Rambus Brief Regarding Defendants Spoliation Of Evidence 042009[1]

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JOSEPH W. COTCHETI(#36324) (#95217) PHTLTP L. GREGORY COTCHETT,PITRX& McCARTHY SanFrancisco AirportOfficeCenter 840MalcolmRoad,Suite200 Burlingame, CA 94010 Telephone: (650)697-6000 GREGORY P.STONE(#78329) BRADLEYS.PHILLPS(#8s263) M. PERRY(#106ls4) STEVEN (#2s2tr5) KErTHR.D.HAMTLTON MI.JNGER" TOLLES& OLSONLLP 355SouthGrandAvenue,35thFloor LosAngeles, CA 90071-1560 Telephone: (213)683-9100 susAN TRAUBBOYD(#229664) LEES.TAYLoR (#243863) (#238230) MTRTAMzuM MI.JNGER TOLLES& OLSONLLP 560MissionStreet, 27thFloor CA 94105-2907 SanFrancisco, Telephone: (415)5124000 Attomeysfor PlaintiffRAMBUS INC.

14 SUPERIORCOURT O['TIIE STATE OF CALIFOR}IIA

l5 COTINTY OF SAI\ F'RANCISCO

l6 RAMBUS INC.,

CaseNo.:04431105

17 Plaintiff,

l8 vs.

RAMBUS INC.'S BRIEF REGARDING DEFEI\DANTS' SPOLIATION OF EVIDENCE

19 MICRONTECHNOLOGY,INC., et al.,

PTJBLICREDAC"TEDVERSION

20 Defendants.

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Date: April 27,2009 Time: 9:30a.m. Dept: 304 Judge:Hon.RichardA. Kramer ComplaintFiled: Trial Date:

May 5, 2004 April 27,2009

24 25 26 27 28 DEFENDANTS' SPOLIATION OFEVIDENCE RAMBUSINC.'SBzuEFREGARDINO

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TABLE OF CONTENTS

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III.

INTRODUCTIONAND SUMMARYOFARGUMENT..........................,........,..,....,..... BACKGRO1JND.,..................... ............4 A. EvidenceRegardingDefendants'ConspiracyAnd Their Anticipation of AntitrustLitigation.....,.... ........;...........................4 l. TheSynclinkConsortium...,................ .............................5 2. SecretMeetings. 3. Inter-Defendant .......................6 Communications............... B. EvidenceRegardingDefendants'Anticipationof PatentLitigation.......,...............8 C. EvidenceRegardingDefendants'DeliberateDestnrctionof Relevant Documents .......................1 I ....... l. EvidenceRegardingHynix's DeliberateDestructionof Relevant Documents ........... II ........ 2. EvidenceThat Hynix OfferedFalseandIncompleteDiscovery 14 Responses In An.EffortTo CoverUp Its DocumentDestruction..,.,........ 3. EvidenceRegardingSamsung'sDeliberateDestructionof Relevant ............16 Documents....... 4. The Scopeof Sarnsung'sDestructionIs RevealedBy The District DRAM Group CourtofNew Jersey'sFindingThatSamsung's ............. IntentionallyDestroyedEmails 19 5. EvidenceRegardingMicron'sDeliberateDestructionof Relevant ............20 Documents ....... .,..,,...22 ARGUMENT.., A. Under Defendants'Proposed(But Inappropriate)ApproachTo The Duty To PreserveDocuments,DefendantsHad A Duty To PreserveRelevant Evidence ................................,..22 SinceAt Least1997....,,............ B. Under Defendants'Proposed@ut Inappropriate)ApproachTo Spoliation, DefendantsIntentionallyDeshoyedDocumensIn Anticipation of ,..,.,.................24 Litigation.....,.... C. Under Defendants'Proposed@ut Inappropriate)ApproachTo Spoliation, Defendants'SpoliationOf EvidencePrejudicedRambus. .........25 (But Inappropriate) ApproachFor Sanctions, D. UnderDefendants'Proposed Sanctions........... .................30 Rambusis Entitledto Proportionate 1 UnderDefendants'(Inappropriate)Approach,RambusIs Entitled Sanctions.......... ............30 To Terminating 2. UnderDefendants'(Inappropriate)ApproachTo Spoliation,The Cross-Claims CourtShouldDismissMicron'sAnd Samsung's UnderTheDoctrineOf UncleanHands,..,,,.................................,............3 3. Accordingto Defendants'Proposed(But Inappropriate)Approach for SpoliationAnd CollateralEstoppel,TerminatingSanctions ...........31 ShouldBeImposedAgainstSarnsung..................

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TABLEOFCONTENTS (continued)

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Under Defendants'(Inappropriate)ApproachTo Spoliation,The Court ShouldImposeIssueAnd EvidenceSanctionsTo Prevent Prejudice AgainstRambus...,......... .................................32 5. Under Defendants'(Inappropriate)ApproachTo Spoliation, AdverseInference Instructions ShouldBe Given...................................,..33 EvenIfthe CourtDoesNot ImposeSanctions Or GiveAdverseInference Instructions,RambusReservesIts Right to Offer Evidenceof Defendants' Spoliation ......................34 At Trial.......................

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coNcLUSroN

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TABLE OF AUTHORITIES

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FEDERAL CASES

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Hynk Semiconductor,Inc. v. RambusInc., RMW, 2009WL 292205(N.D.Cal.Feb.3, 2009)............................2, 10,24 No. C-00-20905 Mosaid Techs.Inc. v. SamsungElectonics Co.,Ltd., (D.N.J.Juty7,2004).... 2004WL 2550306 ......19,20,28,32 Mosaid Techs.Inc. v. SamsungElectronics.Co.Ltd., ..........20,25,32 348F. Supp.2d332(D.N.J.2004)................

8 STATECAsEs

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Bihunv. AT&T Info. Sys, 13Cal.App. 4th976(1993).. Cortezv. Purolator Air Filtration Prods. Co., 23cal4th 163(2000)........ NewAlbertsons,Inc. v. Superior Courl, 168Cal.App.4th 1403(2008)...... lilillard v, Caterpillar, 40 cal. App.4th892(1995).. ll/illiams v. Russ, 167Cal.App.4th l2l5 (2008)......

....................34 .......................34 ............32 ....................23 ........:...26

l6 SurB Srerurps

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Califomia Codeof Civil Procedure Section437c(h). CalifomiaEvidenceCode Section 413 Section 500

...............30 ................32. 33 .................,....34

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INTRODUCTION AND SUMMARY OF ARGUMENT Hynix, Micron, andSamsung(collectively "Defendants')assertmeritless

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spoliationallegationsagainstRambusbasedon erroneouslegalstandardsfor spoliationand

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andon unreasonable from the evidence.lThis Courtshouldnot adopt sanctions, inferences

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Defendants'incorrectassertionsof law and fact. However,ifthe Court appliesDefendants'

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proposedlegal standardsandmodesof drawingfactualinferences,thenthe evidencewill show

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that eachof the Defendantsengagedin deliberatespoliationttrat sufficiently prejudicedRambus

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in this litigation so asto warant sanctionsand/oradverseinferenceinstructions, Firsf, applyingDefendants'erroneorsproposedduty standard,Defendantshad a

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dutyto preservedocuments asearlyas 1997whentheydeveloped a coordinated strategyto "kill"

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RDRAM andin so doing recognizedthat this united effort could createantitrustIiability for the

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co-conspirators.In responseto Intel's selectionof Direct RDRAM asthe next mainstream

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memoryinterface,DefendantsandotherDRAM manufacturers usedthe Synclink Consortium,

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ostensiblyformedto developan altemativeto RDRAM, to engagein an unlawful concerted

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campaignto preventwidespreadmarketacceptanceof RDRAM. By February1998,Defendans

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weremusingaboutwhethertheywouldneedto visit oneanotherinjail dueto their illegal

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conspiracy,^See Declarationof Miriam Kim in Supportof RambusInc.'s Brief Regarding

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Defendants'Spoliationof Evidence('Kim Decl."),Exh.23 (6303at l).2 And by January1999,

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tle conspiratorsrecogrrizedthat becauseof their coordinatedefforts to "kilf'RDRAM, it might

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be wise to form a corporationfor their united front that would "[i]ndemniff membercompanies

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from anti-trust" liability. Exh.24 (6417at 3). Further,rmderazy standard,oncethe Department

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of Justice("DOJ") announcedits investigationinto the DRAM industry and servedsubpoenas on

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' Rambushassetforth its argumentsagainstcollateralestoppeland demonsfiatedthe legalerror in Defendants'proposedlegal standarGin separate"Track l" briefing. ,SeeRambus'sOpening Brief Regardingthe CollateralEffect of the Inuzry 2009Micron Rulingofiled Mar. 10,2009; Rambus'sConsolidatedResponseto Defendants'OpeningBriefs on the Impact ofthe Delaware SpoliationDecisionasa Matterof Laq filed April 3,2009;Rambus'sReplyBrief Re:the CollateralEfect of the January2009Micron Rriing, filed April 17,2009 ("RambusReply''). The evidenceat trial will demonstratethat Rambusdid not engagein deliberatespoliationthat sufficiently prejudicedDefendantsin this litigation so asto warrantsanctions. 2 Unlessnotedotherwise,exhibitscited hereinare attachedto the Kim Declaration. 1634979.l

RAMBUS INC.'S BRIEF REGARDING DEFENDANTS'SPOLIATION OF EVIDENCE

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Hynix, Micron, and Samsung,Defendantshada duty to preserveevidencerelevantto the DOJ

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investigationaswell asthe clearly foreseeable civil antitoustlitigation relatedto their unlawful

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conduct. Moreover,underDefendants'overly expansiveview ofthe preservationstandard,

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a duty to preservedocumentsrelatedto tlits antitru litigation alsoarosewhenDefendants

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patent litgation againstRambus.That duty aroseat leastby the summerof anticipatedseparate 2000,underDefendants'approach to spoliation, whenMicron andHynix decidedto initiatea

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"coordinated[] dual-front litigation" strategyby filing declaratoryrelief actionsagainstRambus

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in Califomia and Delaware,seeHynix Semiconductor,Inc. v. RambusInc., No. C-00-20905

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RMW, 2009WL 292205,at *5 (N.D. Cal.Feb.3,2009),andSamsung hiredcounselto monitor

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the variouspatentlitigationsandweighedlitigationasa potentiatoption.s,See, a.g.,Exh. 100

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(Vl03 (5/14108 DonohoeDepo.at9:15-23)); Exh.71(5/14/08Donohoe Depo.at 35:23-36:15,

1 3 42:1-20), Rambusdisputesthat anticipationof separatepatentlitigation figgers a duty to t4

preservein this antitust litigation. Rambusalsodisputesthat a duty to preseryeevidencethat is

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relevantandmaterialto patentlitigation with respectto non-compatibleDRAM (suchasSDRAM

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and DDR) coversevidencethat is relevantandmaterialto this litigation. But Defendantsare

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in theirassertionthat"spolialiondoesnot requireanticipationofa specificcauseof steadfast

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action" andthat anticipationofpatenf litigation triggereda duty to preservedocumentsrelevant

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to this litigation. SeeMicron's Responseto OpeningBrief on CollateralEffect of Delaware

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Ruling,filed April 3, 2009("Micron Response"); Micron'sReplyBrief, filed April 17,2009

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("Micron Reply'), at 1:7-8,3:16-18;Samsung's ReplyBrief, filed April17,2009 ("Samsung

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Reply"),at2:2-3. Second,if the Courtwereto adoptDefendans' proposedstandardsfor the duty to

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preserve(which it shouldnot), it would needto find that Defendantsintentionallydestroyed

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relevantdocumentsafter the presewationduty atlachedasearly as 1997(or altematively,in

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' Samsungcontinuednegotiationswith Rambusandelectedto take a licensefor SDRAM and DDR in October2000. While Rambuscontendsthat the eamestandsuccessfirlnesotiationof a licenseprecludedsuffrcientanticipationofpatent litigation to trigger a duty to preiewe, Samsung assertedthe oppositein the NorthernDistrict of Califomia.

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7634979,l

RAMBUSINC.'SBRIEFREGARDING DEFENDANTS' SPOLIATIONOFEVIDENCE

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2000). Defendantsknew that their conductviolated antitust laws,andthey took affirmative steps

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to concealevidenceof their misconduct.Given Defendants'knowledgeof the criminal natureof

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their conduc! Defendants'continueddestructionof documentsafter the preservationduty

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attached(andevenafter litigation with Rambuscommencedandafter they were servedwith

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subpoenasfrom the DOJ) demonstrates that their destructionof documentswas deliberate.

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Third, if the Courtwereto adoptDefendants'proposedincorrectstandardfor

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prejudice,then the Court would needto find that Defendants'destructionof evidenceprejudiced

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Rambus. The evidencewill showthat Defendantsengagedin what Defendantsview aslarge-

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scaledestructionof documentswithout maintainingany recordof the documentsthat tley

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destroyedsuchtha! underDefendants'theory ofspoliation, the burdenis on Defendantsto show

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that Rambushasnot beenprejudicedin its pursuitof its claimshere. Hynix, for example,

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destroyedmorethan550boxesof documents in thesummerof 2002,approximately two weeks

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after it receiveda subpoena from the DOJregardingits price-fixingactivities.SeeExhs,60 & 6l

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(OlsonDepo.Exhs.l9 & 20); Exh. 84 (1217104 OlsonDepo.at260:6-262:15); Exh. 59

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(ComputerMemory Chip MakersProbed,A.P. ONLINE, Jlullre 19,2002). Rambuswill neverknow

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the contentsof thoseboxes,but it shouldbe presumed- underDefendanls'view of the world -

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thatthe documents includedcorrespondence relatedto Hynix'sconspiracyto fix pricesandto

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preventRDRAM from achievingmmketsuccess.Similarly,Samsung's PresidentJonKang,who

1 9 was responsibleat timesfor Samsung'sRDRAM marketingprograms,neverreceiveda litigalion 20

hold notice for Rambus-related documentsand testifiedttrathe regularly engagedin a "garbage

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flush" ofthe materialsin his office. Exh.4l (Tr. Ex. 9339);Exh. l0l (V104 (6/19/08Depo.of

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JonKangat 207:12-208:l).UnderDefendants'approach to spoliation,the Courtshouldpresume

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thatthe destroyedmaterials.related, in partnto Mr. Kang'swork on RDRAM. Micron,too,

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continuedto destroydocumentsafter litigation commenced.For example,Micron CEO Steve

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Appleton - who personallymet with his

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pricing and supply EyJl66(4/20101 AppletonDepo.at234:25-235:1). SeealsoExh.6T

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at competitorssuchas Hynix to discuss

(5/7/08 Appleton Depo.at 148:22- 149:19). In the end,whenfacedwith what Defendants 1634919.1

-3RAMBUSINC.'SBRIEFREGARDING DEFENDANTS' SPOLIATION OFEVIDENCE

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characterizeaswidespreaddestruction,Rambus'sprejudiceis clearunderDefendants'view of

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the law andits applicationto fact becauseDefendants'"wrongdoingmakesit practically

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impossibleto assesswhat role the missingevidencewould havehadin this action." Micron's

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OpeningBrief RegardingImpactof theDelawareDecision,filed Mar. 10,2009("Micron

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Opening"), at 9:18-19. To tlre extentthe Court adoptsDefendants'proposedstandardsfor spoliationand

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sanctions,Rambusintendsto seekproportionatesanctionsfor Defendants'spoliationof evidence,

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includingbut not limited to terminatingsanctionsstriking Defendants'answenandgranting

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defaultjudgrnentin Rambus'sfavor,terminatingsanctionsdismissingDefendants'cross-claims,

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and issueor evidencesanctions.Rambusalsointendsto seekadverseinferenceinstructions.and

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below. to makeotherusesoftle evidenceof spoliationasdescribed

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BACKGROT]NI) A.

Evidence Regarding Defendants' Conspiracy And Their Anticipation of Antitrust Litigation In 1996,lntel announcedthat its "next generation"microprocessors would be

engineeredto take advantageof Rambus'srevolutionaryDRAM technology,Direct RDRAM,

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expected to beavailablein the late1990's.Exh.5 (AppletonDepo.Exh.614).4In response to

t7 andMicron Intel'sselectionof RDRAM asthenextmainstream technology,Hynix, Samsung,

l8 embarked on a selfdescribedcampaignof "RDRAM killing." Hynix's WorldwideVice

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Presidentof Marketing,FarhadTabrizi, hasacknowledgedunderoaththat it washis goal to blosk Tabrizi Depo.at RDRAM from becomingthe dominantmemoryinterface. .SaeExh. 99 (7117108

2l Mr.Tabrizihascalledthisjointeffort"RDRAMkillinC;'Idat32:3-8. 32:9-34:4).

22 Defendantsutilized a varietyof vehiclesin furtheranceof their "RDRAM killing" ZJ

of efforts. Rambusdescribeshereinjust a few examplesasrelevantto Defendants'consciousness

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guilt andtheir recogrition that theirjoint efforts potentiallycould give rise to antitrustlitigation.

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' As the Court ordered.the evidencesummarizedhereindoesnot constitutea fi.rll offer of proof theright to makea firfl regardingDefendants'spoliationofevidence,andRambusreserves presentation of Defendants'spoliationat trial. ,SeeFeb.24,2009HrgTr. at25:24-26:2. RAMBUSINC.'S BRIEFREGARDINGDEFENDANTS'SPOLIATTON OF EVIDENCE

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It is undisputedthat a centralpurposeofthe Synclink Consortiumwasto develop

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The Synclink Consortium

a "united strategy"to "resisf'the Rambus-Intelpartnenhip. Exh. 6 (Dec. 1996Synclink MeetingMinutesat HR905_136815). Amongotherthings,Mr. Tabriziusedhis positionas

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Synclink Chairmanto urge other DRAM manufacturers'1o pleaseeducateothersandget their

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agreement to say'NO TO RAMBUS AND NO TO INTEL DOMINATION.'" Exh.7 (Tabrizi Depo.Exh.24) (Sept.1996email). Synclink alsosoughtto develop,andjointly persradeIntel

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to choose,the Synclink DRAM (SLDRAM)in lieu of RDRAM asthe nextgeneration

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technologv.SeeExh.8 (MaillouxDepo.Exh.404). Defendantsknew that the "united shategy"they contemplatedraisedboth antitrust

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andpatentconcems.Duringthe December1996Synclink meeting,Micronrepresentative Terry

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Lee opinedthat the "Consortiumneedsits own attomeyto handlepressreleases,contracts,

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(emphasis antitrustconcerns."Exh.6 (HR905_136814, at HR905_136816) added).Onemonth

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later, Mr. Lee gavea presentationraising questionssuchas:"Could the Consortiumbe usedto . . .

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challengeexistingpatents"or "addressDMM business legalconcerns?"Exh. 9 (RX-0849)

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(emphasis added) ; Exh. 8l (6124I 03 Testimonyof T. Leear 6906: 19-21, 6906:25-6907:6,

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6921:15-6922:3,6924:20-6925:16). Shortlythereafter,Synclinkretainedthelawfirmof

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TownsendandTownsendandCrew. Exh. 10(TabriziDepo.Exh.32atl). Seea/soExh. I (RX-

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0966at 2) (July 1997 Synclink meelingminutesstatingthat "legal feesfor May alonewere

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$28K!).s

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5The Synclink Consortiummemberswerealsoconsidering legalactioninvolvingIntel. On March25, 1997,Mr.Tabrizisentan emailto severalConsortiummembers(knownby thattime asSLDRAM Inc.)entitled"SLAP INTEL NOWI" Mr. Tabriziwrote: Earthto DOJ - haven't you noticedwhat Intel is up to? . . . [Including,]refusingaccessto informationneededto build competingproducts. Don't you agreethis anogantcompanyneeds a slapupsidethe headbeforeit doesany moredamage?

26 27 28 RAMBUS INC,'S BRIEF REGARDINODEFENDANTS' SPOLIATION OF EVIDENCE

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2.

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In the Fall of 1998,Defendantsmet secretlyto coordinateefforts to promoteDDR

SecretMeetings

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(in lieu of SLDRAM) and discouragedesigr wins for RDRAM. See,e.g.,Exh. 19(Tabrizi Depo.

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EyJ.732) (10/21198email from Hynix to Samsung,Microrl andotherDRAM manufacturers

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establishinga private Intemetsite for the "MX" groupcreatedto promoteDDR); Exh. 20 (lBMl2

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149399,producedby IBM) (email listing "noise-creatingideas"and "carefully plantedrumors" to

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sow doubt aboutRDRAM), Thesesecretmeetingslaid the groundworkfor Defendants'

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concertedefforts to preventRDRAM fiom becomingthe dominantmemorytechnologyin the

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marketplace.

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The conspiratorswereconsciousthat their actionsviolatedantitrustlaws and

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soughtto concealevidenceoftheir misconduct.For example,in a February1998emailabout

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RDITAM's puported drawbacks,a Micron marketingdirectoraskedhis Hynix counterpartto

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"pleasevisit me if I end up in jail." Exh. 23 (6303at I ). In January1999,a consultantnamed

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Desi Rhodenacknowledgedthat the DRAM manufacturerswere"clearly shongertogether"than

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ifthey acted"individually," but he advisedthemto act underthe umbrellaofa corporationin an

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efforr to "[i]ndemnifu membercompaniesfrom anti-ru$" liability. Exh. 24 (6417 at3).

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3.

Inter-DefendantCommunications

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As this Court is aware,both SamsungandHynix haveple.dguilty to participating

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in a conspiracyto fix the pricesof SDRAM, DDR and (in the caseof Samsung)RDRAM at times

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PleaAgnt); Exh. 22 (Hynix PleaAgrnt). between1999and2002..leeExh.2l (Samsung

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Micron hasadmittedpublicly to participationin a conspiracyto fix DRAM prices,andits Vice

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PleaAgreementthat President ofSales,MichaelSadler,testifiedafterreviewingthe Samsung

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Micron andHynix were participantsin the conspiraryto which Samsunghadpled guilty.

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Exh. 86 (4/25108SadlerDepo.at 65:6-67:17).In addition,asRambusdemonstratedin

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conjunctionwith Defendants'SummaryJudgrnentmotions,the evidentiaryrecordis rife with

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additionalexamplesof anticompetitiveconductdirectedtowardDefendants'joint goal of

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"RDRAM killing." See,e.g.,Rambus'sSeparateStatementof FactsIn OppositionTo Samsung's

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on Rambus'sComplaint,filed Jan.27,2009. MotionFor SummaryJudgnr.enr DEFENDANTS' SPOLIATION OFEVIDENCE RAMBUSINC.'SBRIEFREGAR.DING

Defendantsknew they violatedantitrustlaws andtried to covertheir tracks. For

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example,in September of 2000,MicronmanagerBill Lauersentan emailto Micronsales

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managers

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Exh. 25 (LauerDepo.Exh. 348). I\&. Lauerconfirmedunderoath that

Exh.78(12/19/07 LauerDepo.at77:23-

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78:2). playedalong. Keith Weinstock Id. at78:.7-79:1.Otler Micronexecutives

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testifiedthat"[i]fI wassendingan email,I wouldtry to saysomething[suchas 'call for details']

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thatwould let theothersknowthat I hadmoreinformationthat I wasn'tputtingin. . . .'). Exh. 95

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(2114/08 TrialTr. at Swanson TrialTr. at 1388:17-19). EeealsoExh.96(2/15/08Swanson

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1492:5-19)(testimonyof Micron executiveSteveThorsennotingthathe usedsirnilareffortsto

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"mask" informationrelayedin emails). AnotherMicron manager,Jeff Mailloux, circulateda

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confidentialHynix roadmapto othersat Micron. Exh.64 (SeibertDepo.Exh.271). lnsteadof

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identiffing his sourceat Hynix who providedhim with theconfidentialinformation,Mr.

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Mailloux saidthat"the roadmapfairy" left it for him. /d Similarly,in a March2001email.

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JayMcBroom: Hynix salesmanagerKen Hellerexplainedto his colleague

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Jay:

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in emailthatyou JustSi, pls, considerNEVER makingstatements spokewith the competition.Lawyer'slovethesebaby's(sic). Just state"l heardfrom dependable source. . ."

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Exh.26 (GarySwansonTrial Exhibit 98). pricefixing issuesin In Juneof2002,the DOJarurounced thatit wasinvestigating

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the DRAM industry andissuedsubpoenas to Samsung,Micron, aadHynix, amongothers. See,

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e.g, Exh. 62 (PleaAgreementof Alfred.P. Censulloatrll4(a));Exh.59 (ComputerMemoryChip

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MakersProbed,A.P. ONLINE, June19,2002).After learningofthe subpoenqMicron account

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managerAlfred Censullo"alteredhis handwrittennotationsin his notebooks"in an effort to 7634979.1 RAMBUS INC.'S BRIEF REGARDINGDEFENDANTS' SPOLIATION OF EVIDENCE

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obscureentriesrelatedto "competitorpricing informatioq responsiveto the subpoena."Exh. 62

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at !f 4(c). Upon receiptof the subpoena,Samsung,Micron, andHynix eachknew that their price

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fixing activities would give rise to criminal and/orcivil antitust litigation, and hadan undisputed

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duty underany standud to preservedocumentsrelevantto the DOJ investigation.

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B.

EvidenceRegarding Defendants' Anticipation of Patent Litigation As explainedin Rambus'sbriefing on the collateraleffect of the DelawareRuling,

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when andwhetherthe partiesanticipatedpatent litigation is irrelevantto the instantanlitrust

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litigation. BecauseDefendantsmakemuchof Rambus'spurportedanticipationof patent

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possibilityof suchlitigation, litigationbasedon intemalRambusdiscussion of thecontingent

1 0 however,it is importantto notethat beginningin 1997,Defendantslikewise werediscussing(and 1l

evenwere preparingfor) patentlitigation with Rambus.The Synclink meetingminutesfrom

1 2 July 1997state: l3 t4 l5 l6

Consortiumshouldcollect informationrelevantto prior art and Rambusfilings and ?? Not an opinion,just collect materialfor all membersto use. Dig out early minutesof Ramlink, etc. Rambuswill sue individunl companissinsteadof Consortium.Companieswill then askGustavsonetc. for prior art info. Budgeteffort for gettingold minutesetc.collected.

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Exh. I (RX-0966 at 3) (emphasisadded). During that meeting,a patentattomeyalsoled a

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discussionaboutlitigation andpatentprosecutionshategies,including the needto obtain"broad from using"patented technology. Id. at1. claims"in orderto "stopnonmembers Defendants'contempomneous actionsconlirm their recognitionofpotential patent litigation with Rambusrelatednot just to SLDRAM, but alsorelatedto SDRAM and,eventually, DDR SDRAM products. For example,DaveGustavsonof SCI wamedHynix in a March 1997 email that Rambus'spatentswerelikely sufficiently broadto covera// synchronousDRAMs (r'.e. including SDRAM and,eventually,DDR SDRAM). ,SeeExh. 13 Q292660).ln response,Hynix engineersand lawyersconducteda detailedanalysisof Rambus'spatentsin the 1997time frame to determinetheir scope.See,e.g.,Exh.98 (8/10/05TabriziDepo.at 139:14-l4l:.ll); Exh.97 (l l/10/03 Tabrizi Depo.at 42:234311). After conductingthat analysis,Hynix wassufficiently

28 RAMBUSINC.'SBRIEFREGARDING DEFENDANTS' SPOLIATIONOFEVIDENCE

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concernedaboutpatentinfringementlitigation that it soughtinformationin April 1998about

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patentinfringementliability insurance.SeeExh. 14(HR905_079410-079546). Similarly,in

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December1996,Samsung wasanalyzingRambus's'327 patent.SeeExh. 15(Tr.8x.7228A).

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SeeExhs.l6 & 17(SS0013000220 andtranslation)(emphasis added).Micron,too,

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perceivedin April 1997thatRambusbelievedthat"changingdataon bothedgesof the clock" (a

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technologywhichDefendants would laterincorporate into their DDR SDRAMdesign)was

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"underfRambus's]patentcoverage."Exh. 58 (RX-920).As the entityintendingto infringe,

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potentiallitigation.6By Januaryof 1998,Micronengineers Micronthuscontemplated were

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working "closely with legalon issuesrelatedto Intel andRambuspatentsandanti-trustissues."

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Exh. l8 (RX-I095at4).

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Defendants'concemthat Rambus"will sueindividual companies"reacheda fever

l5

pitch after Rambusfiled a patentinfringementsuit againstHitachi on January18,2000. That

l6

sameday,Hynix Vice PresidentFarhadTabrizi reportedto Hynix COO SangParkthat the

t7

Rambuslawsuit "was broughtup with Micron. andother companies,andeveryonebelievesthat

18

we cannot takethis lightly, and we haveto join together,and help Hitachi fight this to the end."

t9

Er$. 2 (6522at I ). Mr. Tabrizisimilarlyasserted on January19,2000that'DRAM companies

20

will join forcesandfight this to the endof Rambuscompany."Exh.3 (6524at l;.7 In February

21

2000,MicronCEO SteveAppletonasserted Exh.4 (SadlerDepo.Exh.548);Exh.67(517/08 AppletonDepo.at 170:15-18,

22 zt

24 25 zo

27 28

' Rambus,on the otherhand,did not wantto litigate with Defendants.Instead,Rambus was focusedon ensuringthat RDRAM would havestrongmarketsuccessandit only viewedpatent prosecution andlicensingfor non-compatible technologies suchasSDRAMandDDR SDRAM asanunlikelycontingentback-upplan. 7 During this time immediately after theHitachi suit, Rambusdid not intendto sueDefendants for patentinfringement. Instead,Rambushopedthat Defendantswould takea licensefor Rambus's patentsandtherewould be no needfor litigation. It was Defendantswho knew whetherthey plannedto sign a licenseand,thus, Defendantswerein thebestpositionto assessthe probability of litigation. 7614979|

MMBUS INC.'SBRIEFRECARDING DEFENDANTS' SPOLIATION OFEVIDENCE

I

170:21-171:l).Also in Februaryof 2000,RambusandSamsung metto discussRambuslitigation

2

and a potential licenseagreementcoveringSDR andDDR products. ,SeeExh, 27 (Tr. Ex. 4204);

.]

Eyh. 94 (5123108 Steinberg Depo.at 220:5-221 :14)

+

That samemontlLemail traffrc betweenMicron's

5

Director of DRAM Marketing,Jeff Mailloux, andMr. Tabrizi of Hynix discussed"the DDR

6

potentialpatentproblemswith respectto RDRAM." Exh.28 (I{R905}34773). Then,in July

7

products 2000,SamsungreceivedinformationaboutRambus'spatentsandhow Samsung's

8

TestimonyofJay Shimat infringedthosepatents.,SeeExh.29 (Tr. Ex. 9062);Exh.89 (9/24108

9

417:1419:16). Meanwhile,Micron hired "a lot" of lawyers,including "multiple outsidefirms"

l0

in orderto preparefor a "preemptivestrike" againstRarnbus.Exh. 80 (2/28108Trial Testimony

1l

ofT. Leeat3275:l-3276:15).

t2

Defendants coordinated their litigationresponse to their peroeivedthreatof

l3

Rambus'spatentinfringementlitigation. In July of2000,Hynix CEO SangParksentan emailto

t4

SteveAppleton requestinga meetingin August andstating"I had a meetingwith Geoffof

15

Rambusyesterdayand I don't havemuchtime to decidewhat we want to do with them." ^lee

16

Exh. 30 (AppletonDepo.Exh.627). AppletonandParkthenheld a face-to-face meetingon

t'l

August11.2000. Exh. 67 (517108 AppletonDepo.at 112:14-21),Two weekslater,Micron and

18

Hynix filed suits againstRambuson oppositecoasts,oneday apart. JudgeWhyterecently

t9

describedsomeofthe evidenceofthis "coordinaleddual-frontlitigation" conspiracy: Micron suedRambusfor declaratoryjudgrnenton August28, 2000in Delaware. Hynix suedRambusfor declaratoryjudgmentthe next day herein SanJose.Califomia- Persuasivecircumslantialevidence suggeststhat Micron andHynix coordinatedtheir filing ofthe judgmentlawsuits.,See declaratory ConductTrial Tr. 4006:8-4008:12 (Mar. 5, 2008)(formerHynix employeeFmhadTabriziadmittingto his beliefin 2000prior to litigationwith RambusthatHynix would litigate"to theendof Rambuscompany"); 5131:1-25; 5135:l-16(Mar. I 8, 2008) (testimonyof Micron CEO SteveAppletonthat he met with Hynix penonnelin earlyAugustof2000 andthathe cancelled licensingmeetingswith Rambusto suefor declaratoryjudgment); (Mar.20, 2008)(testimonyfrom Hynix employee 5633:16-5634:1 D.S. ChungaboutlicensingmeetingsHynix scheduledwith Rambus, then cancelledby suingfor declaratoryjudgment).

20 2l 22 23 24 25 26 27 28

HynixSemiconductor Inc. v. Rambus1nc.,2009WL 292205,at *5 (N.D. Cal. Feb.3, 2009). 7634979.t

-10RAMBUS INC.'S BRIEF REcARDINC DEFENDANTS' SPOLIATION OF EVIDENCE

I

JustasMicron andHynix werefinalizing their ComplaintsagainstRambusin

z

August 2000, Samsungpostponedlicensingnegotiationswith Rambusbecauseit wasmonitoring

J

theseevents. ,SeeExh. 3 I (Tr. Ex. 9I 00) (August2000email from Samsungto Rambusthat there

4

were"issues[that] arenot so trivial andthey aretaking longerfor us to resolveintemally than

5

expected'). Jay Shim, Samsung'sVice PresidentandGeneralPatentCounsel,hasadmittedthat

6

Samsungwas consideringthe possibilityof beingsuedby Rambusor suingRambusat this time. Exh.89 (9/24/08Testimonyof Shimat 422:15-19).In August2000,Samsung alsohired

8

litigationcounsel,includingDavidHealey(thenat Weil Gotshal,Samsung's trial counselin the

9

Northem District of Califomia patentcasesandthis case)andthe Clifford Chancefirm to follow

l0

Rambuslitigationwith otherDRAM manufacturers. SeeExh. 100(V103(5114108 Donohoe

l1

Depo.at 9: I 5-23)); Exh.7I (5I | 4/ 08 DonohoeDepo.at 35:23-36:l 5, 42:1-20).

12

C.

EvidenceRegardingDefendants'IleliberateDestructionof Relevant Documents

IJ

t4 l5

l.

EvidenceRegardingHynix's DeliberateDestructionof Relevant Documents

DespiteHynix's participationin joint effortsaimedat "RDRAM killing" andits

16

concemby 1997that Rambus"will sueindividual companies,"asdescribedin SectionsII(A)-(B)

t7

above(and which, underDefendants'incorrectapproach,givesrise to a duty to prcserve

18

documentsrelevantto this litigation), Hynix took no stepsto preservepotentiallyrelevant

19

evidence.Instead,Hynix's Koreanentityhadin placea document retentionpolicyup to May

20

2000thatcalledfor documents for only oneyear. SeeExh. 33 (ShinDepo.Exh. to bepreserved

21

39, Hynix's QualityRecordsandConfiolProcedure).Priorto July2000,Hynix gaveno

22

insfuctions - written or verbal- to its employeesto preservedocumentsrelatedto Rambus.See

23

Exh.79 (11/16/04 Jin Ho LeeDepo.at lE4:19-185:1, 185:20-186:2); Exh.76 (l/31/05SungChul

,4

Kim Depo.at l0l:23-102:l);Exh.84 (12/7104 OlsonDepo.at223:20-224:4). In a brieffiledin

25

the Northem District of Califomia patentlitigation, Hynix acknowledgesthat "there is no doubt

26

that valuabledocumentswerediscarded"by Hynix. Exh. 34 @eply Brief in Supportof Renewed

27

Motion to Dismiss, filed Mar. 2, 2005, at 22).

28

Among other things,Hynix desfoyed evidencethat would further establishthat RAMBUSINC,'SBRIEFREGARDING DEFENDANTS' SPOLTATION OFEVIDENCE

I

Hynix worriedaboutRambuslitigationasearlyas 1997.Forexample,the evidencewill show

z

that Hynix destroyedthe patentanalysesthat Hynix conductedin responseto the March 1997

J

email waming Hynix that Rambus'spatentswerelikely sufficiently broadto coverall

A

DRAMs. See,e.9.,Exh.98 (8/10/05TabriziDepo.at 139:14-141:,ll)(describing synchronous

5

patentanalysisby Hynix patenttearn);.seaalsoExh.97 (11110/03 TabriziDepo.at 42:2343:11)

6

(same);Kim Decl..'lf 106(a).

7 I

Butthat is not all Hynix destroyed.Hynix's documentdestruction in 1997was voluminousunderDefendants' standards andit containedsensitive

9 Exh. 84 (1217/04 Olson

l0 ll

Depo.at 286:8-15).Because H1'nixhadno litigationhold in 1997and 1998,Rambuscannever

t2

fully know whatthecompletearrayof evidencemighthaveshownaboutHynix's "RDRAM

l3

killing" efforts andits efforts to block Rambus'spatentrights and marketplacesuccess. Later in 2000,while Hynix waspreparingits plan ro launcha coordinatedattack

t4 l5

on Rambus,meetingwith its competitors,andplanninga dual-front litigation strategy,Hynix

l6

amendedits documentretentionpolicy to removethen-existingrequirementsthat employees

17

preservedocuments for a specifiedperiodof time. As describedabove,from 1997throughMay

l8

for one 2000,Hynix's Koreanheadquarters hadinstructedits employees to preservedocuments

19

yew. SeeExh.90(1 1/9/04ShinDepo.atll0:23-111:20);seealsoExh.33(ShinDepo.Exh.39

20

On May 5, 2000- just monthsbeforeHynix suedRambus-

2l .leeExh.9l (213105 ShinDepo.at2ll:9-212:18,219:6-9,231:21-

22 ZJ

24).

25

id. at 227:14-229:12.231:6-233:25.

26

During discovery,

27 28

Seeid. at2ll;9-212:l; seealsoExh.90(l l/9/04 Shin -12RAMBUS INC.'S BRIEFREGARDINCDEFENDANTS'SPOLIATIONOF EVIDENCE

However,whenfacedwith a discoveryorderrequiringproductionof

I

Depo.at lll:22-ll4:15).

2

the detailsofthose teamlevel policies,Hynix recantedits storyandadmittedthat it did not have

3

anywrittenteamlevelpoliciesin this post-May2000timeframe.,SeeExh. 35 (AmendedSupp.

I

Response to lntenogatoryNo. 16,whichdoesnot list or describe anyteamJevelpoliciesfor the

5

periodfrom May 2000throughNovember2000);seea/soExh.36 (Hynix's counsel'sMar. 7,

6

2005Letter. statingthat Hynix teams"did not havetheir ownwritten [documentpreservation]

7

policiesprior to May 2004"). In theend,asa resultof theMay 2000revisionto the document

8

retentionpolicy, Rambuswill neverknow the extentandscopeofthe destructionofevidence

9

aboutHynix's conspiracywith its competitorsduringtherelevanttime period.

10 ll

Hynix's destructionof Rambus-related documentscontinuedevenafrer it srrcd, Rambuson August29, 2000in theNorthem District of Califomia. For example,

t2 l3

t4 t5

.SeeExh. 83 (l l/4/04 OlsonDepo.at I l0:25-l l2:2);seea/soExh.79 (11116104 Lee

); Exh.91

Depo.at 162:.18-163:.4

1 6 (2/3/05ShinDepo.at232:25-233:25); Exh.37(HR905_384106 to HR905_384117, examples of t7 l8 19 20

for shredding). invoices FarhadTabrizi. a centralfigure in Hynix"s conspiracyto "kill Rambus,"has admittedthat he destroyedemailsafter Hynix suedRambus.Mr. Tabrizi tesified that! ,See Exh. 98 (8/10/05TabriziDepo.at

2l

67:21-68:4). He further testified that evenafter he was instructednot to destroyRambus-related

22

anda/er Hynix suedRambus,he continuedto indiscriminately deletehis emailat documents

23

regularintervals. Mr. Tabrizi's profferedexcusefor violatingthe litigation hold instructionwas

24

that he supposedlythoughtthat Hynix was"backing up all the emails" andhe was "hoping that

25

theyhaveall the backups"if xheylaterneededhis emailfor thelitigation. Id. at 68:5-71:20

26

(explainingthat he continueddeletinghis email after the allegedlitigation hold inscuction

27

because"I wasthinking there'sa backuptape,sothereis a copy somewhere'). Mr. Tabrizi's

28

documentdestructionwascompotmdedwhenhe left Hynix in 2003. RAMBUS INC.'SBRIEFREGARDINCDEFENDANTS'SPOLIATIONOF EVIDENCE

I

2 (12/7104 OlsonDepo.at2l0:5-17);Exh.83(1 l/4/04OlsonDepo. at38:22-39:22). A

5

In addition,thereis evidencethat otherHynix witnessesdestroyeddocumentsafter in 2000. litigationcommenced

6 ,See Exh.82 (l/19105

7 8

Similarly,Hynix Vice President D.S.Chung,whomHynix MartinezDepo.at 160:13-161:3).

9

calledto testifr in theNorthemDistrictlitigation,testified: E/J.68 (7129/05 ChungDepo.at75:23-76:7).

10 ll

However,Hynix's desfiuctionof documentswas not limited to a few isolated

l2

550boxesof documents.See individuals.For instance,on June28, 2002,Hynix destooyed

13

OlsonDepo.at260:6-262:15); Exhs.60 & 61 (OlsonDepo.Exhs.19&20), Exh.84 (1217104

t4

just two weeksafterthe DOJ servedHynix with a Remarkably, happened this destruction

l5

subpoenafor documentsrelatedto its conspiracyto fix prices. SeeExh. 59 (ComputerMemory

16

(which, ChipMakersProbed,A.P. ONttttt,I:urlle 19,2002).Eventhoughthis destruction

t7

accordingto Defendants,shouldbe considered"massive")took placeafier Hynix receivedits

t8

subpoenafrom the DOJ,

SeeExh.83(11/4104 OlsonDepo.

19 20

at 61:19-63:13).Nor did Hynix otherwisemaintaina list of the contentsof the550boxesof

2l

documentsit destroyedduring the Summerof2002, so Rambuswill neverknow what volume of

22

. materialrelatedto the claimsin this litigation.Seeid. at 64:10-21

ZJ .A

2.

EvidenceThat Hynix Offered Falseand IncompleteDiscovery Responses In An Effort To CoverUp lts DocumentDestruction,

Hynix hasbeenlessthan forthcomingaboutits documentretentionpoliciesand

25 26 27 28

practices.In 2001,Rambusservedits FirstSetof Requests for Productionon Hynix in the thatHynix produce"[a]ll NorthemDistrictof Califomialitigation. Therein,Rambusrequested documentsrelating to [Hynix's] documentretentionor destructionpoliciesor procedurefrom

-t4DEFENDANTS' SPOLIANONOFEVIDENCE RAMBUSTNC.'SBzuEFRECARDING

I

1990to the present." Exh. 38 (Requestfor ProductionNo. 59). Hynix objectedbur agreedto

2

produceall non-privilegeddocuments.Hynix limitedits productionto ten"documentretention

5

policies(applicableat varioustimesandto variousactivities)."Exh. 39 (7/7/03letter).

4

On July 3, 2003,Hynix producedCarl M. Durham,Jr., generalcounselfor Hynix

5

SemiconductorAmeric4 asthe corporatedesigneeon "any policies or practiceswithin Hynix

6

relatingto the storageand/orretentionofdocumentsincludingemailand/orelectronicdataback-

7

up policiesandpracticesbetween1990andthepresent."However,afterhis deposition, the

8

DiscoveryMasterfound that Mr. Durhamwascompletely'lrnpreparedandunqualified"to testi$

9

aboutthe policies andpracticesof the four Hynix entitiesrelatingto the storageandretentionof

l0

documents.Exh.40 (10/17104 OrderGrantingRambus'sMotionto CompelProductionof

ll

Documentsand30OX6)DepositionRe: Hynix's DocumentRetentionPoliciesat 6:14).

12 IJ

l4

In Hynix's nine yearsof litigation with Rambus,Hynix's story regardingits practiceshasbeenever-changing documentpreservation andevolving. .

tnitially, Hynix led Rambusto believethat Hynix America hada written

l5

docunentretentionpolicy. ,SeeExh. 39 (July 7, 2003 letter from Ted Brown

16

to Truc-LinhNguyen(listingHynix Americadocumentretentionpolicy)).

17

Later,afterit hadaccusedRambusofspoliationandput Rambus'sdocument

l8

retentionpoliciesundera microscope,Hynix changedits story andsaidthat

l9

theHynix Americapolicy wasmerelya draftthathadneverbeenadopted.

20

SeeExh.83 (11/4/04OlsonDepo.at l9:6-18);seealsoExh.35(Amended

2l

Supp.Response to IntenogatoryNo. 16at l0 ("From 1997to thepresent,

22

HSA hasnot had or adoptedany written,company-widedocumentretention

z3

policy.")).

24

Initially,Hynix's 30(b)(6)witresstestifiedthat

?<

26 27

SeeExh. 72 (713/ 03 DurhamDepo.at 40:2I 4. | :6,42:4-8,42:2243:2). Then,afteraccusingRambusofspoliation,Hynix offereda new30(b)(6)

28 RAMBUS INC.'SBRIEFREGARDINGDEFENDANTS'SPOLIATIONOF EVIDENCE

I

,SeeExh. 83 (lll4l04 OlsonDepo.at 126:.12-127:9)

L

3 4

3.

5

EvidenceRegardingSamsung'sDeliberateDestructionof RelevantDocuments

participationin Defendants'conspiracyand Notwithstanding Samsung's 6 7

discussionof potentialpatentlitigationasdescribedabove(which,underDefendants'incorrect assertionsoflaw andfac! gives rise to a duty to preservedocumentsrelevantto this litigation),

8 Samsungtook no stepsto preservepotentiallyrelevantevidenceuntil June2005at the earliest. 9 Samsung claimsthatit put a litigationhold in placefor Rambus-related documents in June2005, l0 (Samsung's but not earlier.,SeaExh. 102(VI08 (7/28/08J.S.ParkDepo.at25:22-27:13) ll

t2 l3

30(bX6) designeetestiryingthat Samsungtook no actionprior to June2005'to retainor preserve documents relatedto actualor potentiallitigationwith Rambus");Exh.4l (Tr. Ex. 9339(list of recipientsof litigationhold noticesat Samsung)).

l4 Any litigation hold Samsungdid put in placewas not comprehensive.For

15 example,oneofthe individualswho neverreceiveda litigationhold for documents relatedto

16 17 l8

actual or potentiallitigation with Rambus(evenafter this litigation began)is Jon Kang,the Presidentof SamsungSemiconductor lnc..the U.S.-based in this action. Samsung defendant From 1995to 2000,Mr. KangservedasSamsung's SeniorVice President ofoperations. He

l9 servedasSeniorVice Presidentof MemoryProductPlanningof Samsung Electronics, the parent

20

corporationin Kore4 from 2000to 2004. Exh.73 (6/19/08KangDepo.at l0: I - I I :4). He was

2l involved in marketingRDRAM, andhe attendedquarterlyexecutivemeetingsbetweenSamsung

22

andRambusexecutivesregardingRDRAM. Id. (6/19108 KangDepo.at 65:4-12).Despite

z3

Mr. Kang'srole in Samsung's effortsto marketRDRAM,which Samsung hasstatedis critical evidenceto its defense,Mr. Kang did not receiveany litigation hold notice for Rambus-related documents.,SeeExh.4l (Tr. Ex. 9339).EIfhe did receivesucha notice(whichSamsung's

26 27 28

8Mr. Kang hastestified that he communicatedby e-mail regardingRambus-related business.,See Exh. l0l (V104 (6/19/08KangDepo.at2ll:22-25)). 7634919.t

_16_

RAMBUSINC.'SBRIEFREGARDING DEFENDANTS' SPOLIATIONOFEVIDENCE

1

30OX6) designeeindicateshe did not), he did not pay anyattentionto its instructions. .See

2

Exh. l0l (V104 (6/19/08KangDepo.at208:2-12))(testiffingthathe receiveda litigationhold

J

noticebut "didn't pay much attention"to it). In fact, Mr. Kangtestified that he continuedto do a

4

("WheneverIhave-the regular"garbageflush" of his writtenmaterials.Id. at207:12-208:1

5

drawergetsfilled up,thenI do a garbageflushofpaperwork[.]").

6

Similarly, four Samsungexecutives(SunWoo Lee. Young Woo Lee,Tom Quinn, and Yong Hwan Park)who pled gurlty to participatingin a price fixing conspiracywith respectto

I

DRAMs werenot amongthe Samsung employees who everreceiveda litigationholdnotice

9

relatedto actualor potentiallitigationwith Rambus.SeeExh.41 (Tr. Ex. 9339). Eachofthese

l0

individualshadresponsibilities for recommending and/ordecidingSamsung'sDRAM prices,and

ll

eachsommunicatedwith representatives of other DRAM manufacturersaboutDRAM prices.

12

SeeExh.42 @leaAgreementof Y.W. Leet| 4); Exh.43 (PleaAgreementof Y.H. Parkfl 4);

13

Exh.44 (PleaAgreementof S.W.Leefl 4); Exh. 45 @leaAgreementof Quinn!f 4).e

t4

With no litigationholdin placebeforeJune2005,Samsungautomatically

l5

e-mailsup to at leastJune2005on anongoingbasis..See, destroyed e.g.,Erh. 89 (9124/08

16

Testimonyof Jay Shimat 389:13-24)(Mr. Shimtestifuingthat Samsung has"a systemin place

17

thatwouldkeepsomeof thesefilesbut automaticallyerasesomeoftheseotherfiles"); Exh. 101

l8

(V104(6/19/08Depo.of JonKangat 210:3-9))(e-mail"automatically erasesaftera certaintime

l9

(9/3/03testimonyof offof my computer");Exh.46 (330042000197 at65:8-20,68:6-21)

20

corporatedesignee Samsung's statingthat

Exh.47(S500420016s4)

2l

z2 23

Similarly,employees (like Mr. Kang's"garbageflush" describedabove)to get continuedto do regularhousekeeping

z+

25 26

28

9 In addition,Samsungdid not give instructionsto preservedocumentsto otherswho were involvedin the processof decidingSamsung's RDRAM pricesin the 2000to 2002time period, includingY.W. Lee,President Divisionof SamsungElectronicsCo. Ltd.; of the Semiconductor Young BaeRha, SeniorVice Presidentin chargeof salesandmarketingglobally; HJ Kim, Presidentof SSI in 2000; Dieter Mackowiak,SeniorVice Presidentof SalesandMarketing;and SeanCronin,Samsung's accountmanagerat Dell in 2000.SeeExh.4l (Tr. Ex. 9339)(doesnot includeindividualslistedabove). 1634919.1

RAMBUS INC.'SBRIEFREGARDINCDEFENDANTS'SPOLIATIONOF EVIDENCE

1

rid of unwanteddocuments.See,e.g,,Eldr.77(8/23/07KyungDepo.at22:'12-19,22:22-23:4)

2

(describingregularhousecleaning process,resultingin destructionof notebooks). Indeed the regulardestructionof documentsis consistentwith Samsung's

3 4

documentretentionpolicies. In 2006,after this litigation hadalreadycommenced,Samsung

5

ElechonicsAmerica ("SEA") adopteda documentretentionpolicy that required employees.

6

amongotherthings,to cleanout anddestroydocuments"[a]t leastsemiarmually."Exh. 48 (Tr. Ex,9221). Semi-annualdestrustionof documentsis still mandatoryunder SEA's current

8

documentretentionpolicy, which expresslyacknowledgesthat its purposeis to destroyotherwise

9

documents.ro discoverable Exh.49 CIr. Ex.9222at 4).

l0

The evidenceat trial will showtha! asa resultof the failure to implementa

ll

litigation hold, Samsungdestroyedrelevantevidence,including communicationswith other

t2

DRAM manufacturenregardingtheir coordinatedrefusalto meetOEMs' demandsfor lower

l3

priceson RDRAM. For example,theevidenceat hial will showthat Samsungfailed to produce

l4

the March I , 2001email from SamsrmgVice PresidentIl Ung Kim (who went to prison for price

l5

fixing) to his counterpartat ToshibaaboutSamsung'srefiisal to meetDell's demandsfor sharper

16

declinesin RDRAM pricing. Mr. Kim urgedToshibato "hangin there"and"give samepricing"

17 l8 t9 20 2l 22 23 24 25 26 27 28

l0 Commonlyacceptedreasonsfor adoptionandimplementationof content-neutraldocument retentionpolicies includethe reductionofthe high costsof complyingwith discoveryrequestsin the eventa businessshouldbecomeinvolved in litigation, by limiting the extentof paperrecords andelectronicdatathat would haveto be searchedfor discoverablematerials. However"because Defendantspurport to find somethingnefariousin the adoptionof Rambus'sdocumentretention policy andin statementsby Rambuspersonnelthat the company'sdocumentretentionprogram extendedto "discoverable"documents(althougheventhe DelawareCourt did not), it is worth noting that SEA's currentdocumentretentionpolicy explicitly acknowledgesthe tie betweeq on the onehand,the needto destroymaterial"that eitherhasno valueto SEA or whosepresewation is not requiredby law", Exh. al 1tr. Ox. 9222at3) (Underlying Principles"!] l), ani, on the otherhand,concemsaboutthe potentialdiscoverabilityof documents: The law may not distinguishbetween"personal"work files and SEA's "corporate" or "business"files, As sucll "personalfiles" containingbusiness-or work-related information may be subjectto discoveryin a legal proceeding,just like other corporateor businessrecords.Therefore,calendars,diaries,notes,and chrbnologicalfies, in electronicandpa1ierforms, of firm personnelaretypically consideredo'information"or "records"coveredby this Policy. Eachemployee should,at leasttwice annually,review his "personalfiles" and disposeof any information or recordsfor which the retentionperiodhaspassed. Id. (SEA Januaryl, 2008 documentretentionpolicy provision for "Personalfiles'). 16v9n.l RAMBUSINC.'SBRIEFREGARDING DEFENDANTS' SPOLTATION OFEVIDENCE

I

as Samsung"even if they threten(sic) you badly." Exh. 50 (TAEC-RMBS-v-MU2569). The

2

only reasonRambusleamedof the documentis becauseToshibaproduceda copy during

-)

discovery.Kim Decl.,!f 104(a).

4

Likewise,the evidenceat trial will showthat Samsungdestroyeddocuments

5

regardingcommunicationsandmeetingswith otherDRAM manufacturersabouttheir internal

6

projectionsofRDRAM pricingandproduction.,lee,e.g.,Exh.5l 0TAG-00263188, producedby Infineon) (7/5100emul from Samsungto Infineonrequestingmarketingmeetingwith proposed

8

agendaincluding "[d]emandforecas by applications,Rambus/DDR./PC I 33" and"[p]roduct

9

(lnfineonsummaryof meetingwith Samsung).The [r]oadmap");Exh. 52 (ITAG-003033228)

l0

evidencewill alsoshowthat SamsungdestroyeddocumentsregardingDefendants'secre!

1l

coordinatedeffortstopromoteDDRwhilefashingRDRAM, See,e.g.,Exh.20(18M12149399,

tz

producedby IBM) (listing "noisecreatingideas"and"carefi.rllyplantedrumors" aboutRDRAM.

t3

Kim Decl.,fl 104(b-c).

14

4.

l5 l6

The Scopeof Samsung'sDestructionIs RevealedBy The District Court of New Jersey'sFinding That Samsung'sDRAM Group Intentionally DestroyedEmails.

The scopeof Samsung'sdocumentdestructionis describedin Mosaid Techs.Inc.

l7

v. SamsungElectronicsCo.,Ltd., et al., CaseNo. 0l-CV4340. In that case,Mosaidsued

l8

Samsungin the Dishict of New Jerseyfor infringementof sevenpatentsinvolving DRAMs and

l9

DRAM technology. During the courseofdiscovery, MagishateJudgeHedgesfound that

20

Samsunghad committed"breathtakingandabsolute"spoliation,resultingin Samsung'scomplete

2l

failure to produceemailsto Mosaid. Mosaid Techs.Inc. v. SamsungElectronicsCo.,Ltd.,2004

22

WL 2550306,at *3 @.N.J:July 7,2004). He foundthat",?otechnicale-mailswerepresemed,

ZJ

andthat no 'off-switch' [to Samsung'sretention]policy existed demonstrat[ing],at the least

24

extremelyrecklessbehayior." Id. (emphasisadded). MagistrateJudgeHedgesalsofound that

25

"[t]he prejudiceresulting ftom completeand total e-mail spoliation seemsparticularlyobvious."

26

Id. at*2 (emphasis added).

27 28

Mosaid hadsubmittedan affidavit by a former Samsungmemorydesignerwho testified directly to'"the extensiveandtechnicaluseof e-mail" at Samsung./d. The affiant stated 7$49n,1

DEFENDANTS'SPOLIATION RAMBUSINC.'SBRIEPREGARDING OFEVIDENCE

I

that "email wascommonlyusedeveryday''by Samsungmemorychip designersby 1995.

2

Among otheruses,email wasregularlyusedby Samsungengineersto shareinformationand

3

ideas(suchaspresentations,testresults,etc.)during the developmentofmemory produots;to

4

communicatewith other engineersregardingthe stafusof memoryproductdevelopmentand

5

manufactue;to distributestatusreports,meetingminutes,andtestresultsregardingthe operation

6

of memoryproducts;and to communicatewith customersaboutspecificproductneeds.Exh. 54 (550042001361, at 550042001362). In light ofthe evidenceofthe e-mails'relevance, the

8

ofabsolutespoliationof Magishatefoundthat,"in additionto defendants' effectiveconcession

9

technicale-mails,which is enoughto supportan inference,plaintiff has madeaprimafacie

l0

showingof relevance."Mosaid,2004WL 2550306,at*2. As a resul! theMagistrategranted

il

Mosaid's requestfor an adverseinferenceinstruction. Id. at *3. The Magistratealsoawarded

t2

in feesandcostsassociated with Mosaid'smotionfor sanctions.MosaidTechs.Inc. $566,839.97

l3

v. Samsung ElectronicsCo. Ltd,348 F. Supp.2d,332,334(D.N.J.2004).

t4

Samsungappealedthe Magistrate'sorders,but the district court found that the

l5

sanctionswereboth "appropriateandfair" giventhe "staggering"extentof Samsung'sspoliation

l6

2001until late2004. Id. at339. The district from theinceptionofthe litigationin September

t7

courtfoundthat"Samsungneverplaceda 'litigationhold' or 'offswitch' on its document

l8

retentionpolicy concemingemail"andthatSamsung's emailpolicy allowedemailsto bedeleted

l9

automaticallyon a rolling basis. Id. at333. 'oAsa resull Samsungfailed to producea single

tn

technicale-mail in this highly technicalpatentlitigation becausenonehad beenpresemed." Id.

21

(emphasisadded). The court fudher foundthat "Samsung'sactionsgo far beyondmere

22

negligence,demonstratinglz owingand intentionalconductthat led to the nonproductionof all

23

added). technicale-mails."/d at 338(emphasis

24 25 26 27

5.

EvidenceRegardingMicron's DeliberateDestructionof Relevant Documents

DespiteMicron'sparticipationin the conspiracy againstRambusandRDRAM, its andits initiation of patentlitigation againstRambusas concemaboutthe antitrust consequences, discussedin SecfionII(A)-(B) above,Micron witnesseshavetestified that they desfoyed, altered,

28 DEFENDANTS' RAMBUSINC.'SBRIEFREGARDING SPOLIATIONOFEVIDENCE

I

or failed to retain relevantdocumentslong after a preservationduty attachedunderDefendants'

2

approach,including in manycaseslong after Micron hadcommencedlitigation with Rambus.

J

For example,asof May 2001,Micron did not arshiveits emails. Exh.92 $/2101JulieSmithDeno.at

4

)

5:3-6:15, 71:14-73:25). S""o/- !*hj11Z]1/09!.ith Depo. at7:ll-12,8:2-5). Il

6 7

Fld:..93(2/14/06SmithDepo.at 53:8-

53:25,54:21-55:13,74:5-l 4).

8

Id. at69:25-72:9.

o

10

Criticalwitnesses acknowledged theirdestruction of emailsrelatingto Rambus and/orpricingdiscussions with competitors, evenafterMicronsuedRambus.Examplesinclude: .

ll

SteveAppleton: Micron CEOSteveAppletontestifiedin April 2001- after Micron initiatedlitigationagainstRambus-

l2 IJ

E,h. 66 (4120/01 AppletonDepo.at

t4

234:25-235:l). See alsoE h. 67 (5/7/08AppletonDepo.at 148:22-149 :19).

l5 l6 l7

,SeeExh.55 (RadfordDepo.Exh. 216);Exh. 85 (10/10/07

18 19

Radford Depo.at 133:16-135:12).

zv

MikeSeibert: Mike Seibert,Micron'sMarketingEnablingManagerwith

2l

responsibilityfor promotingDDR overRDRAM asthe next industrystandard,

22

testihedthat

ZJ

24

Exh. 87 (8/3/01SeibertDepo.at 12:20-13:10, 16:l-9, 52:14-

25

53:I 0). Seea/soExh.88 ( I 0/30/07Seibert Depo.at 30:3-8,54:I 6-55:I l, 58:4-

26

24) (describingMr. Seibert'sresponsibilities). o Kyle Daniels.'MicronexecutiveKyle Daniels,Micron'smarketingmanager

27 28 7634979.l

for memorymodulesduring the relevantperiod,testified in July 2001that I RAMBUSINC.'SBzuEFREGARDING DEFENDANTS' SPOLIATIONOFEVIDENCE

I )

Eldl..69 (7/31/01 DanielsDepo.at 9:4-9,25:17-27:19).

J

The evidenceat trial will showthat Micron deshoyedrelevantevidence,including

4 5

with OEMs,suchasDell, demonstrating RDRAM demand(see,e.g.,Exh.63 communications

6

(DEL-RAMB 0l 8056producedby Dell). Theevidenceat trial will alsoshowthatMicron

7

destroyeddocumentsregardingDefendants'secret,coordinatedefforts to kill RDRAM and

I

producedby Hynix) (7/24100 promoteDDR. See,e.9.,Exh.30 (FIR905_387986, Appleton-Park

9

producedby emaildiscussing"what we wantto do with [Rambus]");Exh.53 (ITAG-00259310,

l0

Infineon)Qn2/99 emailfrom Mr. TabriziregardingHSDRAMagenda);Exh.20 (lBW2 149399,

l1

producedby IBM) (10/19/98emaillisting"noisecreatingideas"and"carefullyplantedrumors"

t2

aboutRDRAM).

IJ

il.

ARGUMENT As the abovesummarydemonstrates, the evidenceshowsDefendantsdestroyed

l4

l5

documentsrelating to the parties' claimsanddefensesin this case(evenwithout resortto the

t6

improperpresumptions Defendants seekto employ). As explainedin Rambus'sbriefingon the

t7

collateraleffect of the DelawareRuling, Defendants'proposedstandardsfor spoliationare

l8

inconect. So aretheir methodsof drawinginferencesfrom the facts. However,if the Coud were

t9

to adoptDefendants'proposedapproach, theCourtwouldneedto find thateachofthe

20

Defendantsengagedin intentionalspoliationresultingin sufficientprejudiceto Rambusto

21

warrantterminatingor issuesanctionsor adverseinferenceinstructions.

22 zt

Under Defendants'Proposed@ut Inappropriate)ApproachTo The Duty To PreserveDocuments.DefendantsHad A Dutv To Presene Relevant EvidenceSinceAt Least1997

24

Defendantsassertthat a duty to preservedocumentsthrougha litigation hold arises

A.

25

when litigation involving ary causeof actionis "reasonablyforeseeable"and a partytherefore

26

"knew, or shouldhaveknown, that a generalimplementationof [its documentretention]policy

27

at 5, 8-9; Micron Replyat I:7-8, 3:16-18("Spoliationdoes wasinappropriate,"Micron Response

28

Replyat 2:2-3(same). not requireanticipationofa specificcauseofaction...."); Samsung 7634979.1

RAMBUS INC.'SBRIEFREGARDINGDEFENDANTS'SPOLIANONOF EVIDENCE

I

Defendants'proposedstandardis contraryto California law, which will not find a duty to

2

preservedocumentsunlesslitigation is "ongoing or clemlyforeseeable. . . involving claims similar [to thoseat issuein the presentsuit]." Willmdv. Caterpillar,40Cal.App. 4th 892,922-

4

generallyRambus added);see 23 (1995)(emphasis Replyat 2:6-3:14.Moreover,Defendants'

5

argumenttries to extendeventhe "reasonablyforeseeable"standardbeyondrecognitionto

6

encompassa meregeneralizedpossibility of any futwe litigation.

7

If the Court were to adoptDefendants'approach,the Court shouldfind that each

8

of Defendantshad a duty to preserverelevantdocumentssinceat least 1997. By this time,

9

Defendantshad alreadycometogetherwith other DRAM manufacturersto resistthe

l0

Rambus/lntelpartrrershipand spread'tarefully plantedrumors" aboutRDRAM, Exh. 20 (IBN{/2

1l

149399).Defendantswere awarethat their misconductviolated antitrustlaws.rr lndeed,in

12

preparationfor potentiallitigation, Defendantsretainedlawyersto 'ohandle"variousissues,

IJ

including"antitrustconcems,oo Exlt.6 (HR905_136816), anddeveloped a coordinated litigation

t4

strategyagainstRambusthat includedpatentand antitrustclaims. Seesupra, SectionsII(A)-(B).

l5

Upon receiptof the June2002 DOJ subpoenas, Hynix, Micron, and Samsungwere certainly

16

obligatedto preservedocumentsrelevantto that investigationandto clearly foreseeablelitigation

t7

relatedto the sameconspiracy,accordingto any duty standard. Under Defendants'overly expansiveview ofthe preservationstandard,a duty to

l8 l9

preservedocumentsrelatedto this litigation alsoarosewhenDefendantsrecognizedandprepared

20

for potential sepratepatent litigation with Rambus.By at leastJuJy1997, Defendantswere

21

their beliefthat awareofthe broadscopeof Rambus'sintellectualpropertyanddiscussed

22

including "Rambuswill sueindividualcompanies."Exh. I (RX-0966at 3), Synclink members,

23

Defendants,wereaskedto gathercritical "information relevantto prior art andRambusfilings" in

24

preparationfor litigation. .ld (emphasisadded). Defendants'duty to prcservedocumentsunder

25 26 27 28

" See,e.9.,Exh.23 (6303at l) ("[P]leasevisit me if I endup in jail."); Exh.24 (6417at3) (January1999presentationadvisingthat the DRAM manufacturers act underthe umbrellaof a corporationin an effort to "[i]ndemni$ membercompaniesfrom a4!i:quq{&bil!ty. Seealso Exh. 25 (LauerDepo.Exh. l4t; (Sept6mber2000emlailregardingI Exh. 78 (l 2| 19/07 La;ur;rD epo.at 77:23-78:2,78:7-79:1). 76v979.1

RAMBUSINC.'SBRIEFRECARDING DEFENDANTS' SPOLIATION OFEVIDENCE

I

Defendants'approachthenbecameclearerin the summerof 2000when Micron andHynix sued

2

Rambusaspan ofa coordinated dual-frontlitigationstrategy.SeeHynix,2009WL292205at

J

r.5.12

4 5

Under Defendants'Proposed@ut Inappropriate)Approach To SpoliationnDefendantsIntentionallyDestroyedDocumentsIn Anticipation of Litigation

6

If the Court wereto adoptDefendants'proposedapproachto spoliation,then it

7

B.

shouldfind thatDefendants intentionallydestroyed documents.

8 9

As explainedabove,despitethefactthatit wasanticipatinglitigation(underits erroneous approachto thedutyissue),Hynix undertookno effortsin 1997or 1998to preserve

t0

potentiallyrelevantevidenceandinstead

ll

Further,Hynix

in wholesaledocumentandemail destruction.

t2 .9eeExh.9l (213/05ShinDepo.at2ll:9-212:18,219:6-9,231:21-24).

IJ

t4 ,See Exh.79(11116104

l5 l6

Exh.76(l/31/05SungChulKim Depo.at JinHo LeeDepo.at 184:19-185:1, 185:20-186:2);

t7

l0l:23-102:l);Exh.84(12/7104 OlsonDepo.at223:20-224:4). Forexample,

l8 19

SeeExhs.60& 61 (OlsonDepo. Exhs.19& 20); Exh.84 (1217/04 OlsonDepo.at260:6-262:15).UnderDefendants' erroneous

21

approach,Hynix knew or shouldhaveknown that the documentsdestroyedwerepotentially

22

relevantto antitrustlitisation.

ZJ 21

25 26 27 28

'' With respectto Samsung,Rambuscontends,asit did in the recentuncleanhandstrial in the NorthernDistric! that insuffrcientanticipationof patentlitigation with Samsungeverexistedto give rise to a duty to preserve,andthat in any eventthe October2000 licenseagreementbetween Rambusand Samsungextinguishedany duty that previouslyexisted. Samsungdisagreed, arguingthat the possibility that Rambuscould,at somehlpothetical time yearslater,terminate the licensewas sufficient to imposea continuingduty. Samsungis wrong, but if its standarddid apply,thenit hada continuingduty to preserve.Samsung's hiring of litigationcounselandclose monitoring of Rambuslitigation evidencesthat it actuallycontemplatedthe potentialfor future patentlitigation with Rambus. 163/.979.1

RAMBUS INC.'S BRIEFREGARDINGDEFENDANTS'SPOLIATIONOF EVIDENCE

I

UnderDefendants'spoliationapproach,Samsungalsointentionallydestroyed

2

documentsin anticipationof litigation. Samsungfailed to implementany litigation hold for

J

documentsuntil June2005at the earliest- well after it hired litigation counselto Rambus-relaled

4

monitor Rambuslitigation and afterit wassubpoenaed by the DOJ- resultingin the delibemte

5

destructionof relevantdocuments.In addition,accordingto Defendants'proposedbut inconect

6

standardon collateralestoppel,the Courtwould needto find thal theMosaid spoliationorder conclusivelyestablishesfor purposesof ry'rislirigation that Samsungintentionallydestroyed

8

evidencein anticipationof litigation. TheNew JerseyDistrictCourtfoundthat"Samsung's

9

actionsgo far beyondmerenegligence,demonstratingln owingand intentionolconductIhat led

l0

of all technicale-mails." CompareMosaid,348F. Supp.2d at339 to thenonproduction

1l

(emphasis added),with Micron Response at l :8-l0 ('JudgeRobinson'sfactualfindings

t2

conclusivelyestablishthat Ramousintentionallydestroyeddocumentsin anticipationof

IJ

is entitledto litigation.");Samsung's OpeningBrief, filed Mar. 10,2009,at 6:l5-16 ("Samsung

14

relief purely basedon findings in the [Delaware]Opinion"). Micron also intentionallydestroyeddocumentsunderDefendants'spoliation

l5

16

havetestifiedthattheydeshoyed,altered,or failedto approach.NumerousMicronwitnesses

t7

retainrelevantdocumentswell after Micron's duty to preservearoseunderDefendants'approach,

l8

includingafterlitigationwith Rambushadcommenced,1ee,e.g.,Exh.66 (4/20101 Appleton

t9

(testifying Depo.at234:25-235:l) in April 2001

20 2l '))

23

generallysupra,SectionII(C)(5), C,

Under Defendants'Proposed@ut Inappropriate)Approach To Spoliation,Defendants'SpoliationOf EvidencePrejudicedRambus Thepartiesagreethatthe Courtmustimposea burden-shifting approachin

25 26 77

determiningthe existenceanddegreeofprejudice, althoughthey disagreeaboutthe implementationof that approach,The partiesagreethat underCalifomia law, the moving party mustmakeaprima facie showingthat the respondingparty destroyeddocumentsthat had "a substantialprobability of damagingthe moving party's ability to establishan essentialelementof

28 -25R.AMBUSINC.'S BRIEF REGARDING DEFENDANTS' SPOLIATION OF EVIDENCE

I

Cal.App. 4th 1215,1227(2008), If this [their] claim[s]or defense[s]."Wliams v. Russ,167

2

burdenis met, the burdenshiffs to the respondingpartyto showthat the documentsavailableto

J

the moving party aresuffrcientfor it to t'mountan adequatedefense." Id. at 1227n.5.

4

Defendantssuggesthoweveqthat the destructionof documentsis sufficien! by itself, to meetthe

5

burdenand establish aprimafacie caseof preludice.,Seqe.g.,Micron Openingat 10:10-12;

6

Micron Reply at 7:2-4. This is not conect. Moreover,Defendantssuggestthat a party cannever

7

rcbuta prima facie caseofprejudice unlessit kepta written recordof the substanceof the

8

documentsthat weredestroyedor can otherwisereconstructall that was destroyed,which is also

9

not correct.See,e.9.,MicronOpeningat 9:18-19.If theCourtwereto adoptDefendants'

l0

proposedbut erroneousstandardfor prejudice,thenthe Court shouldfind that Defendants'

lt

spoliationof evidenceprejudicedRambus.

12

As explainedin SectionII above,Defendants'spoliation waspart ofa larger

13

coordinatedconspiracyagainstRambustlat beganto form asearly as 1997to preventRDRAM

l4

from becomingtle dominantmemorytechnology.UnderDefendants'approach,the destruction

l5

of documentswasso widespreadthat it wasnot limited to specificcategoriesof documents,but

l6

ratherinvolved "all aspects"of Defendants'businessoperations.Defendantskept no written

lt

recordof what was destroyed.While it is impossibleto know every.thingthat Defendants

l8

destroyed,the evidenceat trial will showthat the spoliatedevidenceincludeddocumentssuchas

t9

(l) documentsrelatingto communicationsamongandmeetingsbetweenDefendants;

20

(2) documentsrelatingto the activities of the Synclink Consortiumand similar organizations;

2l

(3) documentsrelatingto Defendants'concertedeffofts to promoteDDR; (4) documentsrelating

22

to meetingswith Rambusand/orIntel; (5) documentsrelatingto communicationswith OEMs

z)

and/orother DRAM supplien; (6) documentsrelatingto theperformanceandcostof RDRAM;

24

(7) financial documents;(8) documentsrelatedto Defendants'coordinateddual-frontlitigation

25

strategy;and (9) internal emails.

26 27

The evidenceat trial will demonstatethat the destroyeddocumentswould be relevantto issuesin this case,including, but not limited to, the following:

28 -26RAMBUSINC.'SBRIEFREGARDING DEFENDANTS' SPOLIATIONOFEVIDENCE

o t

.

CommunicationsamongDefendantsandotherDRAM suppliersregardingthe pricingandproductionof RDRAM;

.

The scopeofthe pricefixing conspiracy pled to whichHynix andSamsung guilty andin which Micron admittedlyparticipated;

.

CommunicationsbetweenDefendantsandOEMs regardingRDRAM pricing and pricing projections,the productionof RDRAM, andthe coststo manufactureRDRAM;

r

Defendants' artificialrestrictionof theproductionof RDRAM, including Defendants' coordinated refusalto meetOEMs' demandfor RDRAM;

r

Defendants' purportedeffortsto developandpromotealtemativesto RDRAM;

r

Defendants'intentionalinterferencewith Rambus'sbusinessrelationshipswith Intel andothercompanies;

.

Thecostof producingandperformance of RDRAM, SDRAM,andDDR;

.

Projectionsof RDRAM's future marketpenetrationandpricing; and

r

purportedeffortsto developandpromoteRDRAM. Defendants'

5 6 7 8 9 l0 l1 12 l3 1A

Unlike the categoriesof materialsthat Defendantshavewrongly allegedRambus l5 failedto preserve,onewouldexpectto find thebestevidence for theabovecategories in 16 Defendants'frles. For example,evidencerelatingto issuessuchascommrurications among t7 Defendantswould only comefrom Defendants'files. The evidencewill showthat a numberof l8 Hynix, Samsung,and Micron executives,who were directly involvedwith Rambusor RDRAM, l9 and/orcommunicatedwith competitors,werenot properlypreservingrelevantemails. 20 Hynix did not properlypreserveits email with competitorsduring the relevant 2l

22

time period. For instance,Hynix's FarhadTabrizitestifiedthat ,See Exh.98 (8/10/05TabriziDepo.at

z)

67:21-68:4).Then,whenMr. Tabrizileft Hynix in 2003,the

24 25 26

SeeExh. 84 (1217104 OlsonDepo.at210:5-17);Exh. 83 (11/4/04OlsonDepo.at 38:22-39:22).Therefore,it is not surprisingthat Mr. Tabrizi's emailssentto Hynix's co-

27 conspiratorswere, most likely, destroyed.For instance,Rambus'sreview of Infineon's document

28 7634979.l

RAMBUSINC.'SBRIEFREGARDING DEFENDANTS' SPOLIATION OFEVIDENCE

I

productionrevealsemailsfrom Mr. Tabrizi to Infineonthat were not preservedandproducedby

2

Hynix. See,e.g.,Exh.53 (ITAG-00259310-31l, 9122199 emul from Mr. Tabrizito lnfineon,

J

joint meeting);Kim Decl.,!f 106ft). Micron,andotherHynix executives regarding

4

Samsung,too, engagedin unfettereddestructionof its email resultingin the lossof

5

relevantdocumentsthat would help Rambusillustratethe scope,nature,andimpactofthe price-

6

fixing conspiracy.Indeed,Samsung automatically destroyed e-mailsup to at leastJune2005on

1

an ongoingbasis.Seesupra.SectionII(B)(3) (citingtestimonyof Jay Shim,JonKang,and

I

Samsung's 30(bX6)designee explainingthatSamsung automaticallyerasedemailsafteroneto

9

two weeks);seealsoMosaid,2004WL 2550306,at *3 (holdingthat Samsung engaged in

IO

widespreadspoliationof email andfailed to stopthe automaticdestructionof email after

ll

of anotherDRAM-relatedlitigationmatter).An exampleof Samsrmg's commencement email

t2

destructionis anemailfrom Samsung's Vice President Il Ung Kim, whichwasproducedby

l3

Toshibain whichMr. Kim tellsToshibato "hangin there"in response to pressure from Dell to

t4

lowerpricesin Spring2001. SeeExh. 50 (TAEC-RMBS-v-MU2569). A reviewof Samsung's

l5

documentproductiondemonstrates that it destroyedthis email. Kim Decl.,fl 104(a). The

l6

evidenceat trial will showthat Samsung deshoyedandfailedto produceotheremailsrelatingto

17

its commnnications with its competitorsaboutthepricingandproductionof RDRAM. See,e.g.,

l8

Kim Decl.,!f!l I 04(b-e);Exh.5 I (ITAG-00263188); Exh.52 0TAG-003033228).

l9 20

Micron alsoengagedin the destructionof email communicationwith its competitors.As of May 2001,Micron'semailsystemwasnot archived.

Exh.92(5/2/01Smith

21 22

(2/14/06 Depo.at5:3-6:15,71:14-73:25). SeealsoExh.93 SmithDepo.at7:11-12,8:2-5).'' Exh.93 (2114106 SmithDepo.at

2)

24 25 26 27 28

l;xh.93 Qll4l06 SmithDepo.al69i25-7219). I wereoccurringthroughout 1999-2002.SeeExh. 56 (Micron ConductStatement).The resultsof cf suchactivitieswere communicatedintemally at Micron via email. Seeid. at MSF048731, lines2-5 (notingthatMr. Sadlersharedinformationhe leamedfrom his contactswith othersat Micron, andthe information wassharedorally and by email). 7634979.1 RAMBUSTNC,'SBRIEFRECARDINCDEFENDANTS'SPOLIAT1ONOF EVIDENCE

I

53:825,54:21-55:13,74:5-14). As a result,emailrelevantto this litigationwasdestroyed.For

2

instance,a June7, 2000emailfrom Hynix's FarhadTabrizi (which appearsto havesomehow

J

slippedpastMr. Tabrizi's emaildestruction)was sentto, amongothers,Messrs.Lee,Mailloux,

4

Ryan,andSadlerof Micron. Exh. 57 GfR905_435633). Basedon Micron'sdocument production.it appearsthat,rozre of theseindividualspreserved this email. Kim Decl.,tf 105(e).

6

Themissingemaildiscussed exactlythetypeof communications thatwouldbe relevantto this

7

litigation: Defendants'RDRAM pricing to Dell, andDefendants'desireto tell the "InteVdell

8

folks" to "get your headout ofyoul ***t' with respectto RDRAM. Exh, 57 qfR905_435633).

9

The evidenceat trial will alsoshowthat Micron destroyedandfailed to produceolher emails

t0

relatingto its communications aboutRDRAM. Seee.g.,Exh.63 (DEL-RAMB 018056produced

il

by Dell regardingDell RDRAM Demand);Exh. 53 (ITAG-002593 10,producedby Infineon);

12

Exh. 20 (IBIW2 149399,producedby IBM); Kim Decl.,fl 105(a-d). Rambusis, of course,unableto know whatrelevantinter-Defendant

IJ

t4

communicationsweredestroyedby a// recipients. Moreover,one can infer that individualssuch

t5

asFarhadTabrizi, Il Ung Kim, and SteveAppleton communicatedinternally aboutthe price

l6

fixing conspiracyin additionto communicatingwith competitors.Dueto Defendants'destruction

t7

of documents,Rambusandthe Court will neverknow the full natureandsubstanceofthe wholly

l8

intemal communicationsrelevantto this litigation. Therefore,underDefendants'proposed

l9

prejudiceapproach,this Courtshouldpresumethat Defendantsdestroyedcorrespondence

20

relevantto this caseandthat it washarmfirl to Defendants'defenseof this litigation. See,e.g.,

2l

MicronOpeningat I l:18-21 (speculating aboutwhat"lost" emailsmighthaveshown).

22

In addition to email, Rambuswill showthatDefendantsdestroyedrelevant

23

"paper" evidenceexchangedbetweenDefendants,includingdocumentsexchangedin fu(herance

24

of the conspiracyto preventRDRAM from achievingmarketsuccess.As shownin SectionII

)\

above,Defendantsall engagedin what Defendantswould call large-scaledestructionof hard

26

copy documents.As discussedabove,Hynix admittedthat it destroyedmore than 550 boxesof

27

documentsin 2002. Samsung'sPresidentJon Kang,who wasinvolved in Samsung'smarketing

28

of RDRAM in the 2000time frarne,testified that he wouldpersonallyrip up his documentsand 7634979.1

DEFENDANTS'SPOLIATION RAMBUSINC.'SBRIEFRECARDING OFEVIDENCE

I

throw them awayaspart of his regular'ogarbage flush." OtherSamsungwitnesseswho worked

2

notebooks.SeeExh. 74 (7/20/07 on RDRAM admittedto throwing awaytheir company-iszued

J

K.H. KyungDepo.at22:12-23:4); YeonghoKangDep. at93:17-94:6);Exh.77 (8/23107

4

havealsoadmittedto M.H. Kim Depo.at64:22-66:12). Micronwitnesses Exh.75 (8/22107

5

destroyinga rangeof"papeC'documents.SeeExh.69 (7l3ll0l DanielsDepo.at9:.4-9,25:.17-

6

27:19) Depo.at 52:14-53:13) Exh.87(8/3/01Seibert prejudice Ifthis CourtadoptsDefendants'

8 9

and relevancearguments(which Rambusdisputes),then this Court mustpresumethat the paper

l0

docurnentsshredded,bumed,and otherwisedestroyedby Defendantsincludedrelevant

il

documentsthat would havebeenharmfulto Defendants'defensehere.

t2 l3 t4

The abovearemerely examplesofthe typesof evidencedestroyedby Defendants andis not meantto be comprehensive.la D.

l5

Under Defendants'Proposed@ut Inappropriate)Approach For Sanctions,Rambusis Entitled to ProportionateSanctions l.

16

Under Defendants'(Inappropriate)Approach,RambusIs Entitled To Terminating Sanctions

proposedapproachfor spoliationand If the Courtwereto adoptDefendants'

l7 l8

terminatingsanctions,it would needto issuean orderstriking Defendants'answersandgranting

l9

defaultjudgnrentagainstDefendantson eachof Rambus'sclaims. In addition,the Court would

20

(i,e.,its CartwrightAct claim,unfaircompetitionclaim, needto dismissMicron's cross-claims (i.a.,its Section remainingcross-claims claim)lsandSamsung's andintentionalinterference

22 23 24 25 26 )7

28

raAs explainedin prior briefing, allegedmisconductby Rambusin other litigation hasno relevanceto this litigation. However,to the extentthat Defendantsclaim that Rambus'salleged litigation misconductelsewherecausedprejudiceto their ability to defendthis case,Rambus intendsto presentevidenceof Hynix's litigationmisconductin theNorthemDistrictof Califomia patentcases.Seesupra,SectionII(BX2);seealsoMicronResponse at l0:6-18. 15Rambusnotesthat this Court had announcedits intentionto grantRambus'smotion for summaryjudgment, filed on May 9, 2008,with respectto Micron's CartwrightAct claims. With respectto Micron's unfair competitionandintentionalinterferencecausesofaction only, the Courtcontinuedthe hearing,pursuantto Codeof Civ. Proc,$ 437c(h),rmtil the completionof certainremainingdiscovery.,SeeAug. 1, 2008llrg Tr. at31:5-27.On November20,2008, Rambusinformedthe Court that that discoveryhadbeencompleted,that Micron andRambus 7634919.l

RAMBUS INC,'S BRIEF REGARDINGDEFENDANTS' SPOLIATION OF EVIDENCE

I

17200claim basedon spoliationallegationsand its intentionalinterferencewith prospective

2

economicadvantageclaim). As explainedabove,underDefendants'view of the law and

J

applicationto facts,Defendants'deliberatemisconducthasseriouslyimpaired Rambus'sability

^

.l

to litigate this case,andterminatingsanctionsfor Defendants'spoliationare thereforejustified,

5

2.

6

Under Defendants'(Inappropriate)ApproachTo Spoliation,The Court ShouldDismissMicron's And Samsung'sCross-Claims Under The DoctrineOf UncleanHands

The requisitefindings to establishthe uncleanhandsdefenseareessentiallythe

7 8

sameasthoserequiredto imposesanctions.Therefore,if terminatingsanctionsarejustified

9

underDefendants'view ofthe law andfacts,the CourtshouldalsodismissMicron's and

l0

Samsung's cross-claims undertheuncleanhandsdefenseif it adoptsDefendants'proposed(but

ll

inappropriate)approach.As explainedabove,Micron andSamsungdestroyeddocumentsin a

t2

deliberateattemptto gain an unfair advantagein litigation againstRambus.16

l3

3.

t4 t5

Accordingto Defendants'Proposed@ut Inappropriate) Approach for SpoliationAnd CollateralEstoppel,Terminating Sanctions ShouldBe ImposedAgainst Samsung

If the Court adoptsDefendants'proposedstandardsfor spoliationandcollateral

lo

estoppel,the Court would needto find that the doctrineof collateralestoppelrequiresthat

t7

terminatingsanctionsbe orderedagains Samsungstriking its answerto Rambus'scomplaint,

l8

enteringjudgment on Rambus'scomplain! and dismissingSamsung'sremainingcross-claims

l9

(t e.,its 17200claim basedon spoliationallegationsandits intentionalinterference with

20

prospectiveeconomicadvantageclaims). Under Defendants'proposed(erroneous)approach,the

2l

spoliationissueresolvedagainstSamsungby the New JerseyDistrict Court in the Mosald

22

litigationis "in substance thesame"to thespoliationissuein this casefor purposesofcollateral

23 24 25 26 27 28

agreethat no further argumentor briefrngis required,andthat the motion shouldbe submittedon the currentrecord. 16Micron (erroneously)assertsthat "spoliation of evidenceis frmdamentallydifferentthan other typesof misconductconsideredin prior casesdecliningto dismissantitust claimsunderthe dostrineof uncleanhands"because"spoliation infectsthe very meritsof plaintiffs claim." Micron Responseat lS;4-T. If Micron is conecl which Rambusdisputes,the Court would need to dismissMicron's antitrustclaims- i.e., its CartwrightAct claim andthe Section17200claim basedon allegedconductin violation ofthe CartwrightAct, the ShermanAct, andthe Clayton Act - underthe doctrineof uncleanhands. 7634979.1

_31_ RAMBUS INC.'S BRIEF REGARDING DEFENDANIS' SPOLIATION OF EVIDENCE

I

Reply,filed April 17,2009,a13:9-21,with estoppel.CompareSamsung Mosaid,348F,Supp.2d

2

at 338-39. Among otherthings,theNew JerseyCourt foundthat (l) Samsungfailed to institute a

J

"litigation hold" or "off switch" for its documentretentionpolicy which automaticallydeleted

4

emailson an ongoingbasis;(2) no technicalemailswerepreservedfrom the Semiconductor

5

Division's DRAM Group(the samegroupthat workedon RDRAM) betweenSeptember2001to

6

late2004;(3) emailwasusedby memorydesigners for variousaspects of Samsung's business; and(4) Samsung's actionsdemonstrated "knowingandintentionalconduct.",See.rapr4Section

8

II(BX4). Accordingto Defendants,it is inelevantthat the finding that Samsungengagedin

9

"breathtakingand absolute"spoliationwasrenderedin a patentcase. Mosaid, 2004WL

l0

2550306,at *3. Under Samsung'sproposedcollateralestoppelstandards,it would be

ll

conclusivelyestablishedbasedon the New JerseyDisfict Court's findings that Samsung

12

intentionally destroyeddocumentsin anticipationof litigation, andthesefindings would be

IJ

sufficient to establishprejudicein this caseasa matterof law.17

l4

4.

l5 l6

Under Defendants'(Inappropriate)ApproachTo Spoliation,The Court ShouldImposeIssueAnd EvidenceSanctionsTo Prevent PrejudiceAgainstRambus

The samepredicatefindingsthat arerequiredto imposeissuesanctionsalso are

17

requiredto imposeterminatingsanctions,SeeNewAlbertsons,Inc.v. SuperiorCourt,168Cal.

l8

App. 4th 1403,1428-34(2008). Accordingly,absentterminatingsanctions, andapplying

19

Defendants'standardsfor issuesanctions,the Court shouldorderthat the following facts"shall

20

be takenas established"andthat Defendantsareprohibitedfrom contestingthe following issues

2l

in this case:

22

o Defendantsmadeconcertedeffortsto keepthe price of RDRAM high andthe supply of RDRAM low;

24 25 26

28

17Even if the Cdurt finds tlut terminatingsanctionsarenot appropriate,underthe Defendants' interpretationof the law, Samsungshouldnot be allowedto disputethe New Jeney Court's findings at trial. Applying Defendants'standardsfor collateralestoppel,the Mosaidopinion clearly constitutessubstantialevidenceof Samsung'sspoliationsuchthat thejury shouldbe instructedthat Samsunghasbeenfoundguilty of spoliationby a federalcourt, andthat thejury may infer that the documentsSamsungdeshoyedwould havebeenunfavorableto Samsung's cas'eandfavorableto Rambus's..See Evid. C;de 6 413. RAMBUSINC.'SBRIEFREGARDING DEFENDANTS' SPOLIATION OFEVIDENCE

I

Defendantsengagedin anticompetitivecommunicationsandinformation exchangesconcemingthe pricing andproductionof DRAM, includingRDRAM;

2

Defendantswereawarein 2000and2001that Dell andother OEMsneededlower RDRAM pricesin orderto drive RDRAM into the mainsteam;

J

4 Defendants collectivelyrefusedto meetOEMs' pricingtargetsin 2000and2001; 5 6

Defendantsagreedto keepDDR pricesandprice projectionslow in orderto obtain designwins for DDR chips andmodulesinsead of RDRAM;

8

At the time of andafter tle November1999Caminolaunch,therewasno technical reasonwhy RDRAM could not becometlre dominantmemorytechnology; At the time of andafter the November1999Caminolaunch.therewasno technical reasonwhy RDRAM could not havebeenusedin a variety ofapplications;

9 IO

Samsungsoughtto becomethe industryleaderin both RDRAM andDDR;

ll

Samsungprefenedthat RDRAM becomea "niche" productasopposedto a mainstreammemorystandard;and

l2

t3

Hynix andMicron participatedin the price fixing conspiracyto which Samsung pledguilty.

t4 l5

r6 t7 l8 l9 20

If the Court appliesDefendants'proposedlegal standardsfor spoliation,Rambusalsointendsto seekevidencesanctionsby an orderprecludingDefendantsfrom introducingevidencerelatingto theseissues. 5.

Under Defendants'(Inappropriate)Approach To Spoliation, Adverse Inference Instructions Should Be Given

If the Court adoptsDefendants'proposedapproachto spoliation,Rambusalso

2l

intendsto requestthat the Court provideadverseinferenceinstructionsagainstDefendantsto the

22

jury. ,9eeEvid. Code$ 413 ("In determiningwhat inferencesto draw from the evidenceor facls

z)

in the caseagainsta party, the trier of fact may consider,amongotherthings,the party's ... willful

24

suppressionof evidencerelatingthereto."). As explainedabove,thereis substantialevidence

25

underDefendantsapproachto spoliationthat Defendantsdestroyedinnumerabledocumentsabout

26

andfailed to keepa recordof what was destroyed.Therefore, "all aspects"of their businesses

27

Rambusintendsto requestadveneinferenceinstructionsthat the evidenceDefendants

28

"intentionally concealedor destroyed. . . would havebeenunfavorableto [Defendants]." CACI -JJ-

RAMBUSINC.'SBRIEFREGARDING DEFENDANIS'SPOLIATIONOFEVIDENCE

I

204aseealso BAJI 2.03.rERambusalsointendsto requestan instructionthat thejury may regard

2

suchan inference"as reflecting [the Manufacturer's]recognitionofthe strenglhof plaintiffs case

3

generallyand/orthe weaknessof its own case." Bilwn v. AT&T Info. Sys, 13 Cal' App.4th 976'

4

992(1993),overruledon other groundsby LaHn v. Watkiw Assoc.Indus., 6 Cal. 41he4 Q993).

6

Even If the Court DoesNot Impose SanctionsOr Give Adverte Inference Instructions, Rambus Reserve lts Right to Offer Evidence of Ilefendants' Spoliation At Trirrl

7

To the extentthat the Court finds that spoliationis relevantto claims anddefenses

J

E.

8

assertedby Defendants,Rambusreservesits right to offer evidenceand findings regarding

9

Defendants'spoliationat Eial. Ifthe Court doesnot dismissDefendants'Section17200claims

l0

basedon spoliationallegationsprior to trial, Rambusintendsto offer evidenceof Defendants'

ll

documentretentionpolicies andspoliationof evidenceto demonstratethat Rambus'sdocument

t2

retentionpoliciesandpracticeswerenot untawfirl, unfair, or fraudulentunderSection l72}O.te

l3

Rambusalsointendsto assertevidenceofDefendants' uncleanhandsasan equitablefactor

l4

bearingon whetherthe Court shouldgrantany relief Defendantsseekfor Rambus'salleged

l5

spoliation. Rambusalso reservesthe right to infoduce evidenceof Defendants.'spoliationfor

l6 t7

any purposethat the Court deemsproperin responseto a requestfrom Defendants.For example,

l8

if the Court ultimately were to allow Defendantsto assertspoliationallegationswith Rambus's

l9

witnessesin orderto attacktheir or Rambus'scredibility (asDefendantshavesuggestedthey

20

intendto requestthe right to do), then Rambuswould presentevidenceof witnesses'participation

2l

of Defendants'spoliationfor the samepurpose.Rambusmay also offer in andawareness

22

evidenceof Defendants'spoliationto moveto shift the burdenof proof with respectto certain

23 24 25 26 27 2E

l8 DeDendineon the evidencepresentedby Defendantsat trial, Rambusmay alsoseekadverse failure to explain or denyevidence(CACI 205) and/ortheir inferdnceinitnrctions for Defe:ndants' failure to producebetterevidence(CACI 203). le Rambusalsoreservesits right to ofer evidenceof Defendants'spoliationto establishthat Defendants'uncleanhandslimit or eliminatetheir entitlementto relief underSection17200's remedialprovisions. SeeCortezv. Purolator Air Filtration Prods.Co.,23 Cal.4th 163' 180 (2000) ('A court cannotproperlyexercisean equitablepowerwithout considerationofthe

equitiesonbothsidesofa dispute.'). 7624t%

OFEVIDENCE DEFENDANN'SPOLIATION RAMBUSINC.'SBRIEFREGARDING

o I

elementsof its claimsand defenses(Evid. Code$ 500); moveto excludethe introductionof

2

evidence;or addressassociateddocumentauthenticationproblems. Rambusalso intendsto assert

J

evidenceofDefendants' uncleanhandsas an equitablefactorbearingon whetherthe Court

4

shouldgrantany relief Defendantsseekfor Rambus'sallegedspoliation.

5

w.

6

CONCLUSION Ifthe Court adoptsDefendants'proposedapproachto spoliation,Rambus

respectfullyrequeststhat the Court find that Defendantsengagedin spoliationof evidenceunder

8

thosestandards,strike Defendants'answersandgrant defaultjudgrnent in Rambus'sfavor, find

9

that Itambusis entitledto judgnrentasa matterof law on DefendanS'cross-claims'andimpose

l0

the other sanctionsand/oradverseinferenceinsructions setforth above.

ll

DATED: April 20,2009

t2

COTCHETI,PITRE& McCARTHY MI,JNGE&TOLLES& OLSON

l3 t4 l5

Attomeysfor PlaintiffRAMBUS INC.

l6 t7 l8 l9 20 )l

22 23 24 25 26 27 28 -35SFOLIATIONOFEVIDENCE DEFENDANTS' REGARDINC RAMBUSINC.'SBRTEF