Additional Counsel Listed On Signature Page.

Case5:00-cv-20905-RMW Document4082-1
Filed11/14/11 Page1 of 133
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KENNETH L. NISSLY (SBN 77589) knissly@omm.com SUSAN van KEULEN (SBN 136060)
svankeulen@omm.com
SUSAN ROEDER (SBN 160897) sroeder@omm.com OMELVENY & MYERS LLP 2765 Sand Hill Road Menlo Park, CA 94025 Telephone: (650) 473-2600 Facsimile: (650) 473-2601 KENNETH R. OROURKE (SBN 120144)
korourke@omm.com
OMELVENY & MYERS LLP 400 South Hope Street Los Angeles, CA 90071-2899 Telephone: (213) 430-6000 Facsimile: (213) 430-6407 [Additional counsel listed on signature page.] Attorneys for Plaintiffs HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH, Plaintiffs, v. RAMBUS INC., Defendant.
Case No. C-00-20905 RMW HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW ON SPOLIATION [CLEAN COPY]
HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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TABLE OF CONTENTS Page I. INTRODUCTION ....................................................................................................................... 1
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II. PROPOSED FINDINGS OF FACT........................................................................................... 3 A. The Current Litigation ............................................................................................ 3 B. The Farmwald/Horowitz Patent Applications ......................................................... 5 C. Rambuss RDRAM Technology ............................................................................. 6 D. Rambuss Participation in JEDEC .......................................................................... 6 E. Relationship with Hynix ....................................................................................... 10 F. Rambus Formulates its Licensing and Litigation Strategy ................................... 11 1. Rambus Hires Joel Karp ........................................................................... 11 2. Rambus Meets With Cooley Godward Attorneys ..................................... 13 (a) January 13, 1998 meeting ............................................................. 14 (b) January 15, 1998 meeting ............................................................. 14 (c) February 12, 1998 meeting ........................................................... 14 (d) February 23, 1998 Cooley proposed litigation and licensing strategy .......................................................................................... 19 3. Karp Presents a Licensing and Litigation Strategy to the Board .............. 20 4. Progress on Licensing and Litigation Strategy through 1998 ................... 22 5. Rambus Revises Timing of its Strategy .................................................... 24 (a) October 1998 Strategy Update ...................................................... 24 (b) October to December 1998 DDR Reverse Engineering ............... 26 (c) Late 1998/Early 1999 Nuclear Winter Scenario ........................... 27 G. Rambuss Formulation of its Document Retention Policy ................................... 28 H. Presentation of Rambuss Document Retention Policy ........................................ 33 I. Specific Events Involving the Destruction of Documents .................................... 38 1. Shred Days ................................................................................................ 38 2. Electronic Documents ............................................................................... 39 3. Prosecution Files ....................................................................................... 41 Rambus Continues to Implement its Licensing and Litigation Strategy............... 43 Rambus Initiates its Litigation .............................................................................. 46 Rambuss Resumption of the Destruction of Documents ..................................... 47 Findings Regarding Spoliation.............................................................................. 48 1. Findings regarding Rambuss duty to preserve documents ...................... 48
J. K. L. M.
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TABLE OF CONTENTS (continued) Page Litigation was reasonably foreseeable before Rambus started destroying documents and other materials in July 1998 ............................................................................................... 48 (b) Alternative dates at which litigation was reasonably foreseeable..................................................................................... 52 (c) Litigation was reasonably foreseeable despite alleged contingencies ............................................................................. 55 2. Findings regarding Rambuss destruction of documents and other materials after duty attached ..................................................................... 60 Findings Regarding Bad Faith .............................................................................. 60 Findings Regarding Prejudicial Effect of Document Destruction on Current Litigation with Hynix ............................................................................................ 68 1. Burden of Proof ......................................................................................... 69 2. The Nature and Extent of Rambuss Destruction Makes It Impossible to Identify With Certainty the Specific Evidence Rambus Destroyed .................................................................................... 70 3. Illustrative Examples of Destruction of Particular Documents................. 72 (a) JEDEC-Related Documents at Rambus ........................................ 72 (c) Patent-Related Documents ............................................................ 75 (1) Inventor Materials ............................................................. 75 (2) Prior Art Materials ............................................................ 76 (3) Other Patent-Related Documents ...................................... 79 (d) Documents Regarding SDRAM and DDR Datasheets, Reverse Engineering, and Claim Charts ....................................... 80 (e) Intel Contract Materials ................................................................ 81 (f) Board Materials ............................................................................. 81 4. Rambuss Production of Some Documents Within These Categories Does Not Prove Lack of Prejudice ............................................................ 82 5. The Prejudice Rambus Suffered In Retrieving Evidence is Powerful Evidence that the Document Destruction was Prejudicial ........................ 83 6. Hynix Has Been Prejudiced In Its Ability To Obtain Truthful Testimony From Percipient Witnesses ..................................................... 84 7. Rambuss destruction of some documents that may have been irrelevant does not excuse the destruction of other documents that likely were relevant ................................................................................... 89 8. Rambus cannot demonstrate which documents were destroyed in the 1998 Shred Day as opposed to later Shred Days ................................ 89 Findings Regarding Appropriate Remedy ............................................................ 92
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TABLE OF CONTENTS (continued) Page III. CONCLUSIONS OF LAW .................................................................................................... 95 A. Spoliation .............................................................................................................. 95 B. Spoliation Sanctions Under The Micron Ii Framework ...................................... 100 1. Bad Faith ................................................................................................. 100 2. Prejudice.................................................................................................. 106 3. Appropriate Sanction .............................................................................. 112 C. Unclean Hands .................................................................................................... 118
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TABLE OF AUTHORITIES Page Cases Adler v. Fed. Republic of Nigeria, 219 F.3d 869, 877 (9th Cir. 2000)......................................................................................... 122 Agfa Corp v. Creo Prods., Inc., Civ. No. 00-10836-GAO, 2002 U.S. Dist. LEXIS 14269, at *5-6 (D. Mass. Aug. 1, 2002) ........................................................................................................................ 109 Alexander v. Natl Farmers Org., 687 F.2d 1173, 1205 (8th Cir. 1982)............................................................................. 110, 111 Anderson v. Cryovac, Inc., 862 F.2d 910, 925 (1st Cir. 1988) .................................................................................... Passim Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337 (9th Cir. 1995)........................................................................................... 106, 115 Aptix Corp. v. Quickturn Design Systems, Inc., 269 F.3d 1369, 1381-82 (Fed. Cir. 2001) ........................................................................ Passim Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 346 (1971) ...................................................................................................... 121 Bowman v. Am. Med. Sys., Inc., No. CIV. A. 96-7871, 1998 WL 721079, at *4 (E.D. Pa. Oct. 9, 1998) ............................... 112 Buckley v. Mukasey, 538 F.3d 306, 323 (4th Cir.2008).......................................................................................... 116 Cabnetware, Inc. v. Sullivan, No. Civ. S-90-313 LKK, 1991 U.S. Dist. LEXIS 20329, at *12 (E.D. Cal. July 16, 1991) ............................................................................................................................... 114 Cabrera v. Jakabovitz, 24 F.3d 372, 380 (2d Cir. 1994) ............................................................................................ 119 Carlucci v. Piper Aircraft Corp., 102 F.R.D. 472, 486 (S.D. Fla. 1984) ............................................................................. 97, 114 Century ML-Cable Corp. v. Conjugal Pship, 43 F. Supp. 2d 176, 185 (D.P.R. 1998) ................................................................................. 115 Coates v. Johnson & Johnson, 756 F.2d 524, 551 (7th Cir. 1985)................................................................................. 107, 109 Columbia Pictures Television, Inc. v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1196 (9th Cir. 2001)..................................................................................... 105 Columbia Pictures, Inc. v. Bunnell, No. 2:06-cv-01093, 2007 WL 4877701 (C.D. Cal. Dec. 13, 2007) .............................. 115, 117 Combs v. Rockwell Intern., 927 F.2d 486 (9th Cir. 1991)................................................................................................. 117 Computer Assoc. Intl v. Am. Fundware, Inc., 133 F.R.D. 166, 170 (D. Colo. 1990)............................................................................ 110, 115 Dillon v. Nissan Motor Co., 986 F.2d 263, 267 (8th Cir. 1993)......................................................................................... 113 - iv HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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TABLE OF AUTHORITIES (Continued) Page Dippin Dots, Inc .v. Mosey, 476 F.3d 1337, 1348 (Fed. Cir. 2007) ................................................................................... 109 Doe v. Menefee, 391 F.3d 147, 168 (2d Cir. 2004) .......................................................................................... 103 Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146, 1169 (D.S.C. 1974) ................................................................................ 109 Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir. 1985)..................................................................................... 122 Faas v. Sears, Roebuck & Co., 532 F.3d 633 (7th Cir. 2008)................................................................................................. 100 Fireboard Paper Products Corp. v. East Bay Union of Machinists, Local 1304, United Steelworkers of Am. AFL-CIO, 227 Cal. App. 2d 675, 726-29 (1964) ................................................................................... 118 Fraige v. Am.-Natl Watermattress Corp., 996 F.2d 295, 298 (Fed. Cir. 1993) ....................................................................................... 120 Glover v. Bic Corp., 6 F.3d 1318, 1329 (9th Cir. 1993)......................................................................................... 113 Gumbs v. Intl Harvester, Inc., 718 F.2d 88, 96 (3d Cir. 1983) .............................................................................................. 100 Gutman v. Klein, No. 03 CV 1570(BMC(RML), 2008 WL 4682208, at *12 & n.16 (E.D.N.Y. Oct. 15, 2008) ...................................................................................................... 111 Halaco Engineering Co. v. Costle, 843 F.2d 376, 380 (9th Cir. 1988)................................................................................. 115, 117 Hartley v. Mentor Corp., 869 F.2d 1469, 1473 (Fed. Cir. 1989) ................................................................................... 104 Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 246 (1944) .............................................................................................. 114, 121 Honeywell Intl, Inc. v. Universal Avionics Sys. Corp., 398 F. Supp. 2d 305, 311 (D. Del. 2005) .............................................................................. 119 Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 2d 1038 (N.D. Cal. 2006) ........................................................................... Passim Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011) ........................................................................................ Passim In re Cecconi, 366 B.R. 83 (Bkrtcy. N.D.Cal. 2007) ................................................................................... 106 In re Hechinger Inv. Co. of Del., Inc., 489 F.3d 568, 579 (3d Cir. 2007) .......................................................................................... 100 In re Hitachi Television Optical Block Cases, 2011 WL 3563781, at *12-13 (S.D. Cal. Aug. 12, 2011) ..................................................... 116
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TABLE OF AUTHORITIES (Continued) Page In re Napster Copyright Litig., 462 F. Supp. 2d 1060, 1072 (N.D. Cal. 2006) ...................................................... 115, 117, 118 In re Prudential Ins. Co., 169 F.R.D. 598, 615-16 (D.N.J. 1997).................................................................................. 110 In re Sealed Case, 754 F.2d 395, 401 (D.C. Cir. 1985) ...................................................................................... 120 In re Wechsler, 121 F. Supp. 2d 404, 415 (D. Del. 2000) .............................................................................. 114 Intel Corp. v. Commonwealth Scientific, 455 F.3d 1364, 1371 (Fed. Cir. 2006) ................................................................................... 109 Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 841 (9th Cir. 2002)......................................................................................... 118 Keystone Driller v. Gen. Excavator Co., 290 U.S. 240, 245 (1933) ................................................................................................. Passim Kronisch v. United States, 150 F.3d 112 (2d Cir. 1998) .............................................................................................. 96, 97 Lear, Inc. v. Adkins, 395 U.S. 653, 663-64 (1969)................................................................................................. 120 Leon v. IDX Sys. Corp., 464 F.3d 951, 960 (9th Cir. 2006).................................................................................... Passim Lewy v. Remington Arms Co., Inc., 836 F.2d 1104, 1112 (8th Cir. 1988)....................................................................................... 97 Mas v. Coca-Cola, 163 F.2d 505, 507 (4th Cir. 1947)......................................................................................... 121 MICRON TECH. INC. V. RAMBUS INC., 255 F.R.D. 135 (D. Del. 2009)......................................................................................... Passim Micron Technology, Inc .v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) ........................................................................................ Passim MOSAID Techs. Inc. v. Samsung Elecs. Co., 348 F. Supp. 2d 332, 336 (D.N.J. 2004) ......................................................................... 96, 112 Natl Assn of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557 (N.D. Cal. 1987) .......................................................................... 109, 110 Natl Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976) ...................................................................................................... 115 Nation-Wide Check Corp., Inc. v. Forest Hills Distribs., Inc., 692 F.2d 214, 217 (1st Cir. 1982) ......................................................................................... 109 Padgett v. City of Monte Sereno, No. C 04-03946, 2007 WL 878575 (N.D. Cal. Mar. 20, 2007) ............................................ 116 Pension Committee v. Banc of America Securities, LLC, 685 F. Supp. 2d 456, 464 (S.D.N.Y) ..................................................................................... 116
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TABLE OF AUTHORITIES (Continued) Page Pfizer, Inc. v. Intl Rectifier Corp., 685 F.2d 357, 359 (9th Cir. 1982)......................................................................................... 120 Pope Mfg. Co. v. Gormully, 144 U.S. 224, 234 (1892) ...................................................................................................... 120 Powell v. Town of Sharpsburg, 591 F. Supp. 2d 814, 820-821 (E.D.N.C. 2008) ................................................................... 116 Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945) ................................................................................................. Passim Professional Seminar Consultants, Inc. v. Sino American Technology Exchange Council, Inc., 727 F.2d 1470, 1474 (9th Cir.1984)...................................................................................... 115 Purex Corp. v. Procter & Gamble Co., 664 F.2d 1105, 1108 (9th Cir. 1981)..................................................................................... 103 Rambus Inc. v. Infineon Techs. AG, 318 F.3d 1081 (Fed. Cir. 2003) ........................................................................................ Passim Rambus Inc. v. Infineon Techs. AG, 155 F. Supp. 2d 668 (E.D. Va. 2001)........................................................................ 86, 87, 104 Reilly v. Natwest Mkts. Group Inc., 181 F.3d 253, 268 (2d Cir. 1999) .......................................................................................... 113 Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 108 (2d Cir. 2002 ............................................................................................... 97 S.T.S. Int'l, Ltd. v. Laurel Sea Transport, Ltd., 932 F.2d 437, 440 (5th Cir. 1991)......................................................................................... 119 Samsung Elec. Co., Ltd. v. Rambus, Inc., 386 F. Supp. 2d 708 (2005)................................................................................................... 120 Samsung Elecs. Co. v. Rambus Inc., 439 F. Supp. 2d 524, 558 n.26 (E.D. Va. 2006)...................................................................... 86 Samsung v. Rambus, E.D.Va. Civil Action No. 3:05cv406 at 42:10-42:12............................................................ 104 Schmid v Milwaukee Elec. Tool. Corp., 13 F.3d 76, 78 (3d Cir. 1994) ........................................................................ 100, 107, 112, 115 Scott v. IBM Corp., 196 F.R.D. 233 (D.N.J. 2000) ................................................................................................. 96 Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir. 2001)............................................................................... 95, 96, 97, 112 Sneider v. Kimberly-Clark Corp., 91 F.R.D. 1, 7-9 (N.D. Ill. 1980)........................................................................................... 109 Softview Computer Prods. Corp., No. 97 Civ. 8815 (KMW) (HBP), 2000 U.S. Dist. LEXIS 4254, at *39 (S.D.N.Y. Mar. 31, 2000) ..................................................................................................... 109
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TABLE OF AUTHORITIES (Continued) Page State Farm Fire and Cas. Co. v. Broan Mfg. Co., Inc., 523 F. Supp. 2d 992, 966-97 (D. Ariz. 2007) ...................................................................... 116 Status Time Corp. v. Sharp Elec. Corp., 95 F.R.D. 27, 29 (S.D.N.Y. 1982) ........................................................................................ 109 Synanon Church v. United States, 820 F.2d 421, 428 n.18 (D.C. Cir. 1987) .............................................................. 110, 114, 120 Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 137 (S.D. Fla. 1987) .............................................................................. Passim Therasense, Inc. v. Becton, Dickinson & Co., Nos. 2008-1512-14, 2008-1595, 2011 U.S. App. LEXIS 10598, at *32 (Fed. Cir. May 25, 2011) ................................................................................................................ 109 Thomas E. Hoar, Inc. v. Sara Lee Corp., 882 F.2d 682, 687 (2d Cir. 1989) .......................................................................................... 111 Troubl v. The Wet Seal, Inc., 179 F. Supp. 2d 291 (S.D.N.Y. 2001) ................................................................................... 106 Trull v. Volkswagen of Am., Inc., 187 F.3d 88, 95 (1st Cir. 1999) ............................................................................................. 113 U.S. Bancorp Mortg. Co. v. Bonner Mall Pship, 513 U.S. 18, 26-28 (1994)..................................................................................................... 104 Uniguard Sec. Ins. Co. v. Lakeguard Eng., 982 F.2d 363, 368 n.2 (9th Cir. 1992)................................................................................... 113 United States v. Adamson, 291 F.3d 606 (2002) .............................................................................................................. 103 United States v. Adlman, 134 F.3d 1194, 1203 (2d Cir. 1998) ........................................................................................ 96 United States v. Arteaga, 117 F.3d 388, 397 n.18 (9th Cir. 1997)................................................................................. 103 United States v. Bao, 189 F.3d 860, 866 (9th Cir. 1999)......................................................................................... 103 United States v. Evans, 113 F.3d 1457, 1461 (7th Cir. 1997)..................................................................................... 109 United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002)......................................................................... 98, 107, 116 United States v. Nat'l Medical Enters., Inc., 792 F.2d 906, 912-913 (9th Cir.1986) .................................................................................. 117 United States v. Philip Morris, Inc., 327 F. Supp. 2d 21, 25, (D.D.C. 2004) ................................................................................ 110 United States v. Rockwell Intl, 897 F.2d 1255, 1266 (3d Cir. 1990) ........................................................................................ 96 United States v. U.S. Gypsum Co., 333 U.S. 364, 396 (1948) ...................................................................................................... 103 - viii HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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TABLE OF AUTHORITIES (Continued) Page United States v. White, 970 F.2d 328, 334 (7th Cir. 1992)......................................................................................... 109 Valley Engrs Inc. v. Elec. Engg Co., 158 F.3d 1051, 1057-58 (9th Cir. 1998) ............................................................................... 114 Vodusek v. Bayliner Marine Corp., 71 F.3d 148 (4th Cir. 1995)............................................................................... 95, 99, 111, 113 Webb v. Dist. of Columbia, 189 F.R.D. 180, 188 (D.D.C. 1999) ...................................................................................... 110 West v. Goodyear Tire & Rubber Co., 167 F.3d 776 (2d Cir. 1999) .............................................................................. 95, 96, 112, 113 Wilson v. Volkswagen of Am., Inc., 561 F.2d 494, 504 (4th Cir. 1977)......................................................................................... 106 Wm. T. Thompson Co. v. Gen. Nutrition Corp., Inc., 593 F. Supp. 1443, 1455 (C.D. Cal. 1984) ...................................................................... Passim Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y. 2003) .................................................................................... 95 Statutes 28 U.S.C. 1331 ........................................................................................................................... 95 28 U.S.C. 1338 ........................................................................................................................... 95 28 U.S.C. 1367 ........................................................................................................................... 95 Rules Fed. R. Civ. P. 26 ........................................................................................................................ 101 Fed. R. Civ. P. 30 .......................................................................................................... 66, 102, 105 Fed. R. Civ. P. 34 .................................................................................................................. 34, 111
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I. INTRODUCTION Hynixs unclean hands defense to Rambuss patent infringement claims was tried before the court in October 2005. Among the issues were (1) whether Rambus adopted a document retention plan in order to destroy documents in advance of a planned litigation campaign against DRAM manufacturers and (2) whether in light of any such conduct, the court should dismiss Rambuss patent claims against Hynix as a sanction for unclean hands. On January 5, 2006, the court issued its Findings of Fact and Conclusions of Law. After further proceedings in the case, the court entered final judgment in favor of Rambus on March 10, 2009. Hynix appealed the judgment to the United States Court of Appeals for the Federal Circuit. On May 13, 2011, the Federal Circuit issued its decision in the appeal in this case. Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011) (Hynix II). On the same day, the Federal Circuit issued a decision in the companion case (id. at 1341) of Micron Technology, Inc .v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) (Micron II). In its Hynix II decision, the Federal Circuit vacated this courts January 5, 2006 Findings of Fact and Conclusions of Law and vacated the judgment. Hynix II at 1341. The Federal Circuit remanded to this court with instructions to determine when Rambuss duty to preserve documents began under the framework set forth in Micron II, and the appropriate sanction, if any. Id. at 1341; see also id. at 1347. The Federal Circuit specified that the question of whether the Micron II decision should be given any preclusive effect in this case and the issues of bad faith, prejudice, and appropriate sanction remain for consideration by the district court on remand. Id. at 1347 n.2. Also in its Hynix II decision, the Federal Circuit rejected Rambuss cross-appeal of this courts January 31, 2005 Order Compelling Production of Documents (Spoliation) [Docket Entry (D.E.) 728] (Crime Fraud Order). The Court held there was no error in that order. Hynix II at 1347. Following issuance of mandate by the Federal Circuit, this court held a Case Management Conference on September 2, 2011, at which it ordered the parties to submit briefs listing the issues to be resolved on remand, articulating Hynixs collateral estoppel argument, and discussing -1HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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whether further evidence should be taken. 9/2/11 CMC Tr. (D.E. 4051) at 28:1-16. After those briefs were submitted, the court held another Case Management Conference on October 21, 2011. At that conference, the court ordered the parties to submit briefs and proposed findings of fact and conclusions of law, using the courts (vacated) January 5, 2006 findings and conclusions as a base. 10/21/11 CMC Tr. (D.E. 4078) at 29:14-17. The court indicated that it would allow Hynix to propose additional findings based upon evidence from other proceedings, for the court to consider in connection with Hynixs request for supplementation of the record. Id. at 30:4-8. The court also stated that Hynix should note in its proposed findings that it believes that collateral estoppel applies so that the issue is preserved and for further consideration. Id. at 32:6-8. As ordered by the court, Hynix has used the courts vacated 2006 decision as the base for these proposed findings of fact. 1 As discussed more fully in Hynixs Pre-Hearing Brief on Remand, filed together with these proposed findings and conclusions, Hynix objects to this manner of presentation because it gives undue weight and emphasis to findings and conclusions that the Federal Circuit has already vacated. Hynix also objects to the schedule for this submission and the other remand proceedings in this case insofar as it may accelerate these remand proceedings ahead of the remand proceedings in the Delaware district court, even though the Federal Circuit has made plain, and Rambus has agreed, that the two cases should not be decided differently. See Hynix II at 1347. Accordingly, this court should await the result of the Delaware remand proceedings. Subject to these objections, Hynixs proposed findings and conclusions are set forth below. A document prepared with the Track Changes tool in Word that shows differences between the vacated 2006 findings and these proposed findings of fact is attached as Exhibit A to this document. Proposed findings that are based on evidence from other proceedings are identified in italics. Proposed findings that Hynix asserts are preclusively established by the application of collateral estoppel principles to the Micron II decisions are denoted with a (*) and a cite to Micron II. Hynixs proposed conclusions of law are based on the Micron II framework, in light of the Federal Circuits direction that the remanded issues are to be decided under that framework. See Hynix II at 1341, 1347. -2HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1
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2
In Hynix II, the Federal Circuit did not reach Hynixs argument on appeal that this Court erred in denying preclusive effect to the Delaware district courts decision in Micron Tech. Inc.. v. Rambus Inc., 255 F.R.D. 135 (D. Del. 2009) (Micron I) and to the Virginia district courts decisions in the Infineon case. Those arguments are more fully set forth in the following briefs, are not repeated or noted in this document, and are incorporated herein by reference: 1/19/09 Motion of Hynix for Summary Judgment of Unclean Hands (D.E. 3879); 1/28/09 Reply Brief in support of same (D.E. 3894); 10/1/04 Motion by Hynix to Dismiss Patent Claims as a Sanction for Litigation Misconduct (D.E. 523); 10/22/04 Reply Brief in support of same (D.E. 576); 3/28/05 Motion by Hynix to Dismiss Patent Claims for Unclean Hands on the Basis of Collateral Estoppel (D.E. 944); 4/18/05 Reply in support of same (D.E. 988). Because the Federal Circuit did not rule on collateral estoppel, Hynixs collateral estoppel arguments remain open on remand and in any later appeal. Hynix hereby reserves its right to argue that Micron I, Micron II, and/or Infineon are entitled to collateral estoppel effect in the remand and any future appeal of this case and also in the 334 case. II. A. The Current Litigation F1. On August 29, 2000, plaintiffs Hynix Semiconductor America, Inc., Hynix PROPOSED FINDINGS OF FACT
Semiconductor, Inc., Hynix Semiconductor U.K., Ltd, and Hynix Semiconductor, Deutschland, GmbH (collectively Hynix)2 filed a complaint, later amended, against Rambus Inc. (Rambus) that in part sought a declaratory judgment of non-infringement, invalidity, and unenforceability of eleven Rambus patents. In February 2001, Rambus filed counterclaims asserting that Hynix infringed those eleven patents. Hynix subsequently answered the counterclaims and asserted various defenses. Rambus subsequently amended its counterclaims to add four additional patents. F2. The patents that have been asserted by Rambus in this case and their issue
dates are set out in the following table:
Hynix was referred to as Hyundai prior to Hyundais merger with LG Semiconductor in 1999. -3HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Patent 5,915,105 5,953,263 5,954,804 5,995,443 6,032,214 6,032,215 6,034,918 6,035,365 6,038,195 6,067,592 6,101,152 6,324,120 6,378,020 6,426,916 6,452,863
Issue Date3 6/22/99 9/14/99 9/21/99 11/30/99 2/29/00 2/29/00 3/7/00 3/7/00 3/14/00 5/23/00 8/8/00 11/27/01 4/23/02 7/30/02 9/17/02
Title Integrated circuit I/O using a high performance bus interface Synchronous memory device having a programmable register and method of controlling same Synchronous memory device having an internal register Synchronous memory device Method of operating a synchronous memory device having a variable data output length Synchronous memory device utilizing two external clocks Method of operating a memory having a variable data output length and a programmable register Dual clocked synchronous memory device having a delay time register and method of operating same Synchronous memory device having a delay time register and method of operating same System having a synchronous memory device Method of operating a synchronous memory device Memory device having a variable data output length System having double data transfer rate and integrated circuit therefor Memory device having a variable data output length and a programmable register Method of operating a memory device having a variable data input length
F3.
All of the patents-in-suit are continuation or divisional applications based on
a single parent application, serial number 07/510,898 (898 application). F4. In January 2005, Hynix moved for leave to add the defense of unclean hands
to its pleadings. In an order dated March 7, 2005, this court granted that motion. In a separate order of the same date, the court ordered that Hynixs unclean hands allegations would be considered by the court in a separate, initial phase of the trial of the parties respective claims. F5. On January 31, 2005, the court entered its Crime Fraud Order (D.E. 728), in
which it made certain findings regarding Rambuss spoliation, held that there was sufficient cause to believe that Rambus engaged in spoliation to justify discovery of certain otherwise privileged documents, and ordered Rambus to produce those documents to Hynix. The 1/31/05 Crime Fraud Order has been affirmed by the Federal Circuit. Hynix II at 1347. Rambus filed the applications that resulted in these patents years before they issued, and received notice of allowance of each patent months before it issued. See Proposed Findings of Fact F12, F175, and F281 infra. -4HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
3
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
B.
The Farmwald/Horowitz Patent Applications F6. Rambus was founded in 1990 by two professors, Dr. Michael Farmwald and
Dr. Mark Horowitz, who had been working together to address the increasing gap between microprocessor performance and dynamic random access memory (DRAM) performance. Trial Transcript (hereinafter Trial Tr.) 600:13-601:5; 1341:15-1343:2; 1540:12-19; HTX 005.0014; see also *Micron II at 1316. F7. From 1990 to the start of 2005, Geoffrey Tate was the Chief Executive
Officer of Rambus. At the time of this courts spoliation trial, Tate was the Chairman of the Board at Rambus. Trial Tr. 1226:9-16. F8. On April 18, 1990, Farmwald and Horowitz filed the 898 application. Trial
Tr. at 364:11-365:19; 600:20-601:8; HTX 005.001; see also *Micron II at 1316. F9. The 898 application resulted in a number of continuation and divisional
patent applications (Farmwald/Horowitz family). Rambus received its first issued United States patent resulting from the 898 application in September 1993. The patents that are at issue in this case resulted from this process. HTX 005.001. F10. Rambus retained Blakely, Sokoloff, Taylor & Zafman (BSTZ) as outside
patent counsel from approximately 1981 through sometime in 2001 or 2002 to prosecute Rambus patent applications, including many applications from the Farmwald/Horowitz family. Trial Tr. 784:14-785:2. Lester Vincent, Scot Griffin, and Roland Cortes were patent prosecutors at BSTZ who worked on the Farmwald/Horowitz family of applications. Trial Tr. 784:14-785:2; 1592:22-1593:9; 1603:14-1604:11. F11. [A]ll of the patents in suit claim priority to the 898 application that
Rambus filed in 1990 through patents pending during Rambuss JEDEC participation from 1991 to 1996. Hynix II at 1349. F12. Rambus filed the applications that resulted in the patents in suit several years
before they issued and received notices of allowance of the patents in suit beginning on
4
HTX refers to Hynixs trial exhibit number; RTX refers to Rambuss trial exhibit number. If the court so requests, Hynix will submit copies of the exhibits and transcripts from the spoliation trial in this action. -5HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 D. C.
February 4, 1999. See Item No. 18 at Ex. 3467 to 8/14/06 Hynix Request for Judicial Notice of Rambus Inc.s Patents and Patent File Histories (D.E. 2360) (Notice of Allowance of 5,915,105 patent, dated February 4, 1999). Rambuss RDRAM Technology F13. Rambus does not manufacture its own products, rather, it licenses its
intellectual property to DRAM manufacturers and collects royalties. Trial Tr. 1250:25-1251:2. F14. In the 1996 - 1999 time frame, Intel Corporation planned to use Rambuss
RDRAM (Rambus Dynamic Random Access Memory) technology in its next generation of microprocessors. Trial Tr. 1237:20-1239:1. Because Rambus does not manufacture products, it relied upon DRAM manufacturers to license Rambuss intellectual property and produce RDRAM for use in Intels products. Trial Tr. 1251:3-6; see also *Micron II at 1316. F15. Rambus referred to the RDRAM production by licensed DRAM
manufacturers as the Direct RDRAM ramp. Trial Tr. 1238:4-8; 1330:21-24. Direct RDRAM licensees were granted a narrow license to produce RDRAM. Trial Tr. 1289:1-16. These licenses generally did not permit licensees to utilize Rambus intellectual property for purposes other than producing RDRAM pursuant to Rambuss specifications. Other uses of Rambuss technology were referred to as non-compatible uses, because they were non-compatible with the RDRAM specifications. Trial Tr. 1356:22-1359:24. Rambuss Participation in JEDEC F16. Between 1992 and June 1996, Rambus was a member of the Joint Electron
Device Engineering Council (JEDEC). Trial Tr. 786:21-795:8; 1148:11-12; 1161:12-20; see also Hynix II at 1341-42. F17. Richard Crisp, a program manager for Rambus, was one of Rambuss
representatives to JEDEC and attended JEDEC meetings on behalf of Rambus from 1992 to late 1995. Trial Tr. 1148:8-11. Billy Garrett was Rambuss other JEDEC representative. RTX 311; RTX 312. F18. Crisp and Garrett submitted trip reports following each meeting of JEDEC
they attended. Crisp took a Macintosh laptop computer with him and took notes electronically. -6HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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He later distributed his JEDEC trip reports to members of the Rambus executive team and others in the sales division. Some of those recipients, in turn, distributed Crisps JEDEC trip reports more widely. HTX 220 (3/11/94 email from Dave Mooring to Crisp stating that Mooring forwards Crisps JEDEC trip reports liberally). F19. Rambuss strategy for participating in JEDEC was a matter of significant
importance to the company and was a subject considered by the Rambus board of directors. For example, in June 1992, the Rambus board discussed the companys JEDEC strategy, including the following: Goal: To leverage the JEDEC committee to our advantage or neutralize them or slow them down on the SDRAM effort. Conduct Trial Ex. 3024 at p. 8 (Ex. 3 to Declaration of Susan Roeder filed together herewith (Roeder Decl.)). The board also considered [p]atent claims that SDRAM may conflict with. Id. Although Crisp was Rambuss JEDEC representative, he was not privy to this discussion regarding the companys JEDEC strategy. Conduct Trial Tr. 1012:15-1013:1 (Crisp testimony that he had never seen Conduct Trial Ex. 3024 until he testified at the Conduct trial in this case) (Ex. 1 to Roeder Decl.). F20. Around the time that Rambus joined JEDEC, JEDEC was working to develop
industry standard specifications for memory chips and the interfaces between memory chips and computer processors, eventually adopting its first SDRAM standard in 1993. See Hynix II at 1342; see also *Micron II at 1316; Rambus Inc. v. Infineon Techs. AG, 318 F.3d 1081, 1085 (Fed. Cir. 2003). F21. Under JEDEC policies, the members agreed to participate in good faith
under policies and procedures which will assure fairness and unrestricted participation. Hynix II at 1342. F22. Crisp made no secret of the fact that he did not attend JEDEC in good faith,
if good faith means that you are attending JEDEC with the goal of creating an open standard for JEDEC SDRAM. Hynix II at 1342. F23. Rambuss goal for its participation in JEDEC was instead to set a big
intellectual property trap by seeking to patent competitive alternatives to Rambuss -7HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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proprietary RDRAM technology. Conduct Trial Ex. 3072 (Ex. 5 to Roeder Decl.); see also Conduct Trial Ex. 3023 at p. 17 (June 1992 Rambus business plan stating: we believe that Sync DRAM infringe on some claims of our filed patents; and that there are additional claims we can file for our patents that cover features of Sync DRAMS. Then we will be in a position to request patent licensing (fees and royalties) from any manufacturer of Sync DRAMS.) (Ex. 2 to Roeder Decl.)). F24. In the mid-1990s, Rambuss President and CEO, Geoff Tate, instructed
Rambus employees and patent counsel to actively prepare a patent minefield to trap its competitors. Initial Determination in ITC Investigation No. 337-TA-661 (ITC 661 I.D.) at 99-100 (finding 1) (Ex. 35 to Roeder Decl.). F25. Rambuss patent amendments and filings that were intended to cover
competitive alternatives to RDRAM were coined by Rambuss officers and employees as its patent minefield. In a February 15, 1996 email, Tate wrote: [S]everal papers were presented on SDRAMS that look more and more rambus-like prepare the minefield. Conduct Trial Ex. 3106 (Ex. 6 to Roeder Decl.); see also ITC 661 I.D. at 100 (finding 3) (Ex. 35 to Roeder Decl.). In an August 4, 1997 email, Tate wrote: [D]ave [Mooring] believes we should meet with Intel to get them aware that IF they were to consider a DDR chipset that there is a minefield of 60+ rambus patents that would have to be avoided. Conduct Trial Ex. 3136 (Ex. 7 to Roeder Decl.); see also Micron I, 255 F.R. D at 138 (citing Delaware Trial Ex. MTX 253, MTX 183, and MTX 235, which are attached as Exs. 22, 17, and 19 to Roeder Decl.). F26. By February 1997, Tate believed [t]here are many issued and in-process
patents that DDR *might* infringe but directed employees do *NOT* tell customers/partners that we feel DDR may infringe our leverage is better to wait. Conduct Trial Ex. 3131 (Ex. 4 to Roeder Decl.). F27. After Crisp heard presentations on features to be included in the standard at
JEDEC, he would discuss the inventions with the attorneys prosecuting Rambuss patents, signaling them to direct Rambuss prosecution efforts to cover those features. Hynix II at -8HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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1342; Trial Tr. 1216:19-1217:1 (Crisp); Infineon, 318 F.3d at 1107; see also *Micron II at 1316. F28. No later than December 1996, JEDEC began formal consideration of the
standard for the successor to SDRAM, DDR SDRAM. Hynix II at 1342; Infineon, 318 F.3d at 1105. F29. Even after Rambus resigned from JEDEC in June 1996 and continuing at
least through December 1997, Crisp continued to receive reports from sources identified as deep throat and secret squirrel regarding the progress of JEDECs standardization efforts. Hynix II at 1342. F30. Rambus prosecuted multiple patent applications in the Farmwald/Horowitz
family, intending to obtain issued patent claims that covered SDRAM and DDR SDRAM. See Hynix II at 1342; see also *Micron II at 1316. F31. Rambuss participation in JEDEC imposed a duty to disclose pending
applications and issued patents with claims that a competitor or other JEDEC member reasonably would construe to cover the standardized technology. Hynix II at 1348 (quoting Infineon, 318 F.3d at 1100). F32. The scope of Rambuss disclosure duty extend[ed] to all pending or issued
claims that were reasonably necessary to practice the standard. Hynix II at 1348. F33. Rambus did not disclose to JEDEC that it was prosecuting claims that it
believed would read on JEDEC-standard SDRAM or DDR SDRAM. F34. Between 1992 and late 1995 or early 1996, Crisp, Tate, Tony Diepenbrock
(inside patent counsel) and other Rambus executives and employees were informed that Rambuss participation in JEDEC might pose enforcement problems for some of its patents based on equitable estoppel for not disclosing to JEDEC Rambuss potential patent coverage of products (non-compatible with RDRAM) conforming to JEDEC standards. Trial Tr. 1156:41163:22; HTX 066; HTX 078; HTX 225. Rambus was also informed of this possibility by one of its outside patent attorneys, Lester Vincent. Trial Tr. 785:3-804:7; HTX 192. This concern was discussed within Rambus. Id. -9HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 E.
F35.
Rambus decided to withdraw from JEDEC at least in part because the
company was concerned about its exposure to equitable estoppel claims in future litigation. Trial Tr. 1161:12-18 (Crisp). F36. By late 1997, Rambus believed that JEDEC standard DDR SDRAMs would
infringe its issued 327 and 481 patents. HTX 376. At that time, Rambus also had a pending patent application covering what Rambus called the access time register. Rambus believed that both DDR and SDR JEDEC-standard DRAMs would infringe the access time register patent, once it issued. HTX 004; HTX 087; HTX 376. This patent issued as US Patent No. 5,841,580 on November 24, 1998. See HTX 004.002, HTX 004.003 ([W]e already have claim charts relative to Micron and Fujitsu devices for the 580 patent.). F37. Rambus pursued a two-prong business strategy: it licensed DRAM
manufacturers to manufacture memory chips that complied with Rambuss proprietary RDRAM standards, and prepared to demand license fees and to bring infringement suits against those same manufacturers who also adopted the competing SDRAM or DDR standards. See HTX 098.001 (targets of Rambus licensing and litigation strategy included RDRAM licensees with plans to build competing products); HTX 128.003 (discussing assertion of patents against Direct RDRAM partners); HTX 004.004 (same); see also *Micron II at 1316.
Relationship with Hynix F38. F39. Hynix was one of Rambuss RDRAM licensees. See HTX 098.002. Prior to 1999, Rambus and Hynix (then Hyundai) had an RDRAM licensing
agreement that included an Other DRAM provision, which licensed Hynix to make noncompatible DRAMs using Rambus Interface Technology for a 2.5% royalty. Trial Tr. 1295:191305:11; HTX 004.004; HTX 087. F40. In July 1998, Rambus attempted to remove or amend the Other DRAM
provision. Id. The reasons apparently were that Rambus wanted Hyundai to increase its marketing effort and productize the RDRAM device and to be able to claim infringement by Hyundai if it continued to work on SLDRAM (Synchronous Link DRAM). Id.; Trial Tr. - 10 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F.
1038:2-1039:22. F41. Thereafter, Hynix merged with LG Semiconductor (LGS). At the time of
the merger, both companies had RDRAM licenses with Rambus. Id. Hynix attempted to affirm the 1995 Hynix-Rambus license, asking Rambus to agree to use the royalty rate specified in the Hynix-Rambus license. Id. F42. Rambus decided to treat the LGS license as governing the relationship
between Rambus and the merged company. That agreement did not have an other DRAM provision. Trial Tr. 1038:2-1039:22. Rambus Formulates its Licensing and Litigation Strategy 1. F43. Rambus Hires Joel Karp Rambus hired Joel Karp in October 1997 to develop and execute a strategy
for asserting Rambuss patent portfolio against non-compatible DRAMs. Trial Tr. 356:22357:23; HTX 091; RTX 080. F44. In June 1997, Tate considered hiring Karp but decided not to do so at that
time because DDR was not expected until the first half of 1998 or mid-1998. Tate was not sure what [Karp] would do for 6 months till parts showed up to be worth the $$. Tate wrote that if DDR in fact happened sooner one option would be to try to hire Karp at that time. Delaware MTX 246 (Ex. 21 to Roeder Decl.). F45. By August 1997, however, Rambus was concerned that Intel would decide to
design a chipset to work with DDR as a backup to Intels planned RDRAM chipset. Rambus believed that if Intel were to announce a backup DDR chipset, it would demotivate DRAM manufacturers from ramping RDRAM. Accordingly, Rambus decided it needed a DDR crush plan. Tate considered Rambuss double-data-rate/327 and pll-on-a-memory-device patents/481 patents as relevant to the DDR crush plan. Conduct Trial 3137 (Ex. 8 to Roeder Decl.); see also Conduct Trial Ex. 3136 (Ex. 7 to Roeder Decl.); HTX 376.001; HTX 004.002. Tate hired Karp just weeks after Tate concluded that Rambus needed a DDR crush plan. F46. Karps hiring also came just weeks after the PTO issued Rambuss 481
patent regarding PLL which, as discussed above, Rambus considered to be a weapon against - 11 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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DDR. Delaware Trial Ex. MTX 256 (Ex. 23 to Roeder Decl.); see also Micron I, 255 F.R.D. at 138; HTX 004.002. F47. Tate wanted to keep Karps true role at Rambus a secret from those outside
Rambus. In connection with the hiring of Karp, Tate directed Rambus executives to keep quiet till he starts and to keep this confidential - dont tell partners/customers/press/anyone till joel starts 10/20. Once Karp started work, Tate said Rambus needed to have our spin control ready for partners/etc as to why we are hiring him and what he will be doing. Tate suggested that Rambus could say externally that joel is coming on board to help us with contracts and ip licensing. HTX 091. Similarly, Tate instructed Rambus staff that if they were asked about Karp joining Rambus, please ONLY say hes going to help us on contract negotiations. RTX 080. F48. Before his employment at Rambus, Karp was employed by Samsung from
September 1990 through July 1997. When he left Samsungs employment, he was a senior vice president. F49. During his employment with Samsung, Karp attended JEDEC meetings on
Samsungs behalf, describing his role as Samsungs mouthpiece. Karp met Richard Crisp, Rambuss JEDEC representative, at JEDEC meetings. Trial Tr. 136:16-25. F50. Karp had learned through his experience that the DRAM industry was very
litigious. Trial Tr. 138:23-134:3. F51. While at Samsung, Karp participated in licensing and litigation activities on
behalf of Samsung, including patent litigation involving Mitsubishi, Fujitsu, Fortel, SEL, Hitachi, Harris, and Texas Instruments. Trial Tr. 138:2-22. In one action against Texas Instruments (TI), Karp submitted a declaration asserting that TI was subject to equitable estoppel because it was contrary to industry practice for an intellectual property owner to remain silent during the standard setting practice if its intellectual property covered the standard being considered. Trial Tr. 150:12-151:7. F52. On January 7, 1998, Tate met one-on-one with Karp. Tate instructed Karp to
prepare a plan for licensing infringing DRAMs for presentation to the Rambus Board of - 12 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13
Directors in early March. That strategy was to include a litigation strategy. Trial Tr. 170:2171:12; HTX 013.020; see also HTX 395.002 (Cooley Godward attorney Peter Leals notes from a January 13, 1998 meeting with Tate and Karp stating Want litigation strategy by March board meeting. Six weeks from now.); *Micron II at 1316. F53. According to Tates top level goals for 1998, Rambuss IP goals included
positioning Rambus intellectual property for the future. Under the heading Position Rambus for the Future Including IP, Tates top level goals included the following: Develop and enforce IP A. Get access time register patent issued that reads on existing SDRAM B. Broad patents in place for Direct Rambus, next generation signaling; and chip-to-chip interconnect C. Get all infringers to license our IP with royalties > RDRAM (if it is a broad license) OR sue. HTX 094. 2. F54. Rambus Meets With Cooley Godward Attorneys In order to begin developing Rambuss licensing and litigation strategy, Karp
14 called Diane Savage, an attorney at the law firm of Cooley Godward (Cooley) with whom he 15 had worked before coming to Rambus, seeking litigation assistance. Trial Tr. 393:22-394:10 16 (Karp), 579:6-9 (Savage) (testifying that Karp asked her for a litigator). Attorney Savage, who 17 was a partner in Cooleys technology transactions group, referred Karp to Cooleys IP litigators 18 and patent litigators. Trial Tr. 586:5-7 (Savage). Specifically, Savage introduced Karp to her 19 colleagues John Girvin, Dan Johnson, and Peter Leal. Trial Tr. 393:22-394:10 (Karp); 585:1620 19 and 586:2-7 (Savage). Dan Johnson, whom Karp dealt with extensively, was a litigator. 21 Trial Tr. 395:6-10 (Karp); see also *Micron II at 1316-17. 22 F55. 23 issues relating to patent licensing and litigation. HTX 007; HTX 376; HTX 395. At the 24 January 13, 1998, January 15, 1998, and February 12, 1998 meetings between Cooley attorneys 25 and Rambus executives, Tate and Karp, the discussion about a licensing strategy included 26 formulating a litigation strategy as a part of a licensing strategy. HTX 376, HTX 395, HTX 27 097, HTX 403. 28 - 13 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
In January and February 1998, Karp met with the Cooley lawyers to discuss
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F59. F58. F56.
(a)
January 13, 1998 meeting
On January 13, 1998, Karp and Tate met with Cooley attorney Leal, an
attorney specializing in licensing matters. On January 15, 1998, Karp and Leal met again. HTX 376, HTX 395. F57. As of the January 13, 1998 meeting, Rambus planned to go in and quickly
proceed to either a license or litigation. HTX 376.001. Tate told Leal that Rambus wanted [n]o negotiation w/out full strategy and prep. HTX 395.001. Further, Rambus was looking
for a royalty rate that tells [the DRAM industry] it costs to infringe. Id. Rambus wanted to [t]ry Win-win first; do not prejudice g[ood] - f[aith] for litigation. Id. But Rambuss plan was to [g]o to first meeting [with alleged infringer] but be ready (in advance) to go to litigation. HTX 395.002. To that end, Rambus told Leal that it wanted a litigation strategy by [the] March board meeting. Id. (b) January 15, 1998 meeting
At the January 15, 1998 meeting, Karp and Leal discussed a proposed
sequence for negotiating meetings with potential infringers, including roles Rambus executives and Cooley attorneys might play in negotiations and what information would be presented at each meeting, labeled in Leals notes as the Middle Ground, delaying meeting and the Pound Sand meeting. HTX 376.004. Leals notes indicate that approach to the Pound Sand meeting is easy -- litigate. Id. At the January 15 meeting, Karp gave Leal a list of its existing patents (including two key patents - the 481 and 327 patents) and claim charts Karp had prepared regarding infringement by Samsung and SLDRAM parts. Litigation strategy was among the topics for further meetings with Cooley. HTX 395.002. (c) February 12, 1998 meeting
On February 12, 1998, Karp met with three Cooley attorneys, Johnson,
Girvin, and Leal. Leal, a licensing attorney, reported to Girvin, head of the Information Technology Patent group. Trial Tr. 586:9-16. Girvin, in turn, reported to Johnson, head of Cooleys litigation group. See *Micron II at 1317. Johnson was Rambuss litigation counsel, and Karp described him as such to virtually everyone in the company. Trial Tr. - 14 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
175:17-176:5. F60. The purpose of the February 12, 1998 meeting was to develop the integrated
licensing and litigation strategy Tate had requested at the one-on-one meeting between him and Karp in January 1998. HTX 097; HTX 403. The licensing strategy envisioned optimizing Rambuss notice to potential infringers, a negotiation strategy and a litigation strategy. HTX 403. F61. As of the February 12, 1998 meeting, the Cooley attorneys were aware of
Karps draft licensing term sheet, which specified that Rambus would charge a 5% running royalty for a license to make non-compatible DRAMs. RTX 088. Karp acknowledged that these royalty rates will probably push us into litigation quickly. HTX 097. F62. Karp was well-qualified to judge how DRAM manufacturers would react to
the proposed royalty rates. He knew that they would fiercely resist any running royalty in excess of 1 or 2%. Trial Tr. 179:4-6 (Karp); HTX 004.004. F63. Tate also knew that DRAM companies would be unwilling to pay a 5%
royalty. Tate testified that DRAM companies were unhappy paying even the much lower (2.5% or less) royalty charged by Rambus for licenses to its RDRAM technology. Trial Tr. 1267:6-20 (Tate). And Tate acknowledged that DRAM manufacturers were likely to find the 5% proposed royalty challenging and might well tell Rambus to pound sand. Trial Tr. 1290:16-1291:1 (Tate). F64. At the February 12, 1998 meeting, Johnson told Tate and Karp that if
Rambus demanded royalties in the range of 5%, youre not going to have a licensing program, youre going to have a lawsuit on your hands. Delaware Trial Tr. at 1491:231492:20 (Johnson) (Ex. 10 to Roeder Decl.); see also *Micron II at 1317. F65. The lawyers at the February 12 meeting said the 5 percent number would probably result in litigation. S.F. Superior Court Trial Tr. 5140:22-28 (Karp) (Ex. 31 to Roeder Decl.). F66. Johnson was not aware of Tates instruction to Karp to set a royalty rate that would show competitors that it would cost to infringe. Delaware Trial Tr. at 1558:21- 15 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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1559:6, 1562:7-16 (Johnson) (Ex. 11 to Roeder Decl.); see also Micron I, 255 F.R.D. at 140 n. 17. F67. At the February 12 meeting, Karp noted that Rambus need[ed] to litigate
against someone to establish [a] royalty rate and have [a] court declare patent valid. HTX 097. F68. Karp wrote by hand Attorney Client Work Product on the top of his notes
of the February 12 meeting with Cooley, reflecting that this was a litigation planning document. HTX 097. F69. At the February 12, 1998 meeting, Johnson expressed concern about Rambus
having no document control system in place. Q. A. Q. A. Q. A. Okay. The next bullet point says Make ourselves battle ready. Do you see that, thats the first part of it? Correct. Do you recall somebody saying words to that effect at this meeting? That sounds like something I would do. And what did you mean by that phrase? Very simply, Rambus was essentially an old start-up, as far as I was concerned. It had been around probably eight, nine years. They had, as best I could tell, no central document control system in place s. . . and if you want to have a licensing program, if you end up filing lawsuits against anybody, putting in place a system that gets your documents organized.
*** Q. A. Q. A. Q. A And the last sentence in this bullet point says Need company policy on document retention policy. Do you see that? Correct. Is this something you said at this meeting? Absolutely. . . . What led you to say that to Rambus? Typical start-up. As I said, they didnt have a policy, as best I could tell. I cant recall if somebody mentioned it to me at this point in time, but Id just litigated a case where a company was, either had to spend, I cant remember if it was $60,000 or $100,000 trying to retrieve data, and the President was screaming. And theyd gone back through and recycled and they didnt have a document retention policy. - 16 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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They got accused of spoliation. So you get yourself a document retention policy. Trial Tr. 1675:21-1678:20. F70. At the February 12 meeting, Karp said Rambus needed to get battle-ready,
by which he meant that Rambus needed to be ready for litigation. HTX 097; see also *Micron II at 1317. F71. At the trial in this case, Karp was asked about the meaning of battle ready.
Karp testified that the term came from the lawyers at the February 12 meeting, and that [b]attle readiness refers to the, the idea of licensing though, not, not necessarily litigation. But the entire licensing -- the entire licensing program was thought of as a battle. Trial Tr. at 178:23-24, 181:24-182:2 (Karp). F72. Rambuss counsel endorsed Mr. Karps testimony by advancing the argument
that the term battle ready came from Dan Johnson telling Joel Karp that if you some day are going to enter into negotiations with these companies, you need to be battle ready. Trial Tr. at 1833:19-24. F73. But subsequent to the spoliation trial here, Karp admitted in several other
proceedings that the battle Rambus was contemplating involved litigation. In the San Francisco Superior Court trial, Karp testified as follows: Q: Now, by battle ready, your view was that part of the battle that was
being referred to there was the battle of litigation, part of it; correct? A: Yes.
S.F. Superior Court Trial Tr. at 5134:16-19 (Ex. 31 to Roeder Decl.). F74. Karp made a similar admission in the Delaware trial when he was impeached
with a deposition he gave in 2006, after the spoliation trial in this case: Q: And your understanding in this context, that battle ready is preparing to
the war included -- at least a portion of it was included be ready for the war of litigation? A: I think its well understood that litigation is something that can be an
outcome from licensing discussions. We all knew that. - 17 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Q:
And you knew that was encompassed in his concept here, weve got to
make ourselves ready for that, battle ready; correct? A: Right.
Delaware Trial Tr. at 212:5-15 (impeachment with 7/28/06 deposition testimony) (Karp) (Ex. 10 to Roeder Decl.); see also ITC 661 Initial Determination at 101 (finding 9) (Ex. 35 to Roeder Decl.). F75. Johnson, too, changed his testimony after he testified in the spoliation trial
here that the battle ready phrase sounds like something I would do. Trial Tr. at 1675:21-3 (Johnson). In Delaware, however, Johnson testified, I dont normally talk about making somebody battle ready. Delaware Trial Tr. at 1493:23-1494:1 (Johnson) (Ex. 10 to Roeder Decl.). F76. The court finds that Karps changing testimony regarding the term battle
ready undermines his credibility as a witness and casts doubt on his testimony seeking to downplay the facts surrounding the reasonable foreseeability of litigation. F77. At this February 12, 1998 meeting, Johnson also advised Rambus to instruct
its patent prosecution attorneys to clean up their files for issued patents to ensure that the file was the same as the official file. Trial Tr. 409:18-410:1; 1679:10-1680:3; HTX 097. F78. At the February 12 meeting, Cooley also advised Rambus that any notice letter
must not claim infringement, only that we have a licensing program. Cooley said: No direct threats should be made or they will immediately seek declaratory relief. HTX 097. F79. Karp viewed the institution of a document retention policy as a prelude to
litigation and a matter of getting battle ready. His notes of the February 12 meeting state: Make ourselves battle ready. Start gathering critical documents in company so we can start putting together an electronic database. Gather all documents into searchable coded database. Need company policy on document retention policy. HTX 097. F80. Immediately after the mention of a document retention policy. Karps notes
of the February 12 meeting also state: Prosecution files: clean out all attorney notes so that file is same as official file. HTX 097. - 18 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F81.
At the February 12 meeting, Karp also discussed with Cooley the topic of
Select[ing] experts in advance. HTX 097. F82. Karps understanding from the February 12, 1998 meeting with Cooley was
that if a company such as a DRAM manufacturer thought Rambus was going to make claims against it, that company could go into court and seek declaratory relief that Rambus doesnt have any rights. Karp understood that Rambus needed to be careful not to accuse anybody because [y]ou can invite lawsuits if you do that. S.F. Superior Court Trial Tr. at 5136:6-13, 5187:9-15 (Ex. 31 to Roeder Decl.). F83. Karps handwritten notes of the February 12, 1998 meeting show that other
litigation-related topics were discussed, including whether to do trial ready graphics. Karps notes identify possible products that Rambus could accuse, including Fujitsu DDR and Micron SLDRAM. HTX 403. F84. Around the time of the February 12, 1998, meeting, Karp obtained from
Cooley a list of prominent litigators for IP/trade secrets matters, which included Tony Trepel, John Keker, Joe Cotchett, Allen Ruby, Ralph Aldredge, and Farella Braun & Martel. HTX 013.031, Trial Tr. 172:25-174:6. (d) F85. February 23, 1998 Cooley proposed litigation and licensing strategy
On February 23, 1998, Cooley presented its proposed litigation and licensing
19 strategy for Rambus in a document entitled Proposed Strategy for Rambus. HTX 098. The 20 document briefly outlines a licensing strategy, starting with criteria for selecting initial targets 21 for negotiation. The proposed strategy progresses to a discussion of a tiered litigation strategy 22 in the event that licensing discussions do not result in resolution. One of the assumptions was 23 that Rambus would not initiate action until a competing product enters the market, at which 24 time Rambus would conduct reverse engineering and determine what action to take next. HTX 25 098.002. 26 F86. 27 contract remedy against existing licensees; second, initiating a patent infringement suit against 28 - 19 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
Cooleys proposed strategy offered several options: first, pursuing a breach of
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an unlicensed competitor; third, bringing an action against SLDRAM. With respect to possible litigation, the proposed strategy memo states: To implement the above strategy, Rambus has authorized outside counsel to begin organizing documents and preparing a discovery data base, so that if and when Rambus elects to proceed with litigation, it will not unduly disrupt the companys activities. More importantly, with proper planning, Rambus may be able to obtain an advantage over its competitors by choosing a court such as the eastern district of Virginia, the rocket docket or the ITC. Because these courts proceed at an accelerated schedule, early preparation will benefit Rambus. HTX 098.002-003. F87. The Cooley document outlining Cooleys proposed licensing and litigation
strategy for Rambus does not specifically mention establishing a document retention policy at Rambus, but does state that to prepare for litigation against DRAM companies, Rambus has authorized outside counsel to begin organizing documents and preparing a discovery database, so that if and when Rambus elects to proceed with litigation, it will not unduly disrupt the companys activities. HTX 098.002. Karp added in handwriting document retention policy and patent attorney files after the text of the proposed strategy and added Attorney Client Work Product at the top of the first page. HTX 098.003; HTX 098.001 F88. On February 25, 1998, Karp had a regular one-on-one meeting with Tate at
which they reviewed the developing licensing and litigation strategy. HTX 013.034. 3. F89. Karp Presents a Licensing and Litigation Strategy to the Board On March 4, 1998, Karp presented the licensing and litigation strategy to
the Rambus Board of Directors, which included Tate. HTX 031. The strategy included demanding the 5% running royalty rate and other financial terms that Karp had reviewed with Cooley at the February 12, 1998 meeting. HTX 006.001; see also *Micron II at 1317. F90. The minutes following the March 4, 1998 board meeting memorialize that the
meeting included an update by Karp of the Companys strategic licensing and litigation strategy. HTX 031.002. F91. At the March 4, 1998 board meeting, Karp suggested a carrot and stick
financial alternative for licensees. Under this approach, DRAM manufacturers could get lower - 20 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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running royalties on SDRAM in return for a commitment to devote at least 50% of their output to RDRAM. If, however, RDRAM production turned out to be less than 50%, the licensee would pay a heavy financial penalty. HTX 006.002. F92. In the presentation, Karp recommended that [i]f licensing discussions do not
result in resolution, tiered litigation strategy kicks in. HTX 006.003. He suggested that the first targets for licensing non-compatible uses should be present licensees which currently have released non-compatible product, and that the second group of targets should be present licensees which are currently well along with alternate development. HTX 006.006. Hyundai was listed as a target of Rambuss licensing and litigation strategy. HTX 006.004. F93. The March 4, 1998 presentation included a timetable for executing the
proposed licensing and litigation strategy. The first milestone was the delivery of initial samples of Direct RDRAM (D-RDRAM). This was to ensure that DRAM manufacturers would be locked into the RDRAM ramp. HTX 006.007. The second milestone was procuring customer sample (CS) quality parts of potentially infringing devices. HTX 006.007. Thereafter, Rambus planned to proceed with reverse engineering the products and creating claim charts, notifying the potential infringer, conducting two meetings, and if the meetings did not result in agreement on a license, commencing legal action. The timetable projected 4-6 months from procuring CS quality parts to the commencement of litigation. HTX 006.007. F94. Neither the Board nor Tate voiced disapproval of the licensing and litigation
strategies. Delaware Trial Tr. 259:23-260:13 (Karp) (Ex. 10 to Roeder Decl.), see also Micron I, 255 F.R.D. at 140. F95. Thus, Rambuss plan was to lay in wait until DRAM manufacturers were
locked both into production of Direct RDRAM and to production of allegedly infringing SDRAM and DDR parts. F96. At the time of the March, 1998 board meeting, Rambuss anticipation was
that the D-RDRAM would not be ready for high volume production until late 1998. HTX 094 (Item 2: Direct Rambus 1.0 memory system implemented on spec, on, cost, on schedule for production ramp late 98); Trial Tr. 1250:1-11. - 21 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F97.
As part of his presentation at the March 1998 board meeting, Karp identified
creating a document retention policy as a near term action on Rambuss Licensing and Litigation Strategy. HTX 006.008; see also *Micron II at 1317. Karp regarded the document retention policy as part of getting battle ready. Trial Tr. 206:14-19 (Karp). F98. Prior to the March 1998 board discussion of a document retention policy as
part of Rambuss licensing and litigation strategy, a document retention policy had not been discussed at Rambus in any other context. Delaware Trial Tr. 242:13-243:12 (Karp) (impeachment with 7/28/06 Depo Tr. at 697:21-698:7) (Ex. 10 to Roeder Decl.)); S.F. Superior Court Trial Tr. 5146:13-23 (impeachment with 11/8/07 Karp Depo Tr. at 243:1-12) (Ex. 31 to Roeder Decl.); see also Micron I, 255 F.R.D. at 140 n.20. 4. Progress on Licensing and Litigation Strategy through 1998
F99. In April 1998, following a meeting with Intel at which Intel told Rambus it was considering alternatives to RDRAM for next generation memory, Rambuss board members including Tate, Farmwald, and Bill Davidow discussed whether the situation with Intel would force [Rambus] to play our IP card with the dram companies earlier. Tate reiterated what he had told Karp several months earlier, that the royalties for competing products must be higher than the royalties on RDRAMs: if Intel moved to an adversarial role where intel bets that it can find [a] way to avoid all of our IP and that bet turned out wrong, Intel would have to pay us royalties and we can charge dram companies >> royalties on rdrams. Conduct Trial Ex. 3151 at p. 6 (Ex. 9 to Roeder Decl.). Davidow suggested that Rambus negotiate with Intel to gain time during which Rambus would not have to play the intellectual property card with Micron and SDRAMs. S.F. Superior Court Trial Ex. 5422, at p. 2 (Ex. 32 to Roeder Decl.) Horowitz, another Rambus board member who was privy to this discussion, admits that the IP card mentioned in these emails was Rambuss plan to bring patent infringement suits against the DRAM companies. S.F. Superior Court Trial Tr. at 2170:22-2171:8 (Horowitz) (Ex. 31 to Roeder Decl.). F100. This discussion demonstrates that Rambus and its board had adopted and
were proceeding under the litigation plan presented by Karp at the March 1998 meeting. It - 22 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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further demonstrates that, by April 1998, the question at Rambus was not if it would litigate, but when. F101. On June 25, 1998, Rambuss executive Dave Mooring sent an email to Tate,
Karp, and a number of other Rambus executives in which he discussed how Rambuss first IP battle would best be publicized. He discussed a number of ways in which Rambus could position itself [w]hen we do have to go to battle in order to avoid being viewed as the parasite, pirate, or Gil Hyatt S.F. Superior Court Trial Ex. 10093 (Ex. 33 to Roeder Decl.); S.F. Superior Court Trial Tr. 5312:11-5318:9 (Mooring) (Ex. 31 to Roeder Decl.). This document is significant for a number of reasons. First, it reinforces the conclusion that the battle for which Rambus was making itself battle ready was an IP battle against makers of DDR and other industry-standard products. Second, it shows that Rambus was proceeding under the litigation strategy presented by Karp at the March 1998 board meeting. Third, it shows that as of June 1998, Rambus knew it would end up litigation because it was talking about when not if it would go to battle. It is also noteworthy that Rambus ultimately employed many of the tactics suggested by Mooring once the IP battles began, including fostering a perception that DDR techniques were INVENTED by Rambus and play[ing] up the role of Horowitz. F102. On July 10, 1998, Tate sent an internal e-mail to Roberts and Karp regarding
the Hyundai-Rambus license, in which Tate suggested that Hyundai would be a great company to start joels plan with in q1/99 potentially. HTX 087. F103. Karps quarterly goals for the second and third quarters of 1998 consistently
included the near term actions required by the licensing and litigation plan presented to the board in March 1998. Specifically, one of Karps IP Litigation Activity goals for the second quarter of 1998 was to [p]ropose [a] policy for document retention, which he marked Done. HTX 240.001; see also *Micron II at 1317. F104. One of Karps third quarter 1998 IP Litigation Activity goals was to
[i]mplement [the] document retention policy, which he also marked Done. HTX 001.001. F105. The evidence as a whole establishes that the strategy proposed at the March - 23 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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1998 board meeting was Rambuss company policy. The evidence that illustrates this point includes references to the IP card in April 1998 (Conduct Trial Ex. 3151 - Ex. 9 to Roeder Decl.); Moorings June 1998 litigation marketing plan (S.F. Superior Court Trial Ex. 10093 Ex. 33 to Roeder Decl.); Tates July 1998 nomination of Hynix as a great company to start joels plan with (HTX 087); and Karps quarterly goals for the remainder of 1998, which consistently list the near term actions (including implementing a document retention policy) required by the March 1998 plan as part of the companys IP Litigation Activity (HTX 001; HTX 240). 5. Rambus Revises Timing of its Strategy (a) F106. October 1998 Strategy Update
In late 1998, Rambus revised the timing of its licensing and litigation plan
relating to non-compatible technology manufactured by its existing RDRAM licensees. Rambus always planned to begin its non-compatible licensing and litigation strategy only at the time the DRAM manufacturers were locked in to RDRAM production. HTX 006.007. As of early 1998, Rambus anticipated that the production ramp for Direct RDRAM would occur in late 1998. HTX 094.001. By October 1998, however, Rambus projected that the Direct RDRAM ramp would not reach the point of no return until early 2000. Karp, in an October 1998 strategy update, projected that Rambus might be able to demonstrate that Mosel and Nanya had SDRAM products that directly infringed a pending access time register patent by the first quarter of 1999, thus enabling Rambus to potentially state contributory infringement and inducement claims against companies like Acer, SIS, and VIA for SDRAM and DDR. HTX 128.004. F107. However, in the October 1998 strategy update, Karp recommended delaying
initiation of licensing negotiations to avoid undermining the DRAM manufacturers commitment to producing Direct RDRAM. Rambus was concerned that if it revealed its claims against SDRAM, its Direct partners might withhold support for the troubled Direct RDRAM ramp. Trial Tr. 1319:17-1321:5 (Tate); 282:20-284:2 and 428:12-22 (Karp). Karps October 1998 strategy update reflected this concern: - 24 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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DO NOT ROCK THE DIRECT BOAT. We should not assert patents against Direct partners until ramp reaches a point of no return (TBD) Probably not until Q100 *** However, the Big Question Is - WHATS THE RUSH? What is the compelling business reason? I cant think of any. Keeping the Maytag repairman busy is not a valid reason IMHO, risks of damaging establishment of dominant standard outweigh potential return Lets not snatch defeat from the jaws of victory
HTX 128.003; Trial Tr. 1319:17-1321:5; 282:20-284:2. This point of no return was then projected to be in the first quarter of 2000. Id. F108. Karp explained that there were good business reasons for the delay in
bringing suit, particularly Rambuss interest in getting licensing revenues from RDRAM manufacturers, who would be the same parties it would seek to license for the production of SDRAM. Trial Tr. 428:12-22 (Karp); see also *Micron II at 1317. F109. HTX 128.002. F110. Stealth mode meant Rambus did not want the DRAM companies, Intel, or Rambus accordingly decided to Continue In Stealth Mode During 99.
the world to know what Rambus was doing because it did not want to invite declaratory judgment lawsuits. Delaware Trial Tr. at 407:5-20 (Karp) (Ex. 10 to Roeder Decl.); S.F. Superior Court Trial Tr. at 5138:9-21, 5161:14-18, 5188:15-24 (Karp) (Ex. 31 to Roeder Decl.). Karps testimony in later trials on this point differs from his testimony in the spoliation trial here, where he testified in response to questioning by Rambuss counsel that Rambuss primary reason to remain in stealth mode was to avoid upsetting Intel and the people who would be doing RDRAM. Trial Tr. 426:19-428:4. F111. The court finds the fact that Karp changed his testimony on this subject to suit
Rambuss position in whatever proceeding in which he was testifying undermines Karps credibility.
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F112.
Karps October 1998 presentation recommended that Rambus take advantage
of its strategic decision to continue in stealth mode until the Direct RDRAM ramp reached the point of no return in the first quarter of 2000 by using that time to further strengthen its strategic portfolio of patents that could be asserted against industry standard products. Karp recommended that Rambuss Top priority Should Be Strengthening of Portfolio by covering SDRAM, DDR, SLDRAM, any and all forms of synchronous memory (static and dynamic) by aggressively prosecuting claims that provide such coverage. HTX 128.002. The projected date by which Rambuss strategic portfolio would be ready for presentation to the industry was calendar year 2000 (HTX 128.006), after the RDRAM ramp was expected to reach the point of no return (HTX 128.003). (b) F113. October to December 1998 DDR Reverse Engineering
At the time of Karps October 1998 presentation, Rambus had retained
Semiconductor Insights to perform reverse engineering on a Samsung DDR part. Trial Tr. at 284:11-23; HTX 128.002. F114. The Rambus board of directors was informed of the reverse engineering effort
at a meeting on October 14, 1998. HTX 129.004; Trial Tr. 289:20-25. As reflected in this presentation, reverse engineering was an expensive and time-consuming project, taking ~2 Months and costing $45-55K. HTX 129.004. F115. Rambus has never produced a copy of Semiconductor Insights reverse
engineering reports. Instead, Karp produced them for the first time in 2008, years after the spoliation trial in this case, from files he retained at his home. See 9/22/08 Samsung Trial Tr. at 670:5-9 (Karp) (Ex. 29 to Roeder Decl.); and see generally 11/20/07 Memorandum of Points and Authorities in Support of Manufacturers Motion to Compel Production of Documents held by Joel Karp on Behalf of Rambus (D.E. 2776). F116. The reverse engineering report regarding a Samsung DDR part that Rambus
commissioned by October 1998 (see HTX 128.002) evidences a considerable effort. The report is 106 pages and includes detailed diagrams, photographs, and a list of signals. 9/22/08 Samsung Tr. Ex. 4406 (Ex. 30 to Roeder Decl.) - 26 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F117.
(c)
Late 1998/Early 1999 Nuclear Winter Scenario
By the end of 1998, Rambuss difficulties with Intel and in the launch of
Direct RDRAM had worsened. HTX 004; Trial Tr. 299:5-24 (Karp), 1327:11-16 (Tate), 1330:11-21 (Tate). F118. In December 1998 or January 1999, Karp drafted and distributed to Rambus
executives a Nuclear Winter Scenario memorandum relating to Rambuss Patent Enforcement strategy for 1999. That memo contemplated a scenario in which Intel moved away from Rambuss RDRAM technology, and instead implemented something else, for example DDR or SLDRAM. Karp set forth a strategy for convincing Intel that without access to Rambus IP, it will be difficult and costly to continue selling its current processor based products and its new, more advanced products because the memory needed for these Intel products require use of Rambus IP. HTX 004.2; see also *Micron II at 1317. F119. The Nuclear Winter Scenario memorandum outlined plans for suing Intel and
SDRAM manufacturers, concluding that by the time we do this, the proper litigants will be obvious. HTX004.005. The memorandum also noted that infringement claim charts for Micron and Fujitsu devices had already been completed. HTX 004.003; see also *Micron II at 1317. F120. The Nuclear Winter Scenario memorandum proposed that Rambus could
establish its intellectual property position by showing by clear and convincing evidence that three of Rambuss then-issued patents covered alternate competing, devices: the 327 patent covered DDR (dual edged clocking); the 481 covered DDR (phase locked loop circuitry); and the 580 covered DDR and PC 100 (access time register). HTX 004.002. F121. The 327 patent had issued to Rambus on April 30, 1996; the 481 patent had
issued on August 12, 1997; and the 580 patent had issued on November 24, 1998. Micron I, 255 F.R.D. at 138, 143. Delaware Trial Exs. MTX 200, MTX 256, MTX 236 (Exs. 18, 23, 20 to Roeder Decl.). F122. The Nuclear Winter Scenario document shows that Karp believed that
Rambus had patents in late 1998 or early 1999 that could be asserted against both SDRAM and - 27 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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DDR SDRAM. HTX 004.002; see also HTX 004.003 ([w]e already have claim charts relative to Micron and Fujitsu devices for the 580 patent.). F123. The second part of the Nuclear Winter Scenario memorandum discussed
COMPLAINTS AGAINST DRAM COMPANIES. HTX 004.004. This discussion articulated potential causes of action against DRAM companies, including patent infringement, breach of contract, other common law claims (fraud and business disparagement or defamation), and antitrust actions. Id. The document also identified specific litigation targets and proposed that they be sued separately in different, specified venues, in order to minimize the ability of the targets to cooperate with each other in defending the lawsuits. HTX 004.004-.005. F124. In a section entitled NEGOTIATION TACTICS, the memorandum
suggested holding meetings at which Rambus would show its claim charts to the target companies to show infringement. HTX 004.004. The proposed royalties would be high (510%) if settlement was not thought desirable in a particular case, or lower (1-2%) if Rambus desired settlement. Id. However, Karp advocated an aggressive approach: My recommendation is that we should not be too concerned with settlement at this point and should push for very high rates. We would give them a very short time to accept our royalty terms by setting a short expiration date of the offer to settle. During the meeting we would make it very clear to them that protracted negotiations are not possible and that we are ready to file suit. Id. F125. Rambus ultimately took this aggressive approach with its litigation targets.
For example, Rambus first approached Hitachi about a license on October 22, 1999. HTX 015. When Hitachi did not quickly agree, Rambus filed suit on January 18, 2000, at which time Rambus was still demanding the high rate of 5%. HTX 159. Rambuss tactics demonstrate that Karps testimony that Rambus regarded litigation as unlikely because the goal was to settle is not credible. G. Rambuss Formulation of its Document Retention Policy F126. At a one-on-one meeting with Tate on February 25, 1998, Karp reported on - 28 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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the developing Licensing strategy and Litigation strategy. Karp reported that he was already [w]orking with J. Lau on a document retention policy, discovery database, email, etc. HTX 013.034. Tate did not recall this meeting with Karp. However, it was Tates practice to meet with his executive staff one-on-one every week to discuss goals and progress toward goals. Trial Tr. 1274:23-1275:12 (Tate). Tates inability to recall discussing document retention and litigation strategy as part of licensing strategy suggests that he is not a credible witness. F127. On March 16, 1998, Allen Roberts, Vice president of Engineering, advised
Joseph Lau, Engineering Department Head, that because of a growing worry that emails would be discoverable, Rambus should begin recycling its e-mail backups so that the backups had a shorter shelf life. HTX 100. Roberts suggested three months. Id. Roberts understood the concern that Rambuss e-mails were discoverable as relating to litigation. Trial Tr. 1575:171577:4 As I recall, the general concept was . . . that we were generating gigabytes of information on surely a weekly basis, but maybe even on a daily basis that went onto tapes. And that those tapes were being kept kind of continuously, and that if there was any case where somebody said we want to see all this information, it would be a huge expense to pull all that information back and pay people to review it all. F128. Trial Tr. 1577:7-18. Roberts gave this instruction regarding the backup tape
policy after talking to Karp. Trial Tr. 1575:21-1577:4, 1589:11-25 (Roberts); see also *Micron II at 1317, 1322. In March 1998, Johnson resigned from the Cooley firm and moved to Fenwick & West. Between March 10 or 12, 1998 and some time in May or June of 1998, Johnson did not represent Rambus. Trial Tr. 1713:15-18, 1714:22-1715:5 (Johnson). F129. In May or June of 1998, Johnson began representing Rambus again in
specific matters. Trial Tr. 1716:18-21. Then, in July 1998, Johnson and Karp made a presentation within Rambus of the Rambus document retention policy. Trial Tr. 1719:20-24 (Johnson). See Proposed Findings of Fact F145 to F156, infra. F130. In or about April 1998, Rambus retained Kroll Associates, a specialist in the - 29 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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field of information and computer security, to do review information security at Rambus. Sept. 20, 2005 Deposition Transcript of Alan Brill at 27:7-11 (played at trial on October 28, 2005, Trial Tr. 1515:21-23; 1517:8-9 (Brill Depo.); Ex. 40 to Roeder Decl.). Rambus contacted Kroll because it had security concerns after a hacking attempt on Rambuss computers. Trial Tr. 369:18-370:20. The Kroll representative who worked with Rambus, Alan Brill, was not a specialist in document retention policies; he spent just one percent of his time working with private companies on record retention. Brill Depo. at 11:10-14 (played at trial on October 28, 2005, Trial Tr. 1515:21-23; 1517:8-9; Ex. 40 to Roeder Decl.). Brill spent one week or less on the Rambus project. Id. at 27:12-14. Among other things, Brill warned that Rambus should be concerned about Vampire data that rises from the dead to bite you in the neck. Id. at 55:557:3; Ex. 40 to Roeder Decl. In an April 24, 1998 presentation at the conclusion of the security audit, Kroll advised that Rambus adopt a variety of measures to better protect its confidential information and the confidential information of its business partners. Brill Depo. at 49:15-50:1; 50:13-18. Among the recommendations from Kroll was the confirmation that Rambus should work with outside counsel to develop a document retention policy. Trial Tr. 372:25-373:23; RTX 160 at 26. F131. Rambus has argued that it relied on Krolls recommendation in adopting its
document retention policy, but for several reasons Krolls recommendation does not render Rambuss document retention policy proper. First, Krolls recommendation was made on April 24, 1998 (RTX 160 at 26), nearly two months after Karp had informed the Rambus board that Rambus needed to create [a] document retention policy in the near term as part of its Licensing and Litigation Strategy. HTX 006.008. Thus, Krolls recommendation did not come until after Rambus had already decided to adopt a document retention policy; Krolls recommendation was not the impetus for the policy. Second, Rambus never informed Kroll of Rambuss litigation plans. Brill Depo. at 28:1-7, 36:22-37:2; Ex. 40 to Roeder Decl. Third, Kroll did not advise Rambus on the specifics of its document retention policy, such as what documents to keep and what documents to throw out. Brill Depo. at 51:19-54:9; Ex. 40 to Roeder Decl. Accordingly, Brills general recommendation that Rambus adopt a document - 30 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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retention policy does not excuse Rambuss conduct in doing so at a time when litigation was reasonably foreseeable. F132. On March 19, 1998, after an inquiry about document retention policy by
Karp, Attorney Savage forwarded to Karp a standard document retention policy template that had been developed by Cooley, entitled Document Retention Policy Guidance. Trial Tr. 579:19-580:19, 582:19-24; RTX 091. Savage cautioned Karp, however, that a comprehensive document retention policy must be customized to conform to the Companys business practice and needs. Trial Tr. 583:4-14 (Savage); RTX 091 at 1. She stated that the template was not intended to address the Companys business in particular, but is intended for information purposes only. Id. Attorney Savage was unaware of Rambuss litigation strategy at the time she forwarded the template. Trial Tr. 583:15-584:17. In her forwarding memorandum to Karp, she recommended that he consult Cooley attorney David Lisi if he had any specific litigation oriented issues. Trial Tr. 579:19-584:2; RTX 091 at 1. F133. The memorandum sent to Rambus by Cooley was a generic template for a
document retention program drafted by the law firm for its clients. Trial Tr. 580:15-19. Karp did not consult Attorney Savage or Lisi regarding tailoring the template for Rambus. Trial Tr. 584:18-22, 591:10-592:2 (Savage); RTX 091.001.On March 27, 1998, after he had left Cooley to join Fenwick & West, Attorney Johnson had a lunch meeting with Karp to try to secure Rambus as a Fenwick client. Following that lunch, Johnson wrote Karp saying I am excited about the possibility of working with you. Attorney Johnson also enclosed a standard set of document requests, saying [t]his should give you some idea of the type of information requested in patent cases. HTX 368; Trial Tr. 1715:6-11, -1715:21-1716:9. F134. The generic Cooley template retention policy stated that [t]hat Policy
should inform employees email is subject to review by the Company and is not private. RTX 091 at R401092. F135. On May 14, 1998, Karp met with a group of representatives of the four
operating divisions to decide on a policy for saving back-up tapes. Karps purpose was to get rid of information Rambus stored on backup tapes. Trial Tr. 218:24-219:15 (Karp); HTX - 31 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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013.097. F136. On the same date, Karp sent a memorandum to the Rambus board,
engineering managers, and others at Rambus stating: Effective immediately, the policy is that full system backup tapes will be saved for 3 months only. Therefore, you can no longer depend on the full back ups for archival purposes. Any valuable data, engineering or otherwise, must be archived separately. RTX 104. Karp had consulted with Attorney Johnson about Rambuss policy to retain backup tapes for 3 months. Trial Tr. 528:21-530:4; 1691:21-1692:6; RTX 104. Rambus managers had proposed that Rambus make and keep a full system backup every two years. Johnson recommended against adopting a proposal to create a full system backup every two years, citing the problems and potential expense that could arise from stale data, operating system changes, and corrupt data. Trial Tr. 1692:7-17. Karp advised Rambus personnel that, after discussions with litigation counsel Johnson, Karp had rejected the proposal to make a full system backup every two years. RTX 104; see also *Micron II at 1318, 1322. F137. Karps May 14, 1998 email reflects a consciousness that his document
retention/destruction activities were suspect. He asked recipients to communicate with him face-to-face on the issue and, if they had to use email, to keep the email short and limit its distribution. RTX 104. F138. Karp drafted Rambuss Document Retention Policy shortly before July 22,
1998, based upon the generic template forwarded by Attorney Savage, and incorporating some of its language verbatim. Trial Tr. 525:7-17; HTX 023. Nothing in the policy referred to Rambuss plans for litigation. Trial Tr. 584:17-22 (Savage); 249:17-250:4 (Karp); HTX 023. Karp simply condensed and paraphrased Cooleys template and then proposed the result as Rambuss document retention policy. F139. The Rambus policy provided with respect to Electronic Mail and
Documents that Rambus maintains complete system tape back-ups for a period of 3 months. Employees should not utilize email as a place to save documents beyond 3 months. Email that is required to be saved more than 3 months can be kept either in paper or a separate file on your hard drive. HTX 023.001. - 32 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F140.
The evidence shows that Rambus applied its document retention policy
selectively, instructing employees to keep certain documents that Rambus believed to be favorable. For example, with respect to engineering documents, the Rambus Policy stated that: documents, notebooks, computer files, etc., relating to patent disclosures and proof of invention dates are of great value to Rambus and should be kept permanently. Engineering personnel should not depend on the electronic system back-up tapes to archive their work, since these tapes are only kept for 3 months. They should create their own archive copies of, for example, tape out and major project milestone databases, which can then be kept indefinitely in Rambus offsite, secure storage facility. HTX 023.001-002. In other words, Rambus told its engineers to selectively retain documents of value to Rambus from files that would otherwise be subject to destruction under the document retention policy. F141. The Rambus policy pronounced that Final, execution copies of all contracts
entered into by Rambus are kept at least 5 years after the expiration of the agreement . . . . All drafts . . . and any materials used during negotiations that are not part of the final binding contract . . . should be destroyed or systematically discarded. HTX 023.002 The terms of Rambus s two page Document Retention Policy were based on the template provided by Attorney Savage and referred to various categories of documents. HTX 023; RTX 091. Although the Policy itself contained no directive to discard documents relating to specific companies or to certain subjects, it did instruct employees to keep certain documents that Rambus believed were favorable, such as documents relating to patent disclosures and proof of invention dates. HTX 023.001-.002. F142. The policy was not presented to or implemented by Rambus employees in a
content-neutral manner, as discussed below. H. Presentation of Rambuss Document Retention Policy F143. After Karp had drafted the Policy, he created slides for use in a presentation
introducing the document retention policy to Rambus s managers. Karp sent his two-page document retention policy to Attorney Johnson for his review. Trial Tr. 521:20-522:10; 1692:18-1693:2; 1693:13-25. - 33 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F144.
On July 22, 1998, Rambus distributed its two-page document retention policy
to Rambus employees. HTX 023. F145. On July 22, 1998, Attorney Johnson and Karp gave a presentation to
Rambuss managers about the policy. HTX 111; RTX 130. This presentation was the roll-out of the new document retention plan insofar as it involved paper and other files in the possession of individual employees. Trial Tr. 207:15-208:2, 252:1-260:10 (Karp); 1693:201697:5 (Johnson). F146. Karps portion of the presentation consisted of a summary of the types of
documents Rambus wanted to keep and for how long. Attorney Johnson reviewed and commented on drafts of Karps slides. Trial Tr. 535:4-11; 1699:11-1701:4; RTX 112; RTX 115; RTX 123. Karp in presenting his slides to Rambus managers and employees gave explicit instructions to delete e-mails: EMAIL THROW IT AWAY___________ Email is discoverable in Litigation or Pursuant To A Subpoena Elimination of email is an integral part of document control In General, Email Messages Should Be Deleted As Soon As They Are Read Dont forget to empty trash occasionally, Make sure settings delete email from the server (at least every few days) Messages That Must Be Saved Should Be Saved To A Separate File Or Printed And Saved As Hard Copy Dont rely on backup tapes only kept for three months. LOOK FOR THINGS TO KEEP. HTX 111.010; HTX 112.001; Trial Tr. 261:4-265:1. F147. The primary focus of Rambus s presentation of its document retention policy
was ridding the company of documents that would be discoverable in litigation, particularly documents that could be harmful to Rambus . For example, Allen Roberts testified that one reason given by Karp for purging files was that they were discoverable in litigation. Trial Tr. 1575:17-1577:18, 1589:11-24 (Roberts). The repeated references to discoverable - 34 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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information demonstrate the discoverability of documents in future litigation was a reason for adoption of the policy. HTX 100, HTX 111.004, HTX 111.010, HTX 111.018. The presentation even included a reference to Federal Rule of Civil Procedure 34. HTX 111.022. F148. Karp admits that when he presented this to his colleagues at Rambus and
told them that email is discoverable in litigation, he was telling them that if the company gets involved in litigation, it would have to give to the other side in the lawsuit copies of its emails and documents. Karp wanted to make sure that they threw their email away. S.F. Superior Court Trial Tr. at 5233:1-14 (Karp) (Ex. 31 to Roeder Decl.). F149. Each of Karps slides included the statement LOOK FOR THINGS TO
KEEP, but apart from the formal requirements of the document retention policy, no guidelines were given as to what employees should keep. HTX 111.010, HTX 111.011, HTX 111.014.018. In particular, there was nothing to warn employees that they should keep documents pertaining to JEDEC, license communications with DRAM manufacturers, discussions of possible amendments to the Farmwald-Horowitz patent application, or other matters that could be relevant or discoverable in the litigation that Rambus then contemplated. F150. Moreover, the repeated statement LOOK FOR THINGS TO KEEP shows
that Rambus s document retention policy was not content neutral. For example, although the policy called for the destruction of contract negotiation materials (HTX 023.002), employees were told: If You Feel That A Particular Document Would Aid You In Refreshing Your Recollection -- Keep It. HTX 111.017. Similarly, employees were directed to permanently keep Information Relating To Patent Disclosures and Proof Of Invention Dates. HTX 111.013. F151. The slides presented by Johnson related document retention/destruction
exclusively to litigation issues. Johnsons first slide read: ____________BEFORE LITIGATION________________ A Document Retention/Destruction Policy HTX 111.002 - 35 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F152.
Attorney Johnsons portion of the presentation was litigation-oriented. Slide 3
lists what kind of records are discoverable. HTX 111.004. Slide 4 cautions specifically about e-mail and electronic documents. HTX 111.005. Slide 5 recounts what Johnson referred to as horror stories of cases where e-mails that had been believed to have been deleted had been discovered used to prove age discrimination and sexual harassment. HTX 111.006. Slide 6 warns that the rules for document retention change once litigation begins. HTX111.007. Slide 7 warns that, Once litigation has commenced, a party cannot destroy either relevant evidence or discoverable information. HTX 111.008. RTX130; HTX111.004-008; see also *Micron II at 1317. Attorney Johnson testified that [a]nd the act of deleting, when you are actively involved in litigation, that can give rise to a claim, and I was trying to explain to the client that this was serious business. Trial Tr. 1699:7-10. Johnson also advised that [a] formal document retention policy will likely shield a company from any negative inferences . . . due to destruction of documents, unless the policy was instituted in bad faith or exercised in order to limit damaging evidence available to potential plaintiffs. RTX 130 at R124523. He also warned Rambus managers that destroying relevant documents once litigation started would be improper. RTX 130 at 124527-28, 124545-49; Trial Tr. 1722:2-11. F153. The slides presented by Johnson (referring to Before Litigation, Once
Litigation Begins, and the Eve of Litigation), coupled with the content of the presentation, communicated to Rambus employees (incorrectly) that, until litigation actually began, document destruction was permissible and encouraged. In addition, the presentation of the document retention policy strongly emphasized the possible negative litigation outcomes associated with retaining documents, particularly electronic documents. F154. Despite the policys stated goal of destroying all documents once the
designated disposal date passed, the slides that Karp prepared for Attorney Johnsons review repeatedly directed Rambus employees to look for things to keep, and again directed employees to keep contract-related documents that would help refresh their recollection and information regarding proof of invention even if those materials would otherwise be subject to destruction under the policy. HTX 112.004, 112.008; 111.013, 111.017. Karp chose to keep - 36 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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the language in his slides despite Johnsons advice. Trial Tr. 1700:13-1701:4. F155. When Karp presented the document retention policy, he told the engineering
people that it was very important to keep things that were part of conception of invention. S.F. Superior Court Trial Tr. 5154:2-11 (Karp) (Ex. 31 to Roeder Decl.). F156. Not only were Rambus employees told to keep favorable engineering
documents, they were told to destroy emails and other documents that questioned the patentability of Rambuss claimed inventions. Delaware Trial Tr. 1300:12-21, 1302:7-20, 1303:21-1304:14 (Hampel) (Ex. 10 to Roeder Decl.); see also Micron I, 255 F.R.D. at 142 n.27; see also ITC 661 I.D. at 103 (finding 29) (Ex. 35 to Roeder Decl.). F157. Following the July 22, 1998 presentation by Johnson, Johnson no longer
assisted Rambus in its licensing, litigation, or patent prosecution strategy. Karp merely asked Johnson truly random questions from time-to-time about general litigation related matters, such as arbitration and different venues for litigation. Trial Tr. 1719:20-1721:17; RTX 348; RTX 350; RTX 354. F158. Johnson had no discussions at any time with Karp concerning the effect of a
decision to institute litigation on a document retention policy, other than what was written in Johnsons slides. Trial Tr. 1726:14-21 (Johnson). F159. Johnson had no discussions with Rambus about Rambuss attendance or
participation in JEDEC and testified: As a matter of fact, the first time I heard about any JEDEC issues was after [Rambus] got involved in a lawsuit. Trial Tr. 1726:8-13 (Johnson). F160. Johnson did not have any discussions in which he told Rambus to get rid of
prior art in patent prosecution files, and indeed he testified that [y]ou dont get rid of prior art. Trial Tr. 1726:22-1727:12 (Johnson). F161. Johnson did not review Rambus patents or any prior art associated with them.
Trial Tr. 1728:9-12 (Johnson). F162. Johnson never discussed with Rambus whether Rambus was going to litigate
against Intel. Trial Tr. 1728:24-25 (Johnson). F163. After presenting the document retention policy jointly with Attorney Johnson - 37 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I.
to the Rambus managers, Karp made presentations to various groups of Rambus employees using a different set of slides, which were based on the written policy. Trial Tr. 262:19-263:5; HTX 112. F164. All versions of the presentation utilized a slide discussing e-mail entitled
Email Throw it Away. The slide emphasized that e-mail was discoverable in litigation and that elimination of e-mail is an integral part of document control. It also advised that any messages that must be saved should be saved to a separate file or printed and retained. HTX 111.010, HTX 112.001. F165. Karp strongly urged all Rambus employees to attend presentations of the
document retention policy, and he offered a make up session. HTX 121. Specific Events Involving the Destruction of Documents 1. F166. Shred Days In the third quarter of 1998, Rambus established Key Goals for IP
Litigation Activity. These included implement[ing] [a] document retention action plan. HTX 001.001; see also *Micron II at 1317. F167. In August and September 1998, Rambus staff received multiple emails urging
them to participate in an upcoming shred day in September 1998. HTX 024; HTX 122. F168. On September 3 and 4, 1998, Rambus employees participated in a company-
wide shred day (Shred Day 1998). HTX 123; see also *Micron II at 1318. F169. Rambus employed an outside company, Sure Shred, to provide on-site
document shredding services. See HTX 125; Trial Tr. 1614:16-1615:11. Employees were instructed to follow the Document Retention Policy guidelines to determine what to keep and what to throw away. Trial Tr. 272:14-273:14; HTX 122. Employees were given burlap sacks from Sure Shred for material that needed shredding. The burlap sacks were then taken to a shredding truck in the parking lot of the company. Id. F170. Rambus employees were encouraged to celebrate the Shred Day with pizza,
beer, and champagne. HTX 123. F171. As of the 1998 Shred Day, Rambus was proceeding with the licensing and - 38 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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litigation strategy presented to the Board in March 1998, and the 1998 Shred Day was part of that strategy. HTX 006; HTX 001. F172. Rambus destroyed approximately 185 bags and 60 boxes of material on Shred
Day 1998. HTX 125. The amount of documents destroyed would have totaled 430 banker boxes of material. Trial Tr. 1615:12-1616:18. Rambus destroyed approximately 20,000 pounds of documents during the 1998 Shred Day. 1/31/05 Crime Fraud Order, 2:19-20. Rambus kept no records of what was destroyed. Trial Tr. 334:2-12 (Karp); 524:22-525:1 (Karp); 1118:15-19 (Kramer). F173. A year later, on August 26, 1999, Rambus held the shredding party it had
planned as part of its third quarter intellectual property litigation readiness goals (Shred Day 1999). HTX 139; see also *Micron II at 1318. As of this date, Rambus was ready for litigation on 30 days notice. HTX 139.001. F174. During the 1999 Shred Day, Rambus destroyed between 9,000 and 18,000
pounds of documents in 300 boxes. HTX 147, Trial Tr. 1620:7-9 (Rhoades); see also *Micron II at 1318, 1328. Rambus kept no records of what was destroyed in the 1999 Shred Day. Trial Tr. 334:2-12 (Karp); 524:22-525:1 (Karp); 1118:15-19 (Kramer). F175. At the time of the 1999 Shred Day, one of the patents in suit (the 104 patent)
had issued to Rambus and Rambus had received notices of allowance regarding the 263 and 804 patents. Exs. 3454 and Ex. 3455 to 8/14/06 Hynix Request for Judicial Notice (D.E. 2360); see also Micron I, 255 F.R.D. at 145. F176. In December 2000, Rambus held a third shred day. Rambus employees
destroyed 410 bags (the equivalent of 300-400 boxes) of documents during the 2000 shred day. RTX 216; Trial Tr. 1622:22-25 (Rhoades). No record was kept of what Rambus destroyed. Trial Tr. 334:2-12; 524:22-525:1; 1118:15-19. 2. F177. Electronic Documents Until approximately 1996, business work at Rambus was done on Macintosh
computers. Engineering work, by contrast, was typically done on UNIX workstations. Trial Tr. 1439:4-6, 1440:2-11. Rambus maintained backup tapes of some of the data created on the - 39 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Macintosh computers. In May 1998, Karp confirmed that backup tapes of the companys Macintosh computers were gone. Trial Tr. 208:19-218:14, 250:14-16; HTX 013.097. F178. On or before July 21, 1998, Rambus sent 1269 computer tapes storing its
email backups from the previous several years out to be degaussed (magnetically scrambled to prevent data recovery). Trial Tr. 221:22-223:4, 1105:25-1106:25; HTX 107, HTX 157, HTX 029; see also *Micron II at 1318. F179. The backup tapes that Rambus erased in July 1998 included every backup
tape from the day the company was founded, like eight years worth of backup tapes. S.F. Superior Court Trial Tr. 5153:18-20 (Karp) (Ex. 31 to Roeder Decl.). F180. Each backup tape could store approximately 100,000 documents, including
internal emails. Delaware Trial Tr. 579:22-580:8 (Montaa), 1156:7-16 (Roberts), 1170:171171:2 (Roberts) (Ex. 10 to Roeder Decl); see also Micron I, 255 F.R.D. at 141 n.22. F181. Prior to sending the tapes to be degaussed, Rambus separated its backup tapes
into two sets: (1) project tapes containing only technical project data and (2) other tapes. The other tapes, which contained business correspondence, email, and other business records, were sent for degaussing without further review of the contents. Trial Tr. 1105:17-1106:25, 1113:11-14 (Kramer).Before destroying most of its backup tapes, Karp made certain to retrieve data from Rambus backup tapes that he judged to be of benefit to Rambus. Trial Tr. 224:4-8. 225:3-226:25 (Karp); see also *Micron II at 1318 (Rambus went through great lengths to restore from the backup tapes a document that helped Rambus establish a priority date.). Of course, Rambuss destruction of the backup tapes deprived its later litigation opponents of an opportunity to review the backup tapes to look for materials helpful to them. F182. The degaussing of backup tapes included every backup tape from the day
the company was founded, like eight years worth of backup tapes. S.F. Superior Court Trial Tr. 5153:18-20 (Karp) (Ex. 31 to Roeder Decl.). F183. As of 1998, Rambus was a document and email-intensive company. Trial Tr.
1582:11-1583:13 (Roberts). Rambus employees maintained extensive paper files, and many archived electronic data on their laptop computers, zip disks, and other removable media. Trial - 40 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Tr. 274:22-275:5 (Karp), 1187:23-1188:7 (Crisp), 532:21-533:6 (Karp). F184. Rambus IP managers had routinely preserved backup tapes for most data
stored in Rambuss computer system. Trial Tr. 195:18-196:4 (Karp), 1431:1-7 (Zsarnay). It was quite common for Rambus personnel to retrieve information from the backup tapes. Trial Tr. 1431:8-10 (Zsarnay). F185. Rambuss document retention policy extended to the destruction of backups
of Rambuss internal email. HTX 023.001; see also *Micron II at 1317. F186. The Rambus destruction policy also mandated the destruction of countless zip
drives, floppy disks, and data recorded on the hard drives of individual computers. RTX 091 at 3; Trial Tr. 532:8-533:6 (Karp). F187. There is no record of the electronic data destroyed pursuant to Rambuss
document retention policy. Trial Tr. 334:2-12 (Karp); 524:22-525:1 (Karp); 1118:15-19 (Kramer). Labels on the erased backup tapes indicate that full back-ups of Rambuss servers were erased, as well as tapes that appeared to include records associated with key witnesses including Crisp and Tate. HTX 285, HTX 029. 3. F188. Prosecution Files Attorney Johnson advised Karp at the February 12, 1998 meeting that
Rambus should clean out its patent prosecution files so that the files mirrored the United States Patent and Trademark Office (PTO) file. As with the creation and institution of a document retention policy at Rambus, this purging of patent prosecution files became a component of Rambuss licensing and litigation strategy. HTX 098.003 (Karp handwritten note); HTX 006.008. F189. Rambus purged its internal patent files of documents not found in the official
files of the United States Patent and Trademark Office. Trial Tr. 806:5-813:17 (Vincent). Rambus destroyed attorney notes, correspondence, and other documents from Rambuss patent prosecution files. Trial Tr. 895:3-898:17 (Vincent). F190. Rambus also destroyed notes, files, and other records from the files of the
inventors of the patents-in-suit. HTX 267; Trial Tr. 608:10-610:25, 616:9-20 (Horowitz). - 41 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F191.
Attorney Vincent of BSTZ prosecuted patent applications on behalf of
Rambus claiming priority to Rambuss original 898 application, as did other BSTZ attorneys including Roland Cortes and Scot Griffin. Trial Tr. 784:1-785:2 (Vincent); 1592:22-1593:9 (Cortes); 1603:19-1604:11 (Griffin). F192. By April 1999, Karp had instructed Vincent to clean BSTZs patent
prosecution files for patents which had issued. Trial Tr. 806:5-807:5; 812:3-14 (Vincent); HTX 134.002; HTX 135.004; see also *Micron II at 1318. Vincent was not told that any litigation was planned against manufacturers of JEDEC standard SDRAM or other non-compatible DRAM. Trial Tr. 812:15-21 (Vincent). Karp did not provide details as to what documents should be discarded from they files; rather, Vincent was guided by his general professional knowledge regarding document retention for patent files. Trial Tr. 903:15-24 (Vincent). F193. Between April 1999 and through at least July 1999, Vincent complied with
Rambuss instruction and purged Blakelys patent files of any documents not found in the official PTO files. He discarded draft patent applications, draft patent claims, draft patent amendments, attorney notes, correspondence with Rambus, and drawings. Trial Tr. 894:3899:3 (Vincent); see also *Micron II at 1318. F194. Vincent purged more than 60 patent files between April and July of 1999.
HTX 327; see also HTX 137. F195. Vincents billing entries show that he spoke with Rambus regarding the
patent applications, prior art, and amendments corresponding to the purged patent files. HTX 215. F196. Vincent testified that it was his custom to place notes about these types of
activities in the file. Delaware Trial Tr. 1408:9-15 (attached as Ex. 10 to Roeder Decl.); see also Micron I, 255 F.R.D. at 144 n.43). F197. Many of the documents Vincent destroyed came from files relating to
prosecution of the patents-in-suit, and many others came from files relating to the prosecution of earlier applications and patents in the same family as the patents-in-suit. Compare HTX 005A with HTX 327; Trial Tr. 826:6-834:5. - 42 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F198.
Rambus pressured Vincent to expedite this process. HTX 134; Trial Tr.
806:5-815:6, 894:12-17 (Vincent). F199. Karp also pressured Blakely to adopt a firm-wide email retention policy to
match Rambuss policy. Blakely refused to comply with this request. HTX 135; Trial Tr. 885:13-888:3 (Vincent). F200. In or about October 1999, Vincent learned from an unknown source that
Rambus had sued or was about to sue Hitachi. Vincent decided that it was not appropriate to continue destroying documents from his file under the circumstances, and he stopped the document destruction. Trial Tr. 822:14-826:5 (Vincent). F201. On June 23, 2000, the very day that settlement of Rambuss patent
infringement action against Hitachi was announced, Vincent resumed clearing out the Blakely Sokoloff files, completing the purging of 43 files on that date. Trial Tr. 892:3-25; HTX 327. F202. Vincent was not aware that on the same date, June 23, 2000, Rambus had
notified Hynix of Rambuss claim that Hynix SDRAMs infringed Rambus patents. Trial Tr. 892:3-894:2 (Vincent); HTX 137; HTX 327. F203. In addition, in May 2000, Rambus had accused NVIDIA of infringing its
patents by using Hynix memory. S.F. Superior Court Trial Ex. 11310 (Ex. 34 to Roeder Decl.). Rambus Continues to Implement its Licensing and Litigation Strategy F204. In the summer of 1998, Attorney Neil Steinberg began working as outside
counsel for Rambus. Trial Tr. 163:11-14 (Karp), 1443:2-1444:20 (Steinberg). Karp had worked with Steinberg at Samsung. Trial Tr. 163:4-10 (Karp). Steinberg continued as outside counsel to Rambus until April 1999 at which time he became Rambuss General Patent Counsel. Trial Tr. 163:15-17 (Karp). F205. From the very beginning, Steinbergs work for Rambus included preparation
for litigation with third parties who manufactured SDRAMs and DDR SDRAMs. Trial Tr. 1445:1-1446:7 (playing Steinberg Jan. 16, 2001 Infineon Dep. Tr. at 100:1-9, Ex. 41 to Roeder Decl.), 1446:9-12 (Steinberg); see also *Micron II at 1317. Starting in October 1998 Steinbergs work also included prosecuting continuation applications for the - 43 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Farmwald/Horowitz family of patents. Trial Tr. 1463:7-1464:13 (Steinberg). F206. Rambuss intellectual property goals for the third quarter of 1999 set forth in
documents dated June 27 and July 1, 1999 included goals for Licensing/Litigation Readiness. Those goals included presenting the licensing strategy to Rambuss executives for approval and preparing to make a presentation to the Rambus board in the fourth quarter. These goals also included preparing licensing positions against three manufacturers and a litigation position against one of those three licensing targets. HTX 139.001, HTX140.001. F207. In June 1999, Steinberg and Karp recommended preparing a litigation
strategy against 1 of the 3 manufacturers to be ready for litigation with 30 days notice. HTX 139.001. This was almost exactly in accordance with the timetable established in the March 1998 strategy, as revised in October 1998. HTX 006.007; HTX 128.004; see also *Micron II at 1318. F208. Organize 1999 shredding party at Rambus was listed as one of Rambuss
Licensing/Litigation Readiness goals for the third quarter of 1999. HTX 139.001, HTX 140.002; see also *Micron II at 1318. In a later version of this goals document, Karp (at Steinbergs request) moved the shredding party action item under the heading Database Maintenance and changed it to read Organize document retention compliance event. Delaware Trial Ex. MTX 438 (Ex. 25 to Roeder Decl.); 311:4-313:12 Delaware Trial Tr. 468:18-469:19, 472:12-18 (Karp) (Ex. 10 to Roeder Decl.). F209. The 1999 goals documents are in keeping with Tates instruction to Karp in a
June 24, 1999 email to think about a target and bottom line terms for licensing [Rambuss] IP for infringing DRAMs; the identity of the first target and why; and what Rambuss strategy [would be] for the battle with the first target that we will launch in [O]ctober. Delaware Trial Ex. MTX 429 (Ex. 24 to Roeder Decl.); Delaware Trial Tr. 311:4-313:12 (Karp) (Ex. 10 to Roeder Decl.); see also *Micron II at 1323. F210. Earlier in June 1999, Karp had detailed his progress in fulfilling his key
results for 1999. Among the key results he was trying to achieve in 1999, Karp identifies [c]ommencing licensing negotiations with one company and start clock for calculation of - 44 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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damages during Q4/99; [c]ommencing licensing negotiation with two additional companies during Q1/00; [c]hoos[ing] one company to litigation with during Q1/00; and [c]ommencing litigation during Q2/00 upon exec/board approval. Delaware Trial Ex. 807 (Ex. 27 to Roeder Decl.); see also Micron I, 255 F.R.D. at 145 n.46. F211. In his testimony at the Delaware trial, Karp admitted that by June 1999,
litigation was a written goal and that suing was maybe a likelihood. Delaware Trial Tr. 348:17-23, 350:12-21 (Karp) (Ex. 10 to Roeder Decl.); see also Micron I, 255 F.R.D. at 145 n. 46. F212. Planning for litigation continued when, on July 8, 1999, Fenwick & West
prepared a timeline for the proposed patent infringement suits showing that Rambus planned to file a patent infringement complaint on October 1, 1999. RTX348 at 2, 3; see also *Micron II at 1318. F213. In a strategy update presentation titled IP Strategy 9/24/99, Rambus
recognized that it was losing Intels business (Intel Has Already Started To Let Go) and that, absent that relationship, the DRAM industry would not have respect for Rambuss intellectual property. HTX 244. The presentation stated that Rambus must INCREASE THE INDUSTRYS PERCEPTION OF OUR VALUE THROUGH AGGRESSIVE ASSERTION OF OUR IP RIGHTS. HTX 244.003. Specifically, Rambus needed to earn that respect by substantiating our claims that cover pioneering technology and that [p]atent claims are substantiated either by signing a lucrative license deal with (an) industry powerhouse(s) winning in court
HTX 244.004. F214. 24 demands would ultimately end in litigation. Rambus noted that [e]ven if we gain some initial 25 settlements, we will have to ultimately pursue remedies in court because [c]ompanies like 26 Micron will fight us tooth and nail and will never settle. HTX 244.004. 27 F215. 28 - 45 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
Unchanged from March 1998, Rambus reaffirmed its belief that its licensing
The September 24, 1999 strategy update went on to identify reasons why
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DRAM manufacturers were the best targets for Rambuss litigation campaign, including Rambuss ability to prove [an] infringement case and calculate monetary damages; the existence of a good litigation story; the high risk for the defendant due to the number of patents/claims in suit; and Rambuss [l]imited exposure to counterclaims. Rambus emphasized the importance of its litigation strategy: WE MUST WIN!! HTX 244.005; see also *Micron II at 1318. F216. Shortly thereafter, on September 29, 1999, Tate sent an email indicating that
consensus had been reached among Rambus executives on various issues, including the need to sue a dram company to set an example. Tate also stated that Rambus should publicize the patents and lawsuits to put all dram/controller companies that use sdram/ddr/ on notice, with the expectation that no one will settle with [Rambus] until after initial suit is resolved: 12.5 years if jury trial; if pre-trial settlement 0.5-1 years. Delaware Trial Ex. MTX 464 (Ex. 26 to Roeder Decl.); see also Micron I, 255 F.R.D. at 146. F217. Karp and Steinberg developed a formula for selecting the first targets for
Rambuss licensing/litigation strategy. The formula was set forth in a presentation dated October 14, 1999. HTX 151. The formula considered both business and legal/litigation factors. Among the factors weighed were confirmation of Rambus IP, experience in battle, exposure to Rambus IP, venue flexibility, and litigation story. HTX 151.002. Hynix was identified as the number three target after Hitachi and Samsung. HTX 151.006. F218. Rambuss litigation strategy for the Farmwald-Horowitz patents was
worldwide and expressly included expansion into Germany, specifically Germanys pro-patent docket in Mannheim. Trial Tr. 328:14-330:24 (Karp); HTX 159. K. Rambus Initiates its Litigation F219. Rambus initiated licensing negotiations with Hitachi on October 22, 1999 by
sending Hitachi a letter asserting that Hitachis SDRAM and DDR SDRAM products infringed Rambuss patents. HTX 015. Negotiations with Hitachi broke down when Hitachi refused to respond to Rambuss efforts to negotiate. Trial Tr. 355:15-25 (Karp); see also *Micron II at 1318. - 46 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 L.
F220.
On November 23, 1999, an IP Update was presented at a Rambus offsite
meeting, which included a discussion of Rambuss litigation program, codenamed Lexington and Rambuss plan to fire the Shot Heard Round the World. HTX 155. F221. Rambus conducted a beauty contest in late November or early December
1999 to select counsel for litigation against Hitachi. Trial Tr. 1475:9-23. Rambus retained Gray Cary as litigation counsel for the Hitachi matter in late 1999. Trial Tr. 705:6-9. F222. Rambus filed suit against Hitachi on January 18, 2000. HTX 159; see also
*Micron II at 1318. F223. At Rambus, board approval was not required to prepare for or initiate
litigation. Delaware Trial Tr. at 668:1-4, 705:16-24 (Tate), 770:2-16 (Crisp), 1694:12-1695:3 (Farmwald), 1632:10-1633:1 (Davidow) (Ex. 10 to Roeder Decl.); see also Micron I, 255 F.R.D. at 146 n.53. The Rambus board never voted on whether to sue Hitachi. Delaware Trial Tr. at 1646:7-18 (Davidow) (Ex. 10 to Roeder Decl.); see also Micron I, 255 F.R.D. at 146 n.53. F224. Steinberg testified that in or around December 1999, he and Karp identified
Rambus personnel who were likely to have relevant documents and told them to retain all such documents. Lawyers from Gray Cary, after the firm was retained in connection with the Hitachi litigation, testified that they instructed a number of Rambus employees that they needed to preserve all documents that could be relevant to the litigation. Trial Tr. 775:12776:10. Rambuss Resumption of the Destruction of Documents F225. The Hitachi litigation was settled on or about June 23, 2000. Trial Tr. 892:3-
7 (Vincent); see also *Micron II at 1318. On that day, Rambus sent an infringement notice to Hynix (then Hyundai). RTX 401. F226. On or about that day, Attorney Vincent resumed purging his patent files,
approving his secretarys selection from the Rambus prosecution files of documents to discard. Trial Tr. 892:3-7. F227. On July 17, 2000, against the instructions of Rambus outside litigation - 47 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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counsel Cecilia Gonzalez, Steinberg reminded Rambus executives that they were expected, under the Rambus document destruction policy, to dispose of notes and drafts created in the course of license negotiations. HTX 178; Trial Tr. 1536:3-7 (Gonzalez Feb. 22, 2005 Infineon Trial Tr. at 131:8-136:22) (Ex. 40 to Roeder Decl.). Steinbergs reminder came months after Rambus claims to have put a litigation hold in place. See 2/25/05 Rambus Opp. to Renewed Motion to Dismiss (D.E. 851) at 19; see also *Micron II at 1318. This was less than one month after Rambus sent Hynix an infringement notice to Hynix, and during the period when Rambus was trying to negotiate with Hynix to take a license for SDRAM and DDR. RTX 401. It was also shortly before Rambus continued to litigate against the DRAM industry by suing Infineon on August 8, 2000. See *Micron II at 1318-19. F228. In December 2000, Rambus moved to a new office building. Rambus held
another shred day timed to coincide with the office move. See Proposed Finding of Fact F176, supra. M. Findings Regarding Spoliation 1. Findings regarding Rambuss duty to preserve documents (a) Litigation was reasonably foreseeable before Rambus started destroying documents and other materials in July 1998
F229.
In deciding whether Rambus engaged in spoliation, the court must determine
whether Rambus destroyed potentially relevant documents at a time when Rambus was under a duty to preserve evidence. See Proposed Conclusions of Law C2, C34-36, infra. F230. In determining when Rambuss pre-litigation duty to preserve evidence
began, the court must determine when litigation became reasonably foreseeable. See Proposed Conclusion of Law C5, infra. F231. Whether litigation is reasonably foreseeable is an objective standard, asking
not whether the party in fact reasonably foresaw litigation, but whether a reasonable party in the same factual circumstances would have reasonably foreseen litigation. See Proposed Conclusion of Law C6, infra. F232. Because whether litigation is reasonably foreseeable is determined under an - 48 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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objective standard, claims by Karp and other Rambus witnesses that Rambus hoped to avoid litigation are irrelevant to the issues this court must decide. F233. In deciding the question of spoliation, it is not necessary for the court to
determine the exact date at which litigation became reasonably foreseeable. The real question is binary: was litigation reasonably foreseeable before any particular occasion on which documents or other materials were destroyed, or after? See Proposed Conclusion of Law C10, infra. F234. The evidence presented at trial indicates that Rambus began destroying
documents and other materials on July 14, 1998, when it degaussed 1269 backup tapes. HTX 107. Accordingly, the first question the court must decide is whether litigation was reasonably foreseeable before that date. F235. The fact that Rambus was the party planning to initiate litigation is relevant to
a determination of when litigation became reasonably foreseeable. See Proposed Conclusion of Law C26, infra. F236. In January 1998, Tate directed specifically directed Karp to develop a
litigation plan to be presented to the Rambus board in March 1998. HTX 013.020. F237. By February 23, 1998, Rambus had hired litigation counsel, and Rambuss
counsel had delivered a proposed licensing and litigation strategy in response to Rambuss requests. Rambus was strategizing about where to sue, what theories to assert, whom to sue, and when. Rambus was deep enough into this planning to begin creating a discovery database, to be concerned about trial ready graphics, and to discuss with its counsel the hiring of litigation experts. See Proposed Findings of Fact F52-F84, supra; see also 1/31/05 Crime Fraud Order at 7:15-16 (By February 1998, the same month Rambus first consulted with Cooley Godward, Rambus had begun to develop its litigation strategy against competitors in the industry.). F238. On February 25, 1998, just two days after receiving Cooleys licensing and
litigation strategy document, Karp reviewed both the licensing and litigation strategies with Tate. Karp reported to Tate that he was already taking steps to implement the litigation - 49 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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strategy by [w]orking with J. Lau [on a] document retention policy, discovery database, email, etc. HTX 013.034. F239. On March 4, 1998, Karp delivered a slide presentation entitled Licensing
and Litigation Strategy to the Rambus Board of Directors, which included a detailed, tiered litigation plan. HTX 006, HTX 031. F240. The March 4 board presentation included a timetable for executing the
licensing and litigation strategy. HTX 006.007. The first milestone was that Rambus [w]ill not contact potential licensees until D-RDRAM achieves initial samples. As of early 1998, Direct RDRAM was scheduled to be ready for a production ramp in late 1998. HTX 094.001 (Top Level Key Results for 1998 as of 1/98 included Direct Rambus 1.0 memory system implemented for production ramp late 98); Trial Tr. 1250:1-11 (Tate). F241. The second milestone in the licensing and litigation strategy was procurement
of customer sample-quality parts of potentially infringing devices. HTX 006.007. From the time those parts were obtained, Rambus would reverse engineer the parts, prepare claim charts, send a notice letter and hold meetings with target DRAM companies, and then commence legal action. The timeline projected that legal action would commence 4-6 months after Rambus procured customer sample-quality parts. HTX 006.007. Rambus had a Samsung DDR in hand by October 1998. HTX 128.002, HTX 129.004. It had also prepared claim charts for Samsung and Micron products by then. HTX 376, HTX 004.003. F242. The evidence shows that throughout 1998 Rambus continued planning and
preparing for litigation in accordance with the plan approved by the Rambus board in March 1998. In April 1998, Rambus board members discussed when to play the IP card. In June 1998, Mooring brainstormed about how to position Rambus for when it launched its first IP battle. Then, on July 10, 1998, Tate wrote an email to Allen Roberts, Rambuss VP of Engineering, asking what happens when we get the access time register patent and suggesting that Hyundai would be a great company to start joels plan with in q1/99 potentially. These events establish that Rambus was acting in accordance with the plan presented by Karp to the board in March 1998, and are evidence that Rambus was anticipating - 50 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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litigation as of July 10, 1998. See Proposed Findings of Fact F99 to F102, supra; see also Crime Fraud Order at 8:21-9:2. F243. Thus, before Rambus destroyed its backup tapes on July 14, 1998 and held
the first Shred Day in September 1998, Rambus had formulated its litigation strategy and demonstrated its intent to commence litigation against accused infringers. See Proposed Findings of Fact F52 to F105, supra; see also 1/31/05 Crime Fraud Order at 7:17-19, 9:9-10. F244. The court concludes that a reasonable party in the same factual circumstances
would have concluded that litigation was reasonably foreseeable before Rambus degaussed its backup tapes on July 14, 1998. F245. As of the time of the first Shred Day on September 3 and 4, 1998, Rambus
was still operating in accordance with the timeline developed in March 1998, which projected that litigation would launch in early 1999. F246. Later in 1998, Rambus decided to delay the implementation of its licensing
and litigation plan beyond the time frame discussed at the March 4, 1998 board meeting. See HTX 006.007. This strategic decision had nothing to do with Rambuss intention to litigate against manufacturers of SDRAM and DDR SDRAM, but stemmed from problems that had delayed the launch of RDRAM. Instead of launching by late 1998, as Rambus had anticipated (see HTX 094.001), the launch of Direct RDRAM was delayed such that Rambus did not expect the Direct RDRAM ramp to reach a point of no return until early 2000. HTX 128.003; see also Micron II at 1316. This impacted the time when the first milestone in Rambuss March 4, 1998 strategy would be met. See HTX 006.007 (Rambus [w]ill not contact potential licensees until D-RDRAM achieves initial samples.) Because of the RDRAM delays, Rambus decided it should NOT ROCK THE DIRECT BOAT and should continue in Stealth Mode During 99. HTX 128.002 - .003. F247. Although Rambus delayed the timing of its March 1998 litigation plan
somewhat for its own business purposes, the conclusion that litigation nonetheless was reasonably foreseeable by July 1998 is reinforced by the fact that when Rambus ultimately initiated licensing negotiations and litigation with the DRAM companies in late 1999-early - 51 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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2000, it was still operating under the licensing and litigation framework presented to the Rambus board in March 1998. The March 1998 strategy set forth the key licensing terms: a 5year term, a substantial up-front fee, and royalty rates of 5%. HTX 006.001. Rambus was still demanding these same licensing terms as of the date it sued Hitachi in January 2000. HTX 159.007. As set forth in Rambuss March 1998 strategy (HTX 006.007), Rambus sued Hitachi within 2-3 months after initiating licensing negotiations. See HTX 015 (10/22/99 letter from Karp initiating licensing negotiations with Hitachi) and HTX 159.007 (1/18/08 presentation announcing filing of lawsuit against Hitachi). When it sued Hitachi in early 2000, Rambus was still pursuing a tiered litigation strategy set forth in the March 1998 plan (HTX 006.003), under which Rambus planned to approach additional DRAM companies 30-60 days after filing suit against Hitachi, HTX 159.006. F248. The evidence is overwhelming that although the timing for implementation of
Rambuss licensing and litigation strategy slipped somewhat after it was initially adopted in March 1998, the intention to proceed with the strategy and the basic contours of the strategy remained unchanged. Litigation was a matter of when, not if. (b) F249. Alternative dates at which litigation was reasonably foreseeable
Even if litigation was not reasonably foreseeable prior to Rambuss
18 destruction of its backup tapes or the 1998 Shred Day, litigation was reasonably foreseeable 19 no later than December 1998, when Karp had articulated a time frame and a motive for 20 implementation of the Rambus litigation strategy. See *Micron II at 1325; see also Proposed 21 Findings of Fact F52 to F125, supra. 22 F250. 23 foreseeable prior to Rambuss Second Shred Day in 1999, at the latest. The court reaches this 24 conclusion based on its independent analysis of the evidence in this case. See 1/31/05 Crime 25 Fraud Order at 7:6-8 (Rambus anticipated commencing litigation against industry competitors 26 at least as of the second Shred Day in August 1999.) The same conclusion is compelled by 27 law of the case principles as a result of the Federal Circuits decision in Hynix II. Hynix II at 28 - 52 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
The relevant considerations compel a finding that litigation was reasonably
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
1347 (holding that the relevant considerations compel a finding that litigation was reasonably foreseeable prior to Rambuss Second Shred Day in 1999). The fact that Rambuss duty arose prior to the second shred day is also preclusively established by application of collateral estoppel to the Federal Circuits decision in Micron II. See *Micron II at 1325-26, F251. The fact that Rambus implemented a document retention policy as an
important component of a litigation strategy makes it more likely that litigation was reasonably foreseeable. See Proposed Findings of Fact F 52 to F125 and F204 to F218, supra; see also *Micron II at 1322-23. F252. Rambus was on notice of potentially infringing activities by particular
manufacturers. See, e.g., HTX 376, HTX 097, HTX 403, HTX 098, HTX 006, HTX 087, HTX 001, HTX 128, HTX 004; see also *Micron II at 1323. F253. Once the patent issued, the gun was loaded; when the targets were acquired, it
was cocked; all that was left was to pull the trigger by filing a complaint. While it may not be enough to have a target in sight that the patentee believes may infringe, the knowledge of likely infringing activity by particular parties makes litigation more objectively likely to occur because the patentee is then more likely to bring suit. See, e.g., HTX 376, HTX 097, HTX 403, HTX 098, HTX 006, HTX 087, HTX 001, HTX 128, HTX 004; see also *Micron II at 132223. F254. Here, numerous internal documents manifest Rambuss plan to play [its] IP
card with the DRAM companies against SDRAM and DDR products, either through a patent infringement or a breach of contract suit. See, e.g., HTX 376, HTX 097, HTX 403, HTX 098, HTX 006, HTX 087, HTX 001, HTX 128, HTX 004; Proposed Findings of Fact F89 to F125, supra; see also *Micron II at 1323. F255. Indeed, Rambus was more than on notice because, by its own admission, it
actively broadened its claims to cover JEDEC standard-compliant products, and Rambus knew that those products would infringe its claims. See Proposed Findings of Fact F16 to F37 and F45 to F46, supra; see also Hynix II at 1342; Infineon, 318 F.3d at 1104; Trial Tr. 1216:191217:1 (Crisp); HTX 091; RTX 080; see also *Micron II at 1323. - 53 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F256.
Rambus took several additional steps in furtherance of litigation prior to its
second shredding party on August 26, 1999. See Proposed Findings of Fact F204 to F212, supra; see also *Micron II at 1323. F257. By the 1999 shred day, Karp had already concluded that Rambus would
need to litigate against someone to establish [a] royalty rate and have [the] court declare [the Rambus] patent[s] valid, had prioritized defendants and forums, had created claim charts and determined an expected timeline for litigation that it would launch in October [1999], and had as its goal to be ready for litigation with 30 days notice against 1 of the 3 manufacturers by the third quarter of 1999. See Proposed Findings of Fact F56 to F125 and F204 to F212, supra; see also *Micron II at 1323. F258. On June 24, 1999, Karp was instructed by CEO Tate to hammer out . . . our
strategy for the battle with the first target that we will launch in October [1999]. Delaware Trial Ex. MTX 429 at p. 3 (Ex. 24 to Roeder Decl.); see also *Micron II at 1323. F259. Additional steps toward this litigation were spelled out in late June 1999,
when Rambus established IP 3Q 99 Goals, including goals for Licensing/Litigation Readiness. HTX 139, HTX 140; see also *Micron II at 1323. F260. These goals included [p]repar[ing] litigation strategy against 1 of the 3
manufacturers, being [r]eady for litigation with 30 days notice, and [o]rganiz[ing] [the] 1999 shredding party at Rambus. HTX 139, HTX 140; see also *Micron II at 1323-24. F261. Planning for litigation continued when, on July 8, 1999, Rambuss outside
litigation counsel, Fenwick & West, prepared a timeline for the proposed patent infringement suits showing that Rambus planned to file complaints on October 1, 1999. RTX 348; see also *Micron II at 1324. F262. Indeed, the second shredding party was itself part of Rambuss third-quarter
intellectual property litigation readiness goals. HTX 139, HTX 140; see also *Micron II at 1324. F263. In light of Rambuss preparations for litigation prior to the critical date,
including choosing and prioritizing manufacturers to sue, selecting forums in which to bring - 54 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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suit within a planned time-frame, creating claim charts, and including litigation as an essential component of its business model, Rambus reasonably foresaw litigation before the second shred day on August 26, 1999. See Proposed Findings of Fact F56 to F125 and F204 to F212, supra; see also *Micron II at 1324-25. (c) F264. Litigation was reasonably foreseeable despite alleged contingencies
Rambus has argued that contingencies existed that might have resulted in
7 resolution of Rambuss patent claims short of litigation. This evidence came from witnesses, 8 most notably Tate, who denied recollection of events recorded in surviving documents and who 9 were clearly trying to shape their testimony to rebut the conclusion that, when viewed 10 objectively, litigation was reasonably foreseeable. No contemporaneous documentary evidence 11 was offered to support these assertions. Moreover, events have in fact transpired just as Tate 12 and Karp planned from the beginning: Rambuss demands did push Rambus and its 13 adversaries into litigation quickly. On balance, Rambuss contentions and testimony about 14 contingencies that might have prevented (but did not prevent) litigation are not credible. 15 F265. 16 importance of these contingencies in determining the foreseeability of litigation because 17 [c]ontingencies whose resolutions are reasonably foreseeable do not foreclose a conclusion 18 that litigation is reasonably foreseeable. Hynix II at 1346 (citing Micron II at 1324-25). 19 F266. 20 market rates for the use of its patents. Rather, Rambus was the sponsor of RDRAM, and one of 21 its key objectives was to make RDRAM the commodity interface standard. Rambus viewed its 22 IP relating to SDRAM as a weapon that it could use to enhance the market opportunity for 23 RDRAM by tarnishing the market appeal of SDRAM. See, e.g., HTX 006.002; HTX 004; see 24 also Proposed Findings of Fact F13 to F125, supra. 25 F267. 26 Scenario: [T]he strategy is to convince Intel that without access to Rambus IP, it will be 27 difficult and costly to continue selling its current processor based products and its new, more 28 - 55 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
Rambuss argument regarding contingencies reflects a mistaken view of the
Rambus was not the ordinary patent owner merely seeking compensation at
This point of view was expressed most clearly in Karps 1999 Nuclear Winter
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advanced products because the memory needed for these Intel products require use of Rambus IP. We must convince Intel of this fact quickly. If we can expose or threaten Intels current and future microprocessor based products by cutting off Intels supply to alternative memory, they will be forced to consider re-implementing the Rambus ramp. HTX 004.002. F268. The same pro-RDRAM (vs. SDRAM and DDR) considerations biased
Rambuss licensing strategy in 1998. This is clear from the carrot and stick proposals in Karps March 1998 presentation to the Rambus Board. HTX 006.002. F269. Tate had set the goal of demanding royalties in excess of RDRAM from the
moment Karp came on board, and this goal remained constant. Trial Tr. 1360:11-18, 1399:914 (Tate); HTX 094; HTX 006. The evidence is clear that Rambus believed that its demand for royalties on SDRAMs would probably lead to litigation. See, e.g., HTX 395 (January 13, 1998 notes reflecting Rambus plan to [g]o to first meeting [with alleged infringer] but be ready (in advance) to go to litigation). Nonetheless, Rambus persisted in its plan to seek royalties at rates it knew would result in litigation at least up until the day Rambus sued Hitachi in January 2000. HTX 159.007. F270. Johnson had warned Rambus that if it demanded such royalty rates, it would
have a lawsuit on its hands. Delaware Trial Tr. at 1491:23-1492:20 (Johnson) (Ex. 10 to Roeder Decl.). F271. The motive for demanding a high royalty rate on SDRAMs was that it made
RDRAM look better in relation to its principal competition. As Karp put it, [w]e will need to show Intel by clear and convincing means that alternate devices are covered by Rambus IP and that there will not be any cost savings since Rambus will enforce its (sic) IP against the DRAM companies very aggressively for all flavors of synchronous memory. HTX 004.002. F272. Rambus always planned to wait until DRAM manufacturers were actually
delivering RDRAM parts before launching its Lexington strategy. HTX 006.007; HTX 128.004. At that point, Rambuss plan assumed that the DRAM manufacturers would be locked into RDRAM, and motivated to use the lower royalty product (RDRAM) as compared to the higher royalty product (JEDEC-standard SDRAM). HTX 004.002. - 56 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F273.
Rambuss contention that it did not contemplate litigation because the success
of its RDRAM might have been so complete as to lead Rambus to forego asserting its claims against SDRAM fails. That contention is contradicted by contemporaneous evidence. The February/March 1998 plan contemplated asserting Rambuss claims against SDRAM within months after the DRAM companies became locked in to manufacturing RDRAM. HTX 006.007. This remained true of the Stealth Mode plan of October 1998. HTX 128.004. In addition, the evidence demonstrates that Rambus intended to sue even those RDRAM partners who devoted 50 percent or more of their production to RDRAM. HTX 006.002 (discussing Carrot & Stick offers depending on percentage of total DRAM output devoted to RDRAM). F274. Notes of a November 1998 offsite strategy meeting of Rambus executives
show that Rambus planned to eventually assert its patents against SDRAM, even if the RDRAM adoption strategy succeeded. At that meeting, Geoff Tate projected that even if RDRAM achieved 66% of DRAM market share by 2002, Rambus could nonetheless collect $375 million per year in royalties from allegedly infringing alternatives. Delaware Trial Ex. MTX 947 at 1 (Ex. 28 to Roeder Decl.); see also *Micron II at 1317. F275. As was made clear in the Nuclear Winter Memorandum, if RDRAM did not
become a market leader, Rambus would go after the manufacturers of SDRAM and DDR. If RDRAM did become a market leader, and the RDRAM ramp reache[d] a point of no return, then Rambus could come out from stealth mode and ROCK THE DIRECT BOAT by asserting its patents against industry-standard SDRAM and DDR because the manufacturers would be locked in to the RDRAM standard. Hence the use of definitive language of future intention, such as asking WHATS THE RUSH [to assert patents against RDRAM partners]? and noting that it should not assert patents against Direct [RDRAM] partners until ramp reaches a point of no return (TBD). Either way, Rambus intended to litigate. HTX 128, HTX 004; see also *Micron II at 1324. F276. Rambus also contends that, during 1998 and 1999, it did not want to alienate
its partners who were manufacturing RDRAM. While that may be true, it does not alter the - 57 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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fact that the evidence shows that litigation was reasonably foreseeable in early 1998. The fact that Rambus may have wished to delay that litigation against its partners until it was assured that RDRAM would be available in the market does not suggest at all that Rambus intended to forego litigation against its partners if its ends had been achieved. F277. [T]he relationship between Rambus and the manufacturers involving
RDRAM did not make litigation significantly less likely, it only delayed the initiation of litigation until the manufacturers were either too invested in RDRAM for the SDRAM litigation to negatively impact Rambuss sales, or until Rambus had no choice but to sue because RDRAM was rejected. See *Micron II at 1325; see also, e.g., HTX 128, HTX 004. F278. [W]hen parties have a business relationship that is mutually beneficial and
that ultimately turns sour, sparking litigation, the litigation will generally be less foreseeable than would litigation resulting from a relationship that is not mutually beneficial or is naturally adversarial. Thus, for example, document destruction occurring during the course of a longstanding and untroubled licensing relationship relating to the patents and the accused products that ultimately become the subject of litigation is relatively unlikely to constitute spoliation. See *Micron II at 1325; see, e.g., HTX 128, HTX 004. F279. Here, by contrast, [b]ecause the relationship regarding RDRAM did nothing
to make litigation significantly less likely, and because Rambus and the manufacturers did not have a longstanding and mutually beneficial relationship regarding SDRAM, Rambus cannot use its delay tactics regarding RDRAM to undermine the other considerations herein discussed. See *Micron II at 1325; see, e.g., HTX 128, HTX 004. F280. Rambus argues that litigation was not reasonably foreseeable until sometime
after the 1999 Shred Day because Rambus had not received board approval for licensing negotiations or litigation against DRAM manufacturers and Rambus had not budgeted for litigation as of that shred day. These factors do not demonstrate that [litigation] was not reasonably foreseeable. Indeed, there is no evidence in the record that these matters changed as of January 2000, when Rambus in fact sued Hitachi. Hynix II at 1346. F281. Although the patents in suit did not begin to issue until June 1999, that factor - 58 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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does not demonstrate that litigation was not reasonably foreseeable earlier. The applications that resulted in those patents had been filed long before, and Rambus had received notices of allowance of the patents in suit beginning in February 4, 1999. See Hynix 8/14/06 Request for Judicial Notice (D.E. 2360) Item 18 at Ex. 3467 (Notice of Allowance for Patent No. 5, 915,105, dated February 4, 1999). The evidence demonstrates that, even before that, Rambus was considering litigation based on its unissued patents. See, e.g., HTX 087 (July 7, 1998 email from Tate to Allen Roberts stating that when Rambus access time register issues Hyundai would be a great company to start joels plan with it q1/99 potentially.); HTX 004.002 (Nuclear Winter Scenario Memo, discussing patents available to Rambus in late 1998/early 1999 that could be asserted against both SDRAM and DDR SDRAM); see also 1/31/05 Crime Fraud Order at 8:20-21. F282. As to the contingencies alleged by Rambus, it is of course true that had these
contingencies been cleared, litigation would have been more foreseeable, but overcoming these contingencies was reasonably foreseeable. See *Micron II at 1324. F283. Obtaining product samples would certainly be a reasonably foreseeable event
because Rambus knew the DRAM manufacturers intended to produce industry standard SDRAM and DDR. Rambus expected to be able to assert its patents against these products because it had explicitly broadened its claim coverage in prosecution to cover standardcompliant products. 1324. F284. It was also reasonably foreseeable that the manufacturers would reject See Proposed Findings of Fact F16 to F37, supra; see also*Micron II at
Rambuss licensing terms, because Karp proposed a five percent royalty rate to the board in March 1998 that attorney Johnson had called ridiculous, and that the Cooley attorneys informed him would result in a lawsuit. See Proposed Findings of Fact F58 to F84, supra; see also*Micron II at 1324. F285. In December 1998 or January 1999, Karp opined that in situations where
Rambus was not interested in settling, they should propose a royalty rate between five and ten percent, and noted that we should not be too concerned with settlement at this point and - 59 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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should push for very high rates. See Proposed Findings of Fact F117 to F125, supra; see also*Micron II at 1324. F286. Rambus reasonably foresaw that the manufacturers would reject its licensing
offer, and intended to sue when its royalty demands were rejected. See Proposed Findings of Fact F58 to F84 and F117 to F125, supra; see also *Micron II at 1324 F287. Rambus continued to demand royalty rates of 5% that it knew would push it
into litigation at least up until the day it filed suit against Hitachi. HTX 159. 2. F288. Findings regarding Rambuss destruction of documents and other materials after duty attached Rambus engaged in spoliation because it destroyed documents within the
10 scope of its duty to preserve documents after that duty arose. See Proposed Conclusions of 11 Law C2 and C35-C36, infra. 12 F289. 13 documents arose prior to Rambuss degaussing of its backup tapes in July 1998. Accordingly, 14 Rambuss destruction of its backup tapes in July 1998, as well as the subsequent 1998 Shred 15 Day, the purging of patent files by Vincent beginning in April 1999, the 1999 Shred Day, the 16 2000 Shred Day, and any other instance in or after July 1998 when Rambus destroyed 17 documents within the scope of its preservation duty constitute spoliation. 18 F290. 19 any destruction of documents or other materials within the scope of Rambuss preservation 20 duty that followed that date constituted spoliation. 21 22 23 in the litigation Rambus intended to file. 24 F292. 25 Rambuss litigation strategy by frustrating the fact-finding efforts of parties adverse to 26 Rambus. This is a natural reading of getting [b]attle ready. HTX 097; see also *Micron II at 27 1322. 28 - 60 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
As discussed above, this court finds that Rambuss duty to preserve
Even if Rambuss preservation duty did not arise until a date after July 1998,
N.
Findings Regarding Bad Faith F291. Rambuss destruction of documents was intended to prevent their production
The raison detre for Rambuss document retention policy was to further
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F293.
As discussed above, Rambus was planning for litigation and litigation was
reasonably foreseeable from February 1998 onward. See Proposed Findings of Fact F229 to F248, supra. F294. Cooley, Godwards February 23, 1998 proposed litigation and licensing
strategy for Rambus included discussion of how Rambus may be able to obtain an advantage over its competitors in litigation. HTX 098.003. F295. Although Cooley, Godward did not list document retention or purging of
attorneys files in its February 23, 1998 proposed licensing and litigation strategy for Rambus, Karp added these tactics by hand, reflecting Karps linkage of the document retention recommendation to Rambuss preparation for litigation and to Rambuss attempts to gain an advantage in litigation. Trial Tr. 188:3192:1 (Karp); HTX 098.003. F296. When Karp approached Savage about developing a document retention
program, Savage knew nothing about Rambuss planned litigation strategy, and Karp did not provide her with information necessary to evaluate whether Rambus could properly destroy documents without making reasonable provision to preserve relevant documents. Savage specifically alerted Karp that he should consult with Lisi about litigation concerns, but Karp did not contact either Savage or Lisi for further advice. Trial Tr. 591:10592:2 (Savage); HTX 091.001; see Proposed Findings of Fact F132 to F133, supra.. F297. Karp took no action to revise the document retention policy to assure that
relevant documents would not be destroyed. Indeed, his focus was on ridding the company of potentially damaging documents such as email. HTX 111, HTX 112. F298. Rambus consistently linked the document retention policy to its preparation
for litigation. See, e.g., HTX 001.001, HTX 009.001, HTX 098.003, HTX 139.001, HTX 140.001-.002, HTX 240.001; see also *Micron II at 1322. F299. When the document retention policy was presented to Rambus executives, the
presentation slides were entitled BEFORE LITIGATION: A Document Retention/Destruction Policy. HTX 111; see also *Micron II at 1322. F300. Rambuss policy explicitly stated that destruction of relevant and - 61 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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discoverable evidence did not need to stop until the actual commencement of litigation. HTX 111; see also *Micron II at 1322. F301. Despite the policys stated goal of destroying all documents once they were
old enough, employees were instructed to look for helpful documents to keep, including documents that would help establish conception and prove that [Rambus had] IP and contract negotiation documents that might help reflect the recollections of Rambus personnel, and they did keep these documents. HTX 112.004, HTX 112.008; see also *Micron II at 1322. F302. At the same time as they were instructed to keep helpful documents, Rambus
employees were instructed to destroy harmful documents, such as documents that questioned the patentability of Rambuss inventions. Delaware Trial Tr. 1300:12-21, 1302:7-20, 1303:211304:14 (Hampel) (Ex. 10 to Roeder Decl.). F303. Shortly after the email backup destruction policy was instituted, all of
Rambuss old backup tapes were destroyed. HTX 107; see also *Micron II at 1322. F304. Before the tapes were destroyed, however, Karp went to great lengths to
retrieve and preserve one helpful document from the tapes. See Proposed Findings of Fact F177 to F187, supra; see also *Micron II at 1318. F305. Thereafter, Rambus targeted patent prosecution documents for destruction.
See Proposed Findings of Fact F188 to F203, supra. F306. Before Rambus adopted and implemented a document retention policy, both
Rambus and Karp were aware of the possibility that allegations of equitable estoppel might be leveled at Rambus as a result of its failure to disclose the existence of certain of its patents and patent applications while it was a member of JEDEC. Rambus had received warnings from its in-house and outside counsel that its participation in JEDEC could give rise to an equitable estoppel defense. And while at Samsung, Karp (who knew of Rambuss participation in JEDEC -- see Trial Tr. 137:16-138:5), had submitted a declaration on that precise point in other litigation. HTX 199; Trial Tr. 145:6-155:4 (Karp). Accordingly, Rambus and Karp were aware, at the time they adopted and implemented the document retention policy, that documents within Rambuss control relating to JEDEC could be used by litigation adversaries - 62 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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to attempt to establish that Rambus patents were unenforceable against other JEDEC members under the equitable estoppel doctrine. F307. Rambus knew before it began destroying documents that document discovery
in any litigation over its patent claims would be extensive. HTX 368; Trial Tr. 137:6-144:6 (Karp). F308. This is not the typical patent case in which the transactional evidence is of
limited relevance. In this case, Hynix (and other DRAM manufacturers) assert antitrust and equitable defenses based on communications and other dealings with Rambus, both within JEDEC and outside of JEDEC, over the period 1990 through 2000. F309. Rambus knew that DRAM manufacturers would be likely to raise such
defenses when it began planning to assert patent claims against manufacturers of SDRAM. HTX 078; HTX 085; HTX 192; HTX 225; Trial Tr. 802:7-15 (Vincent); Trial Tr. 1160:51161:1 (Crisp); Trial Tr. 593:19-599:6 (Donohoe) (Ex. 40 to Roeder Decl.). F310. Despite Karps understanding of what type of documents were potentially
relevant to the litigation contemplated by Rambus, he took no action to revise the document retention policy to ensure that relevant documents would not be destroyed. See HTX 023. F311. Rambus employees understood that the true purpose of Rambuss document
retention policy was to eliminate relevant, discoverable evidence. Trial Tr. 1177:8-1180:8 (Crisp), 1331:24-1333:18 (Tate); HTX 100; HTX 111; HTX 152; HTX 255; HTX 330; HTX 331. F312. There is no evidence to support a conclusion that Rambus implemented its
document retention policy for legitimate business reasons, such as general housekeeping. The presentation given to Rambus employees concerning the document retention plan emphasized the discoverability of documents and made no mention of cost savings, tidiness, or any other non-litigation reason for disposing of documents. Trial Tr. 252:23-260:23 (Tate), 641:5-13, 1693:20-1694:7(Johnson, 1694:15-1695:22 (Johnson); HTX 111, HTX 112, HTX 114, RTX 130; see also *Micron II at 1327. F313. Rambus has argued that document retention policies and shred days in which - 63 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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large quantities of documents are destroyed are routine corporate practices. Such abstract principles are irrelevant to the issues to be decided because they ignore the context in which Rambus adopted and implemented its document retention policy. Rambuss policy was not adopted as a part of routine corporate governance, but was put in place by the Rambus executive in charge of developing a litigation plan as part of his effort to get battle ready. The document retention policy was presented to Rambus managers as an effort to get rid of discoverable information Before Litigation. HTX 111. The concept of a document retention policy had never been discussed at Rambus before Karp proposed it as part of the companys licensing and litigation plan. The document retention policy was consistently linked to the litigation plan in corporate plans and goals documents. See Proposed Findings of Fact F89 to F105 and F206 to F210, supra. Moreover, Rambus extended the reach of its document retention policy beyond the company by directing its outside patent prosecution counsel to cleanse his files. See Proposed Findings of Fact F188 to F203, supra. F314. Rambus has attempted to justify its implementation of a document retention
policy as necessary to save Rambus from the expense and burden associated with storage and retrieval of large amounts of old and no longer necessary information. The Court finds that attempt not to be credible. In any event, Rambuss purported justifications for implementation of its document retention program do not apply to Rambuss direction to outside counsel to clean out their patent files because such activities had no bearing on Rambuss document storage and retrieval costs. Elimination of documents from patent attorneys files has no other purpose for Rambus than elimination of potential evidence in the event of patent litigation. The instruction to clean out the patent files was always presented hand-in-hand as part of the overarching document retention policy. Trial Tr. 181:20182:9, 188:19-189:2 (Karp); HTX 097; HTX 006; Trial Tr. 806:5807:5 (Vincent). F315. Rambus has also asserted that it adopted the document retention policy
because, among other things, it was advised that a public company should have a document retention policy. However, the document retention policy was not suggested, implemented or managed by Gary Harmon (Harmon), who was responsible for Rambuss compliance with its - 64 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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duties as a public company (Trial Tr. 1240:14-18 (Tate)), nor did it originate with Rambuss general outside counsel, Wilson Sonsini. Instead, it was developed by Karp, Rambuss Vice President of Intellectual Property, who had been charged by CEO Tate to develop a litigation strategy for the company. Karp developed the document retention plan as an integral part of the litigation plan. Harmon made it a point to attribute the policy to Karp and was critical of the policy, referring to it as the Karp document retention purge and the Karp scorched earth theory of document retention. HTX 330; HTX 331. F316. Karp testified that he was concerned about the possibility that it would be
burdensome for Rambus to respond to a third-party subpoena. Trial Tr. 181:13-19 (Karp). There is no contemporaneous evidence of this concern. Given the lack of any contemporaneous document supporting this position, and given the abundant evidence showing that Rambuss document retention concerns arose simultaneously with its anticipation of future litigation to be initiated by Rambus, Karps testimony that a fear of third-party subpoenas drove the document retention policy is not credible. F317. Rambus post-litigation internal communications confirm that the document
retention policy was adopted for litigation purposes, and specifically to eliminate potentially compromising documents in advance of suing DRAM manufacturers. Thus, Steinbergs January 12, 2001 email to Tate points out that some documents, including a 1992 Business Plan, had become public. Steinberg stated that he wanted to implement a new document retention policy -- new in that the IP group will attempt to execute the policy more effectively. Trial Tr. 1335:41336:24, 1337:3-9 (Tate); HTX 193. The implication of this message is that Rambus was disturbed that compromising documents that it had intended to destroy had survived and were produced in this litigation. F318. There is ample evidence that Rambus destroyed documents in its possession
knowing that they would likely be forced to be produced in litigation and intending to prevent that production. See Proposed Findings of Fact F126 to F203, supra; see also *Micron II at 1330. F319. Rambus controlled the timing of both the destruction of relevant evidence and - 65 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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the timing of the initiation of the litigation. See Proposed Findings of Fact F54 to F228, supra; see also *Micron II at 1330. F320. The evidence is that Rambus willfully destroyed documents it knew would
have to be produced in the litigation it intended to initiate and that Rambus destroyed those documents in order to keep them from being produced. See Proposed Findings of Fact F54 to F228, supra; see also *Micron II at 1331. F321. Rambus has also displayed a consciousness that it had wrongfully destroyed
evidence by attempting to conceal the facts surrounding the adoption and implementation of its document retention policy. F322. For example, when Karp circulated the new policy regarding backup tapes, he
instructed Rambus executives and other employees that if anyone had questions about the policy, they could contact him, but that he would prefer to discuss [the] issue face to face, and that if they did send e-mails, to keep them brief, and keep the distribution narrow. RTX 104; see also *Micron II at 1322. F323. At Steinbergs instruction, Karp revised one of the 1999 goals documents in
an attempt to conceal the link between shredding part[ies] and Rambuss Licensing/Litigation Readiness. See Proposed Finding of Fact 208, supra. F324. Prior to the current litigation with Hynix, Rambus had not disclosed the
amount of document destruction it had undertaken. Sean Cunningham, one of the Gray Cary attorneys on the Hitachi litigation team, was not aware of the Shred Days. Cecilia Gonzales, one of the Howrey Simon attorneys on the Hitachi and Infineon litigation teams, met with Karp, Steinberg, Tate, Crisp, Mooring, and Roberts. She was told by Attorney Steinberg about Shred Day 1998, but she only found out about Shred Day 1999 and the 2000 destruction of documents after reading the Federal Circuit decision in the appeal from the original judgment in Rambus v. Infineon. Trial Tr. 1536:3-17 (Gonzales Feb. 22, 2005 Infineon Trial Tr. at 125:11-131:6, 136:10-15). F325. The issue of spoliation was first uncovered and pursued in the Infineon case.
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of privilege or work product protection. This evidence was ultimately revealed only because of piercing orders made first in the Infineon case, and thereafter in this case. F326. Developments in the Infineon case prompted Infineon to seek a Rule 30(b)(6)
deposition from Rambus concerning its document retention policy and the destruction of documents. Steinberg was designated to testify on the companys behalf. Although it was under a duty to prepare its witnesses to testify to the full extent of the corporations knowledge, Steinberg claimed he was not aware of Shred Days in 1999 and 2000, and testified on behalf of Rambus that the Shred Day in 1998 was a one-time event. This testimony was objectively false. Steinberg insisted that no one at Rambus informed him of a second Shred Day in 1999. Trial Tr. 1471:16-1473:21 (Steinberg). F327. Thereafter, Hynix noticed a Rule 30(b)(6) deposition. Robert Kramer was
designated to testify to the companys knowledge. Kramer, again, was not informed that Shred Days were held in 1999 and 2000, and gave objectively inaccurate testimony. Trial Tr. 1075:23-1078:6, 1131:14-19 (Kramer). F328. In April 2005, Rambus informed Hynix and the Court that it had discovered
that it was in possession of backup tapes that might contain documents previously requested by Hynix. Rambus promised full disclosure about the circumstances of this discovery, but consistently asserted attorney-client privilege to block Hynix from discovering what supposedly occurred that caused Rambus to recognize, allegedly for the first time, that it possessed backup tapes containing documents it should have produced years earlier. See 7/15/05 Hynix Motion to Compel Answers to Deposition Questions Regarding Newly Discovered Backup Tapes (D.E. 1188); 8/5/05 Reply Memorandum in Support of Hynixs Motion to Compel Answers to Deposition Questions Regarding Newly Discovered Backup Tapes (D.E. 1208). F329. After Rambus revealed the existence of the 1100 erased backup tapes, it
produced documentation showing the deliberate erasure of tapes in 1998. Rambus had not produced these documents in response to earlier discovery about spoliation in the Infineon case, even though Rambus purported to have searched the Finance Department (where the - 67 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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documents were found) on multiple occasions. Trial Tr. 1096:9-1100:25 (Kramer); HTX 107; HTX 108; HTX 157. F330. Based on the above, the Court concludes that Rambuss document retention
policy was intended not as a means to clean out messy offices or files, as a routine corporate policy, or for other such reasons, but instead was intended to create an advantage for Rambus in litigation, particularly if it selected a venue in which the types of cases it was contemplating would proceed quickly. F331. Based on the factual record, the court concludes that Rambuss goal in
implementing its document retention policy was to obtain an advantage in litigation through the control of information and evidence. Accordingly, the Court finds that Rambus acted in bad faith when it spoliated documents. F332. Rambus has explicitly waived any reliance on an advice of counsel defense.
See, e.g., Trial Tr. 1801:25 (Stone Closing Argument).
O.
Findings Regarding Prejudicial Effect of Document Destruction on Current Litigation with Hynix F333. Rambus destroyed relevant, discoverable documents beginning in July 1998,
with the first major shred day occurring in September 1998. See HTX 123, HTX 125; see also 18 *Micron II at 1321-22. 19 F334. 20 1999. HTX 147; see also *Micron II at 1322. 21 F335. 22 F336. 23 relating to the prosecution of the prospective patents in suit beginning in April 1999. Trial Tr. 24 806:4-807:5, 812:3-14 (Vincent); HTX 134; HTX 135; Proposed Findings of Fact __ to __, 25 supra; see also *Micron II at 1322. 26 F337. 27 patent prosecution files to the PTO file after the patent has issued, such a practice is not 28 - 68 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
The destruction continued with another major shred day occurring in August
Rambus held a third major shred day in December 2000. RTX 216. Rambus ordered its outside patent prosecution counsel to purge his files
Setting aside the issue of whether it is proper for an attorney to conform his
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appropriate when specific litigation is anticipated or pending. 1/31/05 Crime Fraud Order, 6:27-28. F338. There is ample evidence to support all these findings, and they are not
seriously disputed even by Rambus. See *Micron II at 1322. F339. The Court therefore finds that Rambus destroyed relevant documents
beginning in July 1998 and continuing through December 2000. 1. F340. Burden of Proof Because Rambus engaged in bad faith spoliation, Rambus bears the heavy
burden to show a lack of prejudice to Hynix. See Micron II at 1328 (quoting Anderson v. Cryovac, Inc., 862 F.2d 910, 925 (1st Cir. 1988)). F341. F342. Rambus has not carried its burden to show a lack of prejudice to Hynix. Rambus kept no record of the paper or electronic documents it destroyed.
Trial Tr. 334:2-12; 524:22-525:1; 1118:15-19. Karp expected everyone at Rambus to follow the document retention policy in discarding documents. Trial Tr. 334:13-17; HTX 121. Rambus executives sent multiple reminders to the entire staff of the company directing them to participate in the shredding. HTX 024, HTX 122, HTX 123. Rambus incentivized employee participation in the shred days by throwing celebratory parties with pizza, beer, and champagne. HTX 024, HTX 123. F343. Under these circumstances, Rambus has not carried its burden of proving that
Hynix was not prejudiced by Rambuss spoliation. F344. If Hynix bore any burden on prejudice, [i]n satisfying that burden Hynix
would be required only to come forward with plausible, concrete suggestions as to what the destroyed evidence might have been. See Micron II at 1328 (citations and internal quotation marks omitted). F345. Because Hynix does not bear the burden on prejudice, it need not offer
plausible, concrete suggestions as to what the destroyed evidence might have been. Even if it is required to provide such suggestions, however, Hynix has met its burden by demonstrating that Rambus disposed of its backup tapes and documents relating to Rambuss patents, - 69 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Rambuss participation in JEDEC, contract negotiation documents, board materials, and other documents. See Proposed Findings of Fact F166 to F203, supra, and F347 to F426, infra; see also *Micron II at 1318, 1328. F346. For the reasons discussed below, the court finds that Hynix has proven
prejudice by clear and convincing evidence. 2. The Nature and Extent of Rambuss Destruction Makes It Impossible to Identify With Certainty the Specific Evidence Rambus Destroyed Rambus kept no record of the documents it destroyed. Trial Tr. 334:2-12,
F347.
524:22-525:1 (Karp); Trial Tr. 1118:15-19 (Kramer). F348. There is no way to determine the specific documents that were destroyed; all
one can do is look at the evidence that survived and from that evidence infer that relevant and material evidence was destroyed. F349. As of 1998, Rambus was a document intensive company. Rambus executives
received from 100 to 200 emails a day. There was a large volume of external communication via email, particularly later on in the companys timeframe. Trial Tr. 1582:111583:13 (Roberts). Rambus employees kept extensive paper files, and many archived electronic data on their laptop computers, on zip disks and on other removable media. Trial Tr. 274:22-275:5 (Karp); 1187:23-1188:7 (Crisp); 532:21-533:6 (Karp). Rambus IP managers had followed the practice of preserving backup tapes for most data stored in Rambuss computer system. Trial Tr. 195:18-196:4 (Karp); 1431:1-7 (Zsarnay). F350. As of 1998, Rambus regularly used its archive of backup tapes to obtain data
needed for business purposes. It was quite common to retrieve information from the backup tapes. Trial Tr. 1431:8-10 (Zsarnay). Indeed, Karp needed to resort to information from the backup tapes about a conception date for a patent before causing the erasure of Rambuss backup tape archive. Trial Tr. 224:4-226:5 (Karp). F351. Rambus erased 1279 backup tapes in July 1998, including every backup tape
from the day the company was founded. See Proposed Findings of Fact F177 to F187, supra; see also *Micron II at 1318. - 70 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F352.
Rambus cleansed the patent files kept at Rambus. Delaware Trial Tr.
1349:22-1350:15 (Ex. 10 to Roeder Decl.); see also Micron I 255 F.R.D. at 144 n.41. F353. At Rambuss direction, Vincent destroyed draft patent applications, draft
patent claims, draft patent amendments, attorney notes, and correspondence with Rambus. See Proposed Findings of Fact F188 to F203, supra; Trial Tr. 806:5-813:17; 895:3-899:3 (Vincent); see also *Micron II at 1318. F354. Rambus destroyed JEDEC-related documents from the files of Rambuss
JEDEC representatives. Trial Tr. 1168:5-1169:17 (Crisp). F355. Rambus destroyed correspondence, meeting presentations with third parties,
and other documents generated during Rambuss licensing negotiations with DRAM manufacturers. HTX 114; HTX 178; HTX 330; HTX 331; Trial Tr. 642:5-14 (Bridgewater); Trial Tr. 1402:3-10 (Tate); 609:6-616:20 (Horowitz). F356. Rambus destroyed notes, files, and other records from the files of the
inventors of the patents-in-suit. HTX 267; Trial Tr. 608:10-610:25, 616:9-20 (Horowitz); see also Proposed Findings of Fact F384 to F391, infra; *Micron II at 1328. F357. Rambus destroyed board of directors presentations, business plans and
meeting notes. HTX 112.007; HTX 114. F358. Rambus destroyed financial records and other related documents from the
finance department. Trial Tr. 1406:6-22 (Harmon). F359. Rambus destroyed e-mails and other electronic files. HTX 013.97; HTX 112;
Trial Tr. 332:16-23 (Karp); see also *Micron II at 1317-18. F360. The destroyed documents were relevant to at least the following defenses,
which would have been illuminated by evidence of a non-public nature, e.g. by internal Rambus documents: unenforceability due to patent misuse and violation of the antitrust and unfair competition laws (based in part on Rambuss conduct at JEDEC), as well as inequitable conduct. See *Micron II at 1328 (citation and internal quotation marks omitted).
- 71 -
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3.
Illustrative Examples of Destruction of Particular Documents (a) JEDEC-Related Documents at Rambus
F361.
After Crisp had left Rambus and after patent litigation had commenced, Crisp
located various JEDEC trip reports and other JEDEC-related e-mails on a Macintosh drive in his attic. Trial Tr. 756:8-757:14; 1213:15-1215:10; HTX 182; RTX 206. F362. Crisp claims to have preserved an archive that he had on his hard drive of
certain emails he sent from JEDEC meetings. Nothing in the document retention policy instructed Crisp to save these materials. He did so, according to his testimony, on his own initiative. Trial Tr. 1187:23-1191:1, 1215:1-24 (Crisp); HTX 025; RTX 041. F363. Rambus has not proven Crisps unauthorized retention of certain JEDEC-
related documents in his attic preserved a complete set of Rambus documents regarding JEDEC. F364. Crisps personal collection could not have been a complete record of
Rambuss JEDEC-related documents. Hynix has shown that there were emails within Rambus regarding the companys JEDEC strategy that Crisp neither authored nor received and which Crisp had never seen before. Conduct Trial Ex. 3024 and Conduct Trial Tr. 1012:15-1013:1 (Crisp) (Exs. 1 and 3 to Roeder Decl.). F365. There are approximately thirty to forty reports from Crisp to Rambus
employees regarding the JEDEC meetings. Compare HTX 025 with RTX 041. The Crisp emails were sent to several groups within Rambus, including the senior executives, and the business development and marketing groups. Trial Tr. 1186:20-1187:19 (Crisp). David Mooring advised Crisp that he forwarded Crisps JEDEC reports liberally. HTX 220; Trial Tr. 1185:10-1186:10 (Crisp). F366. The Crisp JEDEC emails include a few embedded responses. HTX 025.005;
HTX 025.011. Rambus has produced few emails from the archives of the recipients of Crisps emails, including emails forwarding or replying to Crisps JEDEC reports emails. Trial Tr. 981:10-982:17 (Brown); 1536:3-17 (Gonzales Feb. 22, 2005 Infineon Trial Tr. at 123) (Ex. 40 to Roeder Decl.). - 72 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F367.
The Crisp JEDEC emails addressed issues directly relevant to Hynixs
antitrust claims and defenses to Rambuss patent infringement claims. For example, on March 23, 1995, Crisp sent an email to exec and bd reporting on a lunch meeting he had with Farhad Tabrizi of Hynix at which they discussed license negotiations. The email recommended a proposal to Hynix and asked when the proposal could be discussed internally. Rambus produced no responses to this email. HTX 025.064. A day later, on March 24, 1995, Crisp reported to Mooring about another conversation with Tabrizi. No responses were produced to this email from Mooring or anyone else. HTX 025.064. F368. Hynix has been prejudiced by Rambuss deficient production of JEDEC
materials. Documents relating to Rambuss conduct at JEDEC, together with documents reflecting Rambuss instruction to its patent prosecution counsel concerning its conduct at JEDEC, could have helped resolve Hynixs antitrust violations, unfair competition, and estoppel claims. See *Micron II at 1328. F369. Based on the foregoing facts, the court finds that Rambuss production of
JEDEC e-mails was deficient, and it is reasonable to infer that Rambus destroyed potentially relevant documents relating to its JEDEC participation. (b) F370. Hynix and Rambus Licensing Negotiation
Rambuss document retention policy targeted license negotiation materials.
All drafts (including computer and word processing files) and any materials used during negotiations that are not part of the final contract, including, but not limited to, notes of meetings, telephonic conversations, drafts, slides, memos, overheads and checklists should be destroyed or systematically discarded. HTX 114. F371. Rambus instructed its employees to selectively retain only those contract-
related documents that would help refresh their recollection. HTX 112.008. F372. In July 2000, contrary to the warning of outside litigation counsel Gonzales,
Steinberg directed Rambus executives that they should continue destroying negotiation documents, despite ongoing litigation. HTX 196; Trial Tr. 1536:3-17 (Gonzales Feb. 22, 2005 Infineon Tr. at 132-33) (Ex. 40 to Roeder Decl.). - 73 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F373.
In July 1998, Rambus attempted to remove the Other DRAM clause from
the Rambus-Hynix License Agreement, which allowed Hynix to make non-compatible DRAMs using Rambus Interface Technology for a 2.5% royalty. HTX 004.004; HTX 087; Trial Tr. 1295:13-1305:11 (Brown). F374. Rambuss proposed amendment was Rambuss first written suggestion that
Rambus believed that Hynix SDRAM products might use Rambus Interface Technology. Trial Tr. 1063:221064:4 (Brown). F375. Hynix responded with a clear denial that any of its SDRAM products was
based on Rambus Interface Technology, or that Rambus was entitled to a royalty. Trial Tr. 1064:15-24 (Brown). F376. This clear denial of the use of Rambus Interface Technology is highly
relevant to Hynixs claim of equitable estoppel because Hynix could reasonably understand that Rambuss silence following Hynixs explicit denial that it was using Rambus Interface Technology was a concession that Hynix was correct in such denial. F377. By letter dated July 29, 1998, Rambus replied, We are in the process of
reviewing the details and will give you our response on all the issues soon. Trial Tr. 1064:251065:8 (Brown). F378. Rambus has not demonstrated that it produced any internal communications
reflecting Rambuss reaction to Hynixs denial that its SDRAM product used Rambus Interface Technology, or evidencing the process of reviewing the details of Hynixs letter. Trial Tr. 1065:9-13 (Tate). F379. These are exactly the type of documents that Rambus targeted for destruction.
HTX 023, HTX 178, HTX 111, HTX 112. F380. In late 1999, at the time of Hynixs merger with LGS, Hynix notified Rambus
that the merged company would affirm the 1995 Hynix-Rambus license, but asked Rambus to agree to use the royalty rate specified in the LGS license. Rambus unilaterally notified Hynix that it treated the LGS license agreement as applicable to the merged company. Trial Tr. 1037:25-1038:5 (Brown). - 74 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F381.
Rambus produced no internal communications reflecting the decision to
ignore Hynixs election of the 1995 Hynix-Rambus license and instead to treat the LGS license as governing. Such communications would be highly material to Hynixs fraud and estoppel claims. Trial Tr. 982:10-983:4 (Brown). F382. Rambus contends that many documents relating to the substitution of the
LGS agreement were withheld under claim of privilege. Trial Tr. 1859:1-23 (Stone). Only one entry in the Rambus privilege log, however, specifically relates to the Hynix agreement for that time period. HTX 216 (Entry 4048). (c) F383. Patent-Related Documents
The court concludes that Rambus disposed of some documents pursuant to its
Document Retention Policy that had a nexus to the patent claims at issue. See Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 2d 1038, 1067 (N.D. Cal. 2006) (Hynix I). (1) F384. F385. Inventor Materials
The Court finds that Rambuss production of inventor materials was deficient. Rambus knew that documentary evidence relating to the date of conception
and the inventors understanding of what they had invented would be highly material in litigation over its SDRAM patent claims. HTX 114. F386. As of 1995, Farmwald had a notebook, a model and detailed diagrams
relating to the alleged inventions dating from his work at the University of Illinois. HTX 267. These materials were not produced, and Rambus has provided no explanation for their absence. Trial Tr. 938:13-939:15 (Brown). F387. Rambus produced only a single Farmwald notebook, only three entries. The
remaining pages were blank. Trial Tr. 931:24-938:12 (Brown in re RTX 026 (Farmwald Inventor Notebook) marked for identification). F388. Inventor Horowitz had maintained extensive files in his cubicle at Rambus.
These included a collection of early technical presentations. Without consulting Horowitz or making a record of what was destroyed, Rambus employees destroyed unspecified quantities of documents, including his archive of early presentations. Trial Tr. 608:10610:25, 614:5-15 - 75 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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(Horowitz). Rambus made no showing that Horowitzs files were irrelevant. F389. Rambus produced just two notebooks prepared by Horowitz. The first
notebook is dated August 1990, and neither notebook includes any notes made prior to the April 1990 filing date of the Farmwald-Horowitz application. Trial Tr. 929:10931:23 (Brown in re RTX 027 and RTX 032 (Horowitz Inventor Notebooks), marked for identification); Trial Tr. 610:15-25 (Horowitz). No other documents relating to Dr. Horowitzs conception or development activities were produced, with the exception of a few pages contained in Dr. Farmwalds boxes. F390. Horowitz testified that Rambus destroyed some early presentations in the first
Shred Day. Trial Tr. 611:13-25; 613:15-616:20 (Horowitz). F391. Hynix has been prejudiced by Rambuss destruction of Farmwald and
Horowitz files. Inventor documents would be highly material to issues of invalidity, inventorship, and adequacy of the written description. (2) F392. Prior Art Materials
With a few exceptions, the only prior art Rambus produced consisted of
references cited to the PTO. Trial Tr. 948:15-949:1 (Brown). Prior art materials not cited to the PTO would be relevant to Hynixs defenses of invalidity, inadequate written description, and possible inequitable conduct. F393. Horowitz did an extensive search of possible prior art in advance of the April
1990 filing of the Farmwald-Horowitz application. Trial Tr. 603:22-608:9 (Horowitz). Rambus produced no documents reflecting this search. F394. It is probable that Rambus's request that BSTZ conform the patent
prosecution files resulted in the destruction, at minimum, of notes of inventor meetings and correspondence between Rambus and BSTZ attorneys regarding the patent applications. See Proposed Findings of Fact F188 to F203, supra; see also Hynix I, 591 F. Supp. 2d at 1067. The documents that Vincent destroyed at Rambuss instruction included drafts of patent applications and amendments, correspondence to and from Rambus, and drawings. Trial Tr. 892:3-898:3 (Vincent); see also *Micron II at 1318. - 76 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F395.
Many of the documents from patent prosecution files that Vincent destroyed
directly relate to the patents in suit. Compare HTX 005A with HTX 327; Trial Tr. 826:6-834:5 (Vincent). F396. Rambus claims that its request that Vincent destroy notes and other
documents not in the PTO file was consistent with common practice and consistent with Blakely Sokoloffs practice. Whether or not this is correct, it is clear that Vincent had not been following the allegedly common practice until instructed by Karp to clean his files, that documents existed in the Blakely files when reviewed by Vincent, that Vincent would not have considered it proper to destroy such documents had he been aware that litigation was anticipated, and that Vincent destroyed the documents only because Rambus instructed him to do so. Trial Tr. 806:2-807:18; 812:6-814:23; 822:3-826:5 (Vincent). F397. Immediately after Rambus settled with Hitachi in June 2000, Vincent
resumed purging his Rambus patent prosecution files and reported to Steinberg when the purge was complete. See Proposed Findings of Fact F201 to F202, supra. F398. Documents of the sort destroyed by Vincent are relevant to patent litigation
or, at a minimum, reasonably calculated to lead to the discovery of admissible evidence. Yet Rambus has argued that its destruction of certain classes of documents did no harm. For example, Rambus has argued that (a) certain of the cleansed patent files possessed by Blakely Sokoloff were copied before cleansing and so Hynix has those documents for use in this action, and (b) that certain documents from the Blakely patent files that were destroyed were privileged and so would not have been available to Hynix in this litigation in any event. The Court rejects those arguments. The pervasive and largely uncontrolled destruction of Rambus documents by Rambus employees and Rambuss outside patent counsel has made it impossible to identify precisely what Rambus destroyed. The evidence before the Court simply does not support a finding that the copying of some portion of Blakelys patent files before cleansing cured the prejudice to Hynix, or that only privileged documents were destroyed. F399. Moreover, the urgency with which Vincent devoted himself to completing the - 77 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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destruction of materials in his files indicates Rambuss continuing efforts to restrict the sources of discoverable material. This is compelling evidence of Rambuss bad faith, advantageseeking conduct. F400. Jose Moniz began working on Rambus matters at Neil Steinbergs law firm in
Virginia in January 1999. Trial Tr. 1626:15-1627:3; 1628:7-12. In late September or early October of 1999, Moniz became a Rambus employee. Trial Tr. 1626:10-12. F401. As part of his duties while working for Steinberg in early 1999, Moniz
conducted a search for prior art relating to Rambus patent applications claiming priority to the original 898 application. Trial Tr. 1629:12-25. F402. Moniz obtained copies of any prior art that he believed might be material to
one or more of Rambuss patent applications. Steinberg and Moniz discarded the materials they collected in this search, including all of their notes, except for the art they cited to the PTO. Trial Tr. 1452:1-14, 1480:23-1483:25 (Steinberg). This prior art was all submitted to the PTO. Trial Tr. 1631:23-1632:6; 1637:9-23 (Moniz). F403. Moniz and Steinberg testified that they discarded working copies of prior art
references and working copies of their notes related to their categorization of the art in order to determine to which of the Rambus patent applications the art could be material. Trial Tr. 1452:1-8; 1454:23-1455:4; 1480:23-1483:25; 1641:3-12 (Moniz). Moniz also no longer has a spreadsheet, created and maintained while he was employed by Steinberg, logging the prior art collected for disclosure to the PTO. Trial Tr. 1659:13-25. Although the Information Disclosure Statements submitted to the PTO show in which applications a particular prior art reference was cited, those statements do not identify prior art that was known to Rambus but not disclosed to the PTO. Trial Tr. 1481:7-1482:20; 1661:10-22.It is undeniable from the evidence before the Court that, had Steinberg and Moniz consulted with Johnson on this point, he would have advised them that this destruction would be improper. See Trial Tr. 1727:2-12 (Johnson) (Oh no. You dont get rid of prior art). F404. What remains of the prior art search conducted by Steinberg and Moniz is
early 1999 is no substitute for other prior art that may have existed in the prosecution of the - 78 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Farmwald-Horowitz family of patents, which began many years earlier, in 1990. Although prior art is largely composed of documents that are publicly available, that does not mean that Rambus was not aware, before 1999, of prior art that was not located by Hynix and others after 1999, ten years or more after the initial patent application was filed. Further, Rambus documents discussing a prior art reference (even where the prior art reference itself is known to Hynix) would be discoverable and could be highly relevant to the validity and enforceability of the patents in suit. F405. Notes made on or about prior art materials by Horowitz, Vincent, Rambus
engineers, Steinberg or Moniz would be highly material to the validity and enforceability of the patents in suit. Hynix has been prejudiced by the deficiency in Rambuss production of prior art materials. Rambus has not proved the absence of prejudice. F406. Documents reflecting Rambuss knowledge of relevant prior art references
could have helped Hynix establish defenses to Rambuss patent infringement claims, such as an inequitable conduct defense. See *Micron II at 1328. (3) F407. Other Patent-Related Documents
Also relevant to Hynixs claims and defenses in this case are documents
questioning the patentability of Rambuss inventions. Karp specifically instructed Rambus engineers to dispose of such documents. See Delaware Trial Tr. 1300:12-21, 1302:7-20, 1303:21-1304:14 (Hampel) (Ex. 10 to Roeder Decl.); see also Micron I, 255 F.R.D. at 142 n.27; ITC 661 I.D. at 103 (finding 29) (Ex. 35 to Roeder Decl.). F408. Rick Barth, Rambuss third employee (after Farmwald and Horowitz) is the
named inventor on a family of patents that Rambus has asserted against various controller companies. In that litigation, certain companies have argued that the Barth patents are invalid under the doctrine of obviousness-type double patenting because they are not patentably distinct from the Farmwald-Horowitz family of patents that are at issue in this case. See generally ITC 661 I.D. at 86-88 (attached as Ex. 35 to Roeder Decl.). F409. Barth maintained a file cabinet at Rambus that included patent-prosecution
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searches, and communications with attorneys. See 12/13/10 Non-Confidential Brief of Appellants NVIDIA Corp., Fed. Cir. Case No. 2010-1557, 2010-1556, at 19-20 (Ex. 36 to Roeder Decl.). The contents of Barths file cabinet were destroyed pursuant to Rambuss document retention policy. Id. at 19. F410. Although much of the record of the ITCs 661 investigation is under seal and
unavailable to Hynix, NVIDIA has argued in that case that [t]he destroyed contents of Barths filing cabinet would have shed a great deal of light on the connection between the Farmwald and Barth I patents. Id. at 64. Apparently, Barth was in possession of a conceptual tree document that listed the Barth I patents and could have helped demonstrate that the Barth I patent was a more general version of the claims in the Farmwald patent or obvious in light of the Farmwald disclosures. Id. at 64; 6/16/11 Non-confidential Reply Brief of NVIDIA, Fed. Cir. Case No. 2010-1557, 2010-1556, at 28 n.14 (Ex. 37 to Roeder Decl.). F411. To the extent the Barth tree document described Rambuss views as to how
the Barth patents were patentably distinct from the Farmwald-Horowitz patents, that document may have contradicted positions Rambus took in this case regarding the broad scope of the Farmwald-Horowitz patents. Accordingly, that document was relevant, or at least reasonably calculated to lead to the discovery of admissible evidence. F412. Although Rambus claims to have produced some conceptual tree
documents, NVIDIA contends that they are not the conceptual tree document that Barth described. See NVIDIA Reply Brief (Ex. 37 to Roeder Decl.) at 27-28. F413. Based on the information set forth above, the Court finds that Rambuss
production of inventor materials, prior art materials, and other patent-related materials was deficient. (d) Documents Regarding SDRAM and DDR Datasheets, Reverse Engineering, and Claim Charts
F414.
There is evidence that original DDR datasheets from the 1996/1997
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:-). HTX 152. F415. Rambus never produced a December 1998 report regarding reverse
engineering report regarding a Samsung DDR part. 9/22/08 Samsung Trial Ex. 4406 (Ex. 30 to Roeder Decl.). F416. The fact that Rambus did not have a copy of the December 1998 reverse
engineering report is powerful evidence of the effectiveness of Rambuss document destruction. F417. Rambus documents that were produced indicate that Rambus had prepared
various claim charts applying its patent claims to SDRAM and DDR products and data sheets. HTX 376.003; HTX 004.002 - .003. None of these claim charts were produced. (e) F418. Intel Contract Materials
There is clear and undisputed evidence that Rambus destroyed documents
relating to its contract negotiations with Intel. F419. Rambus destroyed documents relating to its contract with Intel even though
Intel was the companys most important commercial relationship. S.F. Superior Court Trial Tr. 5359:8-11; 5359:20-23 (Mooring) (Ex. 31 to Roeder Decl.). F420. Gary Harmon, Rambuss CFO, stated that he was involved in Rambuss
negotiations with Intel in 1996, but during the Karp document retention purge he destroyed everything pertaining to these contracts. HTX 331. Harmon stated that because he followed the Karp scorched earth theory of document retention and had only two documents left regarding the Intel contract negotiations. HTX 330. F421. Rambuss communications with Intel as they related to playing the IP card
were relevant, or at least potentially relevant, to Hynixs equitable estoppel claims. (f) F422. Board Materials
Rambus has contended that its document retention policy did not target
particular documents or kinds of documents for destruction. The Court rejects that contention. Rambuss document retention policy specifically targeted board of directors meeting materials, and Rambus employees were expressly instructed to destroy such materials. HTX 112; - 81 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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HTX 114. F423. Rambus argued in its closing argument that the evidence showed it produced
six board presentations. Trial Tr. 1860:141861:10 (Stone). Yet, the few board minutes in the record illustrate more presentations existed than have been produced. F424. As just one example, the March 4, 1998 board minutes refer to additional
presentations, besides Karps presentation on litigation strategy: (1) Mr. Roberts reviewed the status of the 16/18 MC, 64M and RDRAM-D projects. (2) Mr. Mooring discussed various aspects of the Intel program. HTX 031. Rambus has not shown that it produced these presentations. F425. Another example is the May 21, 1998 board minutes, which refer to
additional presentations: (1) Mr. Harmon presented an updated long range forecast for the Company. (2) Mr. Mooring summarized the current status with Intel on a renegotiation of their license agreement. (3) Mr. Roberts discussed the status of the 16/18MC, 64M and Direct RDRAM projects. HTX 035. Rambus has not shown that it produced these presentations. F426. Rambuss board presentations on these various issues, including the
development of RDRAM and its negotiations with Intel, are key to Hynixs antitrust, estoppel and fraud claims, and Hynix is prejudiced by the fact that Rambus has not produced them. 4. Rambuss Production of Some Documents Within These Categories Does Not Prove Lack of Prejudice Rambus has argued that, for each category of document identified by Hynix,
F427.
some documents within that category have been produced. Even if correct, this assertion does not prove establish lack of prejudice. F428. First, Rambus must do more than show that it produced some documents
falling into certain categories. Rambuss preservation duty extends to all documents in relevant (and potentially relevant) categories. Preservation of a few documents -- self-selected by Rambus -- does not fulfill Rambuss duty to preserve evidence. F429. The evidence is overwhelming that although a few documents in these - 82 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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categories may have escaped destruction, other documents in those categories were destroyed. F430. Rambus has failed to demonstrate that all the documents that were destroyed
were either redundant or irrelevant to the trial. See Micron II at 1328. Given that Rambus kept no records of what was destroyed, it cannot demonstrate this. 5. The Prejudice Rambus Suffered In Retrieving Evidence is Powerful Evidence that the Document Destruction was Prejudicial The purpose of Rambuss document destruction was to eliminate documents
F431.
that would be discoverable when Rambus pursued its litigation strategy against incompatible SDRAMs, but the document destruction had unintended consequences. Rambus was unable to find historical documents it needed in subsequent dealings, especially with Intel. Rambus internal communications reveal that its across-the-board destruction of documents in 1998, 1999 and 2000 prejudiced Rambus. F432. In October 1999, for example, Crisp was unable to find his original DDR data
sheet. He polled others at Rambus asking if they had a copy, saying Hopefully someone here has one that hasnt fallen victim to the document retention policy :-). HTX 152. F433. In 2000, Rambus became involved in a controversy with Intel and searched
its files looking for documents relevant to that dispute. Rambus was able to find only a few such documents, and a key player in the Intel relationship, Harmon, attributed the deficiency of written evidence to the scorched earth theory of document retention. Harmon admitted that during the Karp document retention purge I destroyed everything pertaining to these contracts. HTX 330; HTX 331. F434. In June 2000, Tate reported regarding Intel negotiation documents that, this
is all i could find in my files guess Im being zealous about document retention. HTX 255. F435. Rambus destroyed Intel-related documents despite the fact that Intel was the
companys most important relationship. See Proposed Finding of Fact F419, supra. F436. Rambuss outside counsel in the Hitachi litigation, Cecilia Gonzales
(Gonzales), was unable to find documents relevant to the Hitachi litigation, including - 83 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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financial documents, JEDEC documents and correspondence from Hitachi. Gonzales was informed that Rambus had destroyed historical documents during the 1998 document destruction program. Trial Tr. 1494:9-1499-14 (Gonzales Feb. 22, 2005 Infineon Trial Tr. at 120-124) (Ex. 40 to Roeder Decl.). F437. The fact that Rambus employees, who were in the best position to know what
once existed, recognized that Rambuss document retention program as having prejudiced Rambus in its ability to find historical documents in its dealings with Intel is powerful confirmation that the document destruction prejudiced Hynix and other DRAM manufacturers in their efforts to discover documents to support their fraud, estoppel and antitrust defenses. 6. Hynix Has Been Prejudiced In Its Ability To Obtain Truthful Testimony From Percipient Witnesses Hynix is prejudiced by Rambuss destruction of documents because Rambus
F438.
employees and agents have repeatedly claimed that they have no independent recollection of the relevant events. Without documents, full discovery of the facts is impossible. Even with documents, witnesses frequently profess a lack of recollection. Wholesale destruction of documents denies litigation opponents such as Hynix access to documents to use to refresh recollections or to impeach testimony shaped to support Rambuss version of events. This is the epitome of prejudice. F439. Tate, for example, denied it was Rambuss goal as of 1998 to get all
infringers to license their IP or sue and denied that he hired Joel Karp for that purpose. Trial Tr. 1247:3-1248:5 (Tate); HTX 003. It was not until he was shown his own e-mail describing Karps role that he capitulated, If thats what it says in the document, I assume youre reading from the document, so the document says what it says. Trial Tr. 1248:6-14 (Tate). F440. Likewise, Tate could not recall his one-on-one meetings with Karp, even after
being shown the entries in Karps notebook recording the meetings, and denied having instructed Karp to develop a licensing strategy to report to the board in March 1998. Trial Tr. 1259:10-21, 1268:18-24, 1269:17-24 (Tate); HTX 395. - 84 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F441.
Tate did not recall stating in a January 1998 meeting with Cooley Godward
that Rambus wanted to proceed quickly to either licensing or litigation. Only upon being shown a document recording the meeting did Tate concede some recollection of the event, and very little at that. Trial Tr. 1260:24-1264:25, 1265:7-1266:4 (Tate); HTX 395. F442. Tate could not recall the Karp presentation on strategic licensing and
litigation strategy in March 1998. Trial Tr. 1287:23-1288:25, 1291:4-1292:14 (Tate); HTX 031; HTX 006. F443. Tate could not recall the October 1998 strategy presentation in which, in
order to not ROCK THE DIRECT BOAT, Rambus decided to Continue in Stealth Mode During 99. Trial Tr. 1318:23-1319:16 (Tate); HTX 128. F444. Tate could not recall seeing the Nuclear Winter Scenario document other
than in preparation for litigation. HTX 004; Trial Tr. 1327:4-10, 1328:20-25, 1329:20 1330:10 (Tate). F445. F446. The Court finds that Mr. Tates testimony on these topics is not credible. Likewise, Karp had memory problems, especially in the absence of
documents. He denied discussing litigation strategy at meetings with Cooley Godward in January and February 1998. Documents withheld under a claim of privilege and work product and only produced to Hynix after trial began establish that Rambus asked Cooley Godward to develop a litigation strategy at the first meeting and that litigation strategy was discussed in the subsequent meetings of February 12 and 15, in which Karp was involved. Trial Tr. 177:21185:6 (Karp); HTX 097; HTX 403; HTX 395. F447. F448. The Court finds Mr. Karps testimony on this subject is not credible. Leal, a former Cooley Godward attorney, had no recollection of his
January 13, 1998 meeting with Karp and Tate. All he could testify to was that his notes were a record of that meeting. Trial Tr. 1531:23-1533:7, 1535:25-1536:4 (Peter Leal Dep. Tr., 10/29/05). F449. Vincent does not recall the content or timing of his meetings with Rambus
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amend the application so that it would read on JEDEC-standard DRAMs. Trial Tr. 818:1819:23 (Vincent). F450. The foregoing illustrations show that possession of documents was essential
to recover any evidence concerning material events. In these illustrations, even though documents survived, it was difficult or impossible to refresh the recollection of the witnesses. Absent these documents, there would have been no evidence to establish the facts indicated because the witnesses denied recollection. Without documents, there is no effective way that Hynix can learn of important admissions or events or challenge the witnesses lack of recollection of material facts. F451. The absence of contemporaneous documents makes it difficult to develop
testimonial evidence even from cooperative witnesses. F452. Many Rambus witnesses have either had or feigned very limited recollection
of critical events even when shown contemporaneous documents. This was evident at trial as indicated above. F453. For example, Steinberg initially testified in the Infineon litigation before
Rambuss document destruction came to light that beginning in August 1998, his work for Rambus included licensing and preparation for litigation involving third parties using SDRAMs and DDR SDRAMs. Trial Tr. 1445:25-1446:11 (Steinberg Jan. 16, 2001 Infineon Dep. Tr. at 100:1-9; Ex. 41 to Roeder Decl.). But after recognizing Rambuss exposure to unclean hands charges, Steinberg changed his story and denied that Rambus was contemplating litigation even as late as October 1999, accusing Judge Payne of spinning documents. Trial Tr. 1447:16-1448:18 (Steinberg Oct. 6, 2004 Infineon Dep. Tr. at 293:24-294:9; Ex. 41 to Roeder Decl.); HTX151. The Virginia district court found that by changing his testimony on this issue, Steinberg had testified falsely. Samsung Elecs. Co. v. Rambus Inc., 439 F. Supp. 2d 524, 558 n.26 (E.D. Va. 2006), vacated as moot and remanded by 523 F.3d 1374 (Fed. Cir. 2008). F454. Because of his self-serving effort to change his testimony, the Court finds that
Steinbergs testimony is not credible. - 86 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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F455.
Rambus has sought to exploit the benefit of its spoliation in other
proceedings as well. For example, in Infineon, Judge Payne found that Tate and Crisp had given false testimony at their depositions, and had been forced to admit their errors only when shown documents that had been discovered as a result of piercing orders. F456. Specifically, Judge Payne found that Crisp gave objectively false testimony
regarding Rambuss strategy to create a patent trap for the JEDEC SDRAM and DDR SDRAM standard. Rambus Inc. v. Infineon Techs. AG, 155 F. Supp. 2d 668, 681 (E.D. Va. 2001), vacated in part, reversed in part, affirmed in part, and remanded by 318 F.3d 1081 (Fed. Cir. 2003) (For example, Richard Crisp (a former executive, now a consultant to Rambus) testified in his first deposition that he never, ever participated in Rambuss patent drafting efforts. However, when he was confronted with documents obtained after the piercing of the attorneyclient privilege, Crisp was forced to admit that he directed which claims should be filed in response to the technology discussions at JEDEC.); Transcript of Motion to Transfer dated Aug. 23, 2005, Samsung v. Rambus, E.D. Va. Civil Action No. 3:05cv406 at 42:10-42:12 (Mr. Tate and Mr. Crisp have both been adjudicated in this court unappealed for having given false testimony.) (Ex. 42 to Roeder Decl.); see also Delaware Trial Tr. 783:10-784:11; 786:13787:4; 792:4-793:21; 795:9-23; 796:16-800:2; 806:24-807:14; 811:24-813:3; MTX 047 and MTX 133 (Ex. 16 to Roeder Decl.). F457. Judge Payne likewise found that Tate gave objectively false testimony
regarding his direct role in Rambuss strategy to create a patent trap for the JEDEC SDRAM and DDR SDRAM standard. Rambus v. Infineon Techs. AG, 155 F. Supp. 2d at 681 (Rambus Chief Executive Officer, Geoff Tate, at his first deposition, testified that he did not believe that Rambus drafted claims to cover JEDECs standard-setting work (indeed, he stated that he did not know that it was possible to amend patent claims), but, at trial he admitted, upon being prodded by reference to belatedly obtained documents, that he knew that Rambus was amending its patent applications to cover JEDEC SDRAM standard.); Transcript of Motion to Transfer dated Aug. 23, 2005, Samsung v. Rambus, E.D.Va. Civil Action No. 3:05cv406 at 42:10-42:12 (Mr. Tate and Mr. Crisp have both been adjudicated in this court unappealed for - 87 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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having given false testimony.); see also Delaware Trial Tr. 648:7-650:2; 651:3-657:16; 663:918; 664:20-665:17; 684:19-685:1; 687:6-696:5; 701:9-704:3; 721:5-729:11 and Delaware Trial Exs. MTX 48; MTX 56; MTX 93; MTX 94; MTX 183 (Exs. 10, 12, 13, 14, 15, and 17 to Roeder Decl.). F458. Crisp also testified (and Rambus has argued) that he did not believe that the
Rambus patent policy, as interpreted by the JEDEC members, required disclosure of patent applications. Late-produced documents show that Crisp was well aware that JEDEC takes the position that we should disclose patent applications. HTX 085; Trial Tr. 1153:14-1154:10 (Crisp). F459. These examples illustrate the prejudice to Hynix of the destruction of
documents which could have been used to cabin the testimony of Tate, Crisp, and other Rambus witnesses. Destruction of documents by a party whose witnesses have demonstrated, time and again, a willingness to take advantage of gaps in the documentary evidence is especially prejudicial. F460. Rambuss production of some documents does not excuse the destruction of
tons of other documents F461. Rambus has argued that Hynix was not prejudiced because Rambus produced
many documents in this action. F462. The total number of documents produced by Rambus includes many
duplicates. Trial Tr. 924:2-4 (Brown). F463. Regardless of the actual number of documents produced in this case, the
evidence is undisputed that literally tons of other evidence was destroyed. F464. Rambus destroyed an estimated 2.7 million to 2.9 million documents. See
HTX 125, HTX 147, RTX 216 (destruction of a total of 1030-1130 boxes of documents in 1998, 1999, and 2000 shred days); see also Samsung, 439 F. Supp. 2d at 564 (Rambus destroyed 2.7 million pages of documents assuming 2,600 pages per box). F465. In addition, in 1998, Rambus erased 1279 backup tapes, which included every
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This indicates that Rambus destroyed millions of documents when it scrambled its backup tapes. See Proposed Findings of Fact F177 to F187, supra. 7. Rambuss destruction of some documents that may have been irrelevant does not excuse the destruction of other documents that likely were relevant Rambus has suggested that the bulk of materials discarded in the Shred Days
F466.
was irrelevant material. There is no inventory of the material that was destroyed that would confirm this. In any event, this argument is irrelevant. F467. That Rambus shredded some items that were not relevant does not provide
any basis to conclude that some, if not most, of the materials that were destroyed were at least potentially relevant. F468. The focus of the document retention policy, as presented to Rambus
employees, was on discoverable documents, such as emails. HTX 111; HTX 112. F469. In addition, Rambus specifically directed engineers to get rid of documents
questioning the patentability of Rambuss claimed inventions. See Proposed Finding of Fact F155, supra. F470. Rambus pressured its employees to comply with the document retention
policy. HTX 024, HTX 122, HTX 123. F471. There is no evidence to suggest that all of Rambuss employees simply
ignored the instructions to get rid of discoverable evidence and instead threw away only irrelevant materials. F472. There is compelling and undisputed evidence that Rambus destroyed every
backup tape since the founding of the company, patent prosecution files, datasheets and reverse engineering reports, contract files, documents regarding its relationship with Intel, and other materials. That some irrelevant materials may have been put into the shredder along with such highly relevant information is of no consequence. 8. Rambus cannot demonstrate which documents were destroyed in the 1998 Shred Day as opposed to later Shred Days Rambus contends that, if this Court finds that Rambuss duty to preserve - 89 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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documents did not arise until sometime after the 1998 Shred Day, Hynix was not prejudiced because any relevant documents would have been destroyed in the 1998 Shred Day. The Court rejects this argument. F474. Rambuss argument is a tacit admission that relevant documents were
destroyed in the 1998 Shred Day. As set forth above, Rambuss duty arose prior to that event. F475. Moreover, events relevant to this litigation occurred between the shred days
in September 1998 and August 1999, and as a result documents regarding those events would not have been destroyed in the 1998 Shred Day. F476. For example, Rambus conducted reverse engineering of a Samsung DDR part
from October to December 1998, which was between the first and second shred days. Yet Rambus never produced a copy of the reverse engineering report. The only copy that was produced came from personal files that Karp maintained at his home. See Proposed Findings of Fact F115 to F116 and F415, supra. In addition, claim charts that were mentioned in the Karp Nuclear Winter Scenario memo from late 1998 were never produced. This is clear evidence that Rambus continued to destroy relevant, discoverable evidence after the September 1998 Shred Day. F477. Rambus also continued to prosecute the patents in suit following the 1998
Shred Day. Indeed, in October 1998, Rambus decided its Top Priority while it remained in stealth mode in 1999 was Strengthening of [Rambuss Patent] Portfolio by aggressively prosecuting claims on features of industry standard DRAM. HTX 128.002. Rambus believed that a stronger strategic patent portfolio Should Result In Quick Settlements By Several Companies. HTX 128.001. Internal Rambus documents regarding these 1999 patent prosecution efforts would not have been destroyed in the 1998 Shred Day. Meanwhile, Vincents file purge did not begin until April 1999, between the 1998 and 1999 Shred Days. See Proposed Findings of Fact F192 to F193, supra. F478. Another example of documents that likely were destroyed sometime after the
1998 Shred Day are documents relating to negotiations to remove the Other DRAM clause in Hynixs RDRAM license. As discussed, beginning in 1998 and continuing until early 2000, - 90 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Hynix and Rambus were negotiating over the Other DRAM clause in Hynixs RDRAM license. HTX 087; Trial Tr. 304:19-305:7 (Karp), 1026:23-24 (Brown). This was a matter of significant concern to Rambus, as evidenced by the fact that Tate provided strategic direction regarding the negotiations. HTX 087. This issue was not resolved before the 1998 Shred Day; as of the time Karp wrote the Nuclear Winter Scenario in late 1998 or early 1999, the Other DRAM clause was still in place. HTX 004.004. The Other DRAM clause issue was not resolved until Rambus elected in late 1999 or early 2000 to proceed under the LG license rather than the Hyundai license. Accordingly, internal Rambus documents regarding the Other DRAM clause issue would have survived both the 1998 and 1999 shred days, but few such documents have been found. Trial Tr. 1028:1-9 (Brown). The absence of such documents is prejudicial to Hynix because the Other DRAM negotiations were among the events upon which Hynix based its equitable estoppel defense in this action. F479. Another relevant series of events that occurred after the September 1998
shred day was the continued deterioration in Rambuss relationship with Intel. See HTX 244. Rambuss destruction in the second shred day or thereafter of documents regarding Rambuss relationship with Intel prejudiced Hynix because of the importance of the Rambus/Intel relationship and the playing of the IP card. HTX 006.006-.007, HTX 128.003, HTX 004. F480. Rambus was in litigation with Hynix, Micron, and Infineon at the time of its
2000 Shred Day. As is true of Rambuss other shred days, there is no record of what was destroyed in the 2000 Shred Day. Trial Tr. 334:2-12 (Karp); 524:22-525:1 (Karp); 1118:15-19 (Kramer). Steinbergs memo of July 17, 2000 indicates that Rambus continued to destroy negotiation documents in the time period between its 1999 and 2000 shred days HTX 178. This suggests that documents concerning the attempted amendment of the 1995 Hynix-Rambus RDRAM license agreement in July 1998, documents concerning the extinction of the 1995 Hynix-Rambus license agreement in late 1999, and/or documents regarding Rambuss demand in the summer of 2000 that Hynix take a license for SDRAM and DDR may have been destroyed in Shred Day 2000.
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P.
Findings Regarding Appropriate Remedy F481. Dismissal of Rambuss patent claims is the proper remedy for Rambuss
spoliation of documents. Any other remedy would be inadequate. F482. Rambus destroyed millions of documents and over 1200 backup tapes
covering a wide range of relevant subjects and a period of more than a decade. See Proposed Findings of Fact F177 to F187, supra. Prejudice must be presumed from such extensive destruction of documents and other materials. Rambus has not proved the absence of prejudice, and there is no way that Hynix or the Court can determine the precise nature and content of the evidence lost or its effect on a merits adjudication. F483. Rambus destroyed documents -- including patent prosecution files -- as part
of a worldwide litigation strategy affecting a major commodity. The public interest in the full and fair adjudication of patent claims of this scope is great. HTX 006; HTX 097; HTX 368; Trial Tr. 181:20182:9 and 188:19-189:02 (Karp); 806:5807:5 (Vincent); 1715:211716:9 (Johnson). F484. As discussed above, Rambus used its best efforts to cover up the fact of
spoliation. See Proposed Findings of Fact F321 to F330, supra. F485. The remedy in a case like this must consider the need for deterrence of like
conduct and the risk that this or similar conduct would go undetected in other cases. Rambus has consistently and forcefully relied on the attorney client privilege and the work product protection to screen the most important evidence of spoliation from its adversaries. Such evidence was only uncovered by reason of piercing orders entered first in the Infineon case and then in this case. The risk that spoliation would go undiscovered or would successfully be passed off as a legitimate document retention policy is high. This emphasizes the need for a remedy that will deter others from attempting spoliation. F486. Any remedy short of dismissal would not contribute to deterrence of similar
conduct. Rather, Rambus would benefit from its spoliation because Hynixs ability to challenge the validity and enforceability of Rambus patents has been irrevocably compromised. F487. Because it is impossible to know with certainty what evidence was destroyed, - 92 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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this case does not lend itself to an evidentiary sanction. The exclusion of evidence or other evidentiary sanction does not remedy the prejudice caused to Hynix by Rambuss destruction of documents, which deprived Hynix of evidence it could have used at trial. Given the widespread nature of the destruction and the fact that Rambus kept no records of what was destroyed, the evidence cannot be reconstructed. Permitting Rambus to proceed to trial on its claims, even with evidentiary sanctions in place, fails to serve the deterrence aims of an appropriate sanction. If spoliation such as that committed by Rambus was sanctionable only by evidentiary sanctions, this would encourage other bad faith litigants to destroy documents where the resulting evidentiary sanction would be less harmful than the documents. F488. Monetary sanctions are wholly insufficient as a sanction for Rambuss harms.
Such a sanction would not reconstruct the evidence that was lost that would have supported Hynixs claims and defenses. It would not deter other bad faith litigants, who could calculate whether the amount they might have to pay as spoliation sanctions is less than the amount they could win through a tainted trial. To even begin to calculate the monetary costs incurred by Hynix in connection with litigating issues related to Rambuss spoliation would only subject Hynix to months of not years more litigation on this issue, which is hardly a suitable remedy. F489. New trials on the patent and conduct issues, in which Hynix would be
permitted to introduce evidence of Rambuss spoliation and the court would give the juries adverse inference instructions, are the best -- although still inadequate -- alternative to a dismissal sanction. As with other alternative sanctions, however, adverse inference sanctions would not entirely deter future spoliation or remedy the prejudice to Hynix. F490. Rambus has already been adjudicated guilty of unclean hands and its patent
claims dismissed in Rambus v. Infineon. (Memorandum Opinion dated November 8, 2005, Rambus v. Infineon, EDVA Civil Action No. 3:05cv406 at 3). Rambus prevented the publication of Judge Paynes opinion on this subject by entering into a settlement agreement with Infineon that was contingent upon suppression of Judge Paynes opinion. There is a public interest in consistency of result in patent cases. F491. Rambus also had its patents held unenforceable as a sanction for spoliation in - 93 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Micron I. Rambus unsuccessfully appealed Judge Robinsons finding of spoliation. In contravention of the Federal Circuits directive that this case and the Micron case should be decided consistently (Micron II at 1341-42, 1342 n.1, 1347), Rambus has opposed any effort to coordinate the remand proceedings here with the remand proceedings in Micron. Rambus has also consistently opposed every request that Judge Robinsons decision and the Federal Circuits decision on appeal in that case be accorded collateral estoppel effect in other proceedings. Rambuss tactics give every appearance that it is attempting to accelerate the remand proceedings in this case and delay the remand proceedings in the Micron case. F492. Based on this courts consideration of the degree of bad faith and prejudice
and the efficacy of lesser sanctions, this court concludes that dismissal is the only sanction that will serve the trifold aims of deterring future spoliation of evidence, protecting Hynixs interests, and remedying the prejudice Hynix suffered as a result of Rambuss actions. See Proposed Conclusion of Law C109, infra. Given the scope of Rambuss spoliation, it is impossible for the court to design lesser sanctions that would enable fair resolution of this case on the merits. F493. [Alternative finding if court will not order dismissal: Based on this courts
consideration of the degree of bad faith and prejudice and the efficacy of lesser sanctions, this court concludes that it will hold new trials on the patent and conduct issues previously tried in the 2006 patent trial and the 2008 conduct trial in this case. Hynix shall be permitted to introduce evidence regarding Rambuss spoliation in those trials, and the court shall give the jury an appropriate adverse inference instruction. This sanction is necessary in order to deter future spoliation of evidence, protect Hynixs interests, and remedy the prejudice Hynix suffered as a result of Rambuss actions. See Proposed Conclusion of Law C109, infra.]
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C1. 1367(a). A. Spoliation C2.
III. CONCLUSIONS OF LAW This Court has jurisdiction pursuant to 28 U.S.C. 1331, 1338(a), and
Spoliation of evidence is the destruction or material alteration of evidence,
or [] the failure to properly preserve property for anothers use as evidence in pending or reasonably foreseeable litigation. Hynix II at 1344-45; Micron II at 1320 (quoting Silvestri v. General Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001)). C3. A party can be sanctioned for destroying evidence if it had a duty to preserve
it. Micron II at 1320 (citing Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y. 2003)). C4. [G]iv[ing] free reign to destroy documents to the party with the most control
over, and potentially the most to gain from, their destruction s. . . fails to protect opposing parties and the courts interests in uncovering potentially damaging documents, and undermines the level evidentiary playing field created by discovery that lies at the heart of our adversarial system. Hynix II at 1346-47 (citing Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir. 1995)). C5. The duty to preserve evidence begins when litigation is pending or
reasonably foreseeable. Micron II at 1320 (quoting Silvestri, 271 F.3d at 590, and citing West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999)). C6. Whether litigation is reasonably foreseeable is an objective standard, asking
not whether the party in fact reasonably foresaw litigation, but whether a reasonable party in the same factual circumstances would have reasonably foreseen litigation. Micron II at 1320. C7. The standard for determining when litigation is reasonably foreseeable does
not carry a gloss requiring that litigation be imminent, or probable without significant contingencies. Hynix II at 1345 (quoting Micron II at 1320).
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C8.
Rambuss argument that litigation is reasonably foreseeable only when it is
imminent or probable without significant contingencies would place an unduly restrictive gloss on the proper standard. Such a restrictive gloss is contrary to authority and would extend unnecessary generosity to alleged spoliators. Micron II at 1320 (citing Silvestri, 271 F.3d at 591; West, 167 F.3d at 779; Kronisch v. United States, 150 F.3d 112, 126-27 (2d Cir. 1998); MOSAID Techs. Inc. v. Samsung Elecs. Co., 348 F. Supp. 2d 332, 336 (D.N.J. 2004); Scott v. IBM Corp., 196 F.R.D. 233, 249 (D.N.J. 2000); United States v. Rockwell Intl, 897 F.2d 1255, 1266 (3d Cir. 1990)). C9. Thus, the proper standard for determining when the duty to preserve
documents attaches is the flexible one of reasonably foreseeable litigation, without any additional gloss. Micron II at 1321. C10. The exact date at which litigation was reasonably foreseeable is not critical
to determining whether Rambus engaged in spoliation. The real question is binary: whether litigation was reasonably foreseeable before or after any of the occasions on which Rambus destroyed documents and other materials. See Micron II at 1322. C11. The determination of when the duty to preserve evidence begins is
informed by a number of policy considerations, including the need to preserve the integrity of the judicial process in order to retain confidence that the process works to uncover the truth. Hynix II at 1345 (quoting Silvestri, 271 F.3d at 590). C12. [W]here a party has a long-standing policy of destruction of documents on
a regular schedule, with that policy motivated by general business needs, which may include a general concern for the possibility of litigation, destruction that occurs in line with the policy is relatively unlikely to be seen as spoliation. Micron II at 1322. C13. By contrast, a partys implementation of a document retention policy as an
important component of a litigation strategy makes it more likely that litigation was reasonably foreseeable. Micron II at 1322-23 (citing United States v. Adlman, 134 F.3d 1194, 1203 (2d Cir. 1998)). C14. A document retention policy adopted or utilized to justify the destruction of - 96 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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relevant evidence is not a valid document retention policy. Hynix I, 591 F. Supp. 2d at 1060 (citing Carlucci v. Piper Aircraft Corp., 102 F.R.D. 472, 486 (S.D. Fla. 1984)). C15. Destruction of documents pursuant to a document retention policy may
constitute spoliation if the destroyed documents may be relevant to reasonably foreseeable litigation. See, e.g., Lewy v. Remington Arms Co., Inc., 836 F.2d 1104, 1112 (8th Cir. 1988) ([I]f the corporation knew or should have known that the documents would become material at some point in the future then such documents should have been preserved.); see also Silvestri, 271 F.3d at 590; Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 108 (2d Cir. 2002). C16. Thus, a corporation cannot blindly destroy documents and expect to be
shielded by a seemingly innocuous document retention policy.). Lewy, 836 F.2d at 1112; see also Silvestri, 271 F.3d at 590; Residential Funding, 306 F.3d at 108. C17. When litigation is reasonably foreseeable, document retention programs must
be halted, not launched. See Silvestri, 271 F.3d at 591; Kronisch, 150 F.3d at 126-27; Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 137 (S.D. Fla. 1987); Wm. T. Thompson Co. v. Gen. Nutrition Corp., Inc., 593 F. Supp. 1443, 1455 (C.D. Cal. 1984). C18. Even if the terms of a document retention policy are not inappropriate, the
timing of the adoption and implementation of the policy may render it improper. See 1/31/05 Crime Fraud Order at 10:3-4 (While these policies may have been appropriately implemented in the absence of anticipated litigation, they were inadequate given the evidence of Rambuss progressing litigation plan.). C19. In the context of patent infringement litigation, [w]hile it may not be enough
to have a target in sight that the patentee believes may infringe, the knowledge of likely infringing activity by particular parties makes litigation more objectively likely to occur because the patentee is then more likely to bring suit. Micron II at 1323. C20. Even if it is standard practice to remove documents from patent prosecution
files in order to conform them to the USPTO file after the patent has issued, such a practice would not be appropriate when specific litigation is anticipated or pending. - 97 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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1/31/05 Crime Fraud Order at 6 n.4. C21. Where the alleged spoliator took several steps in furtherance of litigation
prior to destroying documents and other materials, that is another factor that makes litigation more objectively likely to occur. See Micron II at 1323-24. C22. Even if contingencies exist, [c]ontingencies whose resolutions are reasonably
foreseeable do not foreclose a conclusion that litigation is reasonably foreseeable. Hynix II at 1346; see also Micron II at 1324. C23. It would be inequitable to allow a party to destroy documents it expects will
be relevant in an expected future litigation, solely because contingencies exist, where the party destroying documents fully expects those contingencies to be resolved. Hynix II at 1346 (citing United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002)). C24. [I]t would make little sense to enjoin document destruction only when the
party clears all the hurdles on the litigation track, but endorse it when the party begins the race under the reasonable expectation of clearing those same hurdles. Micron II at 1321. C25. [W]hen Rambus sued Hitachi on January 18, 2000, it was the plaintiff-
patentee, and its decision whether to litigate or not was the determining factor in whether or not litigation would in fact ensue. Micron II at 1325. C26. It is more reasonable for a party in the position of a patentee to foresee
litigation that does in fact commence, than it is for a party in the position of being accused of infringement. Micron II at 1325. C27. Although document destruction occurring during the course of a long-
standing and untroubled licensing relationship related to the patents and the accused products that ultimately become the subject of litigation is relatively unlikely to constitute spoliation, where (as here) the parties do not have a longstanding and mutually beneficial relationship regarding the accused products, this does not undermine a conclusion that litigation was reasonably foreseeable. Micron II at 1325. C28. The important inquiry is not whether a particular document made litigation
reasonably foreseeable, but whether the totality of the circumstances as of the date of the - 98 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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document destruction made litigation reasonably foreseeable. Micron II at 1325. C29. No other court has concluded that Rambuss duty to preserve documents did
not begin until after Rambuss 1999 shred day, as Rambus has argued. Hynix II at 1346. C30. This court has previously found that by February 1998, Rambus had begun
to develop its litigation strategy against competitors in the industry and that as of the first Shred Day in September 1998 Rambus had formulated its litigation campaign and demonstrated its intent to commence litigation against accused infringers. 1/31/05 Crime Fraud Order at 7:15-19. C31. The relevant considerations compel a finding that litigation was reasonably
foreseeable prior to Rambuss Second Shred Day. Hynix II at 1347. C32. Rambus destroyed documents during its second shred day in contravention
of a duty to preserve them and, thus, engaged in spoliation. Micron II at 1325-26. C33. Based on the findings of fact set forth above, the Court finds that Rambuss
duty to preserve documents began prior to Rambuss destruction of its backup tapes in July 1998. C34. The duty to preserve extends to what [a litigant] knows, or reasonably
should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, [and/or] is reasonably likely to be requested during discovery. Wm. T. Thompson Co., 593 F. Supp. at 1455; see also Kronisch, 150 F.3d at 126-27; Telectron, 116 F.R.D. at 127. C35. The duty to preserve evidence extends to all potentially relevant material, not
simply to some sample of documents selected or located by Rambus. See Micron II at 1328; Hynix II at 1346; Leon v. IDX Sys. Corp., 464 F.3d 951, 960 (9th Cir. 2006); Vodusek, 71 F.3d at 156. C36. Because Rambus destroyed documents and other materials that may have
been relevant or that were reasonably calculated to lead to the discovery of admissible evidence after its preservation duty attached, Rambus engaged in spoliation.
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B.
Spoliation Sanctions Under The Micron Ii Framework C37. District courts have the inherent power to control litigation by imposing
sanctions appropriate to rectify improper conduct by litigants. Micron II at 1326 (quoting West, 167 F.3d at 779, and citing Schmid v Milwaukee Elec. Tool. Corp., 13 F.3d 76, 78 (3d Cir. 1994)). C38. The Court has the responsibility and inherent power to sanction willful
destruction of evidence. See Telectron, 116 F.R.D. at 133-34 & n.10; Wm. T. Thompson Co., 593 F. Supp. at 1455. C39. F.3d at 958). C40. In selecting an appropriate sanction, the court should consider the degree of Such sanctions may include dismissal. Micron II at 1326 (citing Leon, 464
bad faith and prejudice and the efficacy of other lesser sanctions. Micron II at 1328. 1. C41. Bad Faith
A spoliating party acts in bad faith where it intended to impair the ability of
the potential defendant to defend itself. Micron II at 1326 (quoting Schmid, 13 F.3d at 80, and citing Faas v. Sears, Roebuck & Co., 532 F.3d 633, 644 (7th Cir. 2008); In re Hechinger Inv. Co. of Del., Inc., 489 F.3d 568, 579 (3d Cir. 2007); Anderson, 862 F.2d at 925; Gumbs v. Intl Harvester, Inc., 718 F.2d 88, 96 (3d Cir. 1983)). C42. The fundamental element of bad faith spoliation is advantage-seeking
behavior by the party with superior access to information necessary for the proper administration of justice. Micron II at 1326. C43. C44. Litigations are fought and won with information. Micron II at 1327. There are ample facts in this case upon which the court concludes that the
raison detre for Rambuss document retention policy was to further Rambuss litigation strategy by frustrating the fact-finding efforts of parties adverse to Rambus. See Micron II at 1322. C45. C46. This is a natural reading of getting [b]attle ready. Micron II at 1322. The following key facts, among others, lead the court to conclude that - 100 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Rambus acted in bad faith: (1) facts tending to show that Rambuss document retention policy was adopted within the auspices of a firm litigation plan rather than merely carried out despite the reasonable foreseeability of litigation, (2) facts tending to show the selective execution of the document retention policy, (3) facts tending to show Rambuss acknowledgment of the impropriety of the document retention policy, and (4) Rambuss litigation misconduct. Micron II at 1327. C47. Rambuss bad faith is evidenced by the fact that it adopted a document
retention policy in the first instance as part of its planning for litigation. There is no evidence that, prior to the March 1998 board discussion of a document retention policy in the context of Rambuss licensing and litigation strategy, a document retention policy had ever been discussed at Rambus in any other context. C48. The fact that creation and implementation of Rambuss document retention
policy was the responsibility of the same Rambus executive who was responsible for developing Rambuss litigation strategy is further evidence of Rambuss bad faith. C49. Rambus explicitly focused its document retention policy on the destruction of
documents that are discoverable in litigation. The term discoverable is a term of art. Documents are not discoverable unless they either contain evidence that supports a claim or defense or they are reasonably calculated to lead to the discovery of admissible evidence. Fed. R. Civ. P. 26(a), (b). C50. This court has previously concluded that Rambus anticipated litigation at
the time it implemented its document retention policy. 1/31/95 Crime Fraud Order at 6:8-9. C51. There is no evidence that the Rambuss document retention policy was
adopted for benign housekeeping purposes. There is no contemporaneous evidence suggesting that there was a problem with clutter within Rambus. The idea of creating a document retention policy did not originate with anyone responsible for Rambuss facilities or operations, but with the executive responsible for developing Rambuss litigation strategy. The fact that Rambus required its outside patent counsel to comply with its document retention policy is further evidence that the document retention policy was - 101 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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adopted as part of Rambuss litigation strategy rather than for other purposes. C52. Rambus also acted in bad faith by implementing its document retention
policy selectively. Rambus searched for and retained favorable documents, such as inventor notebooks and proof of alleged dates of invention, sometimes at great effort. At the same time, Rambus specifically directed its employees to destroy documents that questioned the patentability of Rambuss inventions. C53. [P]ursuant to Rambuss document retention policy, employees were
encouraged to discard certain categories of documents. 1/31/05 Crime Fraud Order at 11:12. C54. The evidence demonstrates that Rambus was aware that its document
retention policy was improper. Karp encouraged Rambus employees not to discuss the policy on email. After the shred days, Rambus employees knowingly referred to the policy as a scorched earth purge to which relevant documents had fallen victim. C55. Rambus also attempted in bad faith to cover up the facts regarding its
spoliation. When Rambus initiated litigation against JEDEC-standard DRAMs, it did not inform its litigation counsel about its 1999 and 2000 Shred Days. When the issues of spoliation was first uncovered and pursued in the Infineon case, Rambus withheld the most significant evidence from production under claims of privilege or work product protection. Although the evidence was subsequently revealed pursuant to piercing orders, Rambus has repeatedly and consistently attempted to restrict the availability of that evidence. Rambuss efforts to conceal information relating to its spoliation continue to this day, when it has opposed Hynixs effort to present the court with spoliation-related evidence developed in the course of other spoliation proceedings since this court held its original spoliation trial in 2005. Several witnesses Rambus designated to testify in Rule 30(b)(6) depositions on subjects relating to spoliation gave false testimony because Rambus did not inform them of relevant facts, such as the shred days subsequent to 1998. Rambus withheld information about its destruction of backup tapes until years after that information should have been produced in response to discovery requests in this and other actions. - 102 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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C56.
Rambuss bad faith is also evidenced by its desire to execute the policy more
broadly and ensure strict compliance in 2000, when it was involved in litigation with Hitachi, and again in 2001, when it was actively involved in litigation with Micron, Hynix, and Infineon. C57. In addition to committing spoliation, Rambus has engaged in litigation
misconduct in this and related litigation, including but not limited to offering witness testimony that is incomplete, lacks credibility, and, in some cases, is false. Rambus has attempted to conceal the full scope of its spoliation from the parties and courts engaged in proceedings relating to Rambuss spoliation. Rambus has also attempted to avoid the preclusive effect of the Virginia district courts decision in the Infineon case, and has fought the application of collateral estoppel to the Delaware district courts decision. All of this misconduct has multiplied the spoliation proceedings and impaired the full and final resolution of this issue. C58. A witnesss credibility may be impeached by evidence of his prior inconsistent
testimony. United States v. Adamson, 291 F.3d 606, 612 (2002); see also United States v. Arteaga, 117 F.3d 388, 397 n.18 (9th Cir. 1997) (If a witness says X on the stand, his out-ofcourt statement not-X impeaches him, whether X is true or not.); United States v. Bao, 189 F.3d 860, 866 (9th Cir. 1999) (A prior inconsistent statement is admissible to raise the suggestion that if a witness makes inconsistent statements, then his entire testimony may not be credible . . . .). C59. Witness testimony that is contradicted by contemporaneous documents
should not be credited. See, e.g., United States v. U.S. Gypsum Co., 333 U.S. 364, 396 (1948); Purex Corp. v. Procter & Gamble Co., 664 F.2d 1105, 1108 (9th Cir. 1981); Doe v. Menefee, 391 F.3d 147, 168 (2d Cir. 2004). C60. Rambus was adjudicated guilty of unclean hands after a full trial in the
Infineon case in the Eastern District of Virginia. This Court held in an order dated April 25, 2005 that the basis for the Infineon courts finding of unclean hands was not sufficiently clear to support a collateral estoppel in this case. It does not follow, however, that the - 103 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Virginia courts decision is irrelevant to this proceeding. C61. The record in this case establishes that Rambus entered into private
settlement with Infineon -- a fundamental condition and consideration of which was preempting publication of the Virginia courts unclean hands decision. Settlement agreements designed to nullify the precedential effect of fully adjudicated decisions tend to promote inconsistency of judicial rulings and waste of judicial resources. U.S. Bancorp Mortg. Co. v. Bonner Mall Pship, 513 U.S. 18, 26-28 (1994); Hartley v. Mentor Corp., 869 F.2d 1469, 1473 (Fed. Cir. 1989). C62. In earlier proceedings in the Infineon matter, the Virginia court found that
Rambus witnesses had deliberately given false testimony on issues pertaining to Rambuss behavior as a member of JEDEC. Specifically, Judge Payne found that Richard Crisp and Geoff Tate gave objectively false testimony. Rambus Inc. v. Infineon Techs. AG, 155 F. Supp. 2d at 681 (For example, Richard Crisp (a former executive, now a consultant to Rambus) testified in his first deposition that he never, ever participated in Rambuss patent drafting efforts. However, when he was confronted with documents obtained after the piercing of the attorney-client privilege, Crisp was forced to admit that he directed which claims should be filed in response to the technology discussions at JEDEC.); Id. at 681-82 (Rambus Chief Executive Officer, Geoff Tate, at his first deposition, testified that he did not believe that Rambus drafted claims to cover JEDECs standard-setting work (indeed, he stated that he did not know that it was possible to amend patent claims), but, at trial he admitted, upon being prodded by reference to belatedly obtained documents, that he knew that Rambus was amending its patent applications to cover JEDEC SDRAM standard.). C63. These findings were made in the course of a full trial of the merits. They
were not challenged on appeal, and became binding adjudications of fact in the Infineon case. Transcript of Motion to Transfer dated Aug. 23, 2005, Samsung v. Rambus, E.D.Va. Civil Action No. 3:05cv406 at 42:10-42:12 (Mr. Tate and Mr. Crisp have both been adjudicated in this court unappealed for having given false testimony.); (Ex. 42 to Roeder Decl.). C64. This court has previously found to be significant Judge Paynes findings - 104 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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regarding Crisps false testimony about his involvement in Rambuss patent-drafting efforts. 1/31/05 Crime Fraud Order at 12:4. C65. Rambuss patents were held unenforceable after a full trial in the Micron case
in the District of Delaware. Although the Federal Circuit has remanded that case for further consideration of the issues of bad faith, prejudice, and appropriate sanction in the context of a courts inherent power to sanction spoliation, the Federal Circuit affirmed the Delaware district courts determination that Rambus spoliated documents and did not vacate that courts other findings. Micron II at 1332. C66. The Delaware district court found that the litigation record in that case was
replete with misrepresentations on the part of Rambus and listed a number of examples. Micron I, 255 F.R.D at 147-48. C67. The Administrative Law Judge in the ITCs 661 investigation found that
throughout that case, Rambus and its counsel have made a number of both misleading and irrelevant claims, which he discussed in his Initial Determination. ITC 661 Initial Determination at 103-108. C68. This court, too, has recognized that Rambus witnesses lack credibility on key
issues, as set forth in the findings of fact above. C69. Hynix has shown by clear and convincing evidence that Rambus engaged in
willful across-the-board destruction of potentially relevant evidence in 1998, 1999 and 2000. C70. Hynix has also shown by clear and convincing evidence that Rambus gave
misleading and evasive answers in discovery intended to reveal the spoliation of evidence in violation of Rambuss duties under Rule 30(b)(6). C71. Hynix has likewise shown by clear and convincing evidence that Rambus
failed to disclose over a period of at least three years the existence of backup tapes containing relevant information, and Rambus has failed to present any credible justification for this failure. C72. Rambus has formally disavowed reliance on advice of counsel. This
constituted a waiver of that defense to the extent it ever was asserted. See Columbia Pictures - 105 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Television, Inc. v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1196 (9th Cir. 2001) (holding district court had discretion to exclude evidence of defendants reliance on advice of counsel where defendant sought to argue that he continued his infringing activities based on the advice of his attorney, while at the same time refusing to answer questions regarding relevant communications with counsel until the eleventh hour); Troubl v. The Wet Seal, Inc., 179 F. Supp. 2d 291, 304 (S.D.N.Y. 2001) (finding defendant waived the defense of advice of counsel by objecting based on attorney-client privilege throughout discovery); 10/16/05 Order to Exclude Advice of Counsel Defense; 10 Tr. 1801:25 (Stone Closing Argument). C73. Rambus, therefore, cannot assert that its attorneys made a mistake about
Rambuss duty to preserve evidence, or that Rambus relied on the attorneys mistaken advice in good faith. C74. Accordingly, the court concludes that Rambuss goal in implementing its
document retention policy was to obtain an advantage in litigation through the control of information and evidence. See Micron II at 1327. C75. Indeed, Rambuss destruction of documents in preparation of its suit against
the DRAM manufacturers could reasonably constitute a crime. Hynix II at 1347. 2. C76. Prejudice
Prejudice to the opposing party exists where spoliation materially affect[s]
the substantial rights of the adverse party and is prejudicial to the presentation of his case. Micron II at 1328 (quoting Wilson v. Volkswagen of Am., Inc., 561 F.2d 494, 504 (4th Cir. 1977)). C77. Prejudice occurs when the innocent party would be forced to rely on an incomplete
and spotty record at trial. Leon, 464 F.3d at 959 ; Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337, 354 (9th Cir. 1995); In re Cecconi, 366 B.R. 83, 110 (Bkrtcy. N.D. Cal. 2007). C78. If it is shown that the spoliator acted in bad faith, the spoliator bears the
heavy burden to show a lack of prejudice to the opposing party because [a] party who is guilty of . . . intentionally shredding documents. . . should not easily be able to excuse the - 106 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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misconduct by claiming that the vanished documents were of minimal import. Micron II at 1328 (quoting Anderson, 862 F.2d at 925, and citing Coates v. Johnson & Johnson, 756 F.2d 524, 551 (7th Cir. 1985)). C79. There is a presumption of prejudice in cases of knowing destruction of
evidence, which may be refuted only by clear and convincing evidence demonstrating that the withheld material was in fact inconsequential. Anderson, 862 F.2d at 925. C80. The court concludes that Rambus bears the heavy burden of showing a lack
of prejudice because Rambus engaged in bad faith spoliation. See Micron II at 1328; Anderson, 862 F.2d at 925. C81. If, Hynix bears any burden with regard to prejudice, it must only come
forward with plausible, concrete suggestions as to what [the destroyed] evidence might have been. Micron II, at 1328 (quoting Schmid, 13 F.3d at 80, and citing Leon, 464 F.3d at 960). C82. If Hynix must make any showing with respect to spoliation, it is not required
to identify which files were destroyed or how they might have been used. See Micron II at 1328 (quoting Leon, 464 F.3d at 960). C83. Nor does Hynix, as the innocent party, need to demonstrate with certainty
that the destroyed materials were in fact relevant. See Hynix II at 1346 (stating that it is inequitable to permit a party to destroy documents that it expects will be relevant) (emphasis added); Leon, 464 F.3d at 960 (affirming dismissal as sanction for destruction of documents where any number of the many destroyed files could have been relevant to [the innocent partys] claims or defenses, although it is impossible to identify which files and how they might have been used) (emphasis added); cf. Kitsap Physicians Serv., 314 F.3d at 1001 (Defendants engage in spoliation as a matter of law only if they had some notice that the documents were potentially relevant to the litigation before they were destroyed) (emphasis added) (citation and internal quotation marks omitted). C84. Although the burden of proving prejudice is not on Hynix, the court
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C85.
There is ample evidence that Rambus destroyed relevant, discoverable
documents beginning in July 1998. Micron II at 1321-22. C86. Indeed, this court has previously concluded that Rambusdestroyed relevant
evidence. See Hynix I, 591 F. Supp. 2d at 1067 (Hynix has made a showing that Rambus destroyed some relevant documents.); see also 1/31/05 Crime Fraud Order at 12:5-8 (The destruction of some JEDEC-related materials at a time when litigation was being considered, the discarding of some patent prosecution records, and the questioned credibility of the Rambus[] witnesses to the disposal of records does provide reasonable cause to believe that relevant material documents were destroyed pursuant to Rambuss document retention policy.) C87. Documents of the type Rambus destroyed were relevant, or at least
reasonably calculated to lead to the discovery of admissible evidence, in the litigation Rambus was planning. C88. Rambus destroyed documents regarding its participation in JEDEC.
Documents relating to Rambuss conduct at JEDEC, together with documents reflecting Rambuss instructions to its patent prosecution counsel concerning its conduct at JEDEC, could have helped resolve [DRAM companies] claims relating to patent misuse, antitrust violations, and unfair competition. Micron II at 1328. C89. Rambuss strategy for participating in JEDEC was to attempt to patent the
features under discussion for inclusion in industry standards. Internal Rambus communications about JEDEC would have been relevant, or at least reasonably calculated to lead to the discovery of admissible evidence, because they may have demonstrated that Rambus had patent applications pending during its membership in JEDEC that Rambus believed would cover the standards under discussion at JEDEC. Such evidence would have helped Hynix demonstrate that Rambus breached its disclosure duty to JEDEC. See Hynix II at 1348. C90. For example, among the documents Rambus and its outside patent counsel
destroyed were prior art references and draft patent amendments. Rambus also destroyed license negotiation materials. Such documents are relevant, or at least reasonably - 108 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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calculated to lead to the discovery of admissible evidence, in patent infringement lawsuits. See, e.g., Therasense, Inc. v. Becton, Dickinson & Co., Nos. 2008-1512-14, 2008-1595, 2011 U.S. App. LEXIS 10598, at *32 (Fed. Cir. May 25, 2011) (en banc) (holding that proof that an applicant knew of a prior art reference is one element of an inequitable conduct defense); Dippin Dots, Inc .v. Mosey, 476 F.3d 1337, 1348 (Fed. Cir. 2007) (recognizing court can consider draft patent applications in assessing failure to disclose prior art); Intel Corp. v. Commonwealth Scientific, 455 F.3d 1364, 1371 (Fed. Cir. 2006) (stating that patent holders representations during license negotiations as to the scope and validity of its patent are central to its claims of infringement, invalidity, and patent misuse) C91. Documents reflecting Rambuss knowledge of relevant prior art references
could have helped resolve [DRAM companies] inequitable conduct claims. Micron II at 1328. C92. Prior art search results, correspondence with the patent office and
communications between Rambus and its patent counsel destroyed from Rambus' patent files would have been discoverable in this litigation. These documents would not have necessarily been protected by the attorney-client privilege because the attorney-client privilege is narrowly construed. United States v. Evans, 113 F.3d 1457, 1461 (7th Cir. 1997); United States v. White, 970 F.2d 328, 334 (7th Cir. 1992); Agfa Corp v. Creo Prods., Inc., Civ. No. 00-10836-GAO, 2002 U.S. Dist. LEXIS 14269, at *5-6 (D. Mass. Aug. 1, 2002); Sneider v. Kimberly-Clark Corp., 91 F.R.D. 1, 7-9 (N.D. Ill. 1980); Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146, 1169 (D.S.C. 1974). C93. Patent prosecution documents are not protected by work product because
such documents are not prepared in anticipation of litigation. Status Time Corp. v. Sharp Elec. Corp., 95 F.R.D. 27, 29 (S.D.N.Y. 1982); Softview Computer Prods. Corp., No. 97 Civ. 8815 (KMW) (HBP), 2000 U.S. Dist. LEXIS 4254, at *39 (S.D.N.Y. Mar. 31, 2000). C94. Bad faith destruction of a relevant document gives rise to a strong inference
that production of the document would have been unfavorable to the party that destroyed it. Coates, 756 F.2d at 551; Anderson, 862 F.2d at 925; Nation-Wide Check Corp., Inc. v. Forest - 109 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Hills Distribs., Inc., 692 F.2d 214, 217 (1st Cir. 1982); Natl Assn of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557 (N.D. Cal. 1987); Wm. T. Thompson Co., 593 F. Supp. at 1455. C95. Rambuss wide-scale destruction of evidence is inherently prejudicial, because
the act of destruction also eliminates the means of proving prejudice. See Telectron, 116 F.R.D. at 133 (holding that because it is impossible to determine precisely what or how many documents were destroyed, the bad-faith destruction of a relevant document, by itself, gives rise to a strong inference that the production of the document would have been unfavorable to the party responsible for the destruction) (citation and internal quotation marks omitted); Synanon Church v. United States, 820 F.2d 421, 428 n.18 (D.C. Cir. 1987), affg 579 F. Supp. 967 (D.D.C. 1984) (Willful destruction of evidence by a party properly raises the inference that the materials destroyed were adverse to the party which brings about the destruction.); Computer Assoc. Intl v. Am. Fundware, Inc., 133 F.R.D. 166, 170 (D. Colo. 1990) (Destroying the best evidence relating to the core issue in the case inflicts the ultimate prejudice upon the opposing party.); Natl Assn of Radiation Survivors, 115 F.R.D. at 557 (Where one party wrongfully denies another the evidence necessary to establish a fact in dispute, the court must draw the strongest allowable inferences in favor of the aggrieved party.); Webb v. Dist. of Columbia, 189 F.R.D. 180, 188 (D.D.C. 1999) (finding that the potentially critical information that could have been contained in the destroyed files or elicited from witnesses . . . covered such a broad range that a sanction of dismissal was the only appropriate remedy); Alexander v. Natl Farmers Org., 687 F.2d 1173, 1205 (8th Cir. 1982) ([T]he relevance of and the resulting prejudice from destruction of documents cannot be clearly ascertained because the documents no longer exist. Under the circumstances, [defendant] can hardly assert any presumption of irrelevance as to the destroyed documents.); In re Prudential Ins. Co., 169 F.R.D. 598, 615-16 (D.N.J. 1997) (emphasizing that because over 9,000 files were destroyed, they can never be retrieved and the resultant harm is incalculable and stating that [b]ecause the destroyed records in Cambridge are permanently lost, the Court will draw the inference that the destroyed materials are relevant and if available would lead to the proof of a claim); United States v. Philip Morris, Inc., 327 F. Supp. 2d 21, 25, (D.D.C. 2004) (As a practical matter, [because] you cannot recreate what has been destroyed[,] - 110 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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. . . it is impossible to accurately assess what harm has been done by a partys spoliation of evidence.). C96. The prejudicial impact of Rambuss destruction is not excused by the fact
that Rambus did not destroy all relevant evidence. The broad scope of discovery delimited by the Federal Rules of Civil Procedure is designed to achieve disclosure of all of the evidence relevant to the merits of a controversy. Thomas E. Hoar, Inc. v. Sara Lee Corp., 882 F.2d 682, 687 (2d Cir. 1989) (emphasis added). C97. A party can require its opponent to produce entire categories of documents
or things in discovery. The responding party cannot fulfill this requirement by selfselecting documents within each category to produce. Moreover, even if the spoliating party decides that the evidence that was destroyed is not relevant to its own theory of the case, that conclusion ignore[s] the possibility that others might have entertained different theories to which the destroyed [materials] might have been relevant. See Fed. R. Civ. P. 34(b)(1)(A); Vodusek, 71 F.3d at 156. C98. Discovery creates a level evidentiary playing field s. . . that lies at the heart
of our adversarial system. Hynix II, 645 F.3d at 1347 (citing Vodusek, 71 F.3d at 156). C99. A party, such as Rambus, who has committed spoliation cannot merely assert
that the destroyed evidence was irrelevant or of minimal import. Anderson, 862 F.2d at 925; Natl Farmers Org., 687 F.2d at 1205. C100. Because Rambus kept no records of its document destruction, it is not clear what documents were destroyed or what documents were on the backup tapes it destroyed. This, however, does not preclude a finding of prejudice. See Micron II at 1328. C101. Because Rambus kept no records of its document destruction, it cannot demonstrate which documents were destroyed during each shred day. See Micron II at 1328. C102. Indeed, a spoliating party that does not keep any record of what was destroyed cannot disprove prejudice. See Leon, 464 F.3d at 960; Gutman v. Klein, No. 03 CV 1570(BMC(RML), 2008 WL 4682208, at *12 & n.16 (E.D.N.Y. Oct. 15, 2008). C103. The sheer number of documents that Rambus destroyed after the 1998 Shred - 111 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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Day belies any suggestion that no potentially relevant documents survived the 1998 Shred Day. C104. The court concludes that Rambus has not carried its heavy burden of proving lack of prejudice. [I]t is not clear what documents were destroyed, and accordingly, Rambus has not proven that all the documents destroyed were either redundant or irrelevant to the trial. See Micron II at 1328. 3. Appropriate Sanction
C105. Possible sanctions for spoliation include dismissal, evidentiary sanctions, adverse inference instructions, and monetary sanctions. See MOSAID, 348 F. Supp. 2d at 335. C106. Although [a] determination of bad faith is normally a prerequisite to the imposition of dispositive sanctions for spoliation under the district courts inherent power, it is not always required. See Micron II at 1327; see also Silvestri, 271 F.3d at 593; Bowman v. Am. Med. Sys., Inc., No. CIV. A. 96-7871, 1998 WL 721079, at *4 (E.D. Pa. Oct. 9, 1998). C107. Although dismissal sanctions should not be imposed routinely, it is appropriate where there is clear and convincing evidence of both bad-faith spoliation and prejudice to the opposing party, such as where a party has engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings. Micron II at 1328-29 (quoting Leon, 464 F.3d at 958). C108. The sanction ultimately imposed must be commensurate with analysis of [the following] factors: (1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future. Micron II at 1329 (quoting Schmid, 13 F.3d at 79, and citing Leon, 464 F.3d at 958). C109. The sanction selected should vindicate the trifold aims of: (1) deterring future spoliation of evidence; (2) protecting the [Hynixs] interests; and (3) remedying the prejudice [Hynix] suffered as a result of [Rambuss] actions. Micron II at 1329 (quoting - 112 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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West, 167 F.3d at 780). C110. To accomplish these aims, [t]he sanction should be designed to: (1) deter parties from engaging in spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (3) restore the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party. West, 167 F.3d at 779 (citation and internal quotation marks omitted). C111. Spoliation can occur, and spoliation sanctions are warranted, even in the absence of bad faith. Vodusek, 71 F.3d at 156 (court reject[ed] the argument that bad faith is an essential element of the spoliation rule and gave an adverse inference instruction despite the plaintiffs argument that evidence was not destroyed in bad faith) (cited with favor in Hynix II at 1347); see also Glover v. Bic Corp., 6 F.3d 1318, 1329 (9th Cir. 1993) (stating that bad faith is not a prerequisite to permitting an adverse inference from spoliation, and that simple notice of potential relevance to the litigation is sufficient) (citation and internal quotation marks omitted); Reilly v. Natwest Mkts. Group Inc., 181 F.3d 253, 268 (2d Cir. 1999) (holding that a finding of bad faith or intentional misconduct is not a sine quo non to sanctioning a spoliator with an adverse inference instruction); Trull v. Volkswagen of Am., Inc., 187 F.3d 88, 95 (1st Cir. 1999) (careless mishandling of evidence sanctioned by exclusion of evidence); Uniguard Sec. Ins. Co. v. Lakeguard Eng., 982 F.2d 363, 368 n.2 (9th Cir. 1992) (holding that finding of bad faith is not required to support an evidentiary sanction); Dillon v. Nissan Motor Co., 986 F.2d 263, 267 (8th Cir. 1993) (same); Silvestri, 271 F.3d at 593; Leon, 464 F.3d at 958. C112. It would be impractical or impossible to use preclusion orders as a sanction for Rambuss misconduct. Because it is impossible to determine what the destroyed evidence would have established, it is impossible to define what issues of fact should be treated as established or to preclude Rambus from offering evidence to support specific issues of fact. See Telectron, 116 F.R.D. at 133 (holding that a judgment by default was necessitated because it is impossible to determine precisely what or how many documents were destroyed). C113. For the same reason, spoliation instructions would be an inadequate sanction - 113 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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because it would be speculative for a jury to decide what adverse inference should be drawn from Rambuss destruction of documents. C114. Where lesser sanctions would be futile or would leave the injured party equally helpless to rebut any material that [the spoliating party] might use to overcome any adverse inference instruction, dismissal may be warranted. Leon, 464 F.3d at 960-61. C115. Dismissal is warranted by the public interest in correct determinations in patent cases. See Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 246 (1944). C116. Dismissal is warranted by the willfulness of Rambuss conduct and the difficulty of discovering the wrongdoing. See Wm. T. Thompson Co., 593 F. Supp. at 1455 (Default and dismissal are proper sanctions in view of GNC's willful destruction of documents and records that deprived Thompson of the opportunity to present critical evidence on its key claims to the jury.); Carlucci, 102 F.R.D. at 486 (The policy of resolving lawsuits on their merits must yield when a party has intentionally prevented the fair adjudication of the case. By deliberately destroying documents, the defendant has eliminated the plaintiffs' right to have their cases decided on the merits. Accordingly, the entry of a default is the only means of effectively sanctioning the defendant and remedying the wrong.); Valley Engrs Inc. v. Elec. Engg Co., 158 F.3d 1051, 1057-58 (9th Cir. 1998) (stating that dismissal is appropriate where [there] is a pattern of deception and discovery abuse that threaten[s] to interfere with the rightful decision of the case) (citations and internal quotation marks omitted); In re Wechsler, 121 F. Supp. 2d 404, 415 (D. Del. 2000) (When [document] destruction is willful or in bad faith and intended to prevent the other side from examining the evidence, the court may impose the most severe sanction of them all - the outright dismissal of a claim or the entry of a default judgment.); Cabnetware, Inc. v. Sullivan, No. Civ. S-90-313 LKK, 1991 U.S. Dist. LEXIS 20329, at *12 (E.D. Cal. July 16, 1991) ([I]t is well to remind litigants that [spoliation] will not be tolerated in judicial proceedings. Destruction of evidence cannot be countenanced in a justice system whose goal is to find the truth through honest and orderly production of evidence under established discovery rules [and] that nothing less than default judgment on the issue of liability will suffice to both punish this defendant and deter others similarly tempted.); Synanon Church, 820 F.2d at - 114 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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427-28 (affirming dismissal based on finding in separate litigation that plaintiff deliberately destroyed documents relevant to its claims and potential defenses to those claims). C117. Dismissal is warranted to deter those who might be tempted to engage in acts of spoliation. See Natl Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976); Computer Assoc., Intl, 133 F.R.D. at 169-70 (One who anticipates that compliance with discovery rules, and the resulting production of damning evidence, will produce an adverse judgment, will not likely be deterred from destroying that decisive evidence by any sanction less than the adverse judgment he (or she) is tempted to thus evade. It follows that the only sanction adequate and appropriate to punish [the spoliator] and deter future similarly situated litigants is default judgment ss. . . .); Century ML-Cable Corp. v. Conjugal Pship, 43 F. Supp. 2d 176, 185 (D.P.R. 1998) (finding that default judgment is the only sanction which will adequately punish [the spoliator] and deter him and other similarly-inclined litigants from destroying evidence). C118. Where, as here, a party has engaged in such wholesale destruction of primary evidence regarding a number of issues that an effective issue-related sanction cannot be fashioned, dismissal is the only effective remedy. See Shepard v. Am. Broad. Cos., Inc., 62 F.3d 1469, 1479-80 (D.C. Cir. 1995) (Default judgment is appropriate where the guilty party has engaged in such wholesale destruction of primary evidence regarding a number of issues that the district court cannot fashion an effective issue-related sanction.) C119. The court concludes that dismissal is the least onerous sanction corresponding to the willfulness of the destructive act and the prejudice suffered by the victim. Micron II at 1329 (quoting Schmid, 13 F.3d at 79). C120. Dismissal is equally available under Ninth Circuit law C121. Under Ninth Circuit law, dismissal is appropriate in cases involving willfulness or fault; bad faith is not required. See Leon, 464 F.3d at 958 (a finding of willfulness, fault, or bad faith is required for dismissal to be proper) (citation omitted); Anheuser-Busch, Inc., 69 F.3d at 348; Halaco Engr Co. v. Costle, 843 F.2d 376, 380 (9th Cir. 1988); Profl Seminar Consultants, Inc. v. Sino Am. Tech. Exch. Council, Inc., 727 F.2d 1470, 1474 (9th Cir.1984); Columbia Pictures, Inc. v. Bunnell, No. 2:06-cv-01093, 2007 WL 4877701, - 115 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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at *18 (C.D. Cal. Dec. 13, 2007) (granting terminating sanction in case involving willful spoliation); In re Napster Copyright Litig., 462 F. Supp. 2d 1060, 1072 (N.D. Cal. 2006); Padgett v. City of Monte Sereno, No. C 04-03946, 2007 WL 878575, at *3 (N.D. Cal. Mar. 20, 2007) (Whether characterized as willful or negligent, Loventhal's conduct constitutes the kind of fault sufficient to warrant sanctions, including dismissal, under the Court's inherent powers.); see also Hynix I, 591 F. Supp. 2d at 1068 (Default and dismissal are proper sanctions for willful destruction of documents and records that deprive the opposing party of the opportunity to present critical evidence on its key claims to the jury). C122. A finding of willfulness does not require that documents be destroyed for the purpose of gaining a litigation advantage; it merely requires a finding that documents subject to a duty to preserve were destroyed intentionally. See Leon, 464 F.3d at 959 (finding willful spoliation when plaintiff claimed to have destroyed files on firm-issue laptop to protect his privacy: A party's destruction of evidence qualifies as willful spoliation if the party has some notice that the documents were potentially relevant to the litigation before they were destroyed.) (quoting Kitsap Physicians Serv., 314 F.3d at 1001); In re Hitachi Television Optical Block Cases, 2011 WL 3563781, at *12-13 (S.D. Cal. Aug. 12, 2011) (distinguishing willful spoliation and bad faith: willful spoliation requires only notice of relevance and [w]hile all bad faith conduct is willful, not all willful acts are in bad faith.); State Farm Fire and Cas. Co. v. Broan Mfg. Co., Inc., 523 F. Supp. 2d 992, 966-97 (D. Ariz. 2007) (A party's destruction of evidence qualifies as willful spoliation if the party has some notice that the evidence was potentially relevant to the litigation before it was destroyed. . . . Although Plaintiff characterizes its actions as inadvertent and unintentional, Plaintiff's delay in notifying Defendant, combined with its clear notice of the fire scene's importance, qualifies as willful spoliation under these circumstances.); Buckley v. Mukasey, 538 F.3d 306, 323 (4th Cir. 2008) (DEA's document destruction, though not conducted in bad faith, could yet be intentional, willful, or deliberate.); Pension Comm. v. Banc of Am. Sec., LLC, 685 F. Supp. 2d 456, 464 (S.D.N.Y) [I]intentional destruction of relevant records, either paper or electronic, after the duty to preserve has attached, is willful.); Powell v. Town of Sharpsburg, 591 F. Supp. 2d 814, 820-21 (E.D.N.C. 2008) (Destruction is - 116 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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willful when it is deliberate or intentional. . . . Bad faith, which the court deems to mean destruction for the purpose of depriving the adversary of the evidence, is not required.) C123. Relevance and/or prejudice are presumed in cases involving willfulness. Leon, 464 F.3d at 959 (because the relevance of ... [destroyed] documents cannot be clearly ascertained because the documents no longer exist, a party can hardly assert any presumption of irrelevance as to the destroyed documents. (citations omitted)); In re Napster, 462 F. Supp. 2d at 1076 (As the party at fault for failing to preserve the emails, Hummer would typically bear the consequences of this uncertainty. (citations omitted)); Columbia Pictures, Inc. v. Bunnell, 2007 WL 4877701, at *7 (granting terminating sanction in case involving willful spoliation: In a case such as this, where a substantial number of items of evidence have been destroyed, a plaintiff's burden would be particularly onerous if he were required to prove the relevance of all the destroyed items. [T]he relevance of . . . [destroyed] documents cannot be clearly ascertained because the documents no longer exist. Therefore, a party can hardly assert any presumption of irrelevance as to the destroyed documents. The Court finds that Plaintiffs have suffered prejudice as a result of Defendants' willful spoliation of evidence. (citation omitted)). C124. Under Ninth Circuit law, the clear and convincing standard does not apply to proof of the spoliating partys culpable mental state. In re Napster, 462 F. Supp.2d at 1072 (Hummer points to no Ninth Circuit authority applying the clear and convincing standard to the exercise of the court's inherent authority to impose dismissal or default sanctions, and the Ninth Circuit has not squarely addressed the issue of which standard of proof is appropriate. Moreover, none of the cases cited by Hummer dealt with the specific, yet common, situation here-inherent power sanctions resulting from the destruction of evidence. Accordingly, the court declines to adopt the clear and convincing evidence standard.) C125. Under Ninth Circuit law, prejudice is not required for a dismissal sanction. Halaco Engineering Co., 843 F.2d at 382 (A final consideration is the existence and degree of prejudice to the wronged party. This factor is purely optional.); United States v. Nat'l Medical Enters., Inc., 792 F.2d 906, 912-13 (9th Cir.1986) (stating prejudice is not required for dismissal); Combs v. Rockwell Intern., 927 F.2d 486, 488 (9th Cir. 1991) (upholding dismissal for - 117 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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falsification of deposition testimony with no explicit consideration of prejudice); In re Napster, 462 F. Supp. 2d at 1075 (Prejudice is an optional consideration when determining whether default sanctions are appropriate.). C126. For the foregoing reasons, Rambuss patent claims against Hynix should be dismissed with prejudice. C127. [Alternative conclusion if court will not order dismissal: The court concludes that Rambuss spoliation tainted the patent and conduct trials in this case. The court concludes that an appropriate sanction will include at a minimum new trials of the patent and conduct claims, that Hynix shall be permitted to introduce evidence regarding Rambuss spoliation in those trials, and that the court shall give the juries adverse inference instructions. The court will set a schedule for briefing and further hearing to develop these remedies.] C. Unclean Hands C128. Spoliation is not only sanctionable by dismissal under the courts inherent powers, it may also serve as the basis for dismissal under the doctrine of unclean hands. C129. As this court has previously held, under both federal and California law, one who has behaved inequitably or in bad faith is denied relief under the unclean hands doctrine. Hynix I, 591 F. Supp. 2d at 1060 (citing Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945); Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 841 (9th Cir. 2002); Fireboard Paper Products Corp. v. East Bay Union of Machinists, Local 1304, United Steelworkers of Am. AFL-CIO, 227 Cal. App. 2d 675, 726-29 (1964)). C130. Federal courts have a duty to withhold relief from a patent owner guilty of unclean hands. See Keystone Driller v. Gen. Excavator Co., 290 U.S. 240, 245 (1933); Precision Instrument, 324 U.S. at 814; Aptix Corp. v. Quickturn Design Systems, Inc., 269 F.3d 1369, 1381-82 (Fed. Cir. 2001). C131. The unclean hands doctrine closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief. Hynix I, 591 F. Supp. 2d at 1060 (quoting Precision Instrument, 324 U.S. at 814). - 118 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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C132. Where a party seeks to set the judicial machinery in motion and obtain some remedy, but along the way has violated conscience, or good faith, or other equitable principle, in his prior conduct, then the doors of the court will be shut against him. Keystone Driller, 290 U.S. at 245. C133. Rambus, as the patent owner, has the burden of establishing that it is entitled to relief in equity. Once Hynix has produced evidence of unclean hands, Rambus has the ultimate burden of establishing that it is not guilty of unfair or inequitable conduct in connection with this proceeding. See Keystone Driller, 290 U.S. at 244 (It is one of the fundamental principles upon which equity jurisprudence is founded, that before a complainant can have a standing in court he must first show that not only has he a good and meritorious cause of action, but he must come into court with clean hands.) (emphasis added) (citation and internal quotation marks omitted); see also Aptix, 269 F.3d at 1381-82. C134. Unclean hands is an issue for the Court to decide upon the whole of the evidence. The Court is free to make credibility determinations about witnesses. See Cabrera v. Jakabovitz, 24 F.3d 372, 380 (2d Cir. 1994); S.T.S. Int'l, Ltd. v. Laurel Sea Transport, Ltd., 932 F.2d 437, 440 (5th Cir. 1991). C135. The misconduct supporting a finding of unclean hands may occur before the litigation, during the litigation, or both. Honeywell Intl, Inc. v. Universal Avionics Sys. Corp., 398 F. Supp. 2d 305, 311 (D. Del. 2005). C136. Any act that violates equitable standards is sufficient to warrant application of the unclean hands doctrine. Precision Instrument, 324 U.S. at 815. C137. In deciding whether a partys conduct constitutes unclean hands, the Court is not bound by formula or restrained by any limitation. Precision Instrument, 324 U.S. at 815 (quoting Keystone Driller, 290 U.S. at 245-46); Honeywell Intl, 398 F. Supp. 2d at 311. C138. Conduct creating unclean hands includes not only bad faith relevant to the matter, but a willful act concerning the cause of action. See Precision Instrument, 324 U.S. at 814-15. C139. A showing of wrongfulness, willfulness, bad faith, or gross negligence, - 119 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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proved by clear and convincing evidence, will establish sufficient culpability for invocation of the doctrine of unclean hands. Pfizer, Inc. v. Intl Rectifier Corp., 685 F.2d 357, 359 (9th Cir. 1982). C140. As this court has previously held, spoliation of evidence can constitute the necessary inequitableness or bad faith for successful assertion of the unclean hands defense. Hynix I, 591 F. Supp. 2d at 1060 (citing Samsung Elec. Co., Ltd. v. Rambus, Inc., 386 F. Supp. 2d 708 (2005)). C141. Spoliation of evidence constitutes unclean hands and hands dirtied by spoliation are especially repugnant to a court of equity. In re Sealed Case, 754 F.2d 395, 401 (D.C. Cir. 1985) (spoliation strikes at the very foundations of the adversary system and judicial process); Synanon Church, 820 F.2d at 427-28. C142. Litigation misconduct can also constitute the necessary inequitableness or bad faith for successful assertion of the unclean hands defense. Aptix Corp., 269 F.3d at 1374; Keystone Driller, 290 U.S. at 247. C143. As set forth above, in addition to spoliation, Rambus\ has engaged in a variety of litigation misconduct. The Courts litigation misconduct findings are also relevant to this Courts determination of Rambuss unclean hands. Spoliation of documents enhances the opportunity and temptation for perjury and supports the conclusion that Rambuss patent claims should be dismissed for unclean hands. See Keystone Driller, 290 U.S. at 245; Aptix Corp., 269 F.3d at 1381-82. C144. Spoliation of evidence in the peculiar area of patent monopolies is viewed more critically because erroneous determination of patent cases impacts the public as well as the parties to the litigation. See Precision Instrument, 324 U.S. at 816 (The far-reaching social and economic consequences of a patent . . . give the public a paramount interest in seeing that patent monopolies spring from backgrounds free from fraud or other inequitable conduct . . . .); Lear, Inc. v. Adkins, 395 U.S. 653, 663-64 (1969) (It is as important to the public that competition should not be repressed by worthless patents, as that the patentee of a really valuable invention should be protected in his monopoly. (quoting Pope Mfg. Co. v. Gormully, 144 U.S. - 120 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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224, 234 (1892))); Fraige v. Am.-Natl Watermattress Corp., 996 F.2d 295, 298 (Fed. Cir. 1993) ([F]raud, especially in a patent case, is a matter of public concern, with effects extending beyond the parties to the litigation.); Hazel-Atlas Glass Co., 322 U.S. at 246 (There are issues of great moment to the public in a patent suit.). C145. As recognized by the Constitution, [a patent] is a special privilege designed by serve the public purpose of promoting the Progress of Science and useful Arts and is an exception to the general rule against monopolies and to the right to access to a free and open market. Micron II at 1333 (Gajarsa, J., dissenting) (quoting Precision Instrument, 324 U.S. at 816). C146. Rambus abused its patent privilege by intentionally destroying evidence in bad faith to protect its exclusive monopoly. Micron II at 1333 (Gajarsa, J., dissenting). C147. The public interest in the meritorious adjudication of patents is paramount. Precision Instrument, 324 U.S. at 814 ([W]here a suit in equity concerns the public interest . . . this doctrine assumes even wider and more significant proportions. For if an equity court properly uses the maxim to withhold its assistance in such a case it not only prevents a wrongdoer from enjoying the fruits of his transgression but averts an injury to the public.); Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 346 (1971). C148. In the exercise of its responsibility to assure that equity is done in this case, one factor to be considered is the importance of consistency in judicial rulings on the enforceability of the patents. See Blonder-Tongue Labs., 402 U.S. at 346. C149. Because the doctrine of unclean hands protects the judicial process, the disqualification of a patent owner guilty of unclean hands is not contingent on a showing of prejudice to its adversary. If spoliation is tolerated unless it results in prejudice, the risk to the integrity of the judicial process would be unduly enhanced. See Mas v. Coca-Cola, 163 F.2d 505, 507 (4th Cir. 1947) (The clean hands doctrine is one which the court applies, not for the protection of the parties, but for its own protection.); Aptix, 269 F.3d at 1374 (patentee denied relief even though fraudulent changes to inventor notebooks were uncovered prior to trial); Keystone Driller, 290 U.S. at 245 (patentee denied relief even though suppression of a prior use - 121 HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW
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was exposed at trial). C150. The court concludes that Rambus is guilty of unclean hands in this proceeding because it willfully destroyed documents in anticipation of litigation asserting the patents in suit against Hynix and other manufacturers of JEDEC standard DRAMs. See Aptix, 269 F.3d at 1374 (The district court's finding of litigation misconduct fully justified its decision to invoke the unclean hands doctrine and dismiss Aptix from suit.); Keystone Driller, 290 U.S. at 245; Precision Instrument, 324 U.S. at 815 (Courts are not bound by formula or restrained by any limitation that tends to trammel the free and just exercise of discretion. . . . [M]isconduct need not necessarily have been of such a nature as to be punishable as a crime or as to justify legal proceedings of any character[,] rather [a]ny willful act concerning the cause of action which rightfully can be said to transgress equitable standards of conduct is sufficient.). C151. Dismissal under the unclean hands doctrine is warranted where the party engaged in knowing misconduct relevant to the basis for its requested relief. See, e.g., Adler v. Fed. Republic of Nigeria, 219 F.3d 869, 877 (9th Cir. 2000) (dismissal based on unclean hands due to partys knowing participation in illegal conduct); Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir. 1985) (dismissal based on unclean hands due to false statements prior to litigation). C152. For the same reasons, as set forth above, that dismissal is the most appropriate sanction for spoliation under the courts inherent powers, the court concludes that dismissal is the appropriate remedy for Rambuss unclean hands based on its spoliation and litigation misconduct.
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Dated: November 14, 2011
By: /S/ Kenneth L. Nissly KENNETH L. NISSLY KENNETH R. OROURKE SUSAN van KEULEN SUSAN ROEDER OMELVENY & MYERS LLP THEODORE G. BROWN III JULIE J. HAN KILPATRICK TOWNSEND & STOCKTON LLP Attorneys for Plaintiffs HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH
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Case5:00-cv-20905-RMW Document4082-1

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HYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW

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TABLE OF CONTENTS Page I. INTRODUCTION ....................................................................................................................... 1

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -iHYNIXS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW C-00-20905 RMW

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dates are set out in the following table:

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All of the patents-in-suit are continuation or divisional applications based on

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Rambus decided to withdraw from JEDEC at least in part because the

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F59. F58. F56.

January 13, 1998 meeting

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make ourselves ready for that, battle ready; correct? A: Right.

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Cooleys proposed strategy offered several options: first, pursuing a breach of

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Karps October 1998 presentation recommended that Rambus take advantage

At the time of Karps October 1998 presentation, Rambus had retained

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Late 1998/Early 1999 Nuclear Winter Scenario

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Attorney Johnsons portion of the presentation was litigation-oriented. Slide 3