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KENNETH L. NISSLY (SBN 77589) knissly@omm.com SUSAN van KEULEN (SBN 136060) svankeulen@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

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 OPENING PRE-HEARING BRIEF ON REMAND CMC Date: December 16, 2011 Time: 9:00 a.m. Ctrm: 6, 4th Floor Judge: Hon. Ronald M. Whyte

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TABLE OF CONTENTS Page PRELIMINARY ISSUES AND OBJECTIONS ................................................................ 1 A. THE COURT SHOULD COORDINATE THIS REMAND PROCEEDING WITH THE DELAWARE REMAND PROCEEDING ......................................... 1 B. HYNIX OBJECTS TO USING THIS COURTS VACATED 2006 FINDINGS OF FACT AND CONCLUSIONS OF LAW AS THE STARTING POINT FOR PROPOSED FINDINGS AND CONCLUSIONS ON REMAND......................................................................................................... 3 THE COURT SHOULD PERMIT HYNIX TO SUPPLEMENT THE RECORD ................................................................................................................ 4 HYNIX RENEWS AND PRESERVES ITS ARGUMENT THAT A NUMBER OF ITS PROPOSED FINDINGS ARE ESTABLISHED BY COLLATERAL ESTOPPEL .................................................................................. 7

THE COURT SHOULD INFORM THE PARTIES OF ITS DECISION ON THE ISSUE OF BAD FAITH BEFORE CONSIDERING THE ISSUES OF PREJUDICE AND APPROPRIATE SANCTION ............................ 8 RAMBUS ENGAGED IN SPOLIATION.......................................................................... 8 A. THE FEDERAL CIRCUITS HYNIX II AND MICRON II DECISIONS ESTABLISH THAT RAMBUS ENGAGED IN SPOLIATION NO LATER THAN THE 1999 SHRED DAY .............................................................. 8 RAMBUSS DUTY TO PRESERVE EVIDENCE AROSE BEFORE JULY 1998 .............................................................................................................. 9 UNDER THE MICRON II FRAMEWORK, DISMISSAL IS THE MOST APPROPRIATE SANCTION FOR RAMBUSS SPOLIATION.................................... 10 A. RAMBUS SPOLIATED EVIDENCE IN BAD FAITH....................................... 11 B. RAMBUS CANNOT CARRY ITS BURDEN TO PROVE THAT ITS SPOLIATION DID NOT PREJUDICE HYNIX.................................................. 12 THE COURT MUST SANCTION RAMBUSS BAD FAITH, PREJUDICIAL SPOLIATION............................................................................. 14 1. The record warrants a severe sanction for Rambuss spoliation............... 15 2. B.

Dismissal is the most effective sanction .................................................. 17 a. The seriousness of Rambuss misconduct justifies dismissal ....... 17 b. If the court will not dismiss the case, it must impose lesser sanctions........................................................................................ 18 DISMISSAL IS ALSO APPROPRIATE UNDER THE DOCTRINE OF UNCLEAN HANDS......................................................................................................... 19 CONCLUSION ................................................................................................................. 20
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TABLE OF AUTHORITIES Page

Anheuser-Busch, Inc. v. Natural Beverage Distrib., 69 F.3d 337 (9th Cir. 1995)....................................................................................................... 16 Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369 (Fed. Cir. 2001)................................................................................................. 20 Cardiac Pacemakers, Inc. v. Guidant Sales Corp., 576 F.3d 1348 (Fed. Cir. 2009)................................................................................................... 9 Columbia Pictures, Inc. v. Bunnell, No. 2:06-cv-01093 FMC-JCx, 2007 WL 4877701 (C.D. Cal. Dec. 13, 2007)................... 16, 17 Combs v. Rockwell Intl Corp., 927 F.2d 486 (9th Cir. 1991)..................................................................................................... 16 Glover v. BIC Corp., 6 F.3d 1318 (9th Cir. 1993)....................................................................................................... 16 Halaco Engg Co. v. Costle, 843 F.2d 376 (9th Cir. 1988)..................................................................................................... 16 Herrington v. Cnty of Sonoma, 12 F.3d 901 (9th Cir. 1993)......................................................................................................... 9 Hoffman v. Tonnemacher, No. CIV F 04-5714 AUW(DLB), 2006 WL 3457201 (E.D. Cal. Nov. 30, 2006) ..................... 6 Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 2d 1038 (N.D. Cal. 2006) .................................................................................... 13 Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011).......................................................................................... passim In re Napster Inc. Copyright Litig., 462 F. Supp. 2d 1075 (N.D. Cal. 2006) .............................................................................. 16, 17 In re Sealed Case, 754 F.2d 395 (D.C. Cir. 1985) .................................................................................................. 19 Keystone Driller Co. v. Genl Excavator Co., 290 U.S. 240 (1933).................................................................................................................. 20 Leon v. IDX Sys. Corp., 464 F.3d 951 (9th Cir. 2006).............................................................................................. passim Mas v. Coca-Cola, 163 F.2d 505 (4th Cir. 1947)..................................................................................................... 20 MercExchange, L.L.C. v. eBay, Inc., 467 F. Supp. 2d 608 (E.D. Va. 2006).......................................................................................... 7 Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011).......................................................................................... passim Micron Techs., Inc. v. Rambus Inc., 255 F.R.D. 135 (D. Del. 2009).............................................................................................. 7, 10

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TABLE OF AUTHORITIES (continued) Page MOSAID Techs., Inc. v. Samsung Elec. Co., 348 F. Supp. 2d 332 (D.N.J. 2004) ........................................................................................... 14 Padgett v. City of Monte Sereno, No. C 04-03946 JW, 2007 WL 878575 (N.D. Cal. Mar. 20, 2007).......................................... 16 Pfizer, Inc. v. Intl Rectifier Corp., 685 F.2d 357 (9th Cir. 1982)..................................................................................................... 20 Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945)............................................................................................................ 19, 20 Reilly v. NatWest Markets Group, Inc., 181 F.3d 253 (2d Cir. 1999)...................................................................................................... 16 Republic Molding, Inc. v. B.W. Photo Utils., 319 F.2d 347 (9th Cir. 1963)..................................................................................................... 20 Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76 (3d Cir. 1994).................................................................................................... 11, 12 Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir. 2001)..................................................................................................... 15 State Farm Fire and Cas. Co. v. Broan Mfg. Co., Inc., 523 F. Supp. 2d 992 (D. Ariz. 2007)......................................................................................... 17 State Indus., Inc. v. Mor-Flo Indus., Inc., 948 F.2d 1573 (Fed. Cir. 1991)................................................................................................... 6 Suel v. Secy of Health and Human Services, 192 F.3d 981 (Fed. Cir. 1999)............................................................................................. 2, 5, 9 Thomas E. Hoar, Inc. v. Sara Lee Corp., 882 F.2d 682 (2d Cir. 1989)...................................................................................................... 14 Trull v. Volkswagen of Am., Inc., 187 F.3d 88 (1st Cir. 1999) ....................................................................................................... 16 United States v. Kitsap Physicians Serv., 314 F.3d 995 (9th Cir. 2002)..................................................................................................... 13 Vodusek v. Bayliner Marine Corp, 71 F.3d 148 (4th Cir. 1995)................................................................................................. 14, 15 West v. Goodyear Tire & Rubber Co., 67 F.3d 776 (2d Cir. 1999).................................................................................................. 14, 15 Wilson v. Volkswagen of Am., Inc., 561 F.2d 494 (4th Cir. 1977)..................................................................................................... 12 RULES Fed. R. Civ. P. 34(b)(1)(A) ........................................................................................................... 14

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I.

PRELIMINARY ISSUES AND OBJECTIONS A. THE COURT SHOULD COORDINATE THIS REMAND PROCEEDING WITH THE DELAWARE REMAND PROCEEDING

Hynix submits this brief and the accompanying Proposed Findings of Fact and Conclusions of Law in compliance with the schedule the Court has set for the remand proceedings. Hynix renews its objection to the Courts schedule, however, insofar as it may accelerate the remand proceedings here ahead of the remand proceedings in the Delaware district court. The Federal Circuits opinions made plain, and Rambus there agreed, that the outcomes of this case and the Micron case in Delaware should be consistent. The Delaware court proceedings are significantly more advanced than the proceedings here because the Federal Circuit affirmed the Delaware courts spoliation findings and vacated this Courts spoliation findings. Therefore, Hynix renews the request made in its briefs dated September 30 and October 14, 2011 that this Court coordinate its remand proceedings with the remand proceedings in Delaware. Specifically, Hynix requests that this Court take the December 16, 2011 hearing off calendar, allow the Delaware district court to complete its proceedings as to the significantly narrower issues there remanded for reconsideration, and then determine the preclusive effect of those proceedings. The Federal Circuit coordinated the Micron and Hynix appeals at Rambuss request. In its motion to coordinate (which Hynix joined), Rambus argued that [j]oint resolution is warranted and, indeed, the only sensible approach because the appeals involve overlapping issues, the district courts reached conflicting results on certain of those issues, and the subject matter of the underlying patent litigations is closely related. 7/23/09 Joint Motion to Assign Appeal Nos. 2009-1263, 2009-1299, and 2009-1347 to the Same Panel and to Coordinate Oral Arguments, attached to the Declaration of Susan Roeder filed together with this brief (Roeder Decl.), as Ex. 38, at 2. Correctly observing that the two cases involve nearly identical allegations and a substantially similar record, Rambus asserted that the efficiency and consistency benefits of coordination are overwhelming and that coordination would facilitate uniform and consistent treatment of overlapping questions of law and fact that arise in both cases. Id. at 2-4, 8. Rambus noted that both this Court and the Delaware district court had recognized the benefits of -1HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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coordination on appeal and taken steps to facilitate it. Id. at 5-7. The Federal Circuit granted Rambuss motion to coordinate the appeals. 8/17/09 Order, attached to Roeder Decl. as Ex. 39. The arguments in favor of coordination apply with even greater force on remand. When the Federal Circuit remanded this case and the Micron case, it expressly linked its two decisions and made clear its concern about the need for consistent outcomes given the identity of the underlying facts. See Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1342 (Fed. Cir. 2011) (Hynix II) (As both parties agree, the facts underlying Rambuss alleged spoliation are substantially identical in the two cases.). The Federal Circuit decided both cases the same day and directed this Court to decide the remanded issues under the framework set forth in the companion decision in Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) (Micron II). See Hynix II, 645 F.3d at 1341-42, 1347. Equally important, the Federal Circuit explicitly held that Rambus had waived any contention that the outcome of the two cases should be different: [i]n Micron II, Rambus argued that the differences in the records are makeweight, cumulative, and insignificant, and not sufficient to compel a different outcome on spoliation . . . . Thus, to the extent the records are in fact different, Rambus has waived any argument that the different records justify different outcomes. Id. at 1342 n.1; see also id. at 1347 (Rambus has agreed that whatever differences the facts present, the two cases should not be decided differently.). Rambus did not seek Supreme Court review of the Federal Circuits decisions in this case or Micron II, and its rehearing petitions were denied. The Federal Circuits ruling in Hynix II that Rambus has waived any argument that the cases should be decided differently is therefore the law of this case. See Suel v. Secy of Health and Human Services, 192 F.3d 981, 984-85 (Fed. Cir. 1999) (law of the case doctrine operates to protect the settled expectations of the parties and promote orderly development of the case by limiting courts ability to reopen or reconsider what has already been decided at an earlier stage of the litigation). Rambus now ignores its prior position because, contrary to what it hoped for, the Federal Circuit decided both appeals adversely to it. But Rambus is not free to reverse its prior position, because its waiver of any argument that the cases should be decided differently is law of the case. -2HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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And in any event the same considerations that mandated coordination of the appeals also mandate coordination of the remand proceedings. Those considerations also provide compelling reasons for the Delaware remand to proceed first. The Federal Circuit affirmed the [Delaware] district courts determination of spoliation (Hynix II, 645 F.2d at 1344)1 and vacated this Courts Findings of Fact and Conclusions of Law in connection with the rejection of Hynixs motion to dismiss on the basis of spoliation due to legal error (id. at 1347). As Judge Robinson has noted, in large measure, [her] work is done See Ex. C. to Hynixs 9/30/11 brief at 9:19. This Court, by contrast, must consider the spoliation issues anew under the framework set forth in Micron II. In addition, the Federal Circuit left open the issue of collateral estoppel (see Hynix II, 645 F.2d at 1347 n.2), making it appropriate for this court to await the Delaware decision in order to give full consideration to the role of collateral estoppel in advancing the goal of consistent outcomes. This Court previously voiced its concern about an unseemly race between getting a final determination in the Micron case and getting a final determination in the Hynix case. 6/3/11 Transcript of Case Management Conference (D.E. 4039) at 14:20-23. Yet while knowing that the schedule for the Delaware remand would culminate in a hearing on January 26, 2012, the Court at Rambuss instigation has set the remand hearing in this case for December 16, 2011. The Court still has an opportunity to dispel the appearance that Rambus is engaged in an unseemly race by taking the December 16 hearing off calendar and awaiting Judge Robinsons decision on remand. Hynix respectfully urges the Court to do so. B. HYNIX OBJECTS TO USING THIS COURTS VACATED 2006 FINDINGS OF FACT AND CONCLUSIONS OF LAW AS THE STARTING POINT FOR PROPOSED FINDINGS AND CONCLUSIONS ON REMAND

The Federal Circuit vacated this courts prior findings of fact and conclusions of law, see Hynix II, 645 F.3d at 1341, and Rambus did not seek review of the Federal Circuits decision in the Supreme Court. At the October 21 Case Management Conference, however, the Court

The Federal Circuit vacated the Delaware district courts dismissal sanction and remanded for further analysis of bad faith, prejudice, and appropriate sanction, but otherwise did not vacate that courts findings. Micron II, 645 F.3d at 1332. -3HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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directed the parties to use those now-vacated findings and conclusions as the starting point for their proposed findings and conclusions on remand. Hynix objects to this procedure because it gives undue weight and emphasis to findings and conclusions that the Federal Circuit vacated. The Courts direction to use the vacated findings and conclusions as the starting point on remand implies that those findings and conclusions were correct and that Hynix bears some undefined burden to demonstrate they are not. Hynix is not required to make any showing as to why the vacated findings should not be reentered when Hynix has already demonstrated on appeal that the prior findings and conclusions were erroneous. To require an additional showing on remand is an improper collateral attack on the Federal Circuits ruling. In compliance with the Courts direction, however, Hynix has used the prior findings and conclusions as the starting point, modifying them as appropriate in light of the Federal Circuits decisions and providing a redline of its proposed revisions. Hynix also notes that in contrast, the Federal Circuit held there was no error in this Courts January 31, 2005 Order Compelling Production of Documents (Spoliation) (D.E. 728) (Crime Fraud Order). See Hynix II, 645 F.3d at 1347. Again, Rambus did not seek Supreme Court review of that decision, which is now final and the law of this case. Accordingly, the Court should adopt those of Hynixs proposed findings that are based on the Crime Fraud Order. C. THE COURT SHOULD PERMIT HYNIX TO SUPPLEMENT THE RECORD

The Federal Circuit emphasized that a key policy consideration informing the spoliation doctrine is the need to preserve the integrity of the litigation process in order to retain confidence that the process works to uncover the truth. Hynix II, 645 F.3d at 1345 (citation and internal quotation marks omitted). Consistent with that policy goal, this Court should make its decision on remand based on the truth that has been uncovered in all proceedings addressing Rambuss spoliation. The Court should not condone Rambuss attempt to conceal such evidence from Hynix and the Court and shield it from consideration here. Rambuss effort to artificially limit the Court to a six-year-old record is a continuation of Rambuss bad faith conduct and one of many ways in which Rambus has exhibited advantage-seeking behavior by the party with -4HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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superior access to information necessary for the proper administration of justice. Micron II, 645 F.3d at 1326. At the October 21 Case Management Conference, the Court indicated that Hynix could propose additional findings of fact based on evidence from other proceedings. Hynix has done so to the extent the record of those other proceedings is available to Hynix. But as noted in Hynixs September 30 and October 14, 2011 briefs, much of the record in the two ITC evidentiary hearings addressing Rambuss spoliation is under seal and unavailable to Hynix. Hynix therefore renews its request that the Court order Rambus to produce materials from its other spoliation proceedings and that Hynix be given an opportunity to propose additional findings of fact based on those materials. In the Proposed Findings of Fact and Conclusions of Law that accompany this brief, Hynix proposes only a limited number of additional findings (denoted by italics) based on discrete items of evidence introduced in other proceedings. Rambus has offered no principled reason why this Court should refuse to consider such additional evidence. Rambus argues that at some point litigation should end, but the reality is that litigation over Rambuss spoliation is continuing in multiple forums to this day. Rambus can show no prejudice from inclusion of additional evidence from those proceedings in the record here. Nor can Rambus legitimately argue that this limited supplementation must be restricted to evidence that could not have been obtained earlier. Rambus may not object to supplementation of the record here with evidence from the Micron case because it has expressly waived any argument that the outcomes should differ. As discussed earlier, Rambuss waiver is law of the case. See Hynix II, 645 F.3d at 1342, 1342 n.1, and 1347; see also Suel, 192 F.3d at 984-85. Rambus likewise may not object to findings based on its own concealment of relevant evidence or subsequent admissions by it own employees and agents. For example, Joel Karp first revealed years after the spoliation trial in this case that he had retained documents in his home, including key documents regarding Rambuss reverse engineering of a Samsung DDR part in late 1998. See Hynixs Proposed Findings of Fact and Conclusions of Law at F115-F116 and F415 And several witnesses who testified at the spoliation trial here have materially changed their -5HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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testimony in subsequent proceedings. See, e.g., Hynixs Proposed Findings of Fact and Conclusions of Law at F73-F75 and F110. Finally, even if some of the limited additional evidence Hynix seeks to present could have been available at the time of the 2005 trial, the Court should still consider that evidence now. The time limits imposed by the Court made it impossible for Hynix to present every piece of evidence relevant to Rambuss spoliation. Hynix presented what it believed to be sufficient evidence to establish that Rambus engaged in bad faith and prejudicial spoliation. Hynixs belief in the strength of its case was more than reasonable in light of the uniform conclusions reached by multiple other tribunals both before and after spoliation trial here -- in Virginia, Delaware, and the ITC -- that Rambus had engaged in bad faith spoliation. Indeed, both the Virginia and Delaware courts entered terminating sanctions based on that conduct. The Federal Circuit found no deficiency in the spoliation record established by Hynix here but instead concluded that this Court applied a too-strict standard. Hynix II, 645 F.3d at 1346. But now that the Federal Circuit has remanded the matter for reconsideration under the proper standard, it is entirely appropriate to consider the additional evidence available to those other tribunals, especially on the issues of bad faith and prejudice. Even the cases cited by Rambus on this issue establish that the Court should not limit its inquiry to whether the moving party could have obtained the additional evidence earlier. See generally Hoffman v. Tonnemacher, No. CIV F 04-5714 AUW(DLB), 2006 WL 3457201, at *2 (E.D. Cal. Nov. 30, 2006) (considering factors including the degree of prejudice to the nonmoving party, the ability to cure any prejudice, the impact on the orderly and efficient conduct of the trial, and any willfulness or bad faith by the moving party). The limited supplemental evidence Hynix seeks to introduce from other Rambus spoliation proceedings is highly relevant, does not require new depositions or other discovery, does not unfairly prejudice Rambus, and will enable this Court to make a more informed decision under legal standards that have been clarified since the spoliation trial in this case six years ago. In these circumstances, the Court should reopen the record and allow the limited supplementation Hynix seeks. See generally State Indus., Inc. v. Mor-Flo Indus., Inc., 948 F.2d 1573, 1576-77 -6HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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(Fed. Cir. 1991) (district court appropriately reopened record to clarify the existing evidence in the record after appellate court vacated the judgment and remanded for district court to reconsider whether findings of willful infringement and enhanced damages were justified); MercExchange, L.L.C. v. eBay, Inc., 467 F. Supp. 2d 608, 612 (E.D. Va. 2006) (reopening record on remand for limited purpose of admitting evidence relevant to parties motions for injunction and stay after date of district court's original order). D. HYNIX RENEWS AND PRESERVES ITS ARGUMENT THAT A NUMBER OF ITS PROPOSED FINDINGS ARE ESTABLISHED BY COLLATERAL ESTOPPEL

At the October 21 Case Management Conference, the Court requested the parties to brief the issues on remand on the assumption that collateral estoppel does not apply because the Courts still tentative but pretty definite conclusion is that collateral estoppel should not apply. 10/21/11 CMC Tr. (D.E. 4078) at 32:4-13. The Court invited Hynix to note in its proposed findings that it feels [collateral estoppel] does [apply], so that the issue is definitely preserved. Id. In compliance with this instruction, Hynix has identified the findings it believes mandated by Micron IIs collateral estoppel effect with an asterisk (*) and a citation to the Micron II decision. For the reasons set forth in Hynixs briefs dated September 30 and October 14, 2011, these findings are entitled to preclusive effect. Rambuss contrary argument boils down to a contention that the Court may deny collateral estoppel in its discretion, a position that is legally unsound. For the reasons previously articulated, Hynix submits that collateral estoppel should apply, both because the law requires it, and because it will advance consistent outcomes. Hynix has also previously requested that the Court give collateral estoppel effect to certain findings of the Delaware district court in Micron Techs., Inc. v. Rambus Inc., 255 F.R.D. 135 (D. Del. 2009) (Micron I), and the Virginia district court in Rambus v. Infineon. See 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). This Court denied those -7HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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requests. See 2/3/09 Order Denying Hynixs Motion for Summary Judgment of Unclean Hands (D.E. 3897); 11/24/04 Order on Motion to Dismiss as Sanction for Litigation Misconduct (4/25/05 Order Denying Hynixs Motion to Dismiss Patent Claims for Unclean Hands on the Basis of Collateral Estoppel (D.E. 1009). Hynix sought review of those denials on appeal, but the Federal Circuit elected not reach or rule on any collateral estoppel issues. Accordingly, Hynix preserves its argument that the Micron I and Infineon decisions should be give collateral estoppel effect.2 E. THE COURT SHOULD INFORM THE PARTIES OF ITS DECISION ON THE ISSUE OF BAD FAITH BEFORE CONSIDERING THE ISSUES OF PREJUDICE AND APPROPRIATE SANCTION

Hynix requested that the Court make a finding on bad faith before requiring briefing on prejudice because a decision on the issue of bad faith will determine which party bears the burden of proof on prejudice. The Court denied this request. 10/21/11 CMC Tr. (D.E. 4078) at 23:526:3, 30:22-31:4. Under the Micron II framework, however, a finding of bad faith will inform both the finding of prejudice and the appropriate sanction. The proper resolution of the prejudice issue turns largely on which party bears the burden of proof, which in turn depends on whether the Court finds bad faith. See Micron II, 645 F.3d at 1328. In addition, the Courts selection of an appropriate sanction must take into account, among other things, the degree of bad faith. Id. Accordingly, Hynix reserves the right to request the opportunity for further briefing and proposal of additional findings of fact or conclusions of law on the issues of prejudice, appropriate remedy, and/or other issues that may arise or be clarified at the hearing. II. RAMBUS ENGAGED IN SPOLIATION A. THE FEDERAL CIRCUITS HYNIX II AND MICRON II DECISIONS ESTABLISH THAT RAMBUS ENGAGED IN SPOLIATION NO LATER THAN THE 1999 SHRED DAY

In its Hynix II decision, the Federal Circuit held that the record compel[s] a finding that litigation was reasonably foreseeable prior to Rambuss Second Shred Day in August 1999.
2

Because the Court has not indicated that it is inclined to reconsider its rulings on the collateral estoppel effect of Micron I and Infineon, Hynix has not repeated those collateral estoppel arguments here or in its Proposed Findings. Hynix incorporates by reference its arguments on these issues can be ascertained from the motion papers referenced above. -8HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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Hynix II, 645 F.3d at 1347; see also Micron II, 645 F.3d at 1325-26 (affirming determination that Rambus destroyed documents during its second shred day in contravention of a duty to preserve them and, thus, engaged in spoliation). This finding of reasonably foreseeable litigation means that Rambus was under a duty to preserve documents as of its 1999 shred day. Micron II, 645 F.3d at 1320. Because Rambus destroyed documents on that day and thereafter (while it was under a duty to preserve them), Rambus engaged in spoliation. See id. As discussed in Hynixs September 30 and October 14, 2011 briefs, the law of the case and rule of mandate preclude the Court from reconsidering whether Rambuss destruction of documents from its second shred day onward constituted spoliation. Suel, 192 F.3d at 984-85 (holding that law of the case doctrine limits courts ability to reopen or reconsider decided issues); Cardiac Pacemakers, Inc. v. Guidant Sales Corp., 576 F.3d 1348, 1356 (Fed. Cir. 2009) (reversing summary judgment of invalidity on remand because, under mandate, new trial was limited to assessment of infringement and calculation of damages; rule of mandate precludes lower court from reconsidering issue decided by higher court in same case.); Herrington v. Cnty of Sonoma, 12 F.3d 901, 904-05 (9th Cir. 1993) (district court did not err in concluding that appellate rejection of lost damages figure limited recoverable damages on remand). This Court is bound by the Federal Circuits determination that Rambuss 1999 shred day occurred after Rambus was under a duty to preserve documents and that, as a result, Rambus engaged in spoliation. See Hynix II, 645 F.3d at 1347, Micron II, 645 F.3d at 1325-26. B. RAMBUSS DUTY TO PRESERVE EVIDENCE AROSE BEFORE JULY 1998

Under the Federal Circuits ruling, the Court still must decide whether Rambus also engaged in spoliation before the 1999 shred day. This in turn requires the Court to decide when litigation became reasonably foreseeable. See Micron II, 645 F.3d at 1320. In making this determination, [t]he exact date at which litigation was reasonably foreseeable is not critical because the question is binary, i.e., whether litigation was reasonably foreseeable before or after any date upon which destruction of evidence occurred. Micron II, 645 F.3d at 1322. It is undisputed that Rambus erased 1269 email backup tapes in July 1998 and hundreds of -9HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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boxes of documents during its September 1998 shred day. See Hynix II, 645 F.3d at 1343-44; Micron II, 645 F.3d at 1317-19; see also Micron I, 255 F.R.D. at 142, 145, 147. In addition, beginning in April 1999 Rambuss outside patent counsel, at Rambuss direction, destroyed portions of his files regarding the prosecution of Rambuss patents. Micron II, 645 F.3d at 1318; see also Hynix II, 645 F.3d at 1343; Micron I, 255 F.R.D. at 144. The Court must therefore decide whether litigation was reasonably foreseeable before any of those destruction events. The Federal Circuit held that reasonable foreseeability 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, 645 F.3d at 1320. In addition, litigation need not be imminent, or probable without significant contingencies, before the duty arises. Id.; see also Hynix II, 645 F.2d at 1346. In vacating this Courts prior finding that contingencies in Rambuss litigation plan negated foreseeability, the Federal Circuit concluded that the Court had a mistaken view of the importance of these contingencies in determining the foreseeability of litigation. Hynix II, 645 F.3d at 1346. Rather, contingencies such as the ones previously identified by this Court whose resolutions are reasonably foreseeable do not foreclose a conclusion that litigation is reasonably foreseeable. Id.(emphasis added); Micron II, 645 F.3d at 1321-22. As demonstrated at length in Hynixs Proposed Findings of Fact and Conclusion of Law, all of the contingencies identified by the Court were in fact identified and their outcomes foreseen by Rambus by March 1998, when Karp outlined the licensing and litigation strategy to implement Tates IP card to Rambuss Board of Directors. While Rambus might have preferred to simply license its patents, it knew that the licensing overtures it planned to make would produce litigation and planned for that inevitability. Litigation was reasonably foreseeable and in fact foreseen by Rambus before its destruction of backup tapes in July 1998, and accordingly Rambus engaged in spoliation by destroying evidence on that and later occasions. III. UNDER THE MICRON II FRAMEWORK, DISMISSAL IS THE MOST APPROPRIATE SANCTION FOR RAMBUSS SPOLIATION Because it is established that Rambus engaged in spoliation, the Court must determine - 10 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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what sanction is proper based on the degree of bad faith and prejudice and the efficacy of other lesser sanctions. Micron II, 645 F.3d at 1328. A. RAMBUS SPOLIATED EVIDENCE IN BAD FAITH

The Federal Circuit held in Micron II that the proper inquiry on the question of bad faith is whether Rambus intended to impair the ability of the potential defendant to defend itself. Id. at 1326-27 (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 80 (3d Cir. 1994)). This is because [t]he 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, 645 F.3d at 1326. Under this standard: [i]f the district court finds facts to conclude that Rambuss goal in implementing its document retention policy was to obtain an advantage in litigation through control of information and evidence, it would be justified in making a finding of bad faith. If, on the other hand, the district court determines that Rambus implemented its document retention policy for legitimate business reasons such as general house-keeping, a finding of bad faith would be unwarranted. Id. at 1327. The evidence is overwhelming that Rambus adopted and implemented its document retention policy in bad faith under this standard. The Federal Circuit listed several key items that may lead to a determination of bad faith, including: (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 such litigation; (2) facts tending to show the selective execution of the document retention policy; (3) facts tending to show Rambuss acknowledgement of the impropriety of the document retention policy; and (4) Rambuss litigation misconduct. Id. (citations to Micron I omitted). In Micron II, the Federal Circuit affirmed the conclusion 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. This is a natural reading of getting [b]attle ready. Id. at 1322. And as demonstrated at length in Hynixs Proposed Findings and - 11 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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Conclusions, Rambuss document retention policy was anything but a routine corporate housekeeping tool. Instead, it was an effort to selectively preserve evidence favorable to Rambuss positions in anticipated litigation while eliminating damaging evidence, both by targeting specific categories of documents and by engaging in indiscriminate destruction of massive amounts of information. The facts showing that Rambus acted in bad faith are about as strong as they could be. See Ex. 2 to 10/14/11 Hynix Response to Rambuss Brief on Remand Proceedings (D.E. 4075) at 58:18-19 (comment of J. OMalley at the oral argument of Asustek v. ITC). The evidence overwhelmingly shows that Rambus implemented and executed its document retention policy to limit and control the information it would have to produce to adversaries in anticipated litigation. Under the controlling principles of Micron II, Rambuss conduct was in bad faith. B. RAMBUS CANNOT CARRY ITS BURDEN TO PROVE THAT ITS SPOLIATION DID NOT PREJUDICE HYNIX

Spoliation is prejudicial if it materially affect[s] the substantial rights of the adverse party and is prejudicial to the presentation of his case. Micron II, 645 F.3d at 1328 (quoting Wilson v. Volkswagen of Am., Inc., 561 F.2d 494, 504 (4th Cir. 1977)). Moreover, a finding of bad faith shifts the burden of proof on the issue of prejudice to the spoliating party: 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 . . . . Micron II, 645 F.3d at 1328 (citation omitted). Here, because Rambus acted in bad faith, it bears the heavy burden of showing that its massive destruction of literally tons of documents and every backup tape from the day the company was founded did not prejudice Hynix. By contrast, if Hynix bears any burden in connection with the element of prejudice, it is only to offer plausible, concrete suggestions as to what [the destroyed] evidence might have been. Micron II, 645 F.3d at 1328 (quoting Schmid, 13 F.3d at 80). The victim of the spoliation is not required to identify which files were destroyed and how they might have been used. See Micron II, 645 F.3d at 1328 (quoting Leon v. IDX Sys. Corp., 464 F.3d 951, 960 (9th Cir. 2006)). Nor does Hynix, as the innocent party, need to demonstrate with certainty that - 12 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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the destroyed materials were in fact relevant. See Hynix II, 645 F.3d 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 a 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. United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002) (Defendants engage in spoliation of documents 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). Hynix has more than met any burden it may bear under these principles. Indeed, the Court itself has previously found that Rambus destroyed some relevant documents. Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 2d 1038, 1067 (N.D. Cal. 2006) (Hynix I). Similarly, the Federal Circuit held that there was ample evidence that Rambus destroyed relevant, discoverable documents beginning in July 1998. Micron II, 645 F.3d at 1321-22. Elaborating, the Federal Circuit noted that Rambus destroyed between 9,000 and 18,000 pounds of documents in 300 boxes in 1999 alone (see Micron II, 645 F.3d at 1328), and found that some destroyed documents related to contract and licensing negotiations, patent prosecution, JEDEC participation, Board meetings and Rambus finances. Hynix II, 645 F.3d at 1344. The Federal Circuit also noted that Rambuss outside patent counsel, Lester Vincent, discarded draft patent applications, draft patent claims, draft patent amendments, attorney notes, and correspondence with Rambus. Micron II, 645 F.3d at 1318. The Federal Circuit found that the types of materials that were destroyed could easily be relevant to Microns claims and defenses: 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 Microns claims relating to patent misuse, antitrust violations, and unfair competition. Documents reflecting Rambuss knowledge of relevant prior art references could have helped resolve Microns inequitable conduct claims. Micron II, 645 F.3d at 1328. Because Rambus asserted the same family of patents against Hynix, and because Hynixs products comply with the same industry standards as Microns, the materials - 13 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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Rambus destroyed equally impacted Hynixs available claims and defenses. That Rambus did not destroy every potentially relevant document does not and cannot disprove prejudice from Rambuss spoliation. The broad scope of discovery delimited by the Federal Rules of Civil Procedure is designed to achieve disclosure of all 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). A party can require its opponent to produce entire categories of documents or things in discovery. See Fed. R. Civ. P. 34(b)(1)(A). This rule creates a level evidentiary playing field . . . that lies at the heart of our adversarial system. Hynix II, 645 F.3d at 1347 (citing Vodusek v. Bayliner Marine Corp, 71 F.3d 148, 156 (4th Cir. 1995)). A party may not self-select the items to be produced from the categories identified in discovery requests; it must produce all responsive evidence and permit the opposing party to make its own selection. See Vodusek, 71 F.3d at 156. Nor may a spoliating party counter a finding of prejudice by contending that the destroyed evidence was not relevant to its 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. Id. Rambus cannot carry the burden of proving that all the documents destroyed were either redundant or irrelevant to the trial (Micron II, 645 F.3d at 1328), particularly since it maintained no records of what materials it destroyed. As explained more fully in Hynixs Proposed Findings and Conclusions, Rambuss spoliation prejudiced Hynixs claims and defenses in all three phases of this litigation: spoliation, patent, and conduct. See, e.g., id. (documents destroyed by Rambus could have helped resolve claims relating to patent misuse, antitrust violations, unfair competition, and inequitable conduct). C. THE COURT MUST SANCTION RAMBUSS BAD FAITH, PREJUDICIAL SPOLIATION

District courts have the inherent power to sanction spoliation. Micron II, 645 F.3d at 1326. Possible sanctions for spoliation include dismissal, evidentiary sanctions, adverse inference instructions, and monetary sanctions. See generally MOSAID Techs., Inc. v. Samsung Elec. Co., 348 F. Supp. 2d 332, 335 (D.N.J. 2004). The Court also may impose a combination of - 14 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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sanctions. West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 780 (2d Cir. 1999). Under the Micron II framework, a district court determining an appropriate sanction for spoliation should consider the degree of bad faith and prejudice and the efficacy of lesser sanctions. Micron II, 645 F.3d at 1328. The trifold aims of a spoliation sanction are: (1) deterring future spoliation of evidence; (2) protecting the defendants interests; and (3) remedying the prejudice defendants suffered as a result of [Rambuss] actions. Id. at 1329 (quoting West, 167 F.3d at 780). 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). 1. The record warrants a severe sanction for Rambuss spoliation

As described in the accompanying Proposed Findings and Conclusions, there is overwhelming evidence that Rambus spoliated documents in bad faith and prejudiced Hynix so as to justify a terminating sanction. But even absent bad faith and prejudice, the record here would still support a severe sanction, including a terminating sanction, under the applicable law. Although the Federal Circuit in Micron II stated that [a] determination of bad faith is normally a prerequisite to the imposition of dispositive sanctions for spoliation under the district courts inherent power, see Micron II at 1327 (emphasis added), both its word choice and its citations to authority make clear that bad faith is not always required. The Federal Circuit favorably cited multiple cases in which spoliation sanctions -- including dismissal -- were imposed even though the spoliating parties had not been shown to have acted in bad faith. For example, in both Hynix II and Micron II, the Federal Circuit approvingly cited Silvestri v. General Motors Corp., 271 F.3d 583, 593 (4th Cir. 2001). Hynix II, 645 F.3d at 1344-45; Micron II, 645 F.3d at 1326. In Silvestri, the Fourth Circuit affirmed a dismissal sanction in a case involving destruction of evidence that was at least negligent. Silvestri, 271 F.3d at 594. The Federal Circuit also approvingly cited Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir. 1995), in which the Fourth Circuit reject[ed] the argument that bad faith is an essential - 15 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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element of the spoliation rule and gave an adverse inference instruction despite the plaintiffs argument that evidence was not destroyed in bad faith. See Hynix II, 645 F.3d at 1347.3 Most important, the Ninth Circuit, whose decisions are binding here, has long held that that terminating sanctions for spoliation do not require an explicit showing of bad faith. Rather, only a finding of willfulness, fault, or bad faith is required for dismissal to be proper. Leon, 464 F.3d at 958 (emphasis added); see also Anheuser-Busch, Inc. v. Natural Beverage Distrib., 69 F.3d 337, 348 (9th Cir. 1995) (for dismissal to be proper, the conduct to be sanctioned must be due to willfulness, fault, or bad faith.); Halaco Engg Co. v. Costle, 843 F.2d 376, 380 (9th Cir. 1988) (In cases where the drastic sanctions of dismissal or default are ordered, the range of discretion for a district court is narrowed and the losing party's non-compliance must be due to willfulness, fault, or bad faith. [citing cases.] A finding of any of these circumstances can justify the sanction of dismissal.) (emphasis added).4 The Ninth Circuit cases also make clear that bad faith is not required to justify other potential sanctions for spoliation, such as an adverse inference instruction. See generally Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993) (finding of bad faith not a prerequisite to giving adverse inference instruction). Likewise, Ninth Circuit case law does not require an explicit showing of prejudice for terminating sanctions. See Halaco, 843 F.2d at 382 (A final consideration is the existence and degree of prejudice to the wronged party. This factor is purely optional.); Combs v. Rockwell Intl Corp., 927 F.2d 486, 488 (9th Cir. 1991) (upholding dismissal for falsification of deposition testimony with no explicit consideration of prejudice); In re Napster Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1075 (N.D. Cal. 2006) (Prejudice is an optional consideration when Other appellate courts have also affirmed adverse inference and evidentiary sanctions in the absence of bad faith. See, e.g., Trull v. Volkswagen of Am., Inc., 187 F.3d 88, 95 (1st Cir. 1999) (careless mishandling of evidence sanctioned by exclusion of evidence); Reilly v. NatWest Markets Group, Inc., 181 F.3d 253, 267 (2d Cir. 1999) (grossly negligent destruction of relevant evidence sanctioned by adverse inference instruction) 4 See also Columbia Pictures, Inc. v. Bunnell, No. 2:06-cv-01093 FMC-JCx, 2007 WL 4877701, at *8 (C.D. Cal. Dec. 13, 2007) (granting terminating sanction in case involving willful spoliation); In re Napster, 462 F. Supp. 2d 1060, 1072 (N.D. Cal. 2006) (For a dismissal to be proper, the conduct to be sanctioned must be due to willfulness, fault, or bad faith.); Padgett v. City of Monte Sereno, No. C 04-03946 JW, 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.) - 16 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905 3

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determining whether default sanctions are appropriate.) Under the Ninth Circuit cases, spoliation is willful if a party under a duty to preserve documents destroys them intentionally, whether or not motivated by a desire to disadvantage opponents in litigation. See Leon, 464 F.3d at 959 (finding willful spoliation where plaintiff claimed to have destroyed files on firm-issue laptop to protect his privacy); see also State Farm Fire and Cas. Co. v. Broan Mfg. Co., Inc., 523 F. Supp. 2d 992, 966-97 (D. Ariz. 2007) (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.). Rambuss conduct in this case would easily meet this standard even if the evidence did not show -- as it clearly does -- that Rambus adopted and implemented its document destruction program to limit and control the discovery available to its opponents in anticipated litigation. In addition, the Ninth Circuit cases follow the rule that prejudice, where a court chooses to consider it, should be presumed where the extent of the spoliation makes proof of actual prejudice difficult. See 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); 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); Columbia Pictures, 2007 WL 4877701, at *7 (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 The Court finds that Plaintiffs have suffered prejudice as a result of Defendants' willful spoliation of evidence.). Again, even if the record of this case did not establish prejudice -which it clearly does -- the Court would be required to presume it given the extraordinary volume of potential evidence made unavailable by Rambuss spoliation. 2. Dismissal is the most effective sanction a. The seriousness of Rambuss misconduct justifies dismissal

Dismissal is certainly warranted where there is clear and convincing evidence of bad faith - 17 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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and prejudice, as where a party has engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings. Micron II, 645 F.3d at 1328 (quoting Leon, 464 F.3d at 958). In Micron II, although it remanded the issue to the district court for more detailed findings and conclusions, the Federal Circuit held that Rambuss spoliation conduct may well warrant a dispositive sanction. Micron II, 645 F.3d at 1329. And all circuits, including the Ninth, hold that dismissal is appropriate where lesser sanctions would be futile or would not alleviate the actual or presumed prejudice to the opposing party. Leon, 464 F.3d at 960-61. Here, dismissal best serves the aims of protecting the interests of Hynix and remedying the prejudice Hynix has suffered as a result of Rambuss spoliation. Dismissal would also achieve the important goal of deterring other patent holders from doing what Rambus has done -destroying documents in anticipation of unleashing a torrent of patent infringement litigation, the integrity of which has been inevitably compromised. Under the facts set forth in the accompanying proposed findings and conclusions, dismissal is necessary to address Rambuss misconduct because there is compelling evidence that Rambus acted in bad faith to subvert the judicial process. Indeed, the Federal Circuit has held (in affirming this courts crime-fraud ruling) that Rambuss destruction of documents in preparation of its suit against the DRAM companies could reasonably constitute a crime. Hynix II at 1347. The Court should therefore enter a terminating sanction and dismiss Rambuss patent infringement claims against Hynix. Because of the scope and scale of Rambuss wrongful and willful document destruction, no lesser sanction would accomplish the remedial and deterrent goals identified in Micron II, Leon, and the other authorities cited above. b. If the court will not dismiss the case, it must impose lesser sanctions

Although lesser sanctions are inadequate to fully remedy and deter the harm Rambus has cause, if the Court will not dismiss the case it should craft another sanction which should include at minimum a retrial of the parties underlying claims in which Rambuss destruction of evidence can be brought to the factfinders attention. Certainly the Court should not look the other way and excuse Rambuss behavior. The Micron II framework requires this court to analyze - 18 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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alternative sanctions and explain the reasons why the sanction it selects is proper. See Micron II at 1328-29. Rambuss destruction of documents relating to, among other things, the prosecution of its patents and its participation in JEDEC deprived Hynix of fair patent and conduct trials. Litigations are fought and won with information (Micron II, 645 F.2d at 1327), and Rambuss spoliation deprived Hynix of millions of pages full of information from which Hynix could have selected evidence to present at those trials. Rambus performed what amounted to a corporate selflobotomy for the express purpose of purging information reaching all the way back to the foundation of the company, all the while preparing its Lexington litigation strategy. If the Court does not dismiss Rambuss claims outright, it should at minimum order new patent and conduct trials. At those trials, the court should permit Hynix to introduce evidence of Rambuss spoliation and should instruct the juries as to adverse inferences that they may draw from Rambuss spoliation. IV. DISMISSAL IS ALSO APPROPRIATE UNDER THE DOCTRINE OF UNCLEAN HANDS In Micron II, the Federal Circuit noted that the Delaware district court had stopp[ed] short of reaching the unclean-hands claim in that case and had instead dismissed the case as a sanction for spoliation. Micron II at 1319. Micron II was thus decided in the context of imposition of dispositive sanctions for spoliation under the district courts inherent power. Id. at 1327. The Federal Circuit directed this Court to decide the remanded issues under the Micron II framework. Hynix II, 645 F.3d at 1341. Because Hynix also asserted an unclean hands defense, however, even if the Court decides not to dismiss the case under its inherent power to sanction spoliation, the Court must also decide whether to dismiss the case under the unclean hands doctrine. Rambuss willful spoliation of evidence in anticipation of litigation readily satisfies the element of inequitableness or bad faith necessary to establish Hynixs unclean hands defense. See Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 815 (1945) (holding that any act that violates equitable standards is sufficient to warrant application of the unclean - 19 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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hands doctrine), In re Sealed Case, 754 F.2d 395, 401 (D.C. Cir. 1985) (stating that spoliation strikes at the very foundations of the adversary system and judicial process) Conduct constituting misconduct in litigation can also serve as the basis for an unclean hands defense. See Keystone Driller Co. v. Genl Excavator Co., 290 U.S. 240, 247 (1933); Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369, 1374 (Fed. Cir. 2001). The unclean hands defense does not require Hynix to make any explicit showing of bad faith. See Precision Instrument, 324 U.S. at 814-15 (conduct creating unclean hands includes not only bad faith relevant to the matter, but also a willful act concerning the cause of action); Pfizer, Inc. v. Intl Rectifier Corp., 685 F.2d 357, 359 (9th Cir. 1982) (a showing of wrongfulness, willfulness, bad faith, or gross negligence will serve as the basis for invocation of the unclean hands doctrine) (emphasis added). In addition, because the unclean hands doctrine protects the public interest, not only the interests of private litigants, Republic Molding, Inc. v. B.W. Photo Utils., 319 F.2d 347, 349-50 (9th Cir. 1963), a showing of prejudice is not required. See, e.g., 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.); Keystone Driller, 290 U.S. at 247 (patentee denied relief even though suppression of a prior use was exposed at trial); Aptix, 269 F.3d at 1374 (patentee denied relief even though fraudulent changes to inventor notebooks were uncovered prior to trial). Accordingly, even if the Court does not dismiss Rambuss claims under the Micron II framework for the exercise of the Courts inherent powers -- whether because the Court finds an insufficient degree of bad faith or prejudice or for some other reason -- Rambuss claims must still be dismissed because they are barred by the doctrine of unclean hands. V. CONCLUSION As set forth in the accompanying proposed findings of fact and conclusions of law, Rambus engaged in bad faith, prejudicial spoliation by destroying vast quantities of relevant and potentially relevant documents and other materials when it was under a duty to preserve them. For the reasons state above, this Court should sanction that misconduct by dismissal under its inherent powers and should also dismiss Rambuss claims under the doctrine of unclean hands. If - 20 HYNIXS OPENING BRIEF REGARDING PROCEEDINGS ON REMAND CASE NO. C00-20905

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the Court does not dismiss the claims outright, it should at minimum order new patent and conduct trials at which evidence of Rambuss spoliation should be admitted with appropriate adverse inference instructions.

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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