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Gregory P. Stone (SBN 078329) Andrea Weiss Jeffries (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: [email protected] Email: [email protected] Email: [email protected]

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Peter A. Detre (SBN 182619) Rosemarie T. Ring (SBN 220769) Jennifer L. Polse (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: [email protected] Pierre J. Hubert (Pro Hac Vice) Craig N. Tolliver (Pro Hac Vice) McKOOL SMITH PC 300 West 6th Street, Suite 1700 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

15

NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION

16 17

RAMBUS INC.,

18 19 20 21 22 23 24

CASE NO.: C 05-00334 RMW Plaintiff,

vs. HYNIX SEMICONDUCTOR INC., et al.,

RAMBUS INC.’S CONSOLIDATED OPPOSITION TO MOTIONS OF MANUFACTURERS FOR SUMMARY JUDGMENT BASED UPON COLLATERAL ESTOPPEL

Defendants. Date: Time: Courtroom: Judge:

January 30, 2009 2:00 p.m. 6 Hon. Ronald M. Whyte

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1 RAMBUS INC.,

CASE NO.: C 05-02298 RMW

2 Plaintiff, 3 vs. 4 5

SAMSUNG ELECTRONICS CO., LTD., et al.,

6

Defendants.

7 RAMBUS INC.,

CASE NO.: C 06-00244 RMW

8 Plaintiff, 9 vs. 10 MICRON TECHNOLOGY INC., et al., 11 Defendants. 12 13

HYNIX SEMICONDUCTOR, INC., et al.,

14

Plaintiffs,

15

vs.

16

RAMBUS INC.,

17

CASE NO.: CV 00-20905 RMW

Defendant.

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TABLE OF CONTENTS I

INTRODUCTION .............................................................................................................. 1

II.

ARGUMENT ...................................................................................................................... 3 A.

6 7

The Manufacturers Cannot Demonstrate That the Delaware Ruling is Entitled to Collateral Estoppel Effect, Because the Issues Are NonIdentical................................................................................................................... 4 1.

8 9

The Delaware Court’s Determinations About Prejudice, Bad Faith, and the Appropriate Sanction Rested in Part Upon Purported Litigation Misconduct by Rambus that is Irrelevant Here .......................... 4 a.

Rambus’s Purported Litigation Misconduct Was Material to the Delaware Court’s Prejudice and Sanction Determinations ................................................................................ 5

b.

The Purported Litigation Misconduct Relied Upon by the District Court is Irrelevant to this Case, and Renders the Issues of Prejudice and Sanction Distinct ....................................... 7

c.

The Manufacturers’ Attempt to Link the Litigation Misconduct to this Case Are Meritless ......................................... 12

10 11 12 13 14 2.

15 16

The Manufacturers Have Failed to Show that the Issue of Spoliation is Identical ................................................................................................. 15 a.

The Differences Among Products Raise Different Issues as to When Rambus Incurred a Duty to Preserve Documents........... 15

b.

The Circumstances Presented by Rambus’s Infringement Action Against Hynix, Samsung, and Nanya Each Raise Unique Spoliation and Prejudice Issues that Cannot Be Resolved by the Delaware Ruling................................................. 16

17 18 19 20 21 22

B.

This Court Should Exercise its Discretion to Reject the Efforts by Samsung, Nanya, and Hynix to Invoke Collateral Estoppel Based Upon Inconsistent Rulings, Efficiency, and Fairness Concerns ..................................... 19 1.

The Delaware Court’s Findings Are Fundamentally Inconsistent with this Court’s Spoliation Determinations in Hynix I............................ 20

2. 24

The Discretionary Factors Apply to Hynix, Samsung, and Nanya’s Assertion of Non-Mutual Collateral Estoppel........................................... 22

25

a.

Courts Have Discretion to Consider the Fairness of Applying Non-Mutual Collateral Estoppel Even When It Is Defensive ...................................................................................... 22

b.

Regardless, the Manufacturers Assert a Species of Offensive Collateral Estoppel Because Rambus was the Defendant in Delaware ....................................................................................... 25

23

26 27 28

i

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1 2 3

c.

4

3.

5

Hynix’s Implausible “Last in Time” Argument is Expressly Refuted by Controlling Ninth Circuit Law ................................... 28

Collateral Estoppel Also Is Properly Denied Because It Will Not Result In Judicial Economy ...................................................................... 28

6

C.

Nanya’s Particularized Requests for Issue Preclusion Are Equally Impermissible and Unfair...................................................................................... 29

7

D.

The Delaware Court’s Ruling is Unpersuasive..................................................... 30

8

1.

The Delaware Court’s Determination that Rambus Was Required to Preserve Documents in December 1998 Is Erroneous.............................. 30

2.

The Delaware Court’s Prejudice Analysis is Erroneous ........................... 33

9 10

a.

There is No Support for the Delaware Court’s Conclusion that the Spoliated Documents Had a Prejudicial Effect on the Manufacturers’ JEDEC-Related Defenses in this Litigation....................................................................................... 34

b.

There is No Support for the Delaware Court’s Conclusion that the Spoliated Documents Had a Prejudicial Effect on the Equitable Conduct Defenses That Remain to be Tried ........... 36

11 12 13 14 3.

15 16 17

III.

The Delaware Court’s Gave Inadequate Consideration to Sanction Options, and Offered No Reasoned Basis for Dismissing Rambus’s Patent Claims ............................................................................................ 37

CONCLUSION ................................................................................................................. 38

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1 TABLE OF AUTHORITIES 2 FEDERAL CASES 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

A.J. Canfield Co. v. Vess Beverage, Inc., 859 F.2d 36 (7th Cir. 1988)....................................................................................................... 1 American Fabrics, Inc. v. L&L Textiles, Inc., 754 F.2d 1524 (9th Cir. 1985)................................................................................................. 31 Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369 (Fed. Cir. 2001)..................................................................................... 8, 13, 14 Blonder-Tongue Labs., Inc. v. University of Ill. Found., 402 U.S. 313 (1971) ......................................................................................................... passim Brewer v. Dupree, 2003 WL 23507795 (M.D. Ala. 2003).................................................................................... 27 Central Delta Wager Agency v. United States, 306 F.3d 938 (9th Cir. 2002)............................................................................................... 1, 12 Comair Rotron, Inc. v. Nippon Densan Corp., 49 F.3d 1535 (Fed. Cir. 1995)................................................................................................... 4 Delgado v. United States, 536 F.Supp.2d 1328 (Ct. Int’l Trade 2007)............................................................................. 27 Eureka Fed. Sav. & Loan Ass’n v. Am. Cas. Co., 873 F.2d 229 (9th Cir. 1989)..................................................................................................... 7 Fireman’s Fund Ins. Co. v. Int’l Market Place, 773 F.2d 1068 (9th Cir. 1985)................................................................................................. 24 Fund for Animals, Inc. v. Lujan, 962 F.2d 1391 (9th Cir. 1992)................................................................................................. 12 Gates Rubber Co. v. Bando Chem. Indus., Ltd., 167 F.R.D. 90 (D. Colo. 1996)................................................................................................ 37 Halaco Eng’g Co. v. Costle, 843 F.2d 376 (9th Cir. 1988)................................................................................................... 38 Healey v. Labgold, 271 F. Supp. 2d 303 (D.D.C. 2003) .......................................................................................... 8 Hydranautics v. FilmTec Corp., 204 F.3d 880 (9th Cir. 2000)..................................................................................................... 4 Hynix Semiconductor Inc. v. Rambus Inc., No. CV-00-20905-RMW (N.D. Cal. Apr. 22, 2005) .............................................................. 28 Hynix Semiconductor Inc. v. Rambus, Inc., F. Supp. 2d , 2006 WL 565893 (N.D. Cal. 2006) .................................................... passim In re Ameriserve Food Distrib., Inc., 267 B.R. 668 (D. Del. 2001) ................................................................................................... 26 In Re Reynoso, 477 F.3d 1117 (9th Cir. 2007)................................................................................................... 4

27 28 iii

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Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244 (3d Cir. 2006).............................................................................................. 27, 28 Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933) ............................................................................................................ 8, 13 Liberty Mut. Ins. Co. v. FAG Bearings Corp., 335 F.3d 752 (8th Cir. 2003)................................................................................................... 27 McNellis v. First Fed. Sav. & Loan Ass’n, 364 F.2d 251 (2d Cir. 1966)...................................................................................................... 7 Memphis-Shelby County Airport Aut. v. Braniff Airways, Inc., 783 F.2d 1283 (5th Cir. 1986)................................................................................................... 7 Micron Tech., Inc. v. Rambus Inc., No. 00-792-SLR (D. Del. Jan. 9, 2009) .......................................................................... 1, 3, 23 Morris v. Union Pacific RR, 373 F.3d 896 (8th Cir. 2004)................................................................................................... 38 Mozart Co. v. Mercedes-Benz of North America, Inc., 833 F.2d 1342 (9th Cir. 1987)................................................................................................. 17 Offshore Sportswear, Inc. v. Vaurnet Int’l, B.V., 114 F.3d 848 (9th Cir. 1997)................................................................................................. 3, 4 Parklane Hosiery v. Shore, 439 U.S. 322 (1979) ......................................................................................................... passim Precision Instr. Mfg. v. Auto.Maintenance Mach. Co., 324 U.S. 806 (1945) .......................................................................................................... 14, 19 Provau v. State Farm Mut. Auto. Ins. Co., 772 F.2d 817 (11th Cir. 1985)................................................................................................. 30 Rambus, Inc. v. Infineon Techs., 155 F. Supp. 2d 668 (E.D. Va. 2001)................................................................................ 10, 11 Rambus, Inc. v. Infineon Techs. AG, 222 F.R.D. 280 (E.D. Va. 2004) ...................................................................................... passim Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741 (9th Cir. 2006)..................................................................................................... 4 Robi v. Five Platters, Inc., 838 F.2d 318 (9th Cir. 1988)............................................................................................. 31, 32 S.E.C. v. Monarch Funding Corp., 192 F.3d 295 (2d Cir. 1999).................................................................................................... 32 Samsung Elecs. Co., Ltd. v. Rambus, Inc., 523 F.3d 1374 (Fed. Cir. 2008)................................................................................... 19, 23, 24 Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76 (3d Cir. 1994)........................................................................................................ 37 Setter v. A.H. Robbins Co., 748 F.2d 1328 (8th Cir. 1984)................................................................................................... 7 SmithKline Beacham Corp. v. Apotex Corp., 232 F.R.D. 467 (E.D. Pa. 2005) .............................................................................................. 36 Southwestern Bell Telephone, L.P. v. Arthur Collins, Inc., 2005 WL 6225305 (N.D. Tex. 2005)...................................................................................... 27 - iv -

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State of Idaho Potato Comm’n v. GT&T Terminal Packaging, Inc., 425 F.3d 708 (9th Cir. 2005)................................................................................................... 29 Stevenson v. Sears, Roebuck & Co., 713 F.2d 705 (Fed. Cir. 1983)................................................................................................. 27 The Regents of the Univ. of Cal. v. Micro Therapeutics, Inc., 2007 WL 1670120 (N.D. Cal. June 6, 2007) .......................................................................... 37 Western Oil and Gas Ass’n v. E.P.A., 633 F.2d 803 (9th Cir. 1980)................................................................................................... 21 Zdanok v. Glidden Co., 327 F.2d 944 (2d Cir. 1963).................................................................................................... 29

7 8

FEDERAL RULES

9

FRCP 30(b)(6)............................................................................................................................. 8, 9 FRCP 54(b) ............................................................................................................................. 17, 43 FRCP 60(b) ............................................................................................................................. 17, 43

10 11

TREATISES AND ARTICLES 12 13 14 15 16 17 18

9 Stan. L. Rev. 281, 290-92 (1957)............................................................................................... 29 Currie, “Civil Procedure: The Tempest Brews,” 53 Cal. L. Rev. 25 (1965)................................. 30 McClintock on Equity § 26 (2d ed. 1948)....................................................................................... 8 P. Mennell, et al., Patent Case Management Judicial Guide 5-69 ................................................ 24 Restatement (Second) of Judgments § 27 ..................................................................................... 33 Restatement (Second) of Judgments § 29 ................................................................................. 4, 25 Restatement (Second) of Judgments § 88 (Tent. Draft No. 2, Apr. 15 1975) .............................. 26 Wright & Miller, Federal Practice & Procedure § 4465.1 at 741 ................................................. 30 Wright & Miller, Federal Procedure & Practice § 5178 ............................................................... 43

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INTRODUCTION This Court should decline to accord collateral estoppel effect to the Delaware Court’s

3

ruling on unclean hands and spoliation issued in Micron Tech., Inc. v. Rambus Inc., No. 00-792-

4

SLR (D. Del. Jan. 9, 2009) (the “Delaware Ruling” or “Ruling”). When the Delaware Ruling is

5

analyzed in light of the governing standards, none of the Manufacturers is entitled to invoke

6

collateral estoppel here, including Micron, the sole defendant with a claim to mutuality.

7

At one end of the preclusion spectrum sits Hynix. Having litigated and lost its spoliation

8

and unclean hands contentions in this very Court, it can articulate no plausible ground for

9

invoking the Delaware Ruling here. Collateral estoppel is intended to prevent litigants from

10

getting a “second bite at a single apple,” not to enable it. See A.J. Canfield Co. v. Vess

11

Beverages, Inc., 859 F.2d 36, 37 (7th Cir. 1988). Samsung, having already tried its unclean hands

12

defense before this Court, is closely aligned with Hynix. Although Nanya has yet to litigate

13

spoliation or unclean hands, its collateral estoppel arguments fare little better, for it must invoke

14

the doctrine in the face of critical differences in the issues and flatly inconsistent rulings. Only

15

Micron has a colorable claim to collateral estoppel, having litigated spoliation and unclean hands

16

against Rambus and prevailed in Delaware. Ultimately, however, the differences between the

17

issues decided in Delaware and those posed by Micron’s unclean hands defense in this action

18

foreclose the application of collateral estoppel even as to Micron.

19

The principal bar to collateral estoppel here—and the defect that cuts across the

20

Manufacturers’ briefs—is that the unclean hands issues addressed in the Delaware Ruling are not

21

identical to the issues presented in this case. The requirement of identical issues is mandatory,

22

and requires the Manufacturers to show more than a mere similarity or semblance. See Central

23

Delta Wager Agency v. United States, 306 F.3d 938, 953 (9th Cir. 2002). The record evidence

24

makes clear that key factual and legal differences pervade the issues of prejudice and the

25

appropriate sanction, as well as the question of spoliation simpliciter. The Delaware Court’s

26

determination of prejudice hinges in part on purported litigation misconduct in that case and in

27

the Infineon matter in the Eastern District of Virginia. But, as Micron’s own spoliation papers

28

and the undisputed record shows, the representations, testimony, and discovery conduct 1

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referenced in the Delaware Ruling did not take place in or even affect the coordinated cases.

2

Most of the purported misrepresentations were known long before Rambus even brought its

3

actions against the Manufacturers, and all of the challenged conduct was addressed before these

4

cases left the most preliminary phases.

5

The question of whether Rambus spoliated evidence for purposes of this litigation is also

6

necessarily different from the spoliation issues decided in Delaware. Spoliation turns on when

7

Rambus incurred a duty to preserve documents. That question cannot be answered without

8

examining the facts and circumstances surrounding the introduction and marketing of particular

9

accused DRAM products. As this Court recognized in Hynix I, Rambus’s litigation strategy

10

hinged on a variety of factors involving its relationship with DRAM manufacturers, its licensing

11

negotiations, and its investigation of the competing DRAM device. The Delaware Court’s

12

resolution of the duty issue as to earlier generations of products therefore cannot dictate the result

13

with respect to the Manufacturers’ later products. These differences are exacerbated by the

14

unique facts and circumstances presented by the non-mutual Manufacturers, whether that be

15

Hynix’s prior spoliation loss in this Court, Samsung’s licenses with Rambus, or Nanya’s later

16

entry into, and comparatively minor position in, the DRAM industry.

17

The second defect goes to this Court’s discretionary authority to refuse collateral estoppel

18

when, as in this instance, it is being asserted offensively and by non-mutual parties. The law is

19

settled that the existence of conflicting rulings on an issue itself weighs against the application of

20

collateral estoppel. The Delaware Ruling diverges from the Hynix I spoliation order not only in

21

its reasoning, but also in the conclusions it reached on key spoliation issues. These include when

22

the duty to preserve evidence arose, whether any prejudice resulted from the alleged destruction

23

of documents, whether Rambus acted in bad faith, and what sanction—if any—is appropriate.

24

See Hynix Semiconductor Inc. v. Rambus, Inc.,

25

Jan. 5, 2006). Even beyond these inconsistencies, applying the doctrine here would not advance

26

the efficiency goals underlying it. Hynix and Samsung’s unclean hands defenses have already

27

been tried; Hynix’s defense has already been rejected; and the extensive spoliation record built in

28

those cases promises to streamline the trial of Nanya’s defense.

F. Supp. 2d , 2006 WL 565893 (N.D. Cal.

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The non-mutual Manufacturers attempt to circumvent the discretionary factors by arguing

2

that they apply only in the offensive context, and that theirs is a defensive form of collateral

3

estoppel. This argument fails. One of the foundational cases on collateral estoppel, Blonder-

4

Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (1971), makes clear that the Court has

5

discretion to consider the fairness of applying the doctrine, regardless of the non-mutual parties’

6

positions. In any event, as this Court recognized in Hynix I, any effort by the Manufacturers to

7

invoke another court’s spoliation order in this case is inherently offensive. It is the position of the

8

parties in the first case that matters, and Rambus did not choose Delaware as the forum, or

9

Micron as an adverse party. See Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979).

10

Finally, the Manufacturers are wrong in suggesting that the Delaware Ruling constitutes

11

persuasive authority, and that it is cause for the Court to reconsider its Hynix I ruling or to re-open

12

the Samsung record. This Court has carefully analyzed the duty to preserve, the nature and scope

13

of Rambus’s productions to the Manufacturers, and whether any viable defenses were prejudiced

14

by the destroyed documents. Far from casting doubt on this analysis, the Delaware Ruling

15

underscores the accuracy and rigor of this Court’s decision.

16

II.

17

ARGUMENT The doctrine of collateral estoppel bars parties from re-litigating only such issues as were

18

actually litigated and necessarily decided by a final judgment in another case. See Offshore

19

Sportswear, Inc. v. Vaurnet Int’l, B.V., 114 F.3d 848, 850 (9th Cir. 1997). As this Court has

20

noted, the Manufacturers must establish four elements in order to invoke the doctrine: “‘(1) there

21

was a full and fair opportunity to litigate the issue in the previous action; (2) the issue was

22

actually litigated in that action; (3) the issue was lost as a result of a final judgment in that action;

23

and (4) the person against whom collateral estoppel is asserted in the present action was a party or

24

in privity with a party in the previous action.’” Order Denying Hynix’s Mot. to Dismiss Patent

25

Claims for Unclean Hands on Basis of Collateral Estoppel, Apr. 25, 2005 (“CE Order re:

26

Infineon”), at 2 (citation omitted); accord Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d

27

741, 746 (9th Cir. 2006). The Manufacturers bear the burden to prove these elements “with

28

clarity and certainty.” Offshore Sportswear, 114 F.3d at 850. Even if the Manufacturers establish -3-

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that all of these elements are satisfied—and they cannot—this Court can and should exercise its

2

discretion to deny collateral estoppel to the Delaware Court’s ruling. See Parklane Hosiery, 439

3

U.S. at 331; Blonder-Tongue Labs., 402 U.S. at 333-34; Restatement (Second) of Judgments

4

§ 29.

5

A.

The Manufacturers Cannot Demonstrate That the Delaware Ruling is Entitled to Collateral Estoppel Effect, Because the Issues Are Non-Identical

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Collateral estoppel may apply only if the previously adjudicated issues are identical to those before this Court. See Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000) (noting that collateral estoppel requires that “the issue necessarily decided at the previous proceeding is identical to the one which is sought to be relitigated”); accord Comair Rotron, Inc. v. Nippon Densan Corp., 49 F.3d 1535, 1537 (Fed. Cir. 1995). The doctrine may not be applied if there is even “some possibility” that the issues are not identical. In Re Reynoso, 477 F.3d 1117, 1123 (9th Cir. 2007). And because the requirement of identical issues is mandatory, any variance in the issues presented here bars all four of the Manufacturers from invoking the Delaware Ruling for collateral estoppel purposes. As resolved by the Delaware Court, the unclean hands issues in that case differ from those before this Court in at least two critical respects. First, the issue of whether the Manufacturers have suffered any prejudice in this litigation and, if so, the proper remedy for any such spoliation, was not decided by the Delaware Court. In evaluating the extent of Rambus’s purported “bad faith” and the “prejudice” to Micron, and in deciding to exercise its remedial discretion, the Delaware Court relied upon purported litigation misconduct in its case and Infineon, a factor that (among others) is inapplicable in this case. Second, Rambus’s infringement case against each of the Manufacturers presents unique legal and factual issues that preclude giving collateral estoppel effect to the Delaware Court’s spoliation determinations. 1.

The Delaware Court’s Determinations About Prejudice, Bad Faith, and the Appropriate Sanction Rested in Part Upon Purported Litigation Misconduct by Rambus that is Irrelevant Here

Contrary to the Manufacturers’s suggestion (e.g., Samsung CE Mot. 18), the Delaware Court expressly relied upon purported litigation misconduct in determining prejudice, bad faith, -4-

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and the proper remedy. That purported misconduct is demonstrably irrelevant here, because all of

2

the challenged acts were already aired before the coordinated cases were at issue.

3

a.

Rambus’s Purported Litigation Misconduct Was Material to the Delaware Court’s Prejudice and Sanction Determinations

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 arriving at its prejudice determination and in fixing what it believed to be the appropriate sanction, the Delaware Court specifically relied upon purported litigation misconduct by Rambus that was distinct from spoliation. The Delaware Court concluded that Micron was prejudiced by Rambus’s destruction of documents, and that the “prejudice has been compounded by Rambus’[s] litigation conduct.” (Del. Ruling, at 33.) In the Court’s view, Rambus’s spoliation, “when considered in light of Rambus[’s] litigation conduct,” warranted a declaration that its patents were unenforceable. (Id..) While focusing on spoliation, the Delaware Court expressly predicated its prejudice and remedial determinations on the litigation misconduct set out in the ruling, including purported false testimony and misrepresentations to the Courts in Delaware and Virginia. (Id. at 23-25.) The contrary interpretation offered by Samsung and Micron is countertextual, and ignores load-bearing portions of the Delaware Court’s analysis. Samsung argues that “the court applied a sanction based on a finding of spoliation, not litigation misconduct.” (Samsung’s Motion for Entry of J. of Unenforceability of Rambus’s Asserted Patents or, in the Alternative, for Summ. J. (“Samsung CE Mot.”), at 18 (emphasis in original).) Similarly, Micron maintains that the Delaware Court “made clear that Rambus’s spoliation alone fully supported her conclusions of bad faith, prejudice, and inadequacy of remedies other than unenforceability.” (Micron’s Mot. for Summ. J. of Unenforceability Based on Collateral Estoppel (“Micron CE Mot.”), at 20.) But this interpretation overlooks the Delaware Court’s language expressly linking Rambus’s purported spoliation with its purported litigation misconduct. In determining that Micron suffered prejudice, the Court did not treat litigation misconduct as an extraneous consideration; it specifically weighed Rambus’s alleged spoliation “in light of [its alleged] litigation misconduct,” and concluded that the misconduct “compounded” the prejudice to Micron. (Del. Ruling, at 33.) The Manufacturers argue that the Delaware Court included the litigation misconduct only -5-

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“to establish Rambus’s bad faith and an overall scheme of spoliation and litigation.” (Samsung

2

CE Mot., at 18; accord Micron CE Mot., at 21.) The Delaware Court’s discussion of litigation

3

misconduct makes clear, however, that it did not view this factor as a subordinate part of

4

Rambus’s spoliation conduct, or as solely probative of bad faith. The Court referenced litigation

5

misconduct in the context of discussing “the degree of prejudice suffered by Micron” and “the

6

potential sanctions for the conduct of record.” (Del. Ruling, at 32-33.) In the section of the

7

Ruling setting forth its factual conclusions, the Court addressed litigation misconduct separately

8

from spoliation, in paragraphs setting out, albeit erroneously, purportedly false testimony,

9

misrepresentations, and discovery failings. (Id. at 24-25.) Only by ignoring these findings and

10

quoting subordinate clauses out of context (e.g., Samsung CE Mot., at 18 (citing Del. Ruling, at

11

24; quoting id. at 33)) are the Manufacturers able to cabin the role of litigation misconduct in the

12

Delaware Court’s ruling. When the Ruling is viewed as a whole, however, it is apparent that the

13

Manufacturers’ arguments are baseless.1

14

In any event, a tie as to whether the Court’s litigation misconduct determinations were

15

necessary to its ruling must go to Rambus. It is black letter law that a Court may not give

16

preclusive effect to a ruling if it is unclear what issues were actually decided or necessary to the

17

judgment. See Eureka Fed. Sav. & Loan Ass’n v. Am. Cas. Co., 873 F.2d 229, 233 (9th Cir.

18

1989) (“Collateral estoppel is inappropriate if there is any doubt as to whether an issue was

19

actually litigated in a prior proceeding.”); In re Braniff Airways, Inc., 783 F.2d 1283, 1289 (5th

20

Cir. 1986) (“[I]f reasonable doubt exists as to what was decided in the first action, the doctrine of

21

res judicata should not be applied.”); Setter v. A.H. Robbins Co., 748 F.2d 1328, 1331 (8th Cir.

22

1984) (similar). Even if, as the Manufacturers suggest, the Delaware Court did not mean what it

23

said, the Court’s ruling would be at best ambiguous as to the significance and weight of Rambus’s

24

purported litigation misconduct, and it would be unfair to invoke it as grounds for imposing “the

25

1

26 27 28

For the above reasons, Micron’s repeated out-of-context quotations from prior Rambus hearings are inapposite. (See, e.g., Micron CE Mot., at 14 & n.18.) Rambus did not argue or concede that the spoliation issues in Delaware were identical to those in this case for collateral estoppel purposes, but even if it had, it would have been impossible at the time to anticipate that the Delaware Court would rely upon purported case-specific litigation conduct in analyzing the issue, thereby rendering the issues fundamentally distinct. -6-

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drastic remedy of foreclosing a party from litigating an essential issue.” McNellis v. First Fed.

2

Sav. & Loan Ass’n, 364 F.2d 251, 257 (2d Cir. 1966).

3

b.

4

The Purported Litigation Misconduct Relied Upon by the District Court is Irrelevant to this Case, and Renders the Issues of Prejudice and Sanction Distinct

5

In light of its reasoning, the prejudice and sanction issues resolved by the Delaware Court

6

are distinct from, and certainly not identical to, those presented here. The Manufacturers have

7

made no showing that the purported litigation misconduct found by the Delaware Court

8

prejudiced Micron or any of the other Manufacturers in this litigation, or that it had any effect on

9

the “integrity of the litigation process” before this Court. (Cf. Del. Ruling, at 33.) The acts of

10

misconduct alleged by Micron and relied upon by the Delaware Court were not only complete but

11

also well known by the time the coordinated cases were brought. Nearly all of the challenged

12

representations, testimony, and discovery actions took place between 2000 and 2001 in the

13

Infineon and Delaware litigations, and were ultimately ventilated in motion practice before those

14

courts. If anything, the undisputed facts make clear that the challenged litigation actions could

15

not have deceived the parties or the Court in the current proceedings.

16

The Federal Circuit has specifically recognized that a finding of litigation misconduct and

17

unclean hands in one case does not bar the patentholder from seeking relief in later cases. See

18

Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369, 1376 (Fed. Cir. 2001). Because the

19

unclean hands defense “only provides a bar to relief in the case at hand,” litigation misconduct

20

will not “defeat the right to affirmative relief” if “the misconduct has ceased and the right claimed

21

in the suit did not accrue because of it.” Id. (quoting McClintock on Equity § 26 (2d ed. 1948)).

22

The case law makes clear that a court may not impose sanctions for out-of-court conduct unless it

23

directly infected the current proceedings. See Keystone Driller Co. v. General Excavator Co.,

24

290 U.S. 240, 245 (1933) (explaining that unclean hands furnishes a remedy “only for such

25

violations of conscience as in some measure affect the equitable relations between the parties in

26

respect of something brought before the court for adjudication”); Healey v. Labgold, 271 F. Supp.

27

2d 303, 305 (D.D.C. 2003) (“[I]t would be an obvious usurpation of jurisdiction for this Court to

28

exercise its inherent authority to sanction behavior before another district court.”). This means -7-

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that in order to match up the prejudice and sanction issues decided by the Delaware Court, the

2

Manufacturers must show that every instance of the alleged litigation misconduct identified by the

3

Delaware Court had the same effect in the coordinated cases, and they must meet that burden as a

4

matter of law. The Manufacturers’ motions manifestly fail to meet that test:

5

Deposition Testimony About the Presentation of the Document Retention Policy to

6

Rambus’s Board and Number of Shred Days: The Delaware Court concluded that one of

7

Rambus’s Rule 30(b)(6) witnesses inaccurately testified at deposition that the Document

8

Retention Policy had not been presented to the Rambus Board. (Del. Ruling, at 24, ¶ 37.) But to

9

the extent the documents cited by the Delaware Court tell the true facts, they were publicly

10

known, and thus no longer concealed from the Manufacturers, before the coordinated cases even

11

got off the ground. To begin with, as Micron itself acknowledged in its post-trial Delaware

12

briefing, the board presentations that allegedly prove the testimony inaccurate were produced to

13

Infineon following the Virginia Court’s May 18, 2004 production order. (See Wu Decl. Ex. A

14

[Micron’s Post-Trial Brief re Rambus’s Litig. Misconduct and the Proper Sanction for Rambus’s

15

Spoliation, Case No. 00-792 (SLR), D. Del. Dct. No. 1084 (“Micron Spoliation Br.”)] at 35-36.)

16

With the disclosure of the “misconduct” to a litigation adversary, Rambus could hardly be

17

accused of “relying” on this purportedly false testimony in the consolidated cases, and there has

18

been no showing of any such attempt. More fundamentally, these exhibits were used in open

19

court as exhibits in the Infineon trial at the outset of the ‘334 case against Hynix, Nanya, and

20

Samsung, and long before Rambus sued Samsung in the ‘2294 action. (See Wu Decl. ¶¶ 5-6.)2

21

The same is true of the documents and facts underlying the Delaware Court’s

22

determination that Rambus’s Rule 30(b)(6) witnesses gave false deposition testimony about the

23

number of “shred days” held at the company. (Del. Ruling, at 24.) As Micron acknowledges,

24

one of these witnesses agreed in a February 2004 deposition that there were, in fact, three

25

housekeeping events held between 1998 and 2000. (Micron Spoliation Br., at 34 (citing Kramer

26

Depo. 170:3-171:6); accord Wu Decl. Ex. B [Kramer Depo. 170:3-171:6].) Indeed, the Virginia

27

2

28

The Infineon trial began on February 21, 2005, less than one month after Rambus brought the ‘334 action. (Wu Decl. ¶ 2 .) -8-

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Court specifically noted in its May 18, 2004 order that there was evidence Rambus held

2

housekeeping events in 1998, 1999, and 2000. See Rambus, Inc. v. Infineon Techs. AG, 222

3

F.R.D. 280, 286 (E.D. Va. 2004). With these facts out in the open, there is no basis in fact for the

4

Manufacturers to suggest that the initial deposition testimony had any affect on the coordinated

5

cases here.

6

Rambus’s Purported Misrepresentation About the Timing and Purpose of the Document

7

Retention Policy: The Delaware Court concluded that Rambus made a misrepresentation about

8

the timing of its Document Retention Policy in a September 17, 2001 brief opposing Micron’s

9

Motion for Sanctions. (Del. Ruling, at 24-25, ¶ 39a.) According to the Delaware Court, notes

10

from a February 12, 1998 meeting between Karp and outside counsel made it misleading for

11

Rambus to assert that it implemented the policy “long before Rambus even contemplated [a

12

patent infringement] action.” (Id.) But it is undisputed that Rambus produced these otherwise

13

privileged meeting notes in response to the Virginia Court’s May 18, 2004 discovery order.

14

(Micron Spoliation Br., at 38.) Indeed, long before obtaining this document in discovery, the

15

Manufacturers asserted that Rambus’s document retention policy was developed in connection

16

with, and coterminously to, anticipated patent litigation. As early as 2001, Infineon argued, and

17

the Virginia Court agreed, that Rambus “contemplated that it might be bringing patent

18

infringement suits” when it initiated its document retention policy in 1998. See Rambus, Inc. v.

19

Infineon Techs., 155 F. Supp. 2d 668, 682 (E.D. Va. 2001). Hynix made a similar argument when

20

it filed its motion seeking a spoliation sanction from this Court in October 2004, suggesting that a

21

1998 presentation established a link between the Document Retention Policy and anticipated

22

litigation. (See Hynix’s Mot. to Dismiss Patent Claims as a Sanction for Litig. Miconduct, Case

23

No. 00-2-0-5, Dkt. No. 524, at 5.)

24

To the extent there was anything misleading about Rambus’s argument that its Document

25

Retention Policy “had nothing to do with litigation” (Del. Ruling, at 25, ¶ 39b), the corrective

26

documents and facts were available months and even years before these proceedings began. The

27

Delaware Court concluded that this argument amounted to a misrepresentation because “several

28

documents reveal that Rambus considered the policy to be part of its litigation preparation.” (Id.) -9-

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1

This allegation has been made by DRAM manufacturers since at least the early stages of the

2

Infineon litigation. See 155 F. Supp. 2d at 682. As Micron itself notes, at least one of the

3

documents cited by the Delaware Court in its ruling—a list of Rambus Intellectual Property

4

Department goals—was produced in 2002. (Micron Spoliation Br., at 39 n.153.) Other

5

documents relied upon by the District Court were produced in Infineon following the Virginia

6

Court’s May 18, 2004 discovery order, (id.), and shown in open court at the Infineon trial in 2005.

7

(Wu Decl. ¶¶ 8-11.) Indeed, the 2004 discovery orders issued by the Virginia Court themselves

8

reference the same Intellectual Property Department goals cited in the Delaware Ruling. See

9

Rambus, Inc. v. Infineon Techs. AG, 220 F.R.D. 264, 287 (E.D. Va. 2004) (discussing an “internal

10

Rambus document created by Rambus’[s] intellectual property team in June 1999 that discusses

11

the company’s goals for 1999”); id. at 294 (similar). These preexisting contentions and

12

determinations foreclose any inference that Rambus’s purported misrepresentation had any effect

13

in these later-filed litigations.

14

Richard Crisp’s Representation that He Was Minimally Involved with Rambus’s Patent

15

Prosecution Efforts: The Delaware Court relied upon a purported discrepancy in Rambus JEDEC

16

representative Richard Crisp’s testimony that was identified long ago, citing documents that have

17

been in the possession of Micron for years. According to the Delaware Court, Crisp gave

18

misleading testimony by indicating that he was minimally involved in Rambus’s patent

19

prosecution. (Del. Ruling, at 25.) But as early as August 2001, the Virginia Court concluded, in

20

a published order, that notes written by patent counsel Lester Vincent “establish that Rambus[’s]

21

JEDEC representative Richard Crisp was intimately involved in the patent-drafting efforts,” and

22

that Crisp had initially given “false or misleading testimony.” Infineon, 155 F. Supp. 2d at 681.

23

The “misconduct” was therefore uncovered and disclosed long before these cases were filed.

24

Geoffrey Tate’s Purported Testimony About Amending Rambus’s Patent Claims: The

25

Delaware Court determined that, in the Infineon matter, former Rambus CEO Geoffrey Tate

26

falsely denied taking steps to amend Rambus’s patent claims to cover SDRAM features. (Del.

27

Ruling, at 25.) As with Crisp’s testimony, the Virginia Court identified this purported

28

discrepancy in Tate’s testimony in its attorney’s fees order in Infineon, which was issued on - 10 -

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August 9, 2001. See 155 F. Supp. 2d at 681-82 (challenging Tate’s testimony “that he did not

2

believe that Rambus drafted claims to cover JEDEC’s standard-setting work”). The

3

Manufacturers can therefore claim no prejudice here.

4

Rambus’s Response to Micron’s Request for Production of Records Regarding Shredding

5

and Removable Electronic Media: The District Court concluded that Micron requested

6

documents regarding shredding services and back-up tapes in 2001, but that Rambus “failed to

7

produce all responsive documents until much later.” (Del. Ruling, at 24.) By Micron’s own

8

account, however, Rambus produced the challenged shredding invoices on February 17, 2004,

9

some eleven months before any of these cases commenced. (Micron Spoliation Br., at 37 (citing

10

MTX 683); accord Wu Decl. Ex. C [MTX 683].) Moreover, there can be no harm to the

11

Manufacturers in the coordinated cases as a result of Rambus’s March and April 2005 discovery

12

of removable electronic media, including some back-up tapes. The matter was the subject of

13

detailed disclosures by Rambus in its April 22, 2005 verified statement. (See Wu Decl. Ex. D

14

[Rambus’s Verified Statement Re: Discovery of Backup Tapes, filed Apr. 27, 2005, in Case No.

15

CV 00-20905].) The productions from, and disclosures about, the back-up tapes all took place

16

before Rambus brought suit against Micron in the ‘244 case, and before discovery had begun in

17

any of the DDR2 cases.

18

The Issues of Prejudice and Proper Remedy Raise Triable Issues Precluding Summary

19

Judgment: Because the Manufacturers cannot show that the litigation misconduct found in

20

Delaware had any consequences, much less any prejudicial effect, in these cases, the issues of

21

prejudice, bad faith, and proper remedy are non-identical. Even if the Manufacturers could point

22

to some possible effect on the consolidated cases, it is not enough for issues to be “similar”; an

23

order may only be given collateral estoppel effect if it decided the “identical” issue before the

24

Court. See Central Delta Wager Agency, 306 F.3d at 953 (emphasizing that “the issues litigated

25

must not be ‘merely similar,’ but must be ‘identical’”), accord Fund for Animals, Inc. v. Lujan,

26

962 F.2d 1391, 1399 (9th Cir. 1992) (“The doctrine is inapplicable if the issues are merely

27

similar.”). The Manufacturers cannot sustain this burden.

28 - 11 -

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The Manufacturers’ Attempt to Link the Litigation Misconduct to this Case Are Meritless

Unable to escape this clear lack of identity, the Manufacturers attempt to import the litigation misconduct into this case by stretching the law and the facts. Neither their arguments nor the authority they cite, however, suggests that a party’s purported unclean hands in one trial taints its rights in a subsequent trial. First, the Manufacturers insist that Aptix has no application here because it does not expressly address collateral estoppel. (Samsung CE Mot., at 18; Micron CE Mot., at 20.) But the Federal Circuit’s observation that “a finding of unclean hands generally does not prejudice the offending party in subsequent cases,” 269 F.3d at 1376, reflects not only the longstanding principle that such equitable relief is inherently case-specific, but also the collateral estoppel requirement that the issues before the two courts be identical. If, as the Manufacturers suggest, a court must mechanically apply a sanction imposed by another court for past litigation misconduct merely because the litigations have some relationship, the Federal Circuit’s reasoning in Aptix would be meaningless. Far from supporting the Manufacturers’ position (Samsung CE Mot., at 18; Micron CE Mot., at 21), Keystone Driller highlights why the Delaware Court’s litigation misconduct determinations render the prejudice and remedy issues distinct here. In that case, the patentholder secured a judgment of validity and infringement by purchasing the testimony of an inventor who had devised a prior use. See 290 U.S. at 243. In a second action, the patentholder attempted to leverage the fraudulently-obtained judgment in pursuing patent infringement claims, including injunctive relief, against additional defendants. Id. at 246. Because the patentholder attempted to use the fraudulent judgment in the second action, the Court upheld the defendant’s unclean hands defense and denied the patentholder relief. Id. at 247. Nevertheless, as the Federal Circuit noted in Aptix, the Supreme Court did not hold that the plaintiff was barred from asserting its patents in future cases. 269 F.3d at 1377. On the contrary, just two years later, the Supreme Court acknowledged the earlier fraud, but then resolved on the merits an assertion of the same patents by the same party. Id.

28 - 12 -

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The Manufacturers have offered no plausible theory under which Rambus benefited in this

2

litigation from the purported misconduct identified by the Delaware Court. The Manufacturers

3

do not contend that Rambus attempted in the consolidated cases to leverage any particular order

4

or result flowing from the challenged briefs, testimony, and actions in Virginia and Delaware.

5

Nor would there have been any occasion or way for Rambus to do so. The purported

6

misrepresentations and false testimony had been identified and, in many instances, even litigated

7

in Infineon and Delaware at the time the present actions were brought. Micron suggests that

8

Rambus used its litigation misconduct to obtain favorable licenses that it then, in turn, used to its

9

advantage in this litigation. (Micron CE Mot., at 21.) But this argument is both beside the point

10

and wrong. Even if there were anything to this tenuous causal chain—and there is not—the issue

11

of prejudice would still be distinct. Micron assumes, but offers no case showing, that a business

12

benefit allegedly resulting from litigation misconduct can, by virtue of its use as evidence, bar a

13

party from seeking relief in a subsequent proceeding. That assumption is fundamentally at odds

14

with Aptix and Keystone Drilling, which involved litigation misconduct directly affecting the

15

subsequent action and unmediated by dealings with third parties. In any event, if what Micron

16

means to challenge here is Rambus’s reliance upon the licenses negotiated in 2000, nearly all of

17

those licenses were negotiated and/or executed before the alleged litigation misconduct found by

18

the Delaware Court had ever occurred. (See Wu Confidential Decl. Ex. 1 .) With one exception,

19

the challenged conduct took place in or after 2001. (Micron Spoliation Br., at 33-45.) And

20

although Crisp offered the challenged deposition testimony in November 2000, Rambus had by

21

then negotiated licenses with Toshiba, Hitachi, Samsung, Mitsubishi, NEC, and Elpida, among

22

others. (See Wu Confidential Decl. Ex. 1.)

23

Under the Manufacturers’ theory, a plaintiff found to have engaged in litigation

24

misconduct would be forever barred from seeking relief in the courts, even if there were no actual

25

prejudice to the defendant. That is not the law. The unclean hands defense “requires that any

26

alleged misconduct must pertain to the very subject matter involved and affect the equitable

27

relations between the litigants,” 2006 WL 565893, at *26, and does not turn on whether

28

claimants in equity “have led blameless lives.” Precision Instr. Mfg. v. Auto. Maintenance Mach. - 13 -

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1

Co., 324 U.S. 806, 814 (1945). Because, at a minimum, the litigation misconduct found by the

2

Delaware Court cuts differently in this case, its ruling cannot be binding on this Court.

3 4

2.

The Manufacturers Have Failed to Show that the Issue of Spoliation is Identical

In their Motions, the Manufacturers argue that the Delaware Ruling must be given 5 collateral estoppel effect here notwithstanding the fact that the upcoming trial involves different 6 products. (Micron CE Mot., at 19; Samsung CE Mot., at 13-14.) Of course, the Manufacturers 7 have previously maintained that two of the key products at issue in the Delaware litigation, 8 SDRAM and DDR, are so different from the DDR2+ products at issue here that they warranted 9 separate trials. (E.g., Micron Mot. for Separate Trials, Dkt. No. 2005, at 10, 14; Samsung Mot. 10 for Separate Trials, Dkt. No. 2016, at 6; Nanya’s Mot. to Sever, Dkt. No. 2006, at 12.) And when 11 Rambus proposed streamlining these proceedings by extending any infringement finding in the 12 upcoming trial to SDRAM and DDR, the Manufacturers refused. (See Dec. 29, 2008 Letter Br.; 13 Dkt. No. 3003; id. Exh. C.) The Manufacturers refused despite the clear collateral estoppel effect 14 of such a finding of infringement: Samsung and Nanya’s SDRAM and DDR devices share some 15 of the same features with accused products in the upcoming trial, and Rambus has asserted some 16 of the same patents with respect to those SDRAM and/or DDR devices. 17 While insisting that collateral estoppel would not apply to these virtually indistinguishable 18 infringement and validity issues, the Manufacturers argue that the collateral estoppel must apply 19 to the wholly distinct issue of how spoliation applies to Rambus’s claims against the 20 Manufacturers’ products. On the latter question, the Manufacturers have offered no persuasive 21 response to the spoliation issues identified in Rambus’s initial collateral estoppel brief. (See 22 Rambus’s Br. on Delaware Ct. Ruling, at 10-13.) Their main tack is to argue that the Delaware 23 Court drew no distinctions among accused products in assessing Rambus’s duty to preserve 24 documents vis-a-vis Micron. (E.g., Samsung CE Mot., at 13.) But that merely begs the question 25 of whether the facts relating to accused products that were not before the Delaware Court raise 26 different duty and spoliation issues. The Hynix I spoliation order makes clear that different 27 products might well alter when Rambus incurred a duty to preserve documents as to all of the 28 - 14 -

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Manufacturers. And the unique circumstances presented by the non-mutual Manufacturers refute

2

the notion that the Delaware Ruling’s duty and spoliation findings may be applied in blunderbuss

3

fashion here.

4

a.

5

The Difference in Products Raise Different Issues as to When Rambus Incurred a Duty to Preserve Documents

In Hynix I, this Court noted that the question of when Rambus reasonably anticipated 6 litigation against DRAM manufacturers is inherently fact-bound. This is because Rambus’s 7 decision to sue rested on many contingent factors, reflecting the company’s need to balance 8 business relationships against protection of its intellectual property. Rambus did not plan to 9 institute an infringement action until, inter alia, “product samples from potentially infringing 10 DRAM manufacturers” were “available in the market,” the competing devises were reverse 11 engineered and claims charts made, a business decision to initiate licensing negotiations was 12 made and approved, and licensing efforts had come to naught. 2006 WL 5658983, at *22. To 13 determine, then, when the prospect for litigation over a particular accused product triggered a 14 preservation duty, this Court considered and made findings about the rollout of, and dealings 15 over, that product. Id. 16 This analysis could profoundly alter the preservation duty with respect to the accused 17 products at issue here that do not overlap with Delaware. For example, JEDEC did not begin 18 discussing DDR3 until 2002, and the Manufacturers did not begin to sell the product until 2006 19 and 2007. Were the Court to give effect to the Delaware Court’s December 1998 duty date across 20 all of the accused products built by each of the Manufacturers here, it would essentially treat 21 Rambus as anticipating litigation, indiscriminately, against any and all DRAM devices 22 manufactured after that date. The Manufacturers have made no such showing. Nor does it matter 23 that the particular factors and conditions bearing on Rambus’s litigation decisions may have 24 evolved over time. What matters is that Rambus’s duty to preserve raises product-specific issues 25 that render the Delaware Ruling too inapposite for collateral estoppel to apply. 26 27 28 - 15 -

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b.

2 3 4 5 6

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The Circumstances Presented by Rambus’s Infringement Action Against Hynix, Samsung, and Nanya Each Raise Unique Spoliation and Prejudice Issues that Cannot Be Resolved by the Delaware Ruling

As Rambus has explained, the spoliation and unclean hands defenses asserted by each of the non-mutual Manufacturers raise legal or factual issues that distinguish them from the unclean hands defense upheld by the Delaware Court in Micron’s favor. (See Rambus Br. on Delaware Ct. Ruling, at 11-13.)

7 8

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Hynix: Hynix is unique among the Manufacturers, because it has already tried its spoliation allegations and unclean hands defense to this Court and lost. Hynix cannot undo this Court’s binding decision on the merits simply by pointing to a subsequent, contrary adjudication of the defense, as raised by a different party. As the Ninth Circuit has explained,

11 It would be a curious use of affirmative collateral estoppel to permit one who had lost before the jury on certain facts to overturn that verdict by pointing out that on different facts, but identical legal principles, the winner before the jury had lost a jury verdict to a stranger on an earlier day and in a different court.

12 13 14

Mozart Co. v. Mercedes-Benz of North America, Inc., 833 F.2d 1342, 1348 (9th Cir. 1987).

15 16 17 18 19 20 21 22 23

Hynix’s main rejoinder is that it is asserting defensive collateral estoppel, and that the discretionary factors do not apply. (Hynix Mot. for S. J. on Unclean Hands, for Relief from Order Under FRCP 60(b), for Entry of J. under FRCP 54(b), and for Stay (“Hynix CE Mot.”), at 15-17.) But that argument is wrong (see discussion infra), and the law is clear that a party may not circumvent its own loss by invoking another party’s successful litigation of the issue elsewhere. See. 18A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure 4465.2, at 772 (2002) (“[A] party who has lost a judgment should not be able to defeat the claimpreclusion effects of the judgment by relying on inconsistent findings made in subsequent litigation between another party and a common adversary.”).3

24

Samsung: Samsung’s status as a licensee of Rambus makes it differently situated than

25 26 27 28

3

The issues are also distinct as to Hynix because Hynix itself engaged in the destruction of documents, including after litigation with Rambus commenced. (See, e.g., Rambus’s Opposition to Motion In Limine To Exclude Evidence Of Or Reference To Hynix’s Document Retention Program (filed July 30, 2006 in Case No. CV 00-20905 RMW), at 2-6.) - 16 -

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Micron for purposes of its spoliation allegations. Whether Rambus reasonably anticipated

2

litigation against Samsung in light of their relationship and their successful negotiations poses a

3

completely different question than whether Rambus anticipated litigation against Micron.

4

Samsung and Rambus successfully negotiated an RDRAM technology agreement in 1994, and

5

further entered into a license agreement for SDRAM and DDR products in 2000. (Rambus’s

6

Proposed Post-Trial Findings of Fact, Oct. 15, 2008, Dkt. No. 1238, at 12, 14 (“Rambus Findings

7

re Samsung”).) As Rambus demonstrated at the September spoliation trial, Rambus did not

8

reasonably anticipate litigation against Samsung until 2005 (id. at 14), years after the destruction

9

of documents at issue in the Delaware litigation. Moreover, any earlier duty to preserve

10

documents was necessarily extinguished in 2000 upon the execution of the non-compatible

11

license agreement, thereby rendering any prior document destruction immaterial. (Id.)

12

Samsung maintains that the District Court did not deem Micron’s RDRAM license as

13

altering the foreseeability of litigation. (Samsung CE Mot., at 14-15.) But even assuming that is

14

correct—and the ruling is silent on the matter—the Delaware Court had no occasion to consider

15

how a license with Micron for non-compatible products might have affected Rambus’s litigation

16

calculus. That issue is squarely presented by Samsung’s 2000 license, and it must be

17

independently resolved regardless of whether Rambus believed the license to be limited to

18

SDRAM and DDR.

19

Second, and in addition to the unique spoliation issues, the question of prejudice as to

20

Samsung is entirely different from the prejudice issue resolved by the Delaware Court. As

21

Rambus has explained, Samsung has waived all the defenses to which the documents destroyed

22

by Rambus could have been prejudicial. “An unclean hands defense further requires proof that

23

the offending conduct materially prejudiced a party’s ability to defend itself.” Hynix I, 2006 WL

24

565893, at *38. The Delaware Court specifically noted that destruction of Rambus’s internal

25

documents could have been prejudicial only as to Micron’s inequitable conduct and JEDEC-based

26

defenses, i.e., fraud, antitrust violations, and unfair competition. (Del. Ruling, at 32 & n.59.)

27

But Samsung has not asserted an inequitable conduct defense, and it has already waived all of its

28

defenses based upon JEDEC. (Stipulation and Order Dismissing Portions of Certain Claims and - 17 -

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Defenses with Prejudice, Sept. 16, 2008, Dkt. No. 2210.) This means that the Delaware Court’s

2

prejudice analysis is wholly inapplicable to Samsung: this Court must determine whether the

3

purported spoliation affected any other defense based upon the evidence and argument adduced in

4

the September trial. Samsung pushes against an open door when it argues that it has not waived

5

its unclean hands defense. (Samsung CE Mot., at 16.) The point is not that Samsung has given

6

up that defense; it is that Samsung has given up the only defenses that the Delaware Court

7

deemed prejudiced by the spoliation it found.

8

Finally, as Rambus has explained, Samsung’s own improper destruction of documents

9

undercuts its unclean hands defense and request for equitable relief. (See Rambus Findings re

10

Samsung, at 57-60.) Despite the fact that it hired litigation counsel and contemplated litigation

11

against Rambus in August 2000, Samsung proceeded to destroy relevant documents, including

12

draft license agreements, communications regarding license agreements, and emails of key

13

witnesses. (Id. at 59-60.) Samsung attempts to wash its unclean hands by arguing that its

14

conduct is immaterial, reasoning that “[i]f the plaintiff has unclean hands and seeks equitable

15

relief, the defendant’s own improper behavior serves as no bar to its equitable defenses.”

16

(Samsung CE Mot., at 19 (quoting Precision Instrument, 324 U.S. at 814).) This is precisely

17

backwards. It is Samsung that is seeking affirmative equitable relief, and equity does not permit

18

pots to call kettles black.

19

Nanya: Like Samsung, Nanya’s unclean hands defense presents issues distinct from those

20

tried in the Delaware litigation, particularly with regard to the reasonable anticipation of

21

litigation. Unlike the other, more established Manufacturers, Nanya was not formed until 1995,

22

Nanya USA not until 1997, and Nanya USA began to sell a “small amount” of SDRAM only in

23

1998. (See Wu Decl. Ex. E [Conduct Trial RT 2730:9-12, 2752:16-19 (Hurley)].) As a then-

24

minor player in the DRAM industry, and unlike the other Manufacturers, Nanya was not named

25

in the “nuclear winter” memorandum upon which the Delaware Court relied to conclude that the

26

litigation with Micron was reasonably foreseeable. (See Del. Ruling, at 16-17; see also

27

Declaration of Susan Roeder in Support of Hynix’s Mot. for Summ. J., Jan. 30, 2009 (“Roeder

28

Decl.”), Ex. J.) Nanya’s relative insignificance at that time is further illustrated by the fact that - 18 -

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the Delaware Court’s ruling makes no mention of Nanya whatsoever. Nanya attempts to counter

2

these omissions by asserting that its name appeared “in a chart that compared different DRAM

3

companies,” allegedly as potential litigation targets. (Nanya Mot. for Summary Judgment on

4

Unclean Hands Defense,4 at 5.) The speciousness of this argument is demonstrated by Nanya’s

5

near-bottom “score” in those rankings and the fact that it was not mentioned in the section of the

6

memo referencing “targets.” (Cornuelle Decl. Ex. D. (MTX 468) at 468-003, 468-006.) To this

7

document shows anything, then, it demonstrates that Nanya was not a litigation target, and cannot

8

be assumed identical to Micron.

9

B.

10 11

This Court Should Exercise its Discretion to Reject the Efforts by Samsung, Nanya, and Hynix to Invoke Collateral Estoppel Based Upon Inconsistent Rulings, Efficiency, and Fairness Concerns

When the Court weighs and exercises its discretionary power to apply issue preclusion,

12

“no one set of facts, no one collection of words or phrases, will provide an automatic formula for

13

proper rulings on estoppel pleas. In the end, decision will necessarily rest on the trial courts’

14

sense of justice and equity.” Blonder-Tongue, 402 U.S. at 333-34. Accordingly, a trial court may

15

consider any factor bearing on fairness in a particular case, and may refuse offensive collateral

16

estoppel “either for the reasons discussed [by the Supreme Court] or for other reasons” if “the

17

application of offensive estoppel would be unfair to a defendant.” Parklane Hosiery, 439 U.S. at

18

331 (emphasis added). “The circumstances of each case must provide the touchstone for

19

decision.” Western Oil and Gas Ass’n v. E.P.A., 633 F.2d 803, 809-10 (9th Cir. 1980).

20

This case is marked by the inconsistent rulings on spoliation and unclean hands. The

21

Manufacturers’ arguments for denying the Court the discretion to consider the contradictions

22

between its Hynix I spoliation order and the Delaware Ruling are meritless: the discretionary

23

factors apply here regardless of whether the application of collateral estoppel is offensive or

24

defensive, and the Court’s previous application of discretionary factors in an analogous context is

25

firmly grounded in Parklane Hosiery and foundational preclusion principles.

26

4

27 28

Nanya has divided its arguments between its motion for summary judgment and its motion for collateral estoppel. Because the summary judgment motion rests entirely upon obtaining preclusive effect for the Delaware Ruling, the remainder of this brief is addressed only to that motion. Rambus, of course, opposes summary judgment in addition to collateral estoppel. - 19 -

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The Delaware Court’s Findings Are Fundamentally Inconsistent with this Court’s Spoliation Determinations in Hynix I

As this Court has recognized, the fact that the asserted ruling is inconsistent with other rulings favorable to Rambus is a factor weighing against issue preclusion. (CE Order re: Infineon, at 7.) Parklane Hosiery specifically notes that applying the doctrine may be “unfair to a defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant.” 439 U.S. at 330. That is precisely the situation here. The ruling the Manufacturers seek to assert is flatly inconsistent with this Court’s prior order rejecting Hynix’s spoliation contentions and its unclean hands defense. The Delaware Court’s ruling is inconsistent with this Court’s Hynix I spoliation Order in three critical respects. First, the Delaware Court found that “a duty to preserve potentially relevant evidence arose in December 1998,” when Rambus’s then-Vice President of Intellectual Property, Joel Karp, circulated a memo outlining a strategy for responding to a hypothetical “nuclear winter” scenario in which Intel turned to industry standard DRAMs. (Del. Ruling, at 32.) According to the Delaware ruling, litigation was “reasonably foreseeable [by Rambus] no later than [this time]” because Karp “articulated a time frame and a motive for implementation of the Rambus litigation strategy.” (Id. at 31.) This Court, in contrast, found that Rambus did not actively contemplate litigation until late 1999, when the conditions that made it necessary and foreseeable actually obtained. See 2006 WL 565893, at *22-*23. Rambus did not intend to pursue litigation unless and until a number of conditions fell into place, including, critically, a business decision by the Rambus Board to authorize non-compatible license negotiations, and the refusal of the license target to negotiate. Id. Rambus did not actually anticipate litigation until late 1999, when Rambus obtained the first of the patents in suit, made a business decision to initiate non-compatible license negotiations with Hitachi in light of the then-existing business climate, and the negotiation process broke down. Id. at *23. This Court found not only that “Rambus’s adoption and implementation of its content-neutral Document Retention Policy in mid-1998 was a permissible business decision,” but also that its continued application during the “shred days” was not improper. Id. at *24 (emphasis added). - 20 -

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Second, the Delaware Court concluded the destruction of documents prejudiced Micron.

2

The Delaware Court found that the documents destroyed under Rambus’s Document Retention

3

Policy included documents that “were discoverable and the type of document relevant to the

4

instant litigation,” specifically, to Micron’s JEDEC-related patent misuse, antitrust, and unfair

5

competition claims and inequitable conduct defenses. (Del. Ruling, at 32.) These aspects of the

6

Delaware Ruling contrasts sharply with the approach taken by this Court in Hynix I. This Court

7

concluded that “Rambus has produced a large volume of these documents to the Manufacturers,”

8

and that to the extent relevant documents were destroyed, “adequate similar and material

9

documents or classes of documents were not destroyed.” 2006 WL 565893, at *27. The Court

10

found that “essentially the material JEDEC materials are available”; that Rambus had produced a

11

“fairly complete record” of contract-related documents; and that Rambus produced substantial

12

materials relating to the patents in suit, including documents bearing on conception and reduction

13

to practice of the parallel inventions. Id. at *17-*18; accord Wu Decl. Ex. K [Conduct Trial Tr.

14

5912:15-17] (Manufacturers’ Counsel: “In this case, there’s a pretty good written record of what

15

was going on really in the ‘90s in terms of how Rambus got its monopoly power.”).

16

Third, the Delaware Court approached the spoliation issue in a fundamentally different

17

way from this Court’s reasoning in Hynix I. While acknowledging that the controlling legal

18

standard required it to impose “the least harsh sanction,” the Delaware Court determined that the

19

only appropriate sanction was to declare outright that the Rambus patents-in-suit were not

20

enforceable against Micron. (Del. Ruling, at 33 (emphasis added).) When this Court considered

21

the appropriate sanction in light of the facts in Hynix I, it “d[id] not find dismissal to be an

22

appropriate sanction because it does not find the application of the unclean hands doctrine to be

23

warranted.” 2006 WL 565893, at *28.

24

The Manufacturers attempt to invoke Infineon and Samsung to mitigate the inconsistency

25

between Micron and Hynix I. But the “findings” in Infineon and Samsung relied upon by the

26

Manufacturers are not properly considered by this Court—or any other court—in analyzing

27

collateral estoppel. They were either (in the case of Infineon) never reduced to a formal opinion

28

or (in the case of Samsung) thrown out by the Court of Appeals. As a treatise co-authored by - 21 -

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Samsung’s lead counsel states, it is axiomatic that “issues … that cannot be appealed cannot be

2

accorded preclusive effect.” P. Mennell, et al., Patent Case Management Judicial Guide 5-69

3

(forthcoming 2009), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1328659.

4

Plainly, Rambus could not appeal the oral remarks made by the Infineon court prior to its

5

settlement of the case. And Samsung held that the district court lacked subject matter jurisdiction

6

to enter its order at all. Samsung Electronics Co., Ltd. v. Rambus, Inc., 523 F.3d 1374, 1378,

7

1381 (Fed. Cir. 2008).5 Indeed, the Federal Circuit went on to explain that the district court’s

8

findings constituted an “impermissible advisory opinion.” Id. at 1380 (emphasis added).

9

Moreover, because the district court’s order in Samsung “denied Samsung the only relief sought,”

10

523 F.3d at 1377, Rambus was the winning party in that order, and it is well-established in the

11

Ninth Circuit that “[a] determination adverse to the winning party does not have preclusive

12

effect,” Fireman’s Fund Ins. Co. v. Int’l Market Place, 773 F.2d 1068, 1069 (9th Cir. 1985).

13

2.

14

The Discretionary Factors Apply to Hynix, Samsung, and Nanya’s Assertion of Non-Mutual Collateral Estoppel

The Manufacturers ultimately cannot offer any good reason why this Court should 15 abandon its own established spoliation judgment in order to give collateral estoppel to the 16 inconsistent ruling of another court of no greater authority. Instead, they argue that the Court 17 must give preclusive effect to the Delaware Court’s decision because this Court has no choice in 18 the matter. This argument, as advanced by Hynix (Hynix CE Mot., at 15-17), Samsung (Samsung 19 CE Mot., at 21-22), and Nanya (Nanya CE Mot., at 3-5), rests upon two erroneous premises: 20 first, that a court has no discretion to deny defensive non-mutual collateral estoppel; and, second, 21 that the form of estoppel they assert is defensive, not offensive. These premises are refuted by 22 case law, the leading treatises, and the policy rationales upon which Parklane Hosiery rests. 23 a.

24 25 26 27 28

Courts Have Discretion to Consider the Fairness of Applying Non-Mutual Collateral Estoppel Even When It Is Defensive

Both Wright & Miller in Federal Procedure and Practice and the Restatement make clear 5

Contrary to Samsung’s assertion, Rambus did challenge the correctness of those factual findings. See, e.g., 2006 WL 3884284 at *49-52 (Rambus’s Opening Brief on appeal). Because the Virginia court’s ruling was not merely wrong but impermissibly beyond the court’s subject matter jurisdiction, the Federal Circuit had no occasion to address the factual findings. - 22 -

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that the discretionary factors set forth in Parklane Hosiery apply to both offensive and defensive

2

non-mutual collateral estoppel; it is the non-mutuality, not the offensive nature, of the collateral

3

estoppel that triggers judicial discretion. 18A Wright & Miller § 4465, at 730 (2002) (“[T]here is

4

discretion to deny nonmutual preclusion when preclusion would not be fair or in order to achieve

5

justice and equity.”); id. § 4465.2 at 763-64 (“Nonmutual preclusion may also be measured

6

against special factors that weaken trust in the first result…. The existence of inconsistent prior

7

judgments is perhaps the single most easily identified factor that suggests strongly that neither

8

should be given preclusive effect.”);6 Restatement (Second) of Judgments § 29. That courts have

9

discretion with respect to defensive non-mutual collateral estoppel is clear from Blonder-Tongue.

10

There, the Supreme Court explained, with respect to defensive non-mutual collateral estoppel, that

11

“no one set of facts, no one collection of words or phrases, will provide an automatic formula for

12

proper rulings on estoppel pleas. In the end, the decision will necessarily rest of the trial courts’

13

sense of justice and equity.” 402 U.S. at 333-34.

14

Parklane Hosiery reaffirmed the discretionary power of courts to deny any unfair

15

assertion of non-mutual collateral estoppel. As the Court made clear in that decision, “there is no

16

intrinsic difference between ‘offensive’ as distinct from ‘defensive’ issue preclusion, although a

17

stronger showing that the opportunity to litigate was adequate may be required in the former

18

situation.” 439 U.S. at 331 n.16 (quoting Restatement (Second) of Judgments § 88 (Tent. Draft

19

No. 2, Apr. 15 1975)). Although Parklane Hosiery generally spoke about offensive collateral

20

estoppel, it is clear that many of the considerations the Court advanced must apply in both

21

circumstances: for example, whether the defendant in the first action had incentive to vigorously

22

defend the suit, whether there are inconsistent prior judgments, whether there are procedural

23

opportunities that were not available to the defendant in the first action, or a lack of access to

24

6

25 26 27 28

Nanya has revised Wright & Miller in an attempt to get out from under the treatise’s weight. Taking a quotation in which the treatise criticizes courts for applying discretion to cases of mutual collateral estoppel, Nanya deletes the quotation’s context and inserts the word “offensive.” (Nanya CE Mot., at 4 n.1.) Nanya’s insertion of “offensive” has no basis in the text. Compounding its adulteration, Nanya then omits the following sentence that confirms the illegitimacy of its edit: “The need for clear and reliable preclusion rules must defeat any significant element of discretion outside the distinctively risky use of nonmutual preclusion.” 18A Wright & Miller § 4416 (emphasis added). - 23 -

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witnesses. Id. at 330-31 & n.15. The Court indicated that these factors apply to both offensive

2

and defensive collateral estoppel by noting that “[t]he problem of unfairness is especially acute in

3

cases of offensive estoppel.” Id. at 331 n.15. In other words, fairness factors into both situations,

4

though perhaps more strongly where the estoppel is offensive.

5

Several cases clearly support this Court’s right to consider the fairness of what the

6

Manufacturers demand. In In re Ameriserve Food Distrib., Inc., 267 B.R. 668 (D. Del. 2001), the

7

court considered a summary judgment motion “premised upon defensive collateral estoppel.” Id.

8

at 671. Based on fairness considerations, it exercised its discretion to deny the motion. Id. at

9

671-72. In response to the defendant’s “suggest[ion] that only offensive collateral estoppel

10

permits a fairness assessment,” the Court cited Blonder-Tongue and Parklane, concluding that

11

“[t]o apply [a fairness assessment] to some cases [i.e., offensive cases] and not to others [i.e.,

12

defensive cases] is itself unfair, and certainly does not comport with the notion that there is ‘no

13

intrinsic difference’ between offensive and defensive issue preclusion.” Id. at 672. Courts

14

reached the same result in Southwestern Bell Telephone, L.P. v. Arthur Collins, Inc., 2005 WL

15

6225305 at *3-*4 (N.D. Tex. 2005) (“[A]pplication of offensive or defensive collateral estoppel

16

is fact specific inquiry driven by considerations of fairness.”), and again in Brewer v. Dupree,

17

2003 WL 23507795 at *4-5 (M.D. Ala. 2003) (“While defensive use of nonmutual collateral

18

esoppel is an accepted practice … it still must conform to the requirements of fairness.” (citation

19

omitted)). In addition to these cases, the Federal Circuit has considered the existence of a prior

20

inconsistent decision when applying Blonder-Tongue in a case of defensive collateral estoppel.

21

Stevenson v. Sears, Roebuck & Co., 713 F.2d 705, 712 (Fed. Cir. 1983) (“Because of the

22

seemingly inconsistent determination on ‘validity’ by the CCPA, the district court was required to

23

apply the full and fair criteria very carefully.”).

24

The cases the Manufacturers claim refute this rule are inapposite. Delgado v. United

25

States, 536 F. Supp. 2d 1328 (Ct. Int’l Trade 2007), addressed whether it was proper for a

26

magistrate judge to bypass the mandatory factors in a case of offensive nonmutual collateral

27

estoppel and reach a decision based solely on the discretionary factors. Id. at 1338-39 (“Although

28

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estoppel may be applied, that discretion does not include the option to bypass the fundamental

2

determination as to whether collateral estoppel may be applied in the first place.”). Liberty Mut.

3

Ins. Co. v. FAG Bearings Corp., 335 F.3d 752 (8th Cir. 2003), addressed the applicability of the

4

discretionary factors to mutual collateral estoppel. Id. at 757-58 (“Because mutuality is not

5

lacking in this case, the equitable considerations requiring deference to the district court’s

6

evaluation of the overall fairness to the litigants in a nonmutual case are not present.”). Indeed,

7

the court’s analysis strongly suggests that the discretionary fairness analysis should take place in

8

all non-mutual cases. See id.; id. at 758-59 (“However, the ‘full and fair opportunity to litigate’

9

factor was developed to analyze cases where the parties in the first action are not the same as

10

those in the second.”). Finally, Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d

11

244 (3d Cir. 2006), addresses the proper standard of review for an appeals court, not the power of

12

the district court. Id. at 247-48. With respect to the role of the district court, the most the

13

decision can be said to hold is that “[t]he predominant question in preclusion cases involving

14

defensive or mutual collateral estoppel is whether the basic requirements for issue preclusion are

15

satisfied.” Id. at 248 (emphasis added). Of course, this is perfectly consistent with fairness

16

considerations playing a role, simply a less dramatic role, as Parklane itself indicated.

17

b.

18

Regardless, the Manufacturers Assert a Species of Offensive Collateral Estoppel Because Rambus was the Defendant in Delaware

19

The question whether the discretionary factors apply to defensive collateral estoppel is

20

ultimately moot, however, because—as this Court has previously recognized—what the

21

Manufacturers assert in this case is a species of offensive, not defensive, collateral estoppel. In

22

Hynix I, this Court rightly recognized that Hynix, like the nonmutual Manufacturers here, was

23

asserting a type of offensive collateral estoppel. (CE Order re: Infineon, at 6 n.1.) Even Samsung

24

concedes that it is trying to prevent Rambus “from re-litigating the same defense to its patent

25

claims that Rambus has previously lost.” (Samsung CE Mot., at 21 (emphasis added).) This

26

reflects the fluid nature of the parties’ identities in this case, where plaintiffs become defendants,

27

and all parties are asserting affirmative cross- and counter-claims against each other. Based on

28

this Court’s own prior judgment, then, the discretionary factors necessarily apply to the - 25 -

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Manufacturers’ assertion of collateral estoppel. The Court’s ruling in Hynix I reflects the incompleteness of the typical definitions of

3

“offensive” and “defensive” collateral estoppel, which assume that a plaintiff in the first action

4

will be a plaintiff in the second, and a defendant in the first will be a defendant in the second.

5

See, e.g., Parklane, 439 U.S. at 331 n.15 (“[I]n cases of offensive estoppel … the defendant

6

against whom estoppel is asserted typically will not have chosen the forum in the first

7

action….”); id at 329-30 (“[D]efensive estoppel gives a plaintiff a strong incentive to join all

8

potential defendants in the first action if possible” and “preclude[s] a plaintiff from relitigating

9

issues by merely ‘switching adversaries.’”). Where the plaintiff from the first action becomes a

10 11

defendant in the second, or vice-versa, this simplistic approach breaks down. In fact, “offensive” collateral estoppel encompasses not only the “fullest possible sense”

12

of a plaintiff asserting estoppel against a defendant that was also the defendant in the prior action,

13

but also a form in which a defendant asserts estoppel against a party that was a defendant in the

14

first action. See Currie, “Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine,” 9

15

Stan. L. Rev. 281, 290-92 (1957). This observation formed the basis of Professor Curie’s

16

analysis of the “offensive-defensive distinction,” Zdanok v. Glidden Co., 327 F.2d 944, 955-56

17

(2d Cir. 1963), and Professor Currie’s seminal articles on this subject were relied upon by the

18

Supreme Court in both Blonder-Tongue and Parklane. See Parklane, 439 U.S. at 329 n.11, 330

19

n.14; Blonder-Tongue, 402 U.S. at 324 & n.11, 330 n.19. As Currie explained, “[t]he offensive-

20

defensive distinction … is ambiguous” because the determinative factor could be either the fact

21

“that the defendant invokes the plea in one case and the plaintiff in the other” or the fact that “the

22

plea is invoked in the one case against the aggressor in the prior action, and in the other against

23

the former defender.” 9 Stan. L. Rev. at 292.

24

As Professor Currie explained, and as the Supreme Court’s analysis in Blonder-Tongue

25

and Parklane adopted, “there is a significant difference between the situation of a party who has

26

lost a case after choosing the time and place for action, and that of a party who has lost a case in

27

which he had no control over such factors.” Id. at 303. Indeed, Samsung itself clearly agrees

28

with this analysis. Samsung speculates that Micron’s victory in Delaware may “enable it to - 26 -

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achieve competitive advantage over others due to as capricious a factor as their … ability to have

2

their case heard in one venue (or by one jurist) rather than another.” (Samsung CE Mot., at 2.) It

3

adds that “this is especially true” when a party “d[oes] not sue ... first and is not in a jurisdiction

4

of its choosing.” (Id.)

5

Currie initially advocated a blanket prohibition under which neither a plaintiff nor a

6

defendant would “be allowed to invoke the former judgment against one who was a defendant in

7

the prior action” because “the opportunity of a defendant to litigate an issue is not necessarily

8

complete and unfettered; it may be impaired by the plaintiff’s strategic use of the initiative.” 9

9

Stan. L. Rev. at 303-04.7 Currie later decided that case-by-case fairness analysis, rather than the

10

blanket prohibition, was the better approach for such scenarios. See Currie, “Civil Procedure:

11

The Tempest Brews,” 53 Cal. L. Rev. 25 (1965). This same concern, and the same discretionary

12

solution, is set forth in both Parklane and Blonder-Tongue. See Parklane, 439 U.S. at 331 n.15

13

(requiring a fairness examination because “the defendant in the first action [might be] forced to

14

defend in an inconvenient forum and therefore unable to engage in full discovery or call

15

witnesses”); Blonder-Tongue, 402 U.S. at 333 (urging courts to consider the fairness of an

16

assertion of estoppel where “without fault of his own the patentee was deprived of crucial

17

evidence or witnesses in the first litigation”). See also 18A Wright & Miller § 4465.1 at 741

18

(“One of the most general concerns attending the abandonment of mutuality has been that it may

19

be unfair to bind a party who did not take the initiative in the first action.”); Provau v. State Farm

20

Mut. Auto. Ins. Co., 772 F.2d 817, 822 (11th Cir. 1985) (“Special difficulties arise when

21

precluding a party who did not have the initiative in the prior action ….”). Indeed, one specific

22

concern of Currie, Parklane, and Blonder-Tongue—that the defendant in the first action might be

23

sued in an inconvenient forum where it lacked access to witnesses—arose in the Delaware case:

24

Rambus was forced to litigate in a place of Micron’s choosing, and could not have compelled the

25 26 27 28

7

For that reason, Samsung is simply wrong when it states that Blonder-Tongue and State of Idaho Potato Comm’n v. GT&T Terminal Packaging, Inc., 425 F.3d 708 (9th Cir. 2005), “construed similar contexts as defensive nonmutual collateral estoppel.” (Samsung CE Mot., at 21-22.) Both of those decisions involved an assertion of collateral estoppel against a party who had been a plaintiff, not a defendant, in the prior action. - 27 -

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appearance of witnesses such as Richard Crisp, one of the live witnesses it put on in its spoliation

2

defense against Hynix in this Court. (See Wu Decl. ¶¶ 20-21.).

3

Because Rambus was a defendant in the Delaware action, the issue preclusion asserted by

4

Hynix, Samsung, and Micron is a type of offensive collateral estoppel. Accordingly, this Court

5

should, consistent with its decision in Hynix I, apply a discretionary fairness analysis, indeed the

6

heightened fairness analysis applicable in offensive cases.

7

c.

8

Hynix’s Implausible “Last in Time” Argument is Expressly Refuted by Controlling Ninth Circuit Law

In a bold maneuver, Hynix suggests that the Delaware Court’s decision as to Micron 9 should supplant this Court’s spoliation decision as to Hynix itself. (Hynix CE Mot, at 17-18.) In 10 other words, Hynix suggests that a different court’s decision as to a different dispute between 11 Rambus and a different party, concerning different infringing devices, should trump this Court’s 12 resolution of Hynix’s claims against Rambus. Hynix attempts to justify this suggestion by citing 13 the “last in time” rule under which res judicata—not collateral estoppel—will be granted to the 14 later of two inconsistent decisions. (Hynix CE Mot., at 17.) Nanya makes the same argument. 15 (Nanya CE Mot., at 8-9.) The Manufacturers attempt to support their theory with the Ninth 16 Circuit’s decision in American Fabrics, Inc. v. L&L Textiles, Inc., 754 F.2d 1524, 1529-30 (9th 17 Cir. 1985) (cited at Hynix CE Mot., at 17-18). What they neglect to tell the Court is that the 18 Ninth Circuit, limiting Americana, expressly rejected the application of the “last in time” rule to 19 cases of non-mutual collateral estoppel. See Robi v. Five Platters, Inc., 838 F.2d 318, 328 (9th 20 Cir. 1988). Particularly damning for Hynix, the Court added that “[t]he unfairness” present when 21 an inconsistent judgment is given preclusive effect “is magnified enormously when, as in the 22 present case, the judgment which [ostensibly] generates issue preclusion … is itself inconsistent 23 with a judgment … obtained against the very [party] … on whose behalf issue preclusion is 24 asserted.” Id. at 330. See also Mozart, 833 F.2d at 1348. 25 26 27 28

3.

Collateral Estoppel Also Is Properly Denied Because It Will Not Result In Judicial Economy

The primary reason the Supreme Court permits offensive non-mutual collateral estoppel is to save courts and parties the burden of relitigating previously determined issues. See Parklane - 28 -

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Hosiery, 439 U.S. at 326, 328-30. That rationale does not apply here with respect to the

2

Delaware Ruling. As to Hynix and Samsung, this Court has already tried the defense, and has

3

issued its order in Hynix I. The application of collateral estoppel would therefore produce no

4

efficiencies as to Hynix or Samsung. The trial of Nanya’s unclean hands defense will likely draw

5

on the prior spoliation records, except as to the Nanya specific facts. The absence of economy is

6

yet another reason for this Court to exercise is discretion to refuse to apply collateral estoppel to

7

the Delaware Court ruling. See S.E.C. v. Monarch Funding Corp., 192 F.3d 295, 306-07, 310

8

(2d Cir. 1999).

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

C.

Nanya’s Particularized Requests for Issue Preclusion Are Equally Impermissible and Unfair

Rather than requesting that this Court address the Delaware Ruling in a holistic fashion, Nanya has chopped the decision into no fewer than twenty-seven issues on which to seek collateral estoppel. But the statements Nanya has carved out are either, on the one hand, mere microcosms of the general conclusions addressed above or, on the other hand, such narrow factual findings that they cannot be said to have been “necessary” to the Delaware Court’s judgment. For that reason, the Court should deny all of Nanya’s requests. Most of Nanya’s asserted issues are so narrow that it cannot be said that “the judgment is … dependent upon the determinations.” (Nanya CE Mot., at 7 (quoting Restatement (Second) of Judgments § 27).) For example, the Delaware Ruling did not “depend” upon Issue 22: that “[o]n July 17, 2000, Steinberg sent an email to Rambus executives reminding them to comply with the document retention policy vis-à-vis contracts.” (Nanya CE Mot., at 19 (quoting Del. Ruling, at 23 n.57.)) That finding can hardly be deemed the keystone without which the Delaware Court’s ruling would collapse. Indeed, that court’s placement of the finding in a footnote (along with many of Nanya’s other 26 issues) is itself telling. This category of “findings” that are too narrow to be called “necessary” includes Issues 1-11, 15, and 17-23. (Nanya CE Mot., at 10-16, 17-19). An overlapping set of issues, Issues 1-11 (Nanya CE Mot., at 10-16), are plainly irrelevant dicta because they deal with purportedly litigation-related conduct that took place prior to the

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December 1998 time frame in which the Delaware Court assumed litigation became foreseeable.

2

(Del. Ruling, at 31.)

3

The remaining issues asserted by Nanya are simply short statements of the ultimate legal

4

conclusions previously discussed in this brief. Like the general propositions for which they stand,

5

they suffer from both a lack of identicality with the issues in this case and an inconsistency with

6

this Court’s prior decision in Hynix I. Into this category fall Issues 12, 14, 16, and 24-27. (Nanya

7

CE Mot., at 16, 17, 19-21.) For the reasons set forth above as to the general request for collateral

8

estoppel, the Court must deny these more narrowly drawn, but ultimately comparable, requests.

9 10

D.

The Delaware Court’s Ruling is Unpersuasive

Hynix specifically asks this Court to revisit its Hynix I spoliation ruling in light of the

11

Delaware Ruling. (Hynix CE Mot., at 19-22.) That decision, Hynix reasons, “provides powerful

12

reasons for the Court to change its mind and conclude that Rambus engaged in spoliation.” (Id. at

13

19-20.) Samsung also invokes the Ruling’s “persuasive authority,” urging the Court to give it

14

“decisive weight” in ruling on its unclean hands defense even if the Court refuses collateral

15

estoppel. (Samsung CE Mot., at 25.) But the Delaware Ruling suffers from both legal and

16

factual defects affecting the Court’s spoliation and prejudice determinations, as well as the harsh

17

sanction it ultimately imposed. The Court should not substitute the Delaware Court’s analysis for

18

its own reasoned consideration in Hynix I.

19 20

1.

The Delaware Court’s Determination that Rambus Was Required to Preserve Documents in December 1998 Is Erroneous

In Hynix I, after a full trial on the merits, this Court concluded that Rambus had no duty to 21 preserve potentially relevant evidence as to any DRAM manufacturer until late 1999. This Court 22 recognized that Rambus had engaged in some advanced planning for litigation contingencies 23 since early 1998, but found that “Rambus did not actively contemplate litigation or believe 24 litigation against any particular DRAM manufacturer to be necessary or wise before its 25 negotiation with Hitachi failed, namely in late 1999.” 2006 WL 565893, at *24. 26 For its part, the Delaware Court likewise found that Rambus’s adoption of a document 27 retention policy in July of 1998 was proper. The Delaware Court also took no issue with the 28 - 30 -

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initial implementation of Rambus’s document retention program (including degaussing of

2

computer back up tapes, and conducting the September 1998 “shred day”). Rather, the Delaware

3

Court asserted that Rambus spoliated evidence in bad faith by continuing to implement its general

4

document retention policy between December 1998, when a duty to preserve potentially relevant

5

evidence purportedly arose, and December 1999, when Rambus implemented a litigation hold.

6

(Del. Ruling, at 31-32, ¶ 55; see id. at 22, ¶ 33.) This was error.

7

In reaching a conclusion as to when Rambus’s obligation to preserve documents arose that

8

differs from this Court’s ruling in Hynix I, the Delaware Court appears simply to have applied a

9

different (and erroneous) standard. The Delaware Court recognized that a duty to preserve did

10

not arise simply because Rambus was prepared to be an aggressive competitor in a very

11

competitive industry, even if that meant “one could safely predict that litigation was inevitable.”

12

(Del. Ruling, at 31.) Rather, the Delaware Court concluded that “litigation was reasonably

13

foreseeable” (and so a duty to preserve arose) in December 1998 because “Karp had articulated a

14

time frame and a motive for implementation of the Rambus litigation strategy.” (Id. at 31.)

15

However, the document upon which the Delaware Court relied as giving rise to the

16

obligation to preserve—Karp’s December 1998 “nuclear winter” memorandum—itself refutes the

17

Delaware Court’s conclusion that Rambus anticipated litigation at that time. The “nuclear

18

winter” memorandum states that it describes a “very unlikely scenario, even for something that’s

19

purely hypothetical.” (Id. at 16-17; Roeder Decl. Ex. J at HTX004.2.) And in discussing the

20

prospect of specific litigation, Karp first and foremost describes the timeframe as “hopefully

21

never.” (Roeder Decl. Ex. J at HTX004.005.)

22

The Delaware Court also described the “nuclear winter” memorandum as providing a

23

“motive” for litigation, namely, “strategies to enable Rambus to survive the termination of its

24

relationship with Intel.” (Del. Ruling, at 31.) This characterization of “motive” is at odds with

25

the language quoted above (e.g., “very unlikely,” “purely hypothetical,” “hopefully never”).

26

More fundamentally, it is inconsistent with the undisputed record evidence demonstrating the

27

strength of both Intel’s and the DRAM industry’s commitment to RDRAM at that time,

28

including: (1) Intel’s October 1998 announcement “that it would invest $500 million in Micron - 31 -

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in support of Micron’s commitment to producing Direct RDRAM” (id. at 15); and (2) Samsung’s

2

statement that it was making a “huge commitment” to devote nineteen percent of its capacity to

3

RDRAM production by the fourth quarter of 1999, that it had an “aggressive direct rdram

4

roadmap” which “contemplated future development of ‘much higher performance’ RDRAMs,”

5

and that it was making a substantial increase in resources devoted to RDRAM “in anticipation of

6

increased market demand” (id. at 14-15 & nn.34-35).

7

Finally, the Delaware Court’s conclusion regarding Rambus’s purported “anticipation” of

8

litigation in December 1998 is inconsistent with documents much later in 1999 that described

9

Karp’s nascent licensing strategy as still requiring the approval of Rambus’s executive team and

10

Board of Directors (id. at 19; Wu Decl. Ex. F), and that suggest that no “consensus” was even

11

reached among Rambus management regarding the possibility of litigation involving a DRAM

12

company until the very end of September 1999 (Del. Ruling, at 21), which conclusion remained,

13

even at that time, subject to Board consideration and approval (Del. Ruling, at 21-22).

14

In sum, the record evidence not only fails to support the Delaware Court’s conclusion; it

15

actively refutes it. Moreover, contrary to the Delaware Court’s conclusion, even detailed

16

planning for a mere possibility of litigation does not constitute anticipation of litigation. Cf.

17

SmithKline v. Apotex Corp., 232 F.R.D. 467, 484 (E.D. Pa. 2005) (drug patent holder could not

18

“reasonably anticipate litigation” for work product purposes against future generic competitors

19

prior to their entry into market in May 1998, despite fact “that [holder] hired investigators to

20

explore litigation options in 1994, that [holder] retained trial counsel, that [holder’s] counsel

21

prepared draft complaints as early as 1996, or that [holder] secured outside consultants to serve as

22

expert witness”). Consequently, a duty to preserve documents did not arise in December 1998.8

23

8

24 25 26 27 28

Even if the Delaware Court had correctly concluded that the duty to preserve actually arose in December 1998 (rather than in late 1999), the “failure” of Rambus—just like this Court—to recognize this purported “fact” simply does not constitute the type of “bad faith” that warrants forfeiture of Rambus’s right to enforce the patents-in-suit against the accused products. This is especially true given this Court’s findings in Hynix I that: (1) “[t]he evidence here does not support the conclusion that Rambus intentionally designed its Document Retention Policy to get rid of particular damaging documents,” 2006 WL 565893, at *25; (2) “[t]he evidence also does not demonstrate that Rambus targeted any specific document or category of relevant documents with the intent to prevent production in a lawsuit such as the one initiated by Hynix,” id. at *28; and (3) with respect to Rambus’s April 1999 request to outside counsel to conform their files for issued patents to the PTO file wrapper, “there is no indication that Rambus had particular - 32 -

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The Delaware Court’s Prejudice Analysis is Erroneous

The Delaware Court acknowledged that Rambus’s alleged destruction of documents after

2 3

December 1998 (and prior to the December 1999 litigation hold) could have no effect on

4

Micron’s defenses of anticipation, obviousness, and inadequate written description. (Del. Ruling,

5

at 32-33 & n.59.) The Court went on, however, to find prejudice as to Micron’s defenses of

6

“patent misuse and violation of the antitrust and unfair competition laws (based in part on

7

Rambus’s conduct at JEDEC), as well as inequitable conduct.”9 (Id.)

8

With respect to the JEDEC-related defenses, the Delaware Court failed to offer any

9

explanation as to what types of Rambus documents containing what types of information could be

10

material to the presentation of these defenses under the circumstances of this case. This is error,

11

as the very authorities relied upon by the Delaware Court make clear, because material prejudice

12

cannot be found absent a plausible and concrete suggestion as to how the allegedly spoliated

13

evidence potentially could have aided Micron’s defenses. See Schmid v. Milwaukee Elec. Tool

14

Corp., 13 F.3d 76, 80 (3d Cir. 1994) (rejecting claim of prejudice where party “speculates that

15

[the precluded] examination of the [instrumentality of injury] might have provided some evidence

16

helpful to it on the causation issue, [but] has not come forward with plausible, concrete

17

suggestions as to what that evidence might have been”); Gates Rubber Co. v. Bando Chem.

18

Indus., Ltd., 167 F.R.D. 90, 104 (D. Colo. 1996) (similar). Even beyond this failure of explanation, the Delaware Court’s prejudice analysis is deeply

19 20

flawed. The Manufacturers have not demonstrated, and cannot show, that the purportedly

21

destroyed documents prejudiced the JEDEC defenses tried and lost by Micron, Hynix, and

22

Nanya, and voluntarily dismissed by Samsung. Among other things, the conduct trial jury

23

specifically found that Rambus had no duty to disclose its intellectual property plans and

24 25 26 27 28

concerns regarding the contents of those files[, but rather] just wanted Attorney Johnson’s recommendation carried out,” id. at *26. 9

Samsung—unlike its co-defendants—elected not to pursue defenses based on patent misuse, violation of the antitrust and unfair competition laws, or inequitable conduct. Rather, Samsung has limited its defenses to invalidity, obviousness and inadequate written description (as well as unclean hands). The Delaware Court’s prejudice conclusions therefore support the denial of Samsung’s pending unclean hands defense. - 33 -

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inventions, the internal documents destroyed by Rambus could not have materially aided the

2

Manufacturers’ JEDEC defenses. Nor is there any basis to conclude that the Manufacturers’

3

remaining defenses were prejudiced by the destroyed evidence, for the record shows that any

4

destroyed documents relating to inequitable conduct were either cumulative or privileged.

5 6 7

a.

There is No Support for the Delaware Court’s Conclusion that the Spoliated Documents Had a Prejudicial Effect on the Manufacturers’ JEDEC-Related Defenses in this Litigation

The record evidence refutes the Delaware Court’s determination that Rambus’s alleged

8

spoliation prejudiced the Manufacturers’ fraud, antitrust, and unfair competition defenses. In this

9

case, a jury has already found that Rambus had no duty to disclose to JEDEC its intellectual

10

property plans and intentions—a determination binding on the Court, but which garnered nary a

11

mention in the Delaware Court’s ruling. This finding mirrored a conclusion reached by Judge

12

Jordan in an earlier discovery ruling in the Delaware action (likewise unacknowledged in the

13

Delaware Court’s opinion) that Micron had failed to demonstrate “that Rambus had a legal duty

14

to disclose anything beyond what it did disclose to JEDEC.” (Wu Decl. Ex. G [June 15, 2006

15

Memorandum Order], at 3.) These findings render the internal Rambus documents that

16

concerned the Delaware Court irrelevant, and foreclose any finding of prejudice.

17

The Delaware Court concluded that the destroyed documents prejudiced Micron’s

18

JEDEC-related defenses because they were “illuminated by evidence of a non-public nature, e.g.,

19

by internal Rambus documents.” (Del. Ruling, at 32.) With respect to these defenses, the

20

reasoning apparently goes, internal documents would be probative of Rambus’s intent: whether

21

Rambus willfully acquired monopoly power; whether it engaged in anticompetitive behavior; and

22

whether it acted with the intent to deceive. (Jury Instructions, at Instructions 25, 26, 32, 35, 38,

23

39.) All of the Manufacturers’ conduct defenses, and thus all of the issues to which Rambus’s

24

internal documents could be relevant, run through JEDEC. The core of the Manufacturers’

25

antitrust and unfair competition claims was their theory that Rambus engaged in “anticompetitive

26

behavior at JEDEC” by making misrepresentations and material omissions about its patent plans.

27

(Id., Instruction 26.) These are, of course, the same allegations underlying the Manufacturers’

28

fraud claim. (Id., Instruction 38, 39.) - 34 -

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The conduct trial jury found, however, that JEDEC members shared no clearly defined

2

expectation that members would disclose relevant knowledge they had about patent applications

3

or the intent to file applications on technology being considered for adoption as a JEDEC

4

standard. (Special Verdict, at 12 (question 45).) As the jury instructions make clear, the jury

5

necessarily found, in rejecting these claims, that Rambus had no duty to disclose to JEDEC

6

members, including the Manufacturers, its plans and intentions regarding patent prosecution.

7

(See Jury Instructions, Instruction 41 (noting that “[t]he Manufacturers allege that the relationship

8

and understanding among JEDEC members imposed a duty to disclose potential patent coverage

9

of products that would comply with a JEDEC standard being considered”).) The Delaware Court

10

offered no explanation as to what “internal” documents Rambus might have had that could shed

11

any light on that issue and, in fact, there are none. On the contrary, “internal” documents would

12

go solely to Rambus’s intent and state of mind, but would not, and could not, go to the existence

13

of any disclosure duty at JEDEC in the first instance. That issue turns instead on evidence of

14

what the members as a whole believed and understood. The Delaware Court’s finding of JEDEC-

15

related prejudice is thus erroneous for this reason alone.

16

The Delaware Court’s ruling is also wrong because it includes no explanation for its

17

conclusion that Rambus in fact destroyed any non-cumulative documents relevant to Micron’s

18

JEDEC-related defenses. Such an explanation plainly is necessary. As this Court will recall,

19

following a careful analysis in Hynix I of both the source and nature of the JEDEC documents

20

Rambus produced, this Court concluded that “with the trip reports and Crisp’s e-mail, it appears

21

that essentially the material JEDEC materials are available.” 2006 WL 565893, at *17, ¶¶ 108-

22

110. The Delaware Court did not acknowledge either this Court’s contrary finding or the

23

evidence—identical in both cases—that comprehensive internal JEDEC documents (including no

24

less than two unique sets of Richard Crisp’s JEDEC-related e-mail files) were preserved and

25

produced. See Hynix I, 2006 WL 565893, at *17; accord, e.g., Wu Decl. Ex H [Unclean Hands

26

Trial Tr. 756:8-757:14; 1213:15-1215:10.]

27 28

Finally, the Delaware Court offered no explanation for its implicit conclusion that the destruction of JEDEC-related documents must have occurred after Rambus purportedly became - 35 -

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subject to a duty to preserve in December 1998. However, it is undisputed that Rambus had

2

withdrawn from JEDEC years earlier, attending its last meeting in December 1995. It is also

3

undisputed that Rambus held its first “shred day” in August 1998, at a time when even the

4

Delaware Court acknowledges Rambus was under no obligation to preserve documents. There is

5

simply no reason to believe that documents relating to JEDEC were created after the initial “shred

6

day” (nearly three years after Rambus had left JEDEC) or that pre-existing JEDEC documents

7

(such as Crisp’s e-mail files) that were preserved on the first shred day were then destroyed at

8

some later point. Absent such a showing, however, there is no basis for any finding of prejudice.

9 10 11

b.

There is No Support for the Delaware Court’s Conclusion that the Spoliated Documents Had a Prejudicial Effect on the Equitable Conduct Defenses That Remain to be Tried

The Delaware Court specifically concluded in its ruling that the documents it believed

12

were destroyed had no bearing on any of the arguments the Manufacturers intend to advance in

13

support of their invalidity defenses. (Del. Ruling, at 32. n.59.) The only evidence that could

14

potentially be relevant to the other unresolved defense, inequitable conduct, would be documents

15

tending to suggest that Rambus concealed prior art or material information from the PTO. But

16

the record offers no basis to infer that the destroyed documents would have included

17

discoverable, non-cumulative documents relevant to this issue. With respect to prior art itself, it

18

is undisputed that neither Rambus’s employees nor its outside counsel destroyed prior art: to the

19

contrary, the evidence is that they consistently retained it. As this Court noted in its Hynix I

20

spoliation ruling, “[t]he witnesses who testified on the matter confirmed that they had retained

21

prior art and that they did not destroy it in implementing the Document Retention Policy.” 2005

22

WL 565893, at *19. Consistent with this evidence and finding, the Delaware Court did not

23

include prior art among the categories of documents that Rambus’s outside counsel, Vincent,

24

purportedly purged from his Rambus prosecution files. (Del. Ruling, at 17.)

25

The Delaware Court’s finding therefore appears directed to the theoretical disposal of

26

documents discussing prior art. In that regard, the Delaware Court concluded that Vincent purged

27

copies of draft amendments, draft claims, attorney notes, and correspondence to parties other than

28

the PTO. (Del. Ruling, at 18.) However, the categories of documents that Vincent destroyed are, - 36 -

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in the main, privileged and/or generally beyond the scope of discovery. The Delaware Court

2

itself observed that it “does not generally require the production of draft documents,” including

3

documents “relat[ive] to patent prosecution.” (Id. at 32 n.59.) And as this Court has noted, these

4

drafts, and any attorney notes on matters such as interviews with the inventors, would likely be

5

privileged and hence non-discoverable. Hynix I, 2006 WL 565893, at *28; accord The Regents of

6

the Univ. of Cal. v. Micro Therapeutics, Inc., 2007 WL 1670120, at *3 (N.D. Cal. June 6, 2007).

7

It is difficult, if not impossible, to reconcile the privileged nature of the materials discarded from

8

Vincent’s patent files with the Delaware Court’s subsequent finding of prejudice.

9

Finally, the Delaware Court failed to conduct any analysis of whether there is, in fact, any

10

non-cumulative prior art that Rambus failed to disclose to the PTO. Nor is this failure a mere

11

technicality. For the Delaware Court’s findings to translate to any real prejudice, the Court must

12

have assumed all of the following: (1) Lester Vincent became aware of material prior art that had

13

not – in the prosecution of multiple patent applications – previously been cited to the PTO; (2)

14

such art was also not cumulative of any of the hundreds of references previously cited; (3)

15

notwithstanding his awareness of the art, Vincent did not obtain a copy of the prior art and

16

therefore did not place the art in any file (as it is undisputed that all prior art was maintained); (4)

17

although Vincent did not obtain a copy of the prior art, he did create notes regarding such art; (5)

18

the notes regarding the art reflected an intent to suppress the art from the PTO; (6) the notes were

19

placed in files that were cleaned between December 1998 and December 1999 (i.e., were not

20

maintained in Vincent’s general files or the files for any of the patents-in-suit, all of which were

21

preserved and provided to Rambus for production); and (7) the notes were not privileged and

22

would otherwise have been sought or ordered produced in litigation. The speculative nature of

23

each and every element of this series of assumptions underscores the dubious nature of the

24

Delaware Court’s conclusion.

25 26 27 28

3.

The Delaware Court Gave Inadequate Consideration to Sanction Options, and Offered No Reasoned Basis for Dismissing Rambus’s Patent Claims

The Delaware Court’s conclusory sanction analysis also contravenes settled legal principles Although the Delaware Court observed that it was required to “find the least harsh - 37 -

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1

sanction” for Rambus’s purported wrongdoing (Del. Ruling, at 33), the Court in fact went directly

2

to dismissal without meaningfully analyzing the adequacy of a “lesser sanction” that is not so

3

“drastic.” Schmid, 13 F.3d at 79.

4

The Ninth Circuit has held that “the consideration of less severe penalties must be a

5

reasonable explanation of possible and meaningful alternatives.” Halaco Eng’g Co. v. Costle,

6

843 F.2d 376, 381 (9th Cir. 1988). In Halaco, the Ninth Circuit rejected as “an insufficient

7

consideration of lesser sanctions” the district court's conclusory statement that dismissal of the

8

EPA’s counterclaim was an appropriate remedy because “the government’s [spoliation] conduct

9

is so outrageous as to require this sanction.” Id.; see also id. at 382 (finding that court’s order

10

dismissing counterclaim was an abuse of discretion).

11

To the extent the Delaware Court addressed lesser sanctions, its conclusions are also

12

without merit. For example, the court dismissed “adverse jury instructions and preclusion of

13

evidence” as “impractical, bordering in meaningless, under these circumstances and in the context

14

of a typical jury trial.” (Del. Ruling, at 33 (emphasis added).) But this is wrong. In the “typical

15

jury trial,” an adverse jury instruction—directing the jury to assume the worst of the destroyed

16

evidence, 22 Wright & Miller, Federal Procedure & Practice § 5178, or even to take certain

17

alleged facts as true—would be entirely adequate to both alleviate any prejudice to a defendant

18

and to discourage spoliation, see Schmid, 13 F.3d at 79. As one court has observed, “[a]n adverse

19

inference instruction is a powerful tool in a jury trial.” Morris v. Union Pacific RR, 373 F.3d 896,

20

900 (8th Cir. 2004). Yet, the Delaware Court identified nothing about “these circumstances”

21

(Del. Ruling, at 33) rendering this serious sanction inadequate.

22

III.

23

CONCLUSION The Manufacturers have failed to demonstrate that they are entitled to collateral estoppel

24

based upon the Delaware Court’s ruling. For this reason, the Court should deny (1) Micron’s

25

summary judgment motion; (2) Samsung’s motions for summary judgment, for entry of judgment

26

of unenforceability, for dismissal of Rambus’s infringement claim, and to reopen the record; (3)

27

Nanya’s motions for application of issue preclusion and for summary judgment; and (4) Hynix’s

28

motions for summary judgment, Rule 60(b) relief, and for entry of a Rule 54(b) judgment. - 38 -

RAMBUS INC.’S CONSOLIDATED OPPOSITION TO COLLATERAL ESTOPPEL SJ MOTIONS CASE NOS. 05-334; 05-2298; 06-244; 00-20905

Case 5:05-cv-00334-RMW

1 2

DATED: January 13, 2009

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Filed 01/26/2009

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

3 4

By:

5 6

/s/ Gregory P. Stone GREGORY P. STONE

Attorneys for RAMBUS INC.

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 39 -

RAMBUS INC.’S CONSOLIDATED OPPOSITION TO COLLATERAL ESTOPPEL SJ MOTIONS CASE NOS. 05-334; 05-2298; 06-244; 00-20905