Letter From Mm To Court

Case 5:05-cv-00334-RMW

Document 3003

Weil, Gotshal

&

Filed 12/29/2008

Page 1 of 10

Manges llp

201 REDWOOD SHORES PARKWAY REDWOOD SHORES, CA

94065

(650) 802-3000 FAX:

(650) 802-3100

AUSTIN BEIJING BOSTON BUDAPEST DALLAS FRANKFURT HONG KONG HOUSTON LONDON MIAMI MUNICH NEW YORK PARIS

December 29, 2008

PRAGUE PROVIDENCE SHANGHAI WARSAW

BY E-FILING AND EMAIL

WASHINGTON, D.C.

Honorable Ronald M. Whyte United States District Court Northern District of California 280 South 1st Street San Jose, CA 95113 Re:

Rambus Inc. v. Hynix Semiconductor, Inc. et al., C05-00334; Rambus Inc. v. Samsung Semiconductor Co., Ltd. et al., C0502298; Rambus Inc. v. Micron Technology, Inc. et al., C0600244

Your Honor: Pursuant to the Court’s request, the Manufacturers submit this letter to set forth their position regarding phases in the January 2009 Trial, order of presentation and proof, the Manufacturers’ reservation of rights, and the proposal by Micron, Samsung, and Hynix regarding a Micron-only liability trial in which Samsung and Hynix would be bound by the jury verdict, with Rambus’s claims against Nanya relating to DDR2 and DDR3 products to be deferred and included in the liability trial between Rambus, Samsung, and Nanya relating to Rambus’s SDR and DDR SDRAM claims against Samsung and Nanya. The Manufacturers’ proposal regarding not contesting infringement was set forth in their letter to the Court dated December 19, 2008 (attached hereto as Exhibit A). Micron, Samsung, and Hynix’s proposal regarding a Micron-only liability trial in January 2009, in which Samsung and Hynix would not participate before the jury but which Samsung and Hynix agree would bind them (and which would bind Rambus as to Samsung and Hynix), was made at the December 19, 2008 hearing and was addressed in a December 22, 2008 letter to counsel for Rambus (attached hereto as Exhibit B). This letter brief further addresses and supplements these two proposals, addresses issues raised by Rambus in a December 24, 2008 telephonic meet and confer, and addresses

DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 2 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 2

Rambus’s counter-proposal set forth in a December 29, 2008 email (attached hereto as Exhibit C). I.

Manufacturers’ Proposal Not To Contest Infringement

The terms of the Manufacturers’ proposal to not contest infringement were specified in their December 19 letter. Rambus raised several concerns during the parties’ meet and confer session and has now made certain counter-proposals. The concerns and counterproposals fall into three categories: 1) the meaning of the Manufacturers not contesting infringement and what issues relating to infringement were the Manufacturers reserving; 2) what should the jury be told regarding infringement; and 3) without a trial on the remaining infringement issues, what would the record be on appeal of infringement of the limitations the Court has ruled on in the event that the Federal Circuit changed the Court’s claim constructions. These issues are discussed below. Rambus also expressed concerns and made counter-proposals regarding the ordering of the liability and damages phases and the ordering of presentation and proof at trial. These last two issues are addressed in Sections II and III of this letter. 1. Reserved Issues

Meaning of The Manufacturers’ Not Contesting Infringement;

The Manufacturers made clear in their December 19 letter, at the December 19 hearing, and in their December 24 meet and confer with Rambus that their proposal to not contest infringement was manifestly not a concession of infringement (as Rambus has described it) but rather a proposal that they not contest infringement at trial, while preserving their ability to appeal the claim construction and the Court’s November 24 Order granting in part Rambus’s motions for summary judgment of infringement. Specifically, the Manufacturers would not contest whether the following limitations are met in the Accused Products: •

data output “synchronously with respect to a rising edge transition of the external clock signal” and “synchronously with respect to a falling edge transition of the external clock signal” (‘696 claim 4 and ‘446 claim 3);

•

data output “in response to” a rising and falling edge transition of an external clock signal (‘020 claim 36);

•

sampling [or receiving] data “synchronously with respect to the external clock signal (‘184 claim 14; ‘051 claim 27; ‘863 claim 16); and

DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 3 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 3

•

“synchronous” integrated circuit device, memory device, dynamic random access memory device (‘051 claim 43; ‘120 claim 33; ‘916 claim 28; ‘863 claim 16; ‘037 claim 34; and ‘696 claim 4).

In addition, it is the Manufacturers’ position that the Court’s disposition on summary judgment of the limitation regarding sampling data “after a programmable number of clock cycles of the external clock” (‘285, claim 16) is also dispositive of the variable latency limitations of the following claims: •

‘037, claim 34 (sampling data after a delay time)

•

‘696, claim 4 (data output after programmable delay)

•

‘051, claim 27 (sampling data after programmed delay)

•

‘051, claim 43 (sampling data after predetermined delay)

•

‘916, claim 28 (data output after programmable delay)

The Manufacturers do not “concede” infringement and do not agree to abandon their appeal rights or summary motions currently pending that relate to infringement (in particular, Samsung’s and Nanya’s separate motions for summary judgment of non-infringement of the method claims). They further do not agree to abandon their defenses relating to exhaustion, which are the subject of a pending motion for summary judgment by Rambus and which, if that motion is denied, Manufacturers propose be tried during the damages phases, as discussed in their December 19 letter. The approach proposed by the Manufacturers is entirely proper, and would be the most efficient way to resolve the remaining disputes. After the remaining issues are tried, the Court can enter final judgment regarding infringement, validity, and damages.1 Once there is final judgment, the parties may appeal the judgment. Romoland Sch. Dist. v. Inland Empire Energy Ctr., LLC, 548 F.3d 738 (9th Cir. 2008) (“Except in limited circumstances not currently at issue, parties may only appeal from, and appellate courts only have jurisdiction over, ‘final decisions of the district courts.’ See 28 U.S.C. § 1291.”). Indeed, the claim construction issues 1

To the extent Rambus’s counter-proposal implies that the Court should enter a final order on infringement prior to the January 2009 Trial, see Dec. 29, 2008 Email at para. 1, the Manufacturers believe that it would be premature and unnecessary for the Court to do so until all issues are final.

DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 4 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 4

and other infringement-related issues identified by the Manufacturers can be appealed, even if the infringement issues are not tried. Cf. Howmedica Osteonics Corp. v. Wright Med. Tech., Inc., 540 F.3d 1337, 1343 (Fed. Cir. 2008) (plaintiff stipulated to a final judgment of noninfringement because it could not prove infringement under the court’s claim construction); Budde v. Harley-Davidson, Inc., 250 F.3d 1369, 1371, 1375 (Fed. Cir. 2001) (plaintiff appealed judgment of non-infringement which it requested following the court’s claim construction order). Rambus counter-proposes that the Court’s final order adjudicating infringement have the “same force and effect as if it had been entered after a full trial and jury verdict determining Rambus’s infringement claims in Rambus’s favor.” Dec. 29, 2008 Email at para. 3. Although, the Manufacturers propose to not contest infringement (which as described above is not a concession of infringement), they do not propose to pretend there was a full trial and adverse jury verdict or that the Court’s final order should be treated as the equivalent of an adverse jury verdict following a full trial. As a result, the Manufacturers do not agree with Rambus’s counter-proposal. Rambus further counter-proposes that the Manufacturers’ counterclaims for a declaratory judgment of non-infringement be dismissed with prejudice. See id. The Manufacturers do not agree to these two proposals. The Manufacturers will agree to dismiss without prejudice their counterclaims for a declaratory judgment of non-infringement. 2.

What The Jury Should Be Told

The Manufacturers believe that the jury should simply be told by the Court during the liability phase that it is only being asked to determine the validity of the claims at issue. Rambus counter-proposes that the “jury shall be instructed … as to which specific products have been found to infringe which specific patent claims.” See Dec. 29, 2008 Email at para. 6. The jury need not be told, and should not be told, during its determination of validity that the Manufacturers are not contesting infringement. Infringement is simply not relevant to the validity determination, and permitting Rambus to refer to or argue regarding infringement would unfairly prejudice the Manufacturers by inviting the jury to consider that irrelevant procedural posture. Rambus further maintained during the parties’ December 24 meet and confer that Rambus should be able to argue that the Manufacturers’ products infringe as an element of Rambus’s proof of the commercial success of its purported inventions for purposes of secondary considerations of non-obviousness. However, as the Manufacturers explained to Rambus, if Rambus is permitted to put on evidence of commercial success,2 the Court can instruct the jury, 2

Whether Rambus will be able to put forth any evidence of commercial success is now in doubt in light of the Court’s Order On The Manufacturers’ Daubert Motion No. 1 To Preclude Testimony Of Robert Murphy On Secondary Considerations Of Non-Obviousness, in which the Court precluded Mr. Murphy, Rambus’s sole proposed expert witness on commercial success, DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 5 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 5

with appropriate safeguards, that for purposes of determining commercial success, it should assume that the Manufacturers products practice the claims at issue. 3.

The Record On Appeal

The Manufacturers believe, and explained to Rambus during the December 24 meet and confer, that the record submitted by the parties in connection with Rambus’s summary judgment motions is adequate for resolving infringement issues. That record identifies the issues that are dispositive of the infringement issue, including how the claim constructions would render the accused products infringing or non-infringing and what non-infringement contentions by the Manufacturers are in question. See Howmedica, 540 F.3d at n.3. Cf. Jang v. Boston Scientific Corp., 532 F.3d 1330 (Fed. Cir. 2008). Rambus has counter-proposed that the summary judgment record be supplemented by Mr. Murphy’s reports regarding infringement and such other evidence as Rambus may choose to submit as part of an offer of proof. See Dec. 29, 2008 Email at paras. 1 and 4. The Manufacturers disagree. The record developed on summary judgment included expert declarations on the issues on which the Court entered summary judgment. If an additional record is to be made by Rambus, that would trigger the need for a response by the Manufacturers. There is no justification for post-summary judgment supplementation of the record. In addition, no “offer of proof” is necessary when infringement is no longer contested. In any event, it is unclear how any of the parties would be permitted to supplement, at trial, any additional evidence on infringement issues that have been decided on summary judgment or mooted by the Court’s claim construction rulings.3 II.

Order of the Liability and Damages Phases at the January 2009 Trial

At the September 24, 2008 hearing, the Court tentatively ruled that the January 2009 Trial be separated into a liability phase and a damages phase, where liability would be tried from testifying to the non-technical aspects of commercial success and from expressing an opinion that the inventions enjoyed commercial success. See Order at 8, 9-10. 3

In addition, Rambus counter-proposes that a final order adjudicating infringement will be based on, among other things, Rambus’s factual submissions (i.e., Mr. Murphy’s reports regarding infringement and such other evidence as Rambus may choose to submit). However, Rambus further counter-proposes that “[a]n appeal with regard to this finding of infringement can be taken only to the extent the finding depends upon the claim construction order, the November 24, 2008 Order, or both.” See Dec. 29, 2008 Email at para. 1. Rambus’s proposal would bar an appeal that addresses the additional factual submissions—even though the Court has not had an opportunity to address the additional factual submissions on the merits. The Manufacturers cannot agree to Rambus’s counter-proposal.

DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 6 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 6

first and then, if necessary, damages would be tried to the same jury immediately following liability, with willfulness tried to the Court after damages. See Sept. 24, 2008 Tr. at 4, 5, 30. In addition, the Court’s December 4, 2008 Order further contemplates separate liability and damages phases since the parties’ pretrial submissions with respect to willfulness are not due before the beginning of the trial on infringement and validity, but rather are due within ten days of the end of the damages portion of the trial. See Dec. 4, 2008 Order Memorializing Willfulness Procedures at 2. Rambus has argued, and maintained during the December 24 meet and confer with the Manufacturers, that liability and damages should not be separate phases. In the event that the two are separate phrases and in light of the Manufacturers’ proposal to not contest infringement, Rambus counter-proposes that damages should be tried before liability. See Dec. 29, 2008 Email at para. 5. The Manufacturers believe that issues of judicial economy and prejudice against the Manufacturers require that liability and damages be tried in separate phases and that liability, even if only on the issue of validity, should be tried prior to damages. Judicial economy would be served by separately trying liability from damages. First, such a separation would simplify the number and complexity of issues that the jury would need to address. See, e.g., Ciena Corp. v. Corvis Corp., 210 F.R.D. 519, 521 (D. Del. 2002) (“[B]ifurcation might enhance jury decision making in two ways: (1) by presenting the evidence in a manner that is easier for the jurors to understand, and (2) by limiting the number of legal issues the jury must address at any particular time.”); see also Troncoso v. Martin Archery, Inc., 127 F.R.D. 190 (E.D. Wash. 1989) (separating trial into three stages—infringement, validity and enforceability, and damages). Second, such a separation can be easily made. See, e.g., Princeton Biochemicals, Inc. v. Beckman Instruments, Inc., 180 F.R.D. 254, 256 (D.N.J. 1997) (“The trial of the damages question in [a patent infringement suit] is often difficult and expensive, while being easily severed from the trial of the questions and validity and infringement of the patent.” (citing Smith v. Alyeska Pipeline Serv. Co., 518 F. Supp. 977, 98283 (D. Del. 1982))).4

4

Rambus may argue that damages should not be separated from liability because Rambus’s evidence of secondary considerations of non-obviousness (i.e., commercial success) overlaps with its damages-related evidence. However, this argument fails because the minimal overlap, if Rambus is permitted to present evidence relating to commercial success at all, does not outweigh the judicial economy of separating the phases. See Paine Webber, Jackson & Curtis, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 587 F. Supp. 1112, (D. Del. 1984) (“The question of commercial success is not ordinarily determined by a detailed analysis of exhaustive and intricate financial data, such as is required for proof of damages, but rather whether the claimed

DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 7 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 7

It is apparent from the parties’ briefing related to the Manufacturers’ Motions for Separate Patent Trials and To Stay the Patent Trial that complicated issues are involved for both liability and damages. Even without infringement-related issues, the invalidity issues remain complex. Specifically, the technology at issue in this litigation, the state of the art and the knowledge of one of ordinary skill at the pertinent time, and the sufficiency of the disclosures in the original 1990 patent application are dense subject matters. Similarly, the damages issues are complex and multi-faceted. The damages phase will include presentations from all four Manufacturers regarding each Manufacturer’s unique hypothetical negotiation date; the facts and circumstances that inform each Manufacturer’s hypothetical negotiation; each Manufacturer’s expert’s methodologies, analyses, and conclusions; each Manufacturer’s different criticisms of the opinions with respect to that Manufacturer by Rambus’s damages expert; and each Manufacturer’s sets of sales data. Indeed, the damages phase is so complicated that the structure of this phase—such as the whether all the Manufacturers will present their evidence in series followed by one jury deliberation on damages or whether one Manufacturer will present its damages evidence followed by a jury deliberation on damages for that Manufacturer—has not yet been determined. Rambus argues that trying damages first—before validity in a validity-only liability trial—would be consistent with the trial protocol followed in Hynix I. See Dec. 29, 2008 Email at para. 5. That argument ignores what was actually tried first in Hynix I by Rambus— infringement and damages, not damages alone. Thus, Rambus’s argument that the January 2009 Trial should be “consistent” with the Hynix I Trial is inapt. Judicial economy is further served by trying liability prior to trying damages. Indeed, there would be no need for a damages trial if the jury finds that the claims-at-trial are invalid. See, e.g., Princeton, 180 F.R.D. at 256 (“A preliminary finding on the question of liability may well make unnecessary the damages inquiry, and thus result in substantial saving of time of the Court and reduction of expense to the parties.”) (quoting Smith, 538 F. Supp. at 983); see also Gen. Patent Corp. v. Hayes Microcomputer, Case No. SA CV07-429-GLT ANX, 1997 WL 1051899, at *1 (C.D. Cal. Oct. 20, 1997) (“If the patents are found invalid or unenforceable there will be no need to resolve the infringement and damages claims.”). Moreover, if only some of the claims are determine to be valid, the analysis employed in the damages trials will be affected. Thus, it makes no sense to “reorder” the phases so that damages would be tried prior to liability, or to assume that the only possible results are that all or none of the Asserted Claims will be held invalid.

invention is, broadly speaking, an accepted product and a big seller.”); see also Princeton Biochemicals, Inc. v. Beckman Instruments, Inc., 180 F.R.D. 254, 256 (D.N.J. 1997) (same).

DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 8 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 8

The prejudice to the Manufacturers that was articulated in Manufacturers’ Motions for Separate Patent Trials and To Stay the Patent Trial not only supports separate damages trials but also supports damages trials separate from liability. Indeed, if liability and damages were tried together, the only recourse regarding jury deliberations would be for the jury to consider validity and damages regarding all of the Manufacturers in one deliberation. This does not resolve the prejudice to the Manufacturers, as the Court sought to do by separating liability and damages (and where the Manufacturers further proposed to parse the damages phase into separate damages trials). Rambus’s suggested trial of damages before liability could further prejudice the Manufacturers due to the significant risk that, if the jury is asked to evaluate damages first, it will assume (or tend to assume) that liability, if tried later, is already a forgone conclusion. III.

Order of Proof at the January 2009 Trial

If the Court adopts the Manufacturers’ proposal and determines that infringement will not be contested at trial, the Manufacturers bear the burden of proof on the only remaining liability issue. There is no question that the party with the burden of proof typically presents first. Anheuser-Busch, Inc. v. John Labatt Ltd., 89 F.3d 1339, 1344 (8th Cir. 1996) (“Ordinarily, the trial court extends the privilege of opening and closing the case to the party that has the burden of proof.”) (citing Martin v. Chesebrough-Pond’s, Inc., 614 F.2d 498, 501 (5th Cir. 1980)); Fresenius Med. Care Holdings, Inc. v .Baxter Int’l, Inc., Case No. C 03-01431 SBA (EDL), 2006 WL 1646110, at *2 (N.D. Cal. 2006) (“Since it is Fresenius that bears the burden of invalidity, the most critical issue in this case, it is proper for Fresenius to present its evidence first at trial.”); Ericsson Inc. v. Harris Corp., Case No. CIV A3:98CV2903D, 1999 WL 604827, at *2 (N.D. Tex. 1999) (“A court normally will not realign the parties from their original designations unless the plaintiff no longer retains the burden to prove at least one of its claims or if subsequent events in the case significantly shift the ultimate burden of proof from the plaintiff to the defendant.”). If liability and damages are separated, then the Manufacturers should be allowed to present their case first during opening statements, the presentation of evidence, and closing arguments during the liability phase. IV.

Proposal by Micron, Samsung, and Hynix Regarding the Two Remaining Liability Trials

Rambus did not raise any specific concerns in the December 24 meet and confer regarding the proposal made by Micron, Samsung, and Hynix at the December 19 hearing and in their December 22 letter to Rambus (Exhibit B) that the two remaining liability trials be reconfigured into a first DDR2+ trial (including Rambus’s claims relating to DDR2 and certain subsequent related products as to Micron, Samsung, and Hynix) in January 2009 in which Micron would try its invalidity case against Rambus and Samsung and Hynix would agree

DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 9 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 9

(subject to the reservation of rights) to be bound by the jury’s verdict (and of course, Rambus would be bound as to Samsung and Hynix) and a second trial in which Rambus’s DDR2+ claims as to Nanya would be included with Rambus’s SDR SDRAM and DDR SDRAM claims as to Samsung and Nanya. However, in its December 29, 2008, Rambus makes two counter-proposals: that the Court’s final order determining infringement will also extend to the SDR and DDR products of Samsung and Nanya that are accused in this case and that all of the Manufacturers shall remain as parties in the upcoming trial. See Dec. 29, 2008 Email at paras. 2, 8. By making a counter-proposal that all of the Manufacturers remain parties in the upcoming trial, Rambus has rejected outright, without explanation, the proposal made by Micron, Samsung, and Hynix. That is, Micron, Samsung, and Hynix proposed that the liability portion of the January 2009 Trial address Rambus’s DDR2+ claims against Micron only and that, if necessary, damages will be tried against Micron, Samsung, and Hynix seriatim immediately after the liability verdict is returned. See Dec. 22, 2008 Letter. Micron, Samsung’s and Hynix’s proposal was intended to streamline the validity trial and make it less confusing to the jury. Accordingly, Micron, Samsung, and Hynix do not agree with Rambus’s so-called “counter-proposal” that all Manufacturers remain as parties to the liability phase of the January Trial. V.

Conclusion5

It is clear from Rambus’s December 29, 2008 email that it does not agree to the trial management proposal outlined in the Manufacturers’ letters of December 19 and 22, the discussion at the December 19 hearing, and this letter. The Manufacturers believe that their proposals can significantly streamline the resolution of the remaining disputes between the parties and result in judicial efficiency and reduction of complexity for the jury. Moreover, the Manufacturers believe that the Court may, within its discretion, and should, in the interests of efficiency and justice, order the structure and conditions requested by the Manufacturers. The Manufacturers look forward to further discussions regarding these proposals at the January 6 hearing, and share the Court’s and Rambus’s concerns that the structure of the January trial be finalized at the earliest possible opportunity. Sincerely,

5

Rambus also made a counter-proposal regarding Rambus’s access to trial witnesses employed by or under the control of one or more of the Manufacturers. See Dec. 29, 2008 Email at para. 7. The Manufacturers believe that this counter-proposal is unrelated to the trial management proposals that have been made and suggest that the parties meet and confer regarding production of witnesses for trial independent of the issues raised here.

DocsOpen #304370

Case 5:05-cv-00334-RMW

Document 3003

Filed 12/29/2008

Page 10 of 10

Weil, Gotshal & Manges LLP

Honorable Ronald M. Whyte December 29, 2008 Page 10

___/s/ Steven Cherensky___ Steven Cherensky Counsel for Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Semiconductor, Inc., and Samsung Austin Semiconductor, L.P. cc:

Gregory P. Stone (Email: [email protected]) Theodore G. Brown (Email: [email protected]) Ken Nissly (Email: [email protected]) Bob Freitas (Email: [email protected]) Vickie Feeman (Email: [email protected]) Jared Bobrow (Email: [email protected]) Elizabeth Weiswasser (Email: [email protected]) Sven Raz (Email: [email protected]) Matthew D. Powers (Email: [email protected]) Robert S. Berezin (Email: [email protected]) Matthew Antonelli (Email: [email protected])

DocsOpen #304370