Rambus

3

can reach a stipulation with respect to Nanya’s DDR3 SDRAMs to prevent unnecessary issues

4

from having to be tried to the jury.” (Order at 25.) Rambus has proposed such a stipulation to

5

Nanya on three occasions (December 4, 11, and 30, 2008) and received no response until

6

December 31, 2008, when Nanya informed Rambus that it does not believe entering into such a

7

stipulation is necessary or appropriate in light of the Manufacturers’ pending “no contest”

8

proposal.

9

Third, Rambus has proposed, again on three occasions (December 3, 9, and 29, 2008), that

10

the parties stipulate that the claim limitations for which the Manufacturers’ non-infringement

11

experts offer no opinion are infringed, thus obviating the need for Rambus to present evidence on

12

them at trial. Hynix responded on December 30, and Nanya responded on December 31, both

13

claiming, as Nanya did above, that such a stipulation is not necessary or appropriate under the

14

current circumstances, which, presumably, refers again to the Manufacturers’ pending “no

15

contest” proposal.

16

The Manufacturers’ focus on strategic considerations, and not efficiency, is further

17

reflected in trial time estimates proposed in connection with the parties’ joint pretrial statement to

18

be filed on January 5, 2009. If their “no contest” proposal is rejected, the Manufacturers estimate

19

a total of 156-160 hours (53 days or 14 weeks) just to present their evidence, of which 108-112

20

hours would be to present just their evidence to the jury, 40 hours of which would be spent on

21

infringement (10 hours for each Manufacturer). This estimate is vastly inflated and wholly

22

unreasonable for several reasons, but particularly so in light of the Court’s order requiring

23

common non-infringement issues to be addressed through a single non-infringement expert and

24

the fact that only common non-infringement issues remain to be tried.

25

The purported efficiencies to be gained by the Manufacturers’ “no contest” proposal

26

result, in large part, from their own actions up to this point in ignoring or refusing to agree to

27

Rambus’s reasonable proposals to streamline the presentation of infringement evidence in the

28

upcoming trial. The great majority of the efficiencies the Manufacturers now claim to seek could -

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1

have been achieved, and still can be achieved, simply by requiring the Manufacturers to resolve

2

the issues the Court has already identified and directed the parties to resolve.

3

IV.

4

CONCLUSION If what the Manufacturers aim to accomplish is to remove infringement from the issues

5

slated for trial, while pressing their challenge to the claim construction, they should simply do

6

what other civil defendants do: concede infringement, permit the Court to develop a thorough

7

record to present the infringement and claim construction issues on appeal, allow the jury to be

8

instructed on infringement, and then present their invalidity arguments on the merits. The

9

concession need not compromise the Manufacturers’ right to appeal the claim construction order

10

or the partial grant of summary judgment for Rambus. Then, in a trial sans infringement, the best

11

way to promote efficiency would be to maintain the natural consolidation of the remaining issues

12

for a single trial. Instead, the Manufacturers attempt to radically transform civil trial structure—

13

from the mechanics of conceding liability to their proposal to select a proxy defendant—in order

14

to gain a strategic advantage. There are no “efficiencies” from the Manufacturers’ proposal, only

15

tactical advantages to the Manufacturers.

16

This Court should reject Plaintiff’s proposal and adopt Rambus’s counter-proposal for

17

conducting the trial. Otherwise, a trial on all issues should simply proceed in the traditional

18

manner.

19 20

MUNGER, TOLLES & OLSON LLP SIDLEY AUSTiN LLP McKOOL SMITH P.C.

DATED: January 5, 2009

21 22 By: 23 24

/s/ Gregory P. Stone GREGORY P. STONE

Attorneys for RAMBUS INC.

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cv 05-02298 RMW; C 05-334 RMW; C-06-244 RMW