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I. NEEL CHATTERJEE (STATE BAR NO. 173985) [email protected] DEBORAH E. FISHMAN (STATE BAR NO. 197584) [email protected] ROBERT W. RICKETSON (STATE BAR NO. 148481) [email protected] ORRICK, HERRINGTON & SUTCLIFFE LLP 1000 Marsh Road Menlo Park, CA 94025 Telephone: +1-650-614-7400 Facsimile: +1-650-614-7401 Attorneys for Defendant NVIDIA Corporation

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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RAMBUS, INC., Plaintiff,

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Case No. C-08-03343 SI (Consolidated with Case No.: C-08-5500) NOTICE OF MOTION AND MOTION TO LIFT STAY AND FOR PARTIAL SUMMARY JUDGMENT

v. NVIDIA CORPORATION, Defendant.

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Date: Time: Judge:

March 13, 2009 9:00 a.m. The Hon. Susan Illston

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MOTION FOR SUMMARY JUDGMENT C-08-03343

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TABLE OF CONTENTS

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Page I. II.

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III.

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IV.

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V.

INTRODUCTION .............................................................................................................. 1 FACTUAL BACKGROUND ............................................................................................. 2 A. Judge Robinson’s Findings and the Micron Trial Record ...................................... 2 B. NVIDIA Was A Target Of Rambus’s Litigation Strategy...................................... 6 C. The Relationship of the Barth Patents to Judge Robinson’s Order......................... 7 SUMMARY JUDGMENT SHOULD BE GRANTED .................................................... 10 A. Legal Standards Under Rule 56 ............................................................................ 10 B. Legal Standard for Application of Issue Preclusion ............................................. 10 1. Rambus’s anticipated arguments are without merit .................................. 12 C. The Barth Patents Are Unenforceable Under Judge Robinson’s Findings and the Undisputed Facts Here. ............................................................................ 14 LIFTING THE STAY IS WARRANTED TO ADDRESS THE DISPOSITIVE THRESHOLD ISSUE OF THE PRECLUSIVE EFFECTS OF JUDGE ROBINSON’S DECISION UNDER UNDISPUTED FACTS......................................... 16 CONCLUSION ................................................................................................................. 17

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TABLE OF AUTHORITIES Page

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FEDERAL CASES

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Blonder-Tongue Labs., Inc. v. University of Ill. Found., 402 U.S. 313 (1971) .................................................................................................... 10, 11, 14

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Blumcraft of Pittsburgh v. Kawneer Co., 482 F.2d 542 (5th Cir. 1973)................................................................................................... 11 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ................................................................................................................ 10

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Hydranautics v. FilmTec Corp., 204 F.3d 880 (9th Cir.2000).................................................................................................... 12 Idaho Potato Comm'n v. G&T Terminal Packaging, Inc., 425 F.3d 708 (9th Cir. 2005)................................................................................................... 10

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Jean Alexander Cosmetics, Inc. v. L'Oreal USA, Inc., 458 F.3d 244 (3d Cir. 2006).................................................................................................... 11 Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) ................................................................................................................ 11

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Rambus Inc. v. Infineon Techs. AG, 222 F.R.D. 280 (E.D. Va. 2004) ............................................................................................... 6 Samsung Electronics Co., Ltd. v. Rambus Inc., 439 F. Supp. 2d 524 (E.D. Va 2006)......................................................................................... 6

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Samsung Electronics Co., Ltd. v. Rambus, Inc., 523 F.3d 1374 (Fed. Cir. 2008)................................................................................................. 6 SanDisk Corp. v. Phison Electronics Corp., 538 F. Supp. 2d 1060 (W.D. Wis. 2008) ................................................................................ 16

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Shaw v. Hahn, 56 F.3d 1128 (9th Cir. 1995)................................................................................................... 10 Stevenson v. Sears Roebuck & Co., 713 F.2d 705 (Fed. Cir. 1983)..................................................................................... 11, 13, 14

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M&T Mortgage Corp. v. Miller, 2007 WL. 2403565 (E.D. N.Y. August 17, 2007) .................................................................... 6

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DOCKETED CASES

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Micron Technology, Inc. v. Rambus, Inc., Civ. No. 00-792-SLR ............................................................................................................ 1, 3

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TABLE OF AUTHORITIES (Continued)

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Page

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OTHER PUBLICATIONS

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18A C. WRIGHT & A. MILLER, FEDERAL PRACTICE & PROCEDURE, JURIS. § 4416 (3d ed. 2002) ............................................................................................................... 11

5 FEDERAL STATUTES 6 28 U.S.C. § 1659(a) ...................................................................................................................... 16 7 Fed. R. Civ. P. 56(e)(2) ................................................................................................................. 10 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 OHS West:260603151.7

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NOTICE OF MOTION

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TO PLAINTIFF RAMBUS, INC. AND ITS ATTORNEYS OF RECORD:

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PLEASE TAKE NOTICE that on March 13, at 9:00 A.M. or as soon thereafter as the

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matter may be heard, in Courtroom 10 of this Court, before the Honorable Susan Illston,

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defendant NVIDIA Corporation will and hereby does move for the following relief:

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1. A lifting of the stay entered by order of the Court on December 30, 2008 (Dkt. No. 76)

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in this action as to the Barth patents for the limited purpose of hearing and adjudicating the

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motion for summary judgment submitted herewith;

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2. An order granting summary judgment that the Barth patents are unenforceable as to

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NVIDIA, based on the preclusive effects of the opinion and order entered on January 9, 2009 in

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Micron Technology, Inc. v. Rambus, Inc., Civ. No. 00-792-SLR (“the Micron action”) and the

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matters established as undisputed facts herein;

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This motion is based on the accompanying Memorandum, the Request for Judicial Notice

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(“RJN”) filed herewith, and all pleadings and papers that are of record and on file in this case,

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including specifically NVIDIA’s motion to dismiss and supporting papers filed on January 16,

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2009 (Dkt. Nos. 80 and 81).

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I.

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INTRODUCTION NVIDIA Corporation requests that this Court lift the stay it had previously issued, for the

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limited purpose of finding all asserted patents listing Richard M. Barth as the first-named inventor

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(collectively, “the Barth patents”) unenforceable, under the issue preclusion effects of Judge

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Sue L. Robinson’s decision in the Micron action and the undisputed facts shown herein. NVIDIA

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has separately moved to apply the doctrine of issue preclusion to find the six Farmwald patents

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asserted in this action unenforceable. The motion with respect to the Farmwald patents and this

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motion are set to be heard on the same day.

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Judge Robinson joined the opinion of the Eastern District of Virginia and found a bad

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faith effort by Rambus to destroy countless highly relevant (and potentially unfavorable)

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documents as part of an aggressive patent litigation strategy to attack current and developing

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own records of materials that might be used against it at a time when litigation of its patent rights

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was foreseeable. Judge Robinson’s findings show that Rambus’s bad faith spoliation of evidence

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took place while the Barth patents were being prosecuted and necessarily extended to the Barth

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patents. The facts found by Judge Robinson as to the nature, extent, and timing of Rambus’s

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intentional destruction of documents are binding on Rambus under the doctrine of issue

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preclusion. Judge Robinson found Micron’s defenses to have been prejudiced in the matter

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before her because of Rambus’s massive document destruction strategy. Based upon her

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findings, she ruled that all of the Rambus patents before her were rendered unenforceable.

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Just as Micron’s defenses were irrevocably prejudiced, so too NVIDIA’s defenses in this

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action have been irrevocably prejudiced by the same document destruction and patent litigation

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strategy that Judge Robinson found to have occurred. Accordingly, Rambus’s Barth patents

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should be found unenforceable under the doctrine of issue preclusion.

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The Court stayed the infringement action relating to the Barth patents and certain other

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patents in light of proceedings involving those patents pending before the U.S. International

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Trade Commission (the “ITC”). That stay was entered to protect NVIDIA from the undue burden

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of defending on the same patents in two fora simultaneously. Because Rambus’s claims under

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the Barth patents are amenable to summary disposition and because resolution by this Court

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would promote judicial efficiency by removing from suit both in this case and, ultimately in the

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ITC, seven of the asserted patents, NVIDIA requests that the Court lift the stay for the limited

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purpose of resolving this motion.

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II.

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FACTUAL BACKGROUND The following facts are undisputed based upon the trial court record in the Micron action,

and documents subject to judicial notice.

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A.

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As described in Judge Robinson’s opinion in the Micron action, beginning as early as

Judge Robinson’s Findings and the Micron Trial Record

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1996, Rambus envisioned an industry-wide adoption of its DRAM technology, to be achieved

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through aggressive use of its intellectual property, characterized by Rambus as a “patent

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minefield.” FF 50, p. 30.1 To carry out its ambitions, Rambus began preparing for litigation to

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validate its patents and establish royalty rates. Id.

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Central to Rambus’s litigation strategy was its adoption and implementation of a so-called

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“document retention” policy. Id. Under that policy, Rambus conducted a series of “shred days”

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in which millions of internal Rambus documents were destroyed. Rambus also required its

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outside patent counsel to purge materials from patent prosecution files as patents issued. FF 19,

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25, 28.

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Judge Robinson acknowledged, as Rambus vigorously argued, that destruction of

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documents pursuant to a reasonably adopted and implemented document retention policy is not

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wrongful. However, after hearing all of the evidence, which included testimony of more than 20

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witnesses and approximately 300 exhibits, Judge Robinson concluded that Rambus’s

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implementation of its document policy was inappropriate and undertaken in bad faith because

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Rambus knew or should have known that documents that would become material in litigation at

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some point in the future would be destroyed. CL 55.

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Judge Robinson made the following specific findings against Rambus relevant to this motion:

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Facts and Conclusions Re the Duty to Preserve

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1.

“Rambus hired [Vice President of Intellectual Property Joel] Karp to work on a licensing program for non-Rambus technologies, including SDRAMs and DDR DRAMs, that CEO Tate said infringed the Rambus patents.” FF 6, p. 5.

2.

“On January 7, 1998, Tate met with Karp and instructed him to prepare a presentation for the March 1998 Board of Directors (‘the Board’) meeting discussing, inter alia, a licensing framework and a litigation strategy.” FF7, p. 6 (emphasis added).

3.

At a meeting between Karp and attorney Peter Leal on February 12, 1998, “discussion of litigation strategy predominated,” FF 10, p. 7, and “[s]pecific to the litigation strategy, Karp proposed the implementation of a document retention policy.” FF 50, p. 30; see also FF 10, pp. 7-8.

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“[N]otes from the February 12, 1998 meeting between Karp and Leal reveal that

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“FF” refers to the numbered Finding of Fact in Judge Robinson’s decision. “CL” refers to matters identified in that order as Conclusions of Law. A copy of Judge Robinson’s opinion is attached as Exhibit 1 to the Request for Judicial Notice (“RJN”) filed herewith and a copy of her order declaring the patents unenforceable is attached as Exhibit 2 to the RJN. OHS West:260603151.7

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Rambus had contemplated litigation prior to implementing the [document retention] policy.” FF 39, p. 25. – “Karp and the attorneys discussed preparing trial graphics and claims.” FF 10, pp. 7-8.

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– “Karp and the attorneys discussed retaining experts.” FF 10, pp. 7-8.

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– “Karp and the attorneys discussed gathering critical documents and implementing a document retention policy.” FF 10, pp. 7-8.

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– “Karp and the attorneys discussed building a case against potential litigation targets, including Micron, Fujitsu, Samsung, and Hyundai.” FF 10, pp. 7-8.

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“Rambus considered the [document retention/destruction] policy to be part of its litigation preparation,” FF 39, p. 25; see also FF 12, p. 9, n. 20; FF 13, p. 10; because such a policy would “allow Rambus to purge documents, including emails, from its files that might be discoverable in litigation” by its adversaries. FF 13, p. 10.

6.

“On March 2, 1998, Karp presented the licensing and litigation strategies to the Rambus Board,” “Karp discussed using royalty rates in the 5-10% range, in cases where [Rambus] is not interested in settling,” “Karp told the Board that the document retention policy was necessary to prepare for the ‘upcoming battle,’” and “[n]either the Board nor Tate voiced disapproval of the licensing and litigation strategies.” FF 12, pp. 8-9, nn. 19, 20.

7.

“On March 16, 1998, after discussions with Karp about ‘the email back-ups [containing] discoverable information,’ [Allen] Roberts sent an e-mail to Joseph Lau, manager of the computer systems, instructing him to add a Quarter 2 goal about a back-up policy and to implement that policy in Quarters 2 and 3.” FF 13, p. 10.

8.

“[L]itigation was reasonably foreseeable no later than December 1998, when Karp had articulated a time frame and a motive for implementation of the Rambus litigation strategy.” FF 55, p. 31.

9.

“A duty to preserve potentially relevant evidence arose in December 1998.” CL 55, p. 32.

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Facts and Conclusions Re Bad Faith Destruction of Evidence

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10.

“[B]ecause the document retention policy was discussed and adopted within the context of Rambus’ litigation strategy, . . . Rambus knew, or should have known, that a general implementation of the policy was inappropriate because the documents destroyed would become material at some point in the future.” CL 55, pp. 31-32.

11.

“Karp instructed Rambus engineers to look for things to keep that would help establish conception and prove that Rambus had intellectual property,” and that “one of the things the document retention policy was targeted to expunge — were documents questioning the patentability of Rambus inventions.” FF 17, pp. 12-13, n. 27. See also FF17, p. 12, n. 27 (Karp advised Rambus employees “LOOK FOR THINGS TO KEEP”).

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12.

“By July 1998, documents were being destroyed pursuant to the new policy,” specifically back up tapes that “[e]ach . . . could store approximately 100,000 documents, including internal emails,” and that “1,269 back-up tapes [i.e. up to 126,900,000 documents] were degaussed, or erased in July 1998.” FF 50, p. 30, FF 16, pp. 11-12, n. 23. See also FF 13, p. 10, n. 22.

13.

“[O]n August 19, 1998, Rambus’s head of human resources, Ed Larsen, sent an email to other Rambus employees informing them of the upcoming shred day and instructing them to place all to-be-discarded materials in a burlap bag that would be provided to them.” FF 19, p. 14 n. 32.

14.

“On September 3, 1998, Rambus employees participated in an event dubbed ‘Shred Day,’ during which they destroyed [400 banker’s boxes worth of] documents pursuant to the company’s new document retention policy,” including “documents relating to, inter alia, contract and licensing negotiations, patent prosecution, JEDEC and Board meetings, and finances.” FF 19, pp. 13-14 & n.33.

15.

“In April 1999, Karp instructed outside counsel Lester Vincent of the Blakely Sokoloff law firm to begin ‘clear[ing] out’ the Rambus patent files for patents that had issued.” FF 25, pp. 17-18 (emphasis in original).

16.

“By June 1999, litigation was a written goal of Karp’s for which he was preparing.” FF 53, p. 31.

17.

“Vincent cleared out the patent files over the course of April, May, June and July of 1999. Documents cleared out included hard and electronic copies of draft amendments, draft claims, and attorneys’ handwritten notes.” FF 25, pp. 17-18.

18.

“On August 26, 1999, Rambus had another shred day,” and “300 boxes of documents were destroyed.” FF 28, pp. 19-20.

19.

“On June 23, 2000, Vincent resumed purging the Rambus patent files.” FF 34, p. 23, n. 57.

20.

“On December 28, 2000, at Rambus’ request, a shredding contractor disposed of as many as 480 boxes of Rambus materials in connection with an office move.” FF 36, p. 23.

21.

“On July 17, 2000, Steinberg sent an email to Rambus executives reminding them to comply with the document retention policy vis-à-vis contracts.” FF 34, p. 23, n. 57.

22.

“[A]ny documents purged from [ December 1998] . . . forward . . . [were] intentionally destroyed, i.e., destroyed in bad faith.” FF 55, p. 32.

23.

Rambus destroyed “documents relating to, inter alia, contract and licensing negotiations, patent prosecution, JEDEC and Board meetings, and finances.” FF19, p. 14, n.33.

24.

The documents destroyed after December 1998 “were discoverable” and “were documents relevant to” “unenforceability due to patent misuse and violation of the antitrust and unfair competition laws (based in part of Rambus’ conduct at JEDEC), as well as inequitable conduct.” FF 56, pp. 3233.

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Conclusion Re Remedy

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25.

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Any remedies short of unenforceability of the patents “are impractical, bordering on meaningless, under these circumstances and in the context of a typical jury trial.” FF 57, p. 33.

Judge Robinson was not alone in her opinion. Indeed, Judge Payne in the Eastern District

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of Virginia has made similar findings, only to have them vacated through Rambus’s procedural

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maneuvers to vacate the findings. See Samsung Electronics Co., Ltd. v. Rambus Inc. 439 F.

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Supp. 2d 524 (E.D. Va 2006) (vacated on jurisdictional grounds by Samsung Electronics Co., Ltd.

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v. Rambus, Inc., 523 F. 3d 1374 (Fed. Cir. 2008)).

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B.

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NVIDIA Was A Target Of Rambus’s Litigation Strategy

Judge Robinson specifically found that litigation was reasonably foreseeable no later than

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December 1998 and that a duty to preserve potentially relevant evidence arose at that time. FF

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55, p. 31; CL 55, p.32. While Rambus’s duty to preserve arising from anticipation of litigation

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does not require that Rambus anticipated litigation against NVIDIA in particular2, the evidence in

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the Micron action demonstrated that Rambus identified NVIDIA as a target from very early on in

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its litigation strategy planning. For example, in January 1998, Rambus created a document

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entitled “Top Level Key Results for 1998.” The document identifies NVIDIA in the section of

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“establish PC Multimedia Market Segment Momentum.” MTX 279.3 In addition, Joel Karp, the

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person charged with running Rambus’s licensing and litigation program, kept a notebook with

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numerous notes about potential targets. FF 39a-b, pp. 24-25 (MTX 385, MTX 270). NVIDIA is

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listed in the notebook at least twice. Two pages after one such reference is a preliminary mock-

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up of the “Look for things to keep” slide referred to in footnote 27, p. 12, of Judge Robinson’s

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Order. The fact that NVIDIA was a target was then confirmed in MTX 493 (titled “IP Update”)

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wherein a strategy to sue Hitachi is outlined. On page MTX 0493-0006, Rambus said “Tentative

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Rambus Inc. v. Infineon Techs. AG, 222 F.R.D. 280, 295 (E.D.Va. 2004) (rejecting Rambus’s argument that the alleged spoliator must anticipate litigation “with the specific party who later alleges spoliation.”); see also M&T Mortgage Corp. v. Miller, 2007 WL 2403565, *5 (E.D.N.Y. August 17, 2007). (rejecting a “strained argument” that duty to preserve arising in connection with earlier litigation against some parties did not apply in subsequent litigation with other similarly-situated parties). 3 “MTX” refers to Micron Trial Exhibit. The exhibits cited herein are attached collectively in numerical order as Exhibit 3 to the RJN. OHS West:260603151.7

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Plan: IP Group to contact a subgroup of SEC, HEI, NEC, Toshiba and Nvidia to meet 30-60 days

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after filing suit, contact letter to state:

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•

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Need to license Rambus patents relating to DDR and SDRAMs; Need a meeting to discuss patent positions and licensed terms.

Thus, Judge Robinson’s finding that Rambus anticipated litigation and had a duty to preserve documents no later than December 1998 applies with equal force to Rambus’s present lawsuit against NVIDIA.

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C.

The Relationship of the Barth Patents to Judge Robinson’s Order

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The Barth patents include two patent families affected by the findings in Judge

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Robinson’s order. The first patent family, referred to herein as Barth I, purports to claim priority

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to Application No. 08/545,292, filed on October 19, 1995. The Barth I patent family includes

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three patents-in-suit: U.S. Patent Nos. 6,591,353; 6,470,405; and 7,287,109. The second patent

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family, referred to herein as Barth II, purports to claim priority at least to October 9, 1998 and

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potentially to a provisional patent application filed on October 10, 1997. The Barth II patent

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family includes four patents-in-suit: U.S. Patent Nos. 7,330,952; 7,330,953; 7,360,050 and

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7,287,119.

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The Barth patents and the patents at issue before Judge Robinson relate to the same basic

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technology, namely memory and memory controllers, and more specifically to methods and

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devices claimed to improve the speed and other attributes of memory-related technology. See

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Rambus’s First Amended Complaint at ¶¶ 17-22, 25; Exhibits F-K, N (specifications of patents in

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suit); RJN Exh. 5 (abstracts of patents at issue in Micron Action)

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Rambus prosecuted the Barth patents during the same period of time that it formulated

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and implemented its “document retention” policy and when ordered and carried out three

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separate “shred days” to eliminate internal, non-public documents. The application leading to

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these patents had been filed before Karp and Tate’s meeting on January 7, 1998 to prepare a

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litigation strategy for the Board of Directors. Robinson Order at ¶ 7. All of the prosecution of

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the Barth patents occurred after Rambus made the decision to draft patent claims to cover

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industry standards and create a patent “minefield.” Robinson Order at ¶ 4.4 Two “family trees”

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of the Barth I and Barth II Patents, showing the spoliation time frames are attached hereto as

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Exhibits A and B.

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Judge Robinson found that the document destruction program at Rambus was

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indiscriminate and not directed at any particular subset of Rambus’s patents or patent

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applications. For example, footnote 27 of Judge Robinson’s Order describes how Karp expressly

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advised Rambus employees to look for and keep documents that would help establish conception

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and reduction to practice of Rambus inventions, but that they should not keep documents

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questioning the patentability of any such inventions. These instructions were directed at

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anything and everything that Rambus might claim as intellectual property.

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Likewise, as set out above, Judge Robinson specifically found that Rambus in fact

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destroyed “documents relating to, inter alia, contract and licensing negotiations, patent

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prosecution, JEDEC and Board meetings, and finances.” FF19, p. 14, n.33. Such materials

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necessarily related to any and all of Rambus’s patents and pending patents, not merely some

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subset thereof. Indeed, Judge Robinson specifically found: “[t]he spoliation conduct was

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extensive, including within its scope the destruction of innumerable documents relating to all

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aspects of Rambus’s business.” CL 57 (emphasis added).

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Richard M. Barth, the first-named inventor of the Barth patents, admitted that he

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destroyed documents kept in his workspace at Rambus as part of the company’s “Document

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Retention” policy. RJN Exh. 4; Micron Trial Transcript at 1452:7-18. Likewise, Craig Hampel,

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a listed inventor on each of the Barth patents, admitted in deposition testimony presented at trial

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in the Micron action, that Rambus’s document policy sought to eliminate documents questioning

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the patentability of Rambus’s claimed inventions:

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Q. Was anything said about the reasons for instituting this new policy?

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A. A couple of examples of why it’s a good idea not -- not to keep stuff around were cited, yeah.

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Notably, Rambus’s entire theory of infringement in this case appears to rest on adherence to the same industry standards Rambus has attacked in other cases.

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Q. What were those examples?

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A. Things like apparently discussions on patentability of a -- of a concept. If for some reason you had a third party in the company that said that this idea isn’t patented – maybe they were wrong even, but they said it’s not patentable for some reason, having that email around could be used in the prosecution of the patent, or at some later date. So it was examples like that given, where it’s not a good idea to have the discussion on the idea, the formulation of the idea, and its patentability prior to applying for a patent.

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Q. Okay. Were there any other examples that were discussed that you can remember?

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A. The other one I do remember is that keeping early copies of a contract that -- maybe drafts that were -- for internal review that never went to -- that were never taken out externally for some reason -- I don’t even know the specifics, there was a reason not to keep draft copies of a contract around.

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RJN Exh. 4, Micron Trial Transcript at 1303:21-1304:24. In addition, Hampel confirmed that he

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discarded documents in accordance with the guidelines until the middle of 2000:

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Q. Have you yourself ever discarded documents in accordance with the guidelines?

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A. Yeah.

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Q. Did you ever receive instructions to stop discarding documents in accordance with the guidelines?

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A. I think so, but I think that was by attorneys. So yes, I have received instructions.

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Q. Instructions to stop discarding certain documents?

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A. I’ve received instructions not to discard certain documents, yes.

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Q. Okay. And my next question is: When did you receive those instructions?

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A. Middle or late last year, so middle of 2000, approximately. RJN Exh. 4, Micron Trial Transcript at 1307:23-1308:15. The evidence relied upon by Judge Robinson also showed that documents related to the prosecution of Barth I family were purged by Rambus’s outside counsel at Rambus’s instruction. The file history of the Barth I family reveals that the parent application was filed by the Blakely Sokoloff firm, and that Lester Vincent of that firm was given a power of attorney. See RJN,

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1

Exh. 10. The Power of Attorney form identifies the attorney “docket no.” for the application as

2

073305.P048. Id. As part of her finding that Rambus spoliated evidence, Judge Robinson relied

3

on an exhibit entitled “Patent File Clean-Up,” which lists the specific files that Vincent himself

4

purged, or had his assistant purge. Robinson Order at ¶ 25. MTX 601. That exhibit

5

demonstrates that Docket No. P048 — the parent application for the Barth I patents – was among

6

the “cleared out” patent files. Thus, as to Barth I, not only does Rambus’s systematic wholesale

7

destruction of internal documents unduly prejudice NVIDIA’s defenses, NVIDIA also has been

8

deprived of the ability to obtain otherwise discoverable material from the prosecution file that

9

would be relevant to its defenses.

10

III.

SUMMARY JUDGMENT SHOULD BE GRANTED

11

A.

12

Under Federal Rule of Civil Procedure 56(c), summary judgment is appropriate if “there

Legal Standards Under Rule 56

13

is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a

14

matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Once the moving party

15

demonstrates that there is no genuine issue of material fact, the opposing party must come

16

forward with “specific facts showing that there is a genuine issue for trial.” Id. The opposition

17

may not rest upon mere allegations or denials of the adverse party’s evidence, but instead must

18

produce admissible evidence to support its contentions. See Fed. R. Civ. P. 56(e)(2).

19

B.

20

In a case of defensive nonmutual collateral estoppel where Rambus had a full and fair

21

opportunity to litigate such as this, Rambus should be bound by the result. See Idaho Potato

22

Comm’n v. G&T Terminal Packaging, Inc. 425 F.3d 708, 713 (9th Cir. 2005). As set out in more

23

detail in NVIDIA’S previously-filed motion to dismiss under Rule 12(b)(6), issue preclusion,

24

once more commonly known as collateral estoppel, “prevents relitigation of issues actually

25

litigated and necessarily decided, after a full and fair opportunity for litigation, in a prior

26

proceeding.” Shaw v. Hahn, 56 F.3d 1128, 1131 (9th Cir. 1995). This Court should apply issue

27

preclusion here and find all asserted Barth Patents unenforceable.

28

Legal Standard for Application of Issue Preclusion

The leading case applying issue preclusion in a patent context is Blonder-Tongue Labs., OHS West:260603151.7

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1

Inc. v. University of Ill. Found., 402 U.S. 313, 317-27 (1971). In that case, the Supreme Court

2

firmly established that a prior “final judgment” is binding so long as it was fully and fairly

3

litigated and embraces the same issue. As Blonder-Tongue implicitly recognizes, and later cases

4

further clarify, the important purposes of issue preclusion doctrine — “protecting litigants from

5

the burden of relitigating an identical issue with the same party or his privy and of promoting

6

judicial economy by preventing needless litigation,”5 — require courts to apply the doctrine

7

faithfully when it is invoked defensively, as in this case. Indeed, in subsequent cases, the Federal

8

Circuit has recognized:

9

Blonder-Tongue did not throw merely a jab at the multiplicity of patent litigation; rather, it intended a knockout blow through the doctrine of collateral estoppel so that any time a patent was found invalid in a fair fight with a knowledgeable referee, the courts could count ten and the patent holder could no longer maintain that he was champion.

10 11 12 13

Stevenson v. Sears Roebuck & Co., 713 F.2d 705, 710 (Fed. Cir. 1983), quoting Blumcraft of

14

Pittsburgh v. Kawneer Co., 482 F.2d 542, 548-49 (5th Cir. 1973).

15

“The predominant question in preclusion cases involving defensive or mutual collateral

16

estoppel is whether the basic requirements for issue preclusion are satisfied.” Jean Alexander

17

Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 248-49 (3d Cir. 2006) (affirming application

18

of defensive issue preclusion on de novo review; holding that defensive issue preclusion is not a

19

matter of discretion).6

20

Under settled Ninth circuit law, a federal court decision has preclusive effect where:

21

1) the issue necessarily decided at the previous proceeding is identical to the one which is sought to be relitigated;

22

2) the first proceeding ended with a final judgment on the merits; and

23

(3) the party against whom issue preclusion is asserted was a party or in privity with a party at the first proceeding.

24 25 26 27 28

5

Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979). While some courts have suggested that issue preclusion, in general, is a matter of discretion, “most of these statements rest on unthinking extrapolation from the decisions that bring discretion into the determination whether to permit nonmutual [offensive] preclusion.” 18A C. WRIGHT & A. MILLER, FEDERAL PRACTICE & PROCEDURE, JURIS. § 4416 (3d ed. 2002). However, “ordinarily the rules of issue preclusion have not turned on any open-ended discretion.” Id. 6

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MOTION FOR SUMMARY JUDGMENT C-08-03343

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Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir.2000).

2

All three of the basic requirements for application of issue preclusion are satisfied here.

3

There can be no dispute that Rambus, the party against whom preclusion is asserted, was a party

4

to the Micron action; no complicated questions of “privity” need be decided here. As shown in

5

NVIDIA’s motion to dismiss, there also is no doubt that Judge Robinson’s opinion and order

6

meet the “finality” requirement for application of issue preclusion—the absence of a formal

7

“judgment” or the possibility that other collateral matters remain to be litigated in the Micron

8

action does not affect the finality for these purposes. See NVIDIA’s brief in support of its motion

9

to dismiss at 10 and authorities cited therein. (Dkt. No. 80). Furthermore, after NVIDIA’s

10

motion to dismiss was filed, Rambus conceded in open court in the Micron action that the order

11

and opinion were final for purposes of applying issue preclusion. RJN Exh. 7.

12

A substantial identity between the litigated issue in the Micron case and the issue in this

13

case also exists. Indeed, NVIDIA asks this Court to find Rambus to be precluded from re-

14

litigating exactly each of the 25 numbered facts and conclusions set out in section II B above.7

15

Application of those facts and conclusions to the Barth family involves considering limited

16

additional facts that are undisputed, but all NVIDIA seeks to establish directly through issue

17

preclusion are specific points of fact and law that Rambus had full and fair opportunity to litigate

18

in the matter.

19

1.

20

Rambus’s anticipated arguments are without merit.

Rambus may contend that this Court should hesitate to apply preclusive effect to

21

Judge Robinson’s findings and conclusions because, as noted in NVIDIA’s companion motion to

22

dismiss, in an earlier case Judge Whyte concluded that memory manufacturer Hynix failed to

23

carry its burden to show that Rambus engaged in material spoliation of evidence. Rambus’s

24

arguments should be rejected. The only impact of Judge Whyte’s prior order is that this Court

25 26 27 28

7

It may not be necessary for this Court to reach each and every detail set out in all 25 numbered points. The broader points listed in the highlighted items at the end of each topic area, if deemed established under issue preclusion principles, are sufficient to compel entry of summary judgment here when taken together with the undisputed facts that show the document destruction necessarily was equally prejudicial to NVIDIA’s defense on the Barth patents. OHS West:260603151.7

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1

should take care to ensure that the Micron case was fully and fairly litigated. See Stevenson, 713

2

F.2d at 713. There is no question the Micron case was fully and fairly litigated. The matter was

3

tried over five days with extensive testimony and documentary evidence, and Rambus cannot

4

reasonably contend it did not make every possible effort to defeat Micron’s claims.

5

Judge Whyte’s recent rulings regarding the application of issue preclusion are not

6

germane to this motion. On February 3, 2009, Judge Whyte issued two orders in the

7

Consolidated litigation considering the effect of Judge Robinson’s ruling on the matters still

8

pending before him. In the first order, Judge Whyte declined to decide the merits of arguments

9

by manufacturers Samsung, Nanya, and Micron itself that each of them was entitled to the benefit

10

of issue preclusion from the Delaware Micron action. Instead, Judge Whyte stayed the

11

proceedings as between Rambus and those defendants, pending a determination by the Federal

12

Circuit of the anticipated appeal of the Micron action. RJN Exh. 8. Such relief is not appropriate

13

here because of the copending investigation underway at the International Trade Commission.

14

Only a ruling of unenforceability (or an order directing Rambus to refrain from proceeding with

15

the ITC investigation) would prevent prejudice to NVIDIA.

16

Judge Whyte’s second order addressed the request of manufacturer Hynix that he either

17

(1) apply issue preclusion from Judge Robinson’s decision to reverse the effect of his own prior

18

conclusion that Hynix had failed to prove spoliation, or (2) that he reconsider his prior order.

19

Judge Whyte declined to do either, instead representing that he will act expeditiously to resolve

20

other pending motions and to enter final judgment in that action, so that his prior decision on

21

spoliation may be considered by the Federal Circuit on appeal at the same time as it takes up

22

Judge Robinson’s order. RJN Exh. 9.

23

Judge Whyte’s decision refusing to give Hynix the benefit of a preclusive effect to

24

Judge Robinson’s decision has no applicability to this case. In Hynix, Judge Whyte was

25

confronted with the tension between mutual collateral estoppel and nonmutual collateral estoppel.

26

(“Here, it is difficult to see how it would be just or equitable to give Hynix the benefit of a

27

decision between Rambus and a third party when Hynix fully litigated the issue with Rambus and

28

lost”). Order at 1.2:17-19. The Court held mutual collateral estoppel should win in such a OHS West:260603151.7

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MOTION FOR SUMMARY JUDGMENT C-08-03343

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1

circumstance. As Judge Whyte repeatedly emphasized, “Hynix has already tried – and lost – the

2

issue of spoliation.” Order at 9:9; see also id., at 2:4-5 (“The bottom line is that Hynix wants to

3

substitute the favorable decision in Micron for the unfavorable decision it received here”); 2:17-

4

19 (“it is difficult to see how it would be just or equitable to give Hynix the benefit of a decision

5

between Rambus and a third party when Hynix fully litigated the issue with Rambus and lost.”);

6

9:15 (“Hynix directly litigated the issue with Rambus and lost.”). Unlike the Hynix case,

7

obviously, NVIDIA has not previously litigated the issue with Rambus and lost. The tension of

8

Hynix is not present here.

9

Judge Whyte also found the fact that Hynix had previously lost the issue against Rambus

10

not only created issues of fairness, it also undermined one of the bedrock principles supporting

11

issue preclusion doctrine: efficiency. See Order at 8:7-9:11 (explaining why Hynix could not

12

claim “efficiency” would be served where it had previously fully litigated the issue directly with

13

Rambus and had engaged in certain other procedural maneuvers not present here.) In contrast,

14

here, efficiency will be greatly promoted by not permitting Rambus to litigate the same issues

15

again, hoping for a better outcome than it achieved in the Micron action. Thus, the policies

16

Judge Whyte identified as underlying issue preclusion doctrine would be promoted by its

17

application here. See Order at 8:8-10 (citing Blonder-Tongue, 402 U.S. at 328-29, for the

18

proposition that non-mutual issue preclusion serves the need for “efficient judicial

19

administration” and to dispel “the aura of the gaming table.”). The Hynix “efficiency” issue is not

20

present here.

21

Additionally, as Judge Whyte noted, Hynix had every opportunity to join the Micron

22

action. See Order at 7:1-8.5. NVIDIA had no similar opportunity here. Accordingly,

23

Judge Whyte’s refusal to apply issue preclusion in favor of Hynix does not support a conclusion

24

that issue preclusion should not be applied here.

25 26

C.

The Barth Patents Are Unenforceable Under Judge Robinson’s Findings and the Undisputed Facts Here

The facts and conclusions set out in Judge Robinson’s detailed 33-page opinion, not 27 subject to relitigation here, establish that Rambus engaged in widespread, intentional destruction 28 OHS West:260603151.7

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1

of evidence with the direct aim of improving its position, and disadvantaging defendants, in

2

contemplated industry-wide litigation to enforce Rambus’s purported patent rights. These

3

findings are supported by two other fact finders who reached the same conclusion. Although

4

Judge Robinson’s findings and conclusions rendered all the patents before her unenforceable, the

5

nature and scope of destruction found to have taken place is such that it was in no way specific to

6

or limited to those particular patents. Judge Robinson did not find that Rambus spoliated

7

“Farmwald” documents, or “Micron” documents; she found that Rambus systematically

8

destroyed “documents relating to, inter alia, contract and licensing negotiations, patent

9

prosecution, JEDEC and Board meetings, and finances.” FF 19. Again, as Judge Robinson put it,

10

“[t]he spoliation conduct was extensive, including within its scope the destruction of innumerable

11

documents relating to all aspects of Rambus’s business.” CL 57 (emphasis added).

12

Judge Robinson further found that Rambus’s outside patent prosecution attorney was

13

instructed to, and did, purge his prosecution files on an ongoing basis as patents issued, without

14

limitation to any particular “family” of patents or reference to any particular potential defendant.

15

The Barth patents-in-suit descend from applications that were filed in 1995 and 1997,

16

before Rambus’s adjudicated document destruction campaign commenced. Attorney Vincent’s

17

records demonstrate he purged the file for the original application that led to the Barth I patents.

18

It is undisputed that Richard Barth destroyed materials he had retained in his “cube” at Rambus in

19

an effort to comply with the “retention policy.” Likewise, co-inventor Hampel admits to broad

20

destruction of materials, not limited to any particular inventions, patents, or patent applications.

21

Under these circumstances, there is simply no reasonable inference, let alone admissible

22

fact, that could support an argument that the adjudicated spoliation of evidence somehow spared

23

materials relevant to the Barth patents. Accordingly, the Court should find that as a matter of

24

issue preclusion and undisputed fact, Rambus engaged in evidence spoliation that irrevocably

25

prejudiced NVIDIA’s ability to defend itself against Rambus’s claims under the Barth patents.

26

To protect NVIDIA from that prejudice, the Court also must impose the same remedy as

27

that imposed by the Delaware court. Whether imposing the remedy is viewed as strictly a matter

28

of issue preclusion or as an independent determination by this Court, is of little consequence. In OHS West:260603151.7

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1

light of the facts and conclusions that Judge Robinson reached, and which Rambus is not entitled

2

to collaterally attack here, and in light of the undisputed facts, there is no principled basis on

3

which to draw a line between any of the patents, to contend that there is a significantly lesser

4

level of prejudice to be ameliorated, or that the prejudice could be cured through evidentiary or

5

monetary sanctions. It is just as true here as it was found to be by Judge Robinson in Delaware

6

that “any remedy short of finding the patents unenforceable would be ‘impractical, bordering on

7

meaningless, under these circumstances.’”8 Accordingly, summary judgment should issue that

8

the Barth patents are unenforceable against NVIDIA.

9

IV.

10

LIFTING THE STAY IS WARRANTED TO ADDRESS THE DISPOSITIVE THRESHOLD ISSUE OF THE PRECLUSIVE EFFECTS OF JUDGE ROBINSON’S DECISION UNDER UNDISPUTED FACTS

11

On December 30, 2008, the Court entered an order staying this action in part. See Dkt.

12

No. 76. Under the Order, litigation is permitted to go forward as to the Farmwald patents, but

13

proceedings under the Barth Patents and the Ware patents were to be stayed, in light of a pending

14

parallel action initiated by Rambus in the ITC regarding those patents. Id. The stay was entered

15

under the authority of 28 U.S.C. § 1659(a), which is designed to protect defendants from being

16

forced to respond to infringement claims in both the ITC and a district court action

17

simultaneously. See SanDisk Corp. v. Phison Electronics Corp., 538 F. Supp. 2d 1060, 1065,

18

(W.D. Wis. 2008) (citing H.R. Rep. No. 103-826(I), at 140, as reprinted in 1994 U.S.C.C.A.N.

19

3773, at 3912 “Congress passed § 1659 to address the unfairness of requiring importers and

20

producers to ‘defend claims in both the Commission and in district court, possibly at the same

21

time.’”).

22

At the time NVIDIA applied for and obtained the stay, it had no reason to foresee that

23

Judge Robinson would be issuing a dispositive ruling in the Micron action shortly thereafter. The

24

matter had been under submission since the trial in 2007. NVIDIA neither knew that

25

Judge Robinson would rule at any particular time, nor that the substance of the ruling would be

26

such that issue preclusion would be available.

27 28

8

Robinson Order, p. 33 at ¶57.

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Now that Judge Robinson has ruled, there is an opportunity to consider the preclusive

2

effects of that ruling on Rambus’s claims under the Barth patents, and potentially to dispose of

3

those claims, without discovery or other prolonged litigation. Under these circumstances, judicial

4

efficiency and the interests of justice favor lifting the stay to hear and decide the accompanying

5

motion for summary judgment. Accordingly, the stay should be lifted for this limited purpose.9

6

V.

7

CONCLUSION Rambus made itself “battle ready” for litigation against the memory industry by

8

destroying documents that would be relevant and helpful to defending against the enforcement of

9

its patents and by specifically seeking to preserve documents that would someday be helpful to it

10

in its efforts to enforce those same patents. Judge Robinson’s findings as to what Rambus did

11

and the prejudicial effects of that conduct are binding on Rambus. The only conclusion that can

12

be drawn from those findings and the undisputed facts is that the prejudice to NVIDIA’s defenses

13

under the Barth patents is equally severe and equally incurable. Under these circumstances, the

14

Court should rule that Rambus has forfeited its right to enforce the Barth patents against

15

NVIDIA.

16 17

Dated: February 6, 2009

ORRICK, HERRINGTON & SUTCLIFFE LLP

18 /s/ Robert W. Ricketson /s/ Robert W. Ricketson Attorneys for Defendant NVIDIA CORPORATION

19 20 21 22 23 24 25 26 27 28

9

In the event the Court grants the motion for summary judgment and the motion to dismiss, Rambus’s claims under the Ware patents will remain to be adjudicated, and the stay will still be in effect as to those claims. Should litigation of those or any other claims in this action at some point go through the process of discovery, there may come a time when a further motion for summary judgment will be ripe. NVIDIA recognizes that by standing order, this Court prohibits the bringing of seriatim summary judgment motions. NVIDIA hereby respectfully requests relief from that rule, such that it will not be precluded from bringing a motion for summary judgment at the conclusion of discovery, should grounds for such a motion then exist. NVIDIA submits good cause exists to permit an exception under the somewhat unusual circumstances here, where there is a basis for bringing a summary judgment motion at the outset of the action that does not depend on discovery. OHS West:260603151.7

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MOTION FOR SUMMARY JUDGMENT C-08-03343