2009-01!13!3104 - R Brief Re Delaware Spoliation Ruling

Case 5:05-cv-00334-RMW Document 3104 Filed 01/13/2009 Page 1 of 20
1 Gregory P. Stone (SBN 078329) Rollin A. Ransom (SBN 196126)

Andrea Weiss Jeffries (SBN 183408) SIDLEY AUSTIN LLP
2 Fred A. Rowley, Jr. (SBN 192298) 555 West Fifth Street, Suite 4000
MUNGER, TOLLES & OLSON LLP Los Angeles, California 90013-1010
3 355 South Grand Avenue, 35th Floor Telephone: (213) 896-6000
Los Angeles, CA 90071-1560 Facsimile: (213) 896-6600
4 Telephone: (213) 683-9100 Email: rransom@sidley.com
Facsimile: (213) 687-3702
5 Email: gregory.stone@mto.com Pierre J. Hubert (Pro Hac Vice)
Email: andrea.jeffries@mto.com Craig N. Tolliver (Pro Hac Vice)
6 Email: fred.rowley@mto.com McKOOL SMITH PC
300 West 6th Street, Suite 1700
7 Peter A. Detre (SBN 182619) Austin, Texas 78701
Rosemarie T. Ring (SBN 220769) Telephone: (512) 692-8700
8 Jennifer L. Polse (SBN 219202) Facsimile: (512) 692-8744
MUNGER, TOLLES & OLSON LLP Email: phubert@mckoolsmith.com;
9 560 Mission Street, 27th Floor Email: ctolliver@mckoolsmith.com
San Francisco, CA 94105
10 Telephone: (415) 512-4000
Facsimile: (415) 512-4077
11 Email: peter.detre@mto.com
Email: rose.ring@mto.com
12 Email: jen.polse@mto.com
13 Attorneys for RAMBUS INC.
14 UNITED STATES DISTRICT COURT
15 NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION
16
RAMBUS INC., CASE NO.: C 05-00334 RMW
17
Plaintiff, RAMBUS INC.’S BRIEF ON DELAWARE
18 COURT RULING
vs.
19
HYNIX SEMICONDUCTOR INC., et al., Date: January 13, 2009
20 Time: 3 p.m.
Defendants. Courtroom: 6
21 Judge: Hon. Ronald M. Whyte
22
23
Plaintiff,
24
vs.
25
SAMSUNG ELECTRONICS CO., LTD.,
26 et al.,
27 Defendants.
28
RAMBUS INC.’S BRIEF ON DELAWARE
COURT RULING
CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1
2
Plaintiff,
3
vs.
4
MICRON TECHNOLOGY INC., et al.,
5
Defendants.
6
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
COURT RULING
CV 00-20905 RMW; C 05-334 RMW; C-06-244 RMW
3 TABLE OF CONTENTS
4 INTRODUCTION......................................................................................................................... 1
II. ARGUMENT ..................................................................................................................... 2
5
A. The Delaware Ruling Has No Practical Effect on the Upcoming Trial.................. 2
6
B. The Manufacturers Cannot Demonstrate That the Delaware Ruling is
7 Entitled to Collateral Estoppel Effect, or That This Court Should Exercise
its Discretion to Apply the Doctrine ...................................................................... 4
8
1. The Striking Inconsistency Between the Delaware Court’s Findings
9 and this Court’s Spoliation Determinations in Hynix I Itself Weighs
Strongly Against Giving the Delaware Ruling Preclusive Effect
10 Here ............................................................................................................. 6
11 2. The Delaware Ruling Carries No Collateral Estoppel Effect in this
Case Because it Presents Distinct Issues..................................................... 9
12
3. Collateral Estoppel Also Is Properly Denied Because It Will Not
13 Result In Judicial Economy ...................................................................... 15
III. CONCLUSION................................................................................................................ 16
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
COURT RULING
CV 00-20905 RMW; C 05-334 RMW; C-06-244 RMW
1 TABLE OF AUTHORITIES
2 FEDERAL CASES
3 A.B. Dick Co. v. Burroughs Corp.,
713 F.2d 700 (Fed. Cir. 1983)................................................................................................. 10
4
Aptix Corp. v. Quickturn Design Systems, Inc.,
5 269 F.3d 1369 (Fed. Cir. 2001)........................................................................................... 1, 15
Bio-Technology General Corp. v. Genentech, Inc.,
6 80 F.3d 1553 (Fed. Cir. 1996)................................................................................................. 15
7 Blonder-Tongue Labs., Inc. v. University of Ill. Found.,
402 U.S. 313 (1971);............................................................................................................. 5, 6
8 Comair Rotron, Inc. v. Nippon Densan Corp.,
49 F.3d 1535 (Fed. Cir. 1995)............................................................................................. 9, 10
9
Foster v. Hallco Mfg. Co.,
10 947 F.2d 469 (Fed. Cir. 1991) .................................................................................................. 4
Hydranautics v. FilmTec Corp.,
11 204 F.3d 880 (9th Cir. 2000) .................................................................................................... 9
12 Hynix Semiconductor Inc. v. Rambus, Inc.,
F.Supp.2d , 2006 WL 565893 (N.D. Cal. 2006) ............................................................ passim
13 Kearns v. General Motors Corp.,
94 F.3d 1553 (Fed. Cir. 1996) .................................................................................................. 4
14
Mozart Co. v. Mercedes-Benz of North America, Inc.,
15 833 F.2d 1342 (9th Cir. 1987) ................................................................................................ 11
Offshore Sportswear, inc. v. Vaurnet Int’l B.V.,
16 114 F.3d 848 (9th Cir. 1997)................................................................................................. 4, 5
17 Parklane Hosiery Co. v. Shore,
439 U.S. 322 (1979) ......................................................................................................... passim
18 Reyn’s Pasta Bella, LLC v. Visa USA, Inc.,
442 F.3d 741 (9th Cir. 2006)..................................................................................................... 5
19
Providence Health Plan v. McDowell,
20 385 F.3d 1168 (9th Cir. 2004)................................................................................................... 4
S.E.C. v. Monarch Funding Corp.,
21 192 F.3d 295 (2d Cir. 1999).................................................................................................... 16
22 Western Oil and Gas Ass’n v. E.P.A.,
633 F.2d 803 (9th Cir. 1980)..................................................................................................... 6
23 TREATISES
24 Restatement (Second) of Judgments § 29. ...................................................................................... 5
25 18A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure 4465.2, at 772
(2002) ..................................................................................................................................... 18
26
27
28
-1- COURT RULING
CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 I. INTRODUCTION
2 During the January 12, 2009 Meet-and-Confer, the Manufacturers suggested that
3 the Court continue the patent trial slated to commence next week and set a briefing schedule in
4 order to determine the preclusive effect of the Delaware Court’s January 9, 2009 ruling. Rambus
5 submits that that ruling presents no occasion for delaying, let alone derailing, the upcoming trial.
6 The Court and the parties have taken care to structure the trial to exclude spoliation issues. By
7 the Delaware Court’s own reckoning, the purportedly destroyed documents have no bearing on
8 the validity defenses that the Manufacturers plan to assert at the trial, nor is there any suggestion
9 that these documents would be relevant to infringement or damages.
10 The Court can and should decide, on the basis of the briefs filed this day, that the
11 Delaware Court’s ruling does not bar Rambus from enforcing the patents-in-suit. That ruling
12 carries no res judicata force, and it works no collateral estoppel effects. It is a contrary ruling,
13 concerning distinct patents and products, reached by another court on a defense that has been
14 tried by this Court not once, but twice, and that has already been resolved in Rambus’s favor
15 against one of the Manufacturers.
16 In its ruling, the Delaware Court determined that Rambus had engaged in
17 spoliation of evidence by failing to suspend a document retention policy after “litigation was
18 reasonably foreseeable.” (Del. Ruling, at 31.) Concluding that Micron’s inequitable conduct and
19 JEDEC-related patent misuse, antitrust, and unfair competition defenses were prejudiced, the
20 Delaware Court applied the harshest remedy to the case before it: it “declare[d] the patents in suit
21 unenforceable.” (Id. at 33.) 1 The contrast between this ruling and this Court’s prior spoliation
22 Order in Hynix I, which the Delaware Court did not even reference, could not be more stark in all
23 material respects, including when the duty to preserve evidence arose, whether any prejudice
24 resulted from the alleged destruction of documents, whether Rambus acted in bad faith, and what
25 1
Although the Delaware Court characterized its opinion as rendering the patents-in-suit in the
26 case before it “unenforceable” against Micron (id. at 31), Federal Circuit law makes clear that it
lacked authority to destroy the patent’s enforceability in any case other than its own. Aptix Corp.
27 v. Quickturn Design Systems, Inc., 269 F.3d 1369, 1376 (Fed. Cir. 2001). The ruling must,
therefore, for these purposes, be construed simply as a dismissal of the infringement claims
28 before it.
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CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 sanction—if any—is appropriate. See Hynix Semiconductor Inc. v. Rambus, Inc., F.Supp.2d ,
2 2006 WL 565893 (N.D. Cal. 2006).
3 As discussed further below, the Delaware Court’s ruling need not and should not
4 be given preclusive effect. The patents and accused products are different, so Micron (the only
5 party to which claim preclusion might otherwise apply) cannot invoke res judicata. The issues
6 are not identical, so none of the defendants can invoke collateral estoppel. Indeed, any argument
7 that collateral estoppel applies is particularly baseless as to the three non-mutual Manufacturers—
8 Samsung, Hynix, and Nanya—because each presents individual issues, Samsung and Hynix have
9 both tried their unclean hands defenses before this Court, and Hynix already has lost that
10 defense. 2
11 At bottom, there is no good reason—legal or pragmatic—for this Court to abandon
12 its own considered judgment on the spoliation defenses in favor of the Delaware Court’s, and
13 there is no reason for the Delaware Court’s decision to prevent the trial from going forward in a
14 timely fashion. Neither efficiency nor the interests of justice would be served by allowing the
15 Manufacturers to use this decision to forestall a final resolution of this long-pending litigation.
16 II. ARGUMENT
A. The Delaware Ruling Has No Practical Effect on the Upcoming Trial
17
18 The Delaware Court’s ruling has no effect on the upcoming trial. The only issues
19 slated for the upcoming trial, apart from Rambus’s patent infringement claims and damages,
20 relate to the Manufacturers’ affirmative defense of invalidity. The Delaware specifically
21 concluded in its ruling, however, that the documents that it believed were improperly destroyed
22 did not bear on any of the arguments the Manufacturers intend to advance in support of their
23 invalidity defense. (Del. Ruling, at 32. n.59.) The Delaware Court concluded that “[t]he defenses
24 that do not seem likely to depend [upon] evidence internal to Rambus include those of
25 anticipation and obviousness, since prior art references (by definition) must be publicly
26 available,” and made a similar finding as to written description. (Id.)
27 2
Rambus respectfully submits that the Delaware Court’s ruling is also erroneous on the merits.
28 If the Court believes briefing on this matter would be of benefit, Rambus is prepared to provide it.
-2- COURT RULING
CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 Because the Delaware Court agrees that any purportedly destroyed documents
2 would not be relevant to the defenses to be tried to the jury, its ruling has no impact on the
3 upcoming trial. Indeed, the Court and the parties alike have long contemplated that, with specific
4 exceptions, spoliation would be tried separately. The Joint Case Management Order (“JCMO”)
5 provides that “[a]ny claim or defense, or part thereof, in the 05-06 Cases that is based on
6 allegations of Rambus’s destruction of documents, litigation misconduct, or spoliation of
7 evidence ... shall be adjudicated separately from ... the 05-06 Patent Trial(s).” (JCMO at 2.)
8 Consistent with this plan, three of the Manufacturers—Micron, Samsung, and Hynix—have
9 specifically agreed to exclude spoliation issues from the patent trial (See 12/10/08 Record
10 Transcript 116-19.) That was the agreement reached by all of the parties (including Nanya) in the
11 conduct trial, allowing only limited exceptions. (See Feb. 3, 2008 Rulings on Rambus’s Mot. in
12 Limine, at 9 (noting that, with a single exception, “[n]o party shall raise any allegations about the
13 document retention policies or the destruction of documents by any party or about any party’s
14 alleged or adjudicated spoliation of evidence”); Stip. Resolving Mfrs. Mots. in Limine, at 3.)
15 The most efficient approach here is for the Court to resolve the Manufacturers’
16 preclusion arguments immediately and proceed to trial, as scheduled. It makes no sense to upend
17 a trial that Rambus has awaited, and that has been on this Court’s calendar, for years given that
18 the arguments for preclusion here are easily disposed of—and, indeed, have been briefed by the
19 parties numerous times. Even if the doctrine’s elements were met as to any of the Manufacturers,
20 it is too late in the day to advance the efficiency concerns that underlie offensive collateral
21 estoppel. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 328-30 (1979). The Court already
22 has held two trials on spoliation and unclean hands (the second on the record created in the first),
23 and as to Nanya, a further trial on additional claims is already contemplated. In these
24 circumstances, the benefits of pressing forward, with celerity, to a final resolution of the key
25 infringement and validity issues in this case far outweigh any possible gain from a postponement
26 to further brief collateral estoppel.
27
28
-3- COURT RULING
CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 B. The Manufacturers Cannot Demonstrate That the Delaware Ruling is

Entitled to Collateral Estoppel Effect, or That This Court Should Exercise its
2 Discretion to Apply the Doctrine
3
Even bracketing the absence of a final judgment in Delaware, the Delaware
4
Court’s decision presents, at most, the possibility of issue preclusion (or collateral estoppel), not
5
the possibility of claim preclusion (or res judicata). As to all the Manufacturers but Micron, this
6
conclusion could not be clearer: it is axiomatic that claim preclusion requires identity of the
7
parties. Providence Health Plan v. McDowell, 385 F.3d 1168, 1174 (9th Cir. 2004). But the
8
analysis is scarcely more difficult as to Micron because none of the Delaware claims against
9
Micron are replicated here: all the claims here involve different patents, different accused
10
devices, or both. “Each patent asserted raises an independent and distinct cause of action.”
11
Kearns v. General Motors Corp., 94 F.3d 1553, 1555 (Fed. Cir. 1996). As the Federal Circuit has
12
explained, “[j]ust as infringement of one patent is not a ground of liability for infringement of a
13
different patent, so an involuntary dismissal of a suit regarding one patent is not a ground for
14
dismissal of a different patent.” Id. at 1555-56 (holding that prior judgment did not have claim
15
preclusive effect on subsequent suit involving same patentee but different patents). Claim
16
preclusion is especially inappropriate if the prior dismissal was not pursuant to an adjudication of
17
infringement or validity on the merits. Id. at 1556. Moreover, even where two actions involve
18
the identical set of patents—decidedly not the situation here—the accused products must be
19
“essentially the same” for claim preclusion to apply. Foster v. Hallco Mfg. Co., 947 F.2d 469,
20
479-80 (Fed. Cir. 1991). Yet the Manufacturers, Micron included, have steadfastly insisted that
21
the different product generations are not “essentially the same”—proposing, for example, distinct
22
representative products for DDR2 and DDR3—and Micron cannot now claim otherwise in order
23
to take advantage of the Delaware ruling. Accordingly, as to Micron no less than the other
24
Manufacturers, the question before this Court is whether the Delaware decision is entitled to
25
collateral estoppel in this action.
26
The doctrine of collateral estoppel bars parties from re-litigating only such issues as were
27
actually litigated and necessarily decided by a final judgment in another case. See Offshore
28
-4- COURT RULING
CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 Sportswear, Inc. v. Vaurnet Int’l, B.V., 114 F.3d 848, 850 (9th Cir. 1997). As this Court has
2 noted, the Manufacturers must establish four elements in order to invoke the doctrine: “‘(1) there
3 was a full and fair opportunity to litigate the issue in the previous action; (2) the issue was
4 actually litigated in that action; (3) the issue was lost as a result of a final judgment in that action;
5 and (4) the person against whom collateral estoppel is asserted in the present action was a party or
6 in privity with a party in the previous action.’” Order Denying Hynix’s Mot. to Dismiss Patent
7 Claims for Unclean Hands on Basis of Collateral Estoppel, Apr. 25, 2005 (“CE Order re:
8 Infineon”), at 2 (citation omitted); accord Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d
9 741, 746 (9th Cir. 2006). The Manufacturers bear the burden to prove these elements “with
10 clarity and certainty.” Offshore Sportswear, 114 F.3d at 850. Even if the Manufacturers establish
11 that all of these elements are satisfied—and they cannot—this Court can and should exercise its
12 discretion to deny collateral estoppel to the Delaware Court’s ruling. See Parklane Hosiery, 439
13 U.S. at 331; Blonder-Tongue Labs., Inc. v. University of Ill. Found., 402 U.S. 313, 333-34 (1971);
14 Restatement (Second) of Judgments § 29. This Court already has held that it has particularly
15 broad discretion to deny collateral estoppel where, as here, the request is for “offensive” non-
16 mutual collateral estoppel. (See CE Order re: Infineon, at 6-7 & n.1.)
17 Under these principles, the Manufacturers cannot show that the Delaware ruling
18 collaterally estops Rambus from enforcing the patents in suit in this case. The mandatory and
19 discretionary factors establish that it would be both unfair and legally improper to give the ruling
20 preclusive effect. This Court has already tried the same unclean hands defense twice, and has
21 already resolved the key spoliation facts underlying that defense in Rambus’s favor in Hynix I.
22 Nor is the Hynix I order the only finding at odds with the Delaware ruling: as this Court has
23 noted, the ALJ in the FTC proceedings also found no destruction of documents material to the
24 conduct-related defenses grounding the Delaware Court’s order. This inconsistency alone
25 justifies denying preclusive effect to the ruling, at a minimum, as to Hynix, Samsung, and Nanya.
26 But there are still other fundamental defects in the Manufacturers’ collateral estoppel theory that
27 foreclose its application as to any of the Manufacturers, including Micron. The issues in this case
28 and the Delaware case are not identical—notably, none of the Micron devices accused of
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CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 infringing Rambus patents in the Delaware case are accused of infringing the same patents in this
2 trial. The infringement claims and defenses also raise unique issues as to many of the
3 Manufacturers. And the issue of the appropriate remedy is highly fact-bound, and cannot be
4 dictated by the discretionary decision of a court.
5 1. The Striking Inconsistency Between the Delaware Court’s Findings
and this Court’s Spoliation Determinations in Hynix I Itself Weighs
6 Strongly Against Giving the Delaware Ruling Preclusive Effect Here
7 The offensive use of collateral estoppel, this Court has explained, is “less favored”
8 because it raises special fairness concerns. CE Order re: Infineon, at 6; accord Parklane Hosiery,
9 439 U.S. at 331 n.15 (“The problem of unfairness is particularly acute in cases of offensive
10 estoppel [] because the defendant against whom estoppel is asserted typically will not have
11 chosen the forum in the first action.”). Accordingly, when the Court weighs and exercises its
12 discretionary power to apply issue preclusion, “no one set of facts, no one collection of words or
13 phrases, will provide an automatic formula for proper rulings on estoppel pleas. In the end,
14 decision will necessarily rest on the trial courts’ sense of justice and equity.” Blonder-Tongue,
15 402 U.S. at 333-34. Accordingly, a trial court may consider any factor bearing on fairness in a
16 particular case, and may refuse offensive collateral estopel “either for the reasons discussed [by
17 the Supreme Court] or for other reasons” if “the application of offensive estoppel would be
18 unfair to a defendant.” Parklane Hosiery, 439 U.S. at 331 (emphasis added). “The circumstances
19 of each case must provide the touchstone for decision.” Western Oil and Gas Ass’n v. E.P.A., 633
20 F.2d 803, 809-10 (9th Cir. 1980).
21 As this Court has recognized, the fact that the asserted ruling is inconsistent with
22 other rulings favorable to Rambus is a factor weighing against issue preclusion. (CE Order re:
23 Infineon, at 7.) Parklane Hosiery specifically notes that applying the doctrine may be “unfair to a
24 defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or
25 more previous judgments in favor of the defendant.” Id. at 330. That is precisely the situation
26 here. The ruling the Manufacturers seek to assert is flatly inconsistent with this Court’s prior
27 order rejecting Hynix’s spoliation contentions and its unclean hands defense. On every element
28
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CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 of unclean hands—from bad faith and spoliation to prejudice to the appropriate sanction—the
2 Delaware Court reached the opposite conclusion from this Court. The opinions’ divergence in
3 analysis and reasoning extends to critical issues of fact underlying the elements of unclean hands,
4 including the timing of Rambus’s duty to preserve documents and the effect of the destroyed
5 documents on the relevant defenses. Nothing in the collateral estoppel doctrine requires a court
6 to cast aside its own prior determinations of fact in deference to another court’s subsequent and
7 contradictory determinations.
8 The Delaware Court’s ruling is inconsistent with this Court’s Hynix I spoliation
9 Order in three critical respects. First, the Delaware Court found that “a duty to preserve
10 potentially relevant evidence arose in December 1998,” when Rambus’s then-vice president of
11 intellectual property, Joel Karp, circulated a memo outlining a strategy for responding to a
12 hypothetical “nuclear winter” scenario in which Intel turned to industry standard DRAMs. (Del.
13 Ruling, at 32.) According to its ruling, litigation was “reasonably foreseeable [by Rambus] no
14 later than [this time]” because Karp “articulated a time frame and a motive for implementation of
15 the Rambus litigation strategy.” (Id. at 31) This Court, in contrast, found that Rambus did not
16 actively contemplate litigation until late 1999, when the conditions that made it necessary and
17 foreseeable actually obtained. See 2006 WL 565893, at *22-*23. Although Rambus began
18 developing a licensing and litigation strategy in early 1998—continuing through the time period
19 deemed critical by the Delaware Court—“the path to litigation was neither clear nor immediate.”
20 Id. at *22. As this Court noted, Rambus did not intend to pursue litigation unless and until a
21 number of conditions fell into place, including, critically, a business decision by the Rambus
22 Board to authorize non-compatible license negotiations, and the refusal of the license target to
23 negotiate. Id. Rambus did not actually anticipate litigation until late 1999, when Rambus
24 obtained the first of the patents in suit, made a business decision to initiate non-compatible
25 license negotiations with Hitachi in light of the then-existing business climate, and the negotiation
26 process broke down. Id. at *23. This Court found not only that “Rambus’s adoption and
27 implementation of its content neutral Document Retention Policy in mid-1998 was a permissible
28 business decision,” but also that its continued application during the “shred days” was not
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CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 improper. Id. at *24 (emphasis added). Focusing on the specific facts surrounding that Policy,
2 this Court determined (a) that it “contained no directive to discard documents relating to specific
3 companies or to certain subjects”; (b) that the policy was based upon a general template provided
4 by outside counsel, without any tailoring “to target particular categories of harmful document[s]”;
5 and (c) that there was nothing unusual about the so-called shred days Rambus occasionally used
6 to implement the strategy. Id. at *11-*13. Taken together with the timing of Rambus’s litigation
7 plans, the legitimate nature of the Policy made it clear that “[t]he destruction of documents on the
8 1998 and 1999 shred days pursuant to the policy did not constitute unlawful spoliation.” Id.
9 Second, the Delaware Court concluded the destruction of documents prejudiced
10 Micron. The Delaware Court reasoned that documents destroyed under Rambus’s Document
11 Retention Policy included documents that “were discoverable and the type of document that
12 would be relevant to the instant litigation,” specifically, to Micron’s JEDEC-related patent
13 misuse, antitrust, and unfair competition claims and inequitable conduct defenses. (Del. Ruling,
14 at 32.) The Delaware Court’s ruling is, in form and substance, the polar opposite of the approach
15 taken by this Court in Hynix I. The Court specifically found that JEDEC-related documents were
16 essentially available; that Rambus had produced a “fairly complete record” of contract-related
17 documents; and that Rambus produced substantial materials relating to the patents in suit,
18 including documents bearing on conception and reduction to practice of the parallel inventions.
19 2006 WL 565893, at *17-*18. With respect to each category, the Court offered specific examples
20 of relevant documents produced to Hynix. Id. Based upon these particular findings, this Court
21 concluded that “adequate similar and material documents or classes of documents were not
22 destroyed,” and that Rambus has produced a large volume of these documents to the
23 Manufacturers. Id. at 27.
24 Finally and importantly, the Delaware Court viewed and wielded its remedial
25 powers in a manner that contrasts sharply with this Court’s approach in Hynix I. While
26 acknowledging that the controlling legal standard required it to impose “the least harsh sanction”
27 serving the objectives of fairness and deterrence, the Delaware Court determined that the only
28 appropriate sanction was to declare outright that Rambus patents were not enforceable against
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CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 Micron. (Del. Ruling, at 33 (emphasis added).) But as this Court observed in Hynix I, “inherent
2 powers must be exercised with discretion and restraint.” 2006 WL 565893, at *28 (citation
3 omitted). When it considered the appropriate sanction in light of the facts in Hynix I, this Court
4 “d[id] not find dismissal to be an appropriate sanction because it does not find the application of
5 the unclean hands doctrine to be warranted.” Id.
6 The Delaware Court’s ruling conflicts not only with the Hynix I spoliation ruling,
7 but also with the findings made by the Chief Administrative Law judge in the FTC proceedings
8 centering on the antitrust and unfair competition defenses that are the focus of the Delaware
9 Court’s ruling. As this Court has explained, the ALJ found “no indication that any documents
10 relevant and material to the issues before the FTC were destroyed.” (CE Order re: Infineon, at 7.)
11 While “not a prior inconsistent judgment,” this finding nonetheless tends to confirm the
12 correctness of this Court’s spoliation ruling (id.), to cast further doubt on the Delaware Court’s
13 ruling, and thus to weigh against the application of collateral estoppel here. Accord Order
14 Denying Mfrs.’ Mot. for Prima Facie Effect and Denying Mfrs.’ Mot. for Collateral Estoppel
15 (relying in part on FTC trial court decision in favor of Rambus as part of discretionary rejection
16 of collateral estoppel effect for FTC Commission decision).
17 2. The Delaware Ruling Carries No Collateral Estoppel Effect in this
Case Because it Presents Distinct Issues
18
It is settled that collateral estoppel may apply only if the previously adjudicated
19
issues are identical to those before this Court. See Hydranautics v. FilmTec Corp., 204 F.3d 880,
20
885 (9th Cir. 2000) (noting that collateral estoppel requires that “the issue necessarily decided at
21
the previous proceeding is identical to the one which is sought to be relitigated”); accord Comair
22
Rotron, Inc. v. Nippon Densan Corp., 49 F.3d 1535, 1537 (Fed. Cir. 1995). The doctrine may not
23
be applied if there is “some possibility” that the issues are not identical. In Re Reynoso, 477 F.3d
24
1117, 1123 (9th Cir. 2007). And because the requirement of identical issues is mandatory, any
25
variance in the issues presented here independently bars all four of the Manufacturers from
26
invoking the Delaware ruling for collateral estoppel purposes.
27
The issues presented in the Delaware litigation and in this case are not identical,
28
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CV 05-02298 RMW; C 05-334 RMW; C-06-244 RMW
1 and indeed materially differ, in at least three respects. First, there are both patents and products at
2 issue in this case that are not included in the Delaware litigation. Second, Rambus’s infringement
3 case against each of the Manufacturers presents unique factual issues that preclude giving
4 collateral estoppel effect to the Delaware ruling. Third, the issue of the proper remedy for any
5 spoliation, and in particular whether dismissal would be an appropriate sanction, rests on a
6 factually distinct record here. In evaluating the extent of Rambus’s purported “bad faith” and the
7 “prejudice” to Micron for purposes of exercising its remedial discretion, The Delaware Court
8 relied upon purported litigation misconduct in its case, a factor that (among others) is inapplicable
9 in this case.
10 a. This Case Involves Patent Claims and Accused Products that
Are Different From Those At Issue in the Delaware Litigation
11
The upcoming patent trial plainly presents issues that are not part of the Micron
12
case before the Delaware Court. For example, the Delaware litigation does not encompass DDR3
13
and does not involve six of the ten patents-in-suit. It is axiomatic that, for issue preclusion
14
purposes, “separate patents describe separate and distinct inventions, ... and it can not be
15
presumed that related patents rise and fall together.” Comair Rotron, 49 F.3d at 1539 (internal
16
brackets and quotation marks omitted). It is equally clear that a prior decision as to one accused
17
product would not bar litigation over a separate product, even if the same patent is asserted in
18
both actions. A.B. Dick Co. v. Burroughs Corp., 713 F.2d 700, 703 (Fed. Cir. 1983).
19
Accordingly, under no circumstances could collateral estoppel apply to render unenforceable the
20
six patents that are unique to this Court.
21
In addition, spoliation requires a finding that litigation is reasonably anticipated
22
when the material, non-cumulative documents are destroyed. Hynix I, 2006 WL 565893, at *20-
23
*21. As this Court has held, the availability of infringing “product samples from potentially
24
infringing DRAM manufacturers” bears critically on when litigation was reasonably anticipated
25
by Rambus and thus on the issue of spoliation. Id. at *22. It is an open question, to say the least,
26
whether litigation over DDR3—a product that the Manufacturers did not begin to sell until 2006-
27
2007, and which JEDEC did not even discuss until 2002 at the earliest (Conduct Trial RT 696:16-
28
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1 697:1 (Desi Rhoden))—was reasonably foreseeable when Rambus implemented its document
2 retention policy in 1998. The Delaware Court did not, and could not have, decided that issue, for
3 the simple reason DDR3 was not among the accused products in the case before it. Accordingly,
4 even as to the four patents that are common to the Delaware litigation and the cases in this Court,
5 there is no basis for application of collateral estoppel.
6 b. The Defenses Interposed by the Manufacturers Present Unique
Issues that Differentiate this Case from the Delaware Litigation
7
Beyond these cross-cutting differences between this case and the Delaware case,
8
the claims and defenses relating to the Manufacturers raise particular issues that make the
9
Delaware ruling non-identical. These include the following:
10
Hynix: Hynix, of course, is in the unique position of having already tried its
11
unclean hands defense to this Court and lost. Hynix cannot undo this Court’s binding decision on
12
the merits, reached after a long and hard-fought trial, simply by pointing to an unrelated
13
proceeding tried by an unrelated infringer. As the Ninth Circuit has explained,
14
15 It would be a curious use of affirmative collateral estoppel to permit one

who had lost before the jury on certain facts to overturn that verdict by
16 pointing out that on different facts, but identical legal principles, the winner
before the jury had lost a jury verdict to a stranger on an earlier day and in
17 a different court. Issue preclusion in its affirmative form is not that
expansive.
18 Mozart Co. v. Mercedes-Benz of North America, Inc., 833 F.2d 1342, 1348 (9th Cir. 1987) (no
19 issue preclusion where the second action had already been tried to verdict before the prior action
20 became final); cf. 18A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure
21 4465.2, at 772 (2002) (“[A] party who has lost a judgment should not be able to defeat the claim-
22 preclusion effects of the judgment by relying on inconsistent findings made in subsequent
23 litigation between another party and a common adversary.”).
24 The issues are also distinct as to Hynix because Hynix itself engaged in the
25 destruction of documents, including after litigation with Rambus commenced. Indeed, in prior
26 filings in this Court, Rambus has laid out substantial evidence that Hynix intentionally and
27 improperly destroyed relevant Rambus-related documents. (See, e.g., Rambus’s Opposition to
28
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1 Motion In Limine To Exclude Evidence Of Or Reference To Hynix’s Document Retention

2 Program (filed July 30, 2006 in Case No. CV 00-20905 RMW), at 2-6.)
3 Samsung: The spoliation and prejudice issues raised by Rambus’s claims against
4 Samsung differ in important ways from those raised in the Delaware litigation. First, Samsung
5 and Rambus successfully negotiated an RDRAM technology agreement in 1994, and further
6 entered into a license agreement for non-compatible products in 2000. (Rambus’s Proposed Post-
7 Trial Findings of Fact, Oct. 15, 2008, at 12, 14 (“Rambus Findings re Samsung”).) Whether
8 litigation was reasonably anticipated by Rambus against Samsung in light of their relationship
9 and their successful negotiations poses a completely different question than whether Rambus
10 anticipated litigation against Micron. As Rambus previously pointed out, Rambus did not
11 reasonably anticipate litigation against Samsung until 2005 (id. at 14), years after the destruction
12 of documents at issue in the Delaware litigation. Moreover, any earlier duty to preserve
13 documents was necessarily extinguished in 2000 upon the execution of the non-compatible
14 license agreement, thereby rendering any prior document destruction immaterial. (Id.) The
15 Delaware Court did not, and could not have, decided these issues unique to Samsung. Cf.
16 Reynoso, 477 F.3d at 1122-23 (collateral estoppel did not apply because the two plaintiffs
17 accessed the defendant’s website at different times, and it was possible that the website had
18 different content at different times).
19 Second, Samsung’s unclean hands defense is irreparably tarnished by its own
20 destruction of relevant and material evidence. (Rambus Findings re Samsung, at 57.) In August
21 2000, Samsung entered into a confidential agreement with other DRAM producers, including
22 Hynix and Micron, to monitor and attack Rambus’s patents. (Id.) Jay Shim, a Samsung witness,
23 admitted that Samsung contemplated litigation with Rambus at this time. (Id.) Nonetheless,
24 Samsung proceeded to destroy relevant documents, including draft license agreements,
25 communications regarding license agreements, and emails of key witnesses. (Id. at 59-60.)
26 Again, the impact of Samsung’s own conduct on the Court’s equitable discretion was not, and
27 could not have been, litigated in the Micron litigation.
28 Third, prejudice to Samsung presents a wholly different issue than prejudice to
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1 Micron, because Samsung has waived all the defenses to which the documents destroyed by
2 Rambus could have been prejudicial. “An unclean hands defense further requires proof that the
3 offending conduct materially prejudiced a party’s ability to defend itself.” (Hynix I Findings, at
4 38.) As the Delaware Court recognized, destruction of Rambus’s internal documents could have
5 been prejudicial only as to Micron’s inequitable conduct and JEDEC-based defenses. (Del.
6 Ruling, at 32 & n.59.) Samsung, unlike Micron in Delaware, has not asserted an inequitable
7 conduct defense and has already waived all of its defenses based upon JEDEC. (Stipulation and
8 Order Dismissing Portions of Certain Claims and Defenses with Prejudice, Sept. 16, 2008, C-05-
9 00334, Dkt. No. 2210.) Accordingly, even if Judge Robinson’s findings are credited, there is
10 simply no impact on Rambus’s claims against Samsung, or Samsung’s defenses to those claims.
11 Nanya: Like Samsung, Nanya’s unclean hands defense presents issues distinct
12 from those tried in the Delaware litigation, particularly with regard to the reasonable anticipation
13 of litigation. Unlike the other, more established Manufacturers, Nanya was not formed until
14 1995, Nanya USA not until 1997, and Nanya USA began to sell a “small amount” of SDRAM
15 only in 1998. (Conduct Trial RT 2730:9-12, 2752:16-19 (Hurley).) As a then-minor player in the
16 DRAM industry, and unlike the other Manufacturers, Nanya was not named in the “nuclear
17 winter” memorandum upon which the Delaware Court relied to show that the litigation with
18 Micron was reasonably foreseeable. (See Del. Ruling, at 16-17; HTX 004.) Nanya’s relative
19 insignificance at that time is further illustrated by the fact that the Delaware Court’s ruling makes
20 no mention of Nanya whatsoever.
21 c. This Case and the Delaware Litigation Present Distinct Issues
with Respect to Remedy
22
The Delaware Court concluded that the appropriate sanction for its spoliation
23
finding was to “declare the patents in suit unenforceable against Micron.” (Del. Ruling, at 33.)
24
To the extent a court’s discretionary selection of an appropriate sanction can be deemed a
25
“finding” eligible for issue preclusion at all, the Delaware Court’s finding that certain patents are
26
unenforceable as to Micron cannot be given preclusive effect in this case because the identity-of-
27
issues requirement is not met. As this Court has recognized, the propriety of imposing a sanction
28
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1 as severe as dismissal turns on the nature of the misconduct involved and the extent of prejudice
2 shown, Hynix I, 2006 WL 565893, at *28—factors that will usually be case- and defendant-
3 specific. Thus, at most, the decision to impose a sanction of dismissal in one case could be given
4 preclusive effect in a second case only if the universe of misconduct and corresponding prejudice
5 were precisely the same in both cases. Only in that scenario would the “issue” for purposes of
6 issue preclusion potentially be identical.
7 As discussed above, the extent of any prejudice allegedly suffered by Hynix,
8 Samsung, and Nanya was not before the Delaware Court and differs in material respects from the
9 showing of prejudice Micron asserted. That difference alone bars Hynix, Samsung, and Nanya
10 from attempting to assign preclusive effect to the Delaware Court’s selection of remedy. In
11 addition, as this Court has previously noted, “offensive collateral estoppel may be unfair ‘where
12 the second action affords the defendant procedural opportunities unavailable in the first action
13 that could readily cause a different result.’” (CE Order re: FTC, at 12 (quoting Parklane Hosiery,
14 439 U.S. at 331 & n.15).) That is the case here because this Court has now tried the conduct
15 issues while the Delaware Court has not, a difference in the procedural posture of this case that
16 places this Court in a far better position than the Delaware Court to assess potential prejudice to
17 all parties—Micron, Hynix, Samsung, and Nanya—arising from Rambus’s alleged spoliation.
18 For example, while the Delaware Court was left to speculate that internal Rambus documents
19 might have “illuminated” Micron’s defenses based on “patent misuse and violation of the antitrust
20 and unfair competition laws (based in part on Rambus’ conduct at JEDEC)” (Del. Ruling, at 32),
21 this Court can make that assessment based on concrete knowledge about the documents that were
22 produced, the testimony that was provided, and—perhaps most importantly—the findings of the
23 jury on those very defenses. 3 Rambus submits that this court’s intimate familiarity with how that
24 issue would be tried could readily lead to a different assessment of the degree of prejudice, if any,
25 from the allged destruction of additional Rambus documents. This Court can and should make an
26 3
(See, e.g., Verdict Form (Doc. No. 1651 in Case No. 5:05-cv00344-RMW) at 12, ¶ 45
27 (answering “No” to question “Did JEDEC members share a clearly defined expectation that
members would disclose relevant knowledge they had about patent applications or the intent to
28 file patent applications on technology being considered for adoption as a JEDEC standard”).)
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1 independent prejudice determination based on the superior record afforded by the procedural
2 posture of this case.
3 Moreover, the nature of the misconduct considered by the Delaware Court in
4 selecting a remedy is different from the “unclean hands” conduct allegedly at issue in this case,
5 even with respect to Micron. In selecting the remedy that it did, the Delaware Court explicitly
6 relied not only on findings relating to spoliation but also on findings relating to “Rambus’
7 litigation conduct,” both when determining the extent of Rambus’s bad faith and the extent of
8 prejudice to Micron. (Del. Ruling, at 33.) But the Federal Circuit has made clear that litigation
9 misconduct in one case, even when severe enough to justify a finding of unclean hands,
10 “generally does not prejudice the offending party in subsequent cases, but only provides a bar to
11 relief in the case at hand.” Aptix, 269 F.3d at 1376; see also Bio-Technology General Corp. v.
12 Genentech, Inc., 80 F.3d 1553, 1565 (Fed. Cir. 1996) (district court properly rejected unclean
13 hands defense because “the purported misconduct did not occur in the context of the present
14 lawsuit”). Thus, because the Delaware Court based its selection of remedy at least in part on
15 litigation conduct that occurred in that case but not this one, the “issue” decided by the Delaware
16 Court with respect to remedy is not identical to the issue before this Court, even if preclusive
17 effect were accorded to the Delaware Court’s spoliation findings.
18 3. Collateral Estoppel Also Is Properly Denied Because It Will Not Result
In Judicial Economy
19
The primary reason the Supreme Court permits offensive non-mutual collateral
20
estoppel is to save courts and parties the burden of relitigating previously determined issues. See
21
Parklane Hosiery Co., 439 U.S. at 326, 328-30. That rationale does not apply here with respect
22
to the Delaware Court ruling. As to Hynix and Samsung, this Court has already tried the defense,
23
and has issued its order in Hynix I. There is simply no time saving or efficiency that would be
24
gained as to Hynix or Samsung through application of collateral estoppel. And, even as to Nanya,
25
it is likely that the parties will be able to structure a trial that draws on prior records, except as to
26
the Nanya specific facts (as the recent Samsung trial demonstrates). Therefore, the absence of
27
economy is yet another reason for this Court to exercise is discretion to refuse to apply collateral
28
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1 estoppel to the Delaware Court ruling. See S.E.C. v. Monarch Funding Corp., 192 F.3d 295,
2 306-07, 310 (2d Cir. 1999) (given general risks of unfairness, trial courts may refuse to grant
3 collateral estoppel to any sentencing finding that will not promote judicial economy as “it makes
4 little sense to forego the opportunity to reexamine a potentially wrong decision if the economies
5 achieved by doing so are slight or non-existent”).
6 III. CONCLUSION
7 The trial should proceed as planned and on schedule.
8 DATED: January 13, 2009 MUNGER, TOLLES & OLSON LLP
SIDLEY AUSTIN LLP
9 McKOOL SMITH P.C.
10
11 By: /s/ Gregory P. Stone

GREGORY P. STONE
12
Attorneys for RAMBUS INC.
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2009-01!13!3104 - R Brief Re Delaware Spoliation Ruling

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2009-01!13!3104 - R Brief Re Delaware Spoliation Ruling

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Case 5:05-cv-00334-RMW Document 3104 Filed 01/13/2009 Page 1 of 20

1 Gregory P. Stone (SBN 078329) Rollin A. Ransom (SBN 196126)

15 NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION

9 that these documents would be relevant to infringement or damages.

15 against one of the Manufacturers.

20 relate to the Manufacturers’ affirmative defense of invalidity. The Delaware specifically

26 available,” and made a similar finding as to written description. (Id.)

1 B. The Manufacturers Cannot Demonstrate That the Delaware Ruling is

15 It would be a curious use of affirmative collateral estoppel to permit one

1 Motion In Limine To Exclude Evidence Of Or Reference To Hynix’s Document Retention

11 By: /s/ Gregory P. Stone

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