3164N

Case 5:05-cv-00334-RMW Document 3164 Filed 01/28/2009 Page 1 of 21
1 KENNETH L. NISSLY (SBN 77589) knissly@omm.com

SUSAN van KEULEN (SBN 136060) svankeulen@omm.com
2 SUSAN ROEDER (SBN 160897) sroeder@omm.com
O’MELVENY & MYERS LLP
3 2765 Sand Hill Road
Menlo Park, CA 94025
4 Telephone: (650) 473-2600
Facsimile: (650) 473-2601
5 [Additional counsel listed on signature page.]
6 Attorneys for Plaintiffs

HYNIX SEMICONDUCTOR INC.,
7 HYNIX SEMICONDUCTOR AMERICA INC.,
HYNIX SEMICONDUCTOR MANUFACTURING AMERICA INC.,
8 HYNIX SEMICONDUCTOR U.K. LTD., and
HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH
9
UNITED STATES DISTRICT COURT
10
FOR THE NORTHERN DISTRICT OF CALIFORNIA
11
SAN JOSE DIVISION
12
HYNIX SEMICONDUCTOR INC., Case No. C-00-20905 RMW
13 HYNIX SEMICONDUCTOR AMERICA
INC., HYNIX SEMICONDUCTOR U.K. REPLY BRIEF IN SUPPORT OF
14 LTD., and HYNIX SEMICONDUCTOR HYNIX’S MOTION FOR SUMMARY
DEUTSCHLAND GmbH, JUDGMENT ON UNCLEAN HANDS,
15 FOR RELIEF FROM ORDER UNDER
Plaintiffs, FRCP 60(b), FOR ENTRY OF
16 JUDGMENT UNDER FRCP 54(b), AND
v. FOR STAY OF REMAINING
17 PROCEEDINGS
RAMBUS INC.,
18 Date: January 30, 2009
Defendant. Time: 2:00 p.m.
19 Ctrm: 6, 4th Floor
Judge: Hon. Ronald M. Whyte
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REPLY BRIEF IN SUPPORT OF HYNIX’S MOTION FOR SUMMARY JUDGMENT ON UNCLEAN HANDS, FOR RELIEF FROM
ORDER UNDER FRCP 60(b), FOR ENTRY OF JUDGMENT UNDER FRCP 54(b), AND FOR STAY OF REMAINING PROCEEDINGS
CASE NO. C00-20905; CASE NO. C05-00334
1 RAMBUS INC., Case No. C-05-00334 RMW

Plaintiff,
2 v.
3 HYNIX SEMICONDUCTOR INC., HYNIX
SEMICONDUCTOR AMERICA INC.,
4 HYNIX SEMICONDUCTOR
MANUFACTURING AMERICA INC.,
5
SAMSUNG ELECTRONICS CO., LTD.,
6 SAMSUNG ELECTRONICS AMERICA,
INC., SAMSUNG SEMICONDUCTOR,
7 INC., SAMSUNG AUSTIN
SEMICONDUCTOR, L.P.,
8
NANYA TECHNOLOGY CORPORATION,
9 NANYA TECHNOLOGY CORPORATION
U.S.A.,
10
Defendants.
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CASE NO. C00-20905; CASE NO. C05-00334
1 TABLE OF CONTENTS
2 Page
3 I. INTRODUCTION ................................................................................................................1
4 II. ONLY AN APPEAL LIMITED TO UNCLEAN HANDS WILL RESULT IN

THE FEDERAL CIRCUIT CONSIDERING THIS COURT’S UNCLEAN
5 HANDS RULING AT THE SAME TIME AS IT CONSIDERS THE
INCONSISTENT DELAWARE RULING ..........................................................................2
6
A. The “Unclean Hands Only” Approach Is Procedurally Sound .................................3
7
B. Rambus’s “Appeal Everything Try Everything” Approach Is Likely To
8 Cause The Federal Circuit To Review The Delaware Unclean Hands
Decision Well Before Any Decision Of This Court .................................................4
9
C. A Stay Of The ‘334 Case Is Necessary Regardless of Approach .............................6
10
D. If The Court Enters Judgment In The ‘905 Case It Should Be Limited To
11 SDRAM And DDR SDRAM ....................................................................................8
12 III. THIS COURT SHOULD FIND IN FAVOR OF HYNIX ON UNCLEAN HANDS ..........9
13 A. The Delaware Decision Is Entitled To Collateral Estoppel Effect ...........................9
1. The same spoliation and unclean hands issues were actually decided
14 in Delaware ...................................................................................................9
15 2. It is fair to give collateral estoppel effect to the Delaware decision ...........11
B. The Court Should Reconsider Its Unclean Hands Findings....................................14
16
17 IV. CONCLUSION ...................................................................................................................15
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1 TABLE OF AUTHORITIES
2 Page
CASES
3 Americana Fabrics, Inc. v. L&L Textiles, Inc.,
754 F.2d 1524 (9th Cir. 1985)............................................................................................... 13
4
Aptix Corp. v. Meta Systems, Inc., 269 F.3d 1369 (Fed. Cir. 2001) .....................................12, 14
5
Astec America, Inc. v. Power-One, Inc.,
6 2008 U.S. Dist. LEXIS 55100, *13-*14 (E.D. Tex. 2008) ..................................................... 8
7 Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found.,
402 U.S. 313 (1971) .................................................................................................. 11, 12, 13
8
Blumcraft v. Kawneer Co.,
9 482 F.2d 542 (5th Cir. 1973)........................................................................................... 12, 13
10 Broadcom Corp. v. Int’l Trade Comm’n,
542 F.3d 894 (2008)................................................................................................................ 5
11
Coast Fed. Bank, FSB v. U.S.,
12 49 Fed.Cl. 11 (2001) ............................................................................................................... 6
13 Cygnus Telecomm. Tech., LLC v. Amer. Int’l Telephonics, LLC,
569 F.Supp.2d 1035 (N.D. Cal. 2008) .................................................................................. 13
14
Emergis Technologies, Inc. v. PNM Resources, TNMP,
15 263 Fed. Appx. 63 (unpublished) (Jan. 31, 2008)................................................................... 5
16 Glover v. BIC Corp.,
6 F.3d 1318 (9th Cir. 1993)..................................................................................................... 7
17
Kamilche Co. v. U.S.,
18 53 F.3d 1059 (9th Cir. 1995)............................................................................................. 9, 10
19 McConnell v. Lassen County,
2007 U.S. Dist. LEXIS 85752, *9 (E.D. Cal. 2007) ............................................................... 8
20
Mendenhall v. Barber-Greene Co.,
21 26 F.3d 1573 (Fed. Cir. 1994)............................................................................................... 14
22 Narda Microwave Corp. v. General Microwave Corp.,
1980 U.S. Dist. LEXIS 9615, *65 (E.D.N.Y. 1980)............................................................. 14
23
Nursing Home Pension Fund v. Oracle Corp.,
24 2008 U.S. Dist. LEXIS 66740, *14 (N.D. Cal. 2008)............................................................. 7
25 Robi v. Five Platters, Inc.,
838 F.2d 318 (9th Cir. 1988)................................................................................................. 13
26
Sears Roebuck & Co. v. Mackey,
27 351 U.S. 427 (1956) ................................................................................................................ 3
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1 TABLE OF AUTHORITIES
2 Page
Seatrain Shipbuilding Corp. v. Shell Oil Co.,
3 444 U.S. 572 (1980) ................................................................................................................ 3
4 Stevenson v. Sears, Roebuck & Co.,
713 F.2d 705 (Fed. Cir. 1983)................................................................................... 11, 12, 13
5
6 STATUTES
28 U.S.C. § 1292(b) ................................................................................................................ 3, 15
7
8 RULES
Fed. Cir. Local Rule 12 Practice Note .......................................................................................... 5
9
Fed. Cir. Local Rule 27(h) ............................................................................................................ 5
10
Fed. R. Civ. P. 54(b) ....................................................................................................... 2, 3, 7, 15
11
Fed. R. Civ. Proc. 60(b) .............................................................................................................. 15
12
13 OTHER AUTHORITIES
Restatement 2d Judgments, § 15.................................................................................................13
14
Restatement 2d of Judgments, § 29 ............................................................................................ 11
15
Wright, Miller & Cooper, FEDERAL PRACTICE & PROCEDURE:
16 CIVIL 3D § 4426 (2008) ......................................................................................................... 13
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1 I. INTRODUCTION
2 Hynix and Rambus agree on two key points. First, stating the obvious, Hynix and
3 Rambus agree that this “case is marked by inconsistent rulings on spoliation and unclean hands.”
4 ‘334 D.E. 3151 (“Rambus Consol. Opp.”), at 19. As Hynix has emphasized, if Rambus destroyed
5 relevant documents all of the DRAM manufacturers have been equally prejudiced, and if Rambus
6 did not destroy relevant documents all of the DRAM manufacturers should litigate on the same
7 footing. There is simply no basis in fact or fairness to single out one DRAM manufacturer for
8 differential treatment in regards to Rambus’s indiscriminate document destruction. Second,
9 Hynix and Rambus – as well as this Court and the Delaware Court – agree that the Federal Circuit
10 should consider the unclean hands decisions of this Court and the Delaware court at the same
11 time. ‘334 D.E. 3150 (“Rambus Cal. Letter”), at 3. Thus, both elemental fairness and sound case
12 management require this Court to take the procedural steps necessary to assure that this Court’s
13 unclean hands ruling and the Delaware Court’s inconsistent ruling are reviewed at the same time
14 by the Federal Circuit.
15 Hynix’s proposal of an appeal limited to the “unclean hands” issue is by far the most
16 likely way of assuring that the Federal Circuit will consider together the unclean hands rulings of
17 this Court and the Delaware Court. See ‘334 D.E. 3131/’905 D.E. 3879 (“Hynix Motion”), pp. 7-
18 8. Such a focused appeal would precisely mirror the Delaware matter. Hynix explained, and
19 Rambus does not dispute, that the standard timetable for an appeal would allow the unclean hands
20 appeal to be resolved in approximately seven months. Quickly resolving the unclean hands issue
21 and harmonizing the inconsistent results promotes the strong public policy in favor of consistent
22 treatment of patents in this industry-wide dispute.
23 In contrast, both the Court’s “Option 1” and Rambus’s “appeal everything try everything”
24 approach ensures two more years of expensive and potentially unnecessary litigation. If the
25 appeal from the ‘905 case includes numerous patent and conduct issues, it will be a far more
26 complex and lengthy appeal than a Delaware appeal that is limited to unclean hands. Where one
27 appeal can be resolved in a matter of months and a second appeal requires a matter of years, there
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CASE NO. C00-20905; CASE NO. C05-00334
1 is no reason to think the Federal Circuit would consolidate the appeals and thereby unnecessarily
2 postpone resolution of the Delaware matter.
3 Accordingly, Hynix requests that the Court enter judgment under Rule 54(b) on Hynix’s
4 unclean hands claims in the ‘905 and ‘334 cases and stay all remaining issues in those cases. This
5 approach is consistent with that advocated by Rambus in Delaware, where Rambus has proposed
6 an appeal limited to spoliation issues and a stay of all remaining issues pending the outcome of
7 that appeal. As Rambus has stated in Delaware, a stay of remaining issues is critical once
8 spoliation issues are on appeal because it will “remove any chance that the Federal Circuit will
9 see the spoliation issues again” or that the district court will have to relitigate the remaining issues
10 in the event of a reversal of the spoliation results. See ‘334 D.E. 3157 at Attachment 2 (“Rambus
11 Del. Letter”), at 5.
12 As for the substance of the Rule 54(b) judgment, Rambus makes only two arguments why
13 this Court should not give collateral estoppel effect to the Delaware decision: (1) Rambus argues
14 that the issues in the Delaware and California cases are not identical, and (2) Rambus argues that
15 fairness considerations should lead this Court to reject collateral estoppel. But the identical issues
16 of spoliation and unclean hands were litigated in Delaware under conditions ensuring fairness to
17 Rambus. Accordingly, the Court should decide in favor of Hynix on its unclean claims in the
18 ‘905 and ‘334 cases.
19 II. ONLY AN APPEAL LIMITED TO UNCLEAN HANDS WILL RESULT IN THE
FEDERAL CIRCUIT CONSIDERING THIS COURT’S UNCLEAN HANDS
20 RULING AT THE SAME TIME AS IT CONSIDERS THE INCONSISTENT
DELAWARE RULING
21
22 Rambus agrees that “prompt appellate review of this Court’s spoliation decision is
23 warranted in light of the recent Delaware Ruling.” Rambus Cal. Letter, p. 6. However, Rambus
24 argues against Hynix’s proposal for an unclean hands-only appeal, claiming that (1) there is no
25 proper available procedural mechanism and (2) the “conduct trial record” is necessary to evaluate
26 the spoliation rulings. Id., pp. 7-8. Neither argument has merit.
27
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1 A. The “Unclean Hands Only” Approach Is Procedurally Sound.
2 Rambus is twice wrong with regard to the availability of a procedural mechanism for
3 permitting interlocutory appellate review only of this Court’s spoliation rulings. Contrary to
4 Rambus’s mistaken statement (Rambus Cal. Letter, p. 7), Hynix did plead “unclean hands” as an
5 affirmative basis for non-enforcement of Rambus’s patents. Hynix has sought a declaration that
6 Rambus’s patents are unenforceable for unclean hands in both the ‘905 and ‘334 cases. See ‘905
7 D.E. 893, at ¶124.11, and see ‘334 D.E. 289 at ¶224. Each of these requests for a declaration of
8 unenforceability for unclean hands is a separate affirmative “claim” as contemplated by Rule
9 54(b). See Seatrain Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572, 581 (1980). The Court’s
10 ruling in the ‘905 case on Hynix’s unclean hands claim is an “ultimate disposition of an
11 individual claim,” as required by Rule 54(b). W.L. Gore & Assoc., Inc. v. Int’l Med. Prosthetics
12 Research Assoc., Inc., 975 F.2d 858, 861 (Fed. Cir. 1992) (citing Sears Roebuck & Co. v.
13 Mackey, 351 U.S. 427, 436 (1956)). If the Court rules on the unclean hands issue in the ‘334
14 case, that decision would also satisfy the finality requirement of Rule 54(b). Thus, Hynix’s
15 claims of unenforceability for unclean hands, in both the ‘905 and ‘334 cases, are appropriate for
16 judgment under Rule 54(b).
17 Alternatively, the Court can certify the spoliation question for appeal under 28 U.S.C.
18 § 1292(b).1 Notably, Rambus now agrees that the Court’s spoliation ruling turns on a legal
19 question: “In reaching a conclusion as to when Rambus’s obligation to preserve documents arose
20 that differs from this Court’s ruling in Hynix I, the Delaware Court appears simply to have
21 applied a different (and erroneous) standard.” ‘334 D.E. 3151 (“Rambus Consol. Opp.”), p. 31.
22 Thus, this Court can without hesitation certify the question of the proper “standard” for triggering
23 the duty to preserve documents. In short, if the Court wishes to permit the Federal Circuit to
24 review its spoliation ruling alone, the Court has two available procedural mechanisms.
25
26
1
27 Certification under 28 U.S.C. § 1292(b) is appropriate where: (1) the order involves a
controlling question of law; (2) as to which there is a substantial ground for difference of opinion;
28 and (3) an immediate appeal may materially advance the ultimate termination of the litigation. Id.
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CASE NO. C00-20905; CASE NO. C05-00334
1 B. Rambus’s “Appeal Everything Try Everything” Approach Is Likely To

Cause The Federal Circuit To Review The Delaware Unclean Hands
2 Decision Well Before Any Decision Of This Court
3 Rambus proposes “pushing through to the end.” Rambus Cal. Letter, p. 6.2 By this mule-
4 like approach, Rambus urges both a massive multi-party, multi-issue interlocutory appeal and
5 completion of the consolidated patent trial. While urging the Court to “expeditiously” take all the
6 many steps necessary to enter a laundry list of partial judgments, Rambus at the same time urges
7 that the upcoming patent trial proceed as planned. Id., p. 4. This approach would neither hasten
8 the end of this litigation nor minimize the burden on the parties and the judicial system, but would
9 instead have the opposite effect. The complex multi-party partial appeal urged by Rambus would
10 take ate least two years to resolve, far longer than the focused appeal on spoliation recommended
11 by Hynix. And imposing the burden of a trial where one might not be necessary or, if necessary,
12 might require different ground rules is a poor use of judicial and party resources. There is no
13 need to take such a resource-intensive approach where there is a far more sensible approach urged
14 by Rambus in the Delaware litigation and Hynix here – appeal of the unclean hands issue and stay
15 of remaining proceedings.
16 Rambus is wrong about the necessity or advantages of reviewing the conduct trial verdict
17 along with the spoliation rulings. The results of the conduct trial do not illuminate the spoliation
18 issues. Because of Rambus’s spoliation, the evidence available to Hynix in the conduct trial was
19 incomplete. The point is not what evidence was presented at the conduct trial, but what was
20 missing. Certifying the conduct results will add a tremendous amount of material to the record on
21 appeal with no commensurate benefit. As in the Delaware case, the relevant unclean hands
22 rulings from this Court were issued before the corresponding conduct trials in each case. The
23 Federal Circuit’s role is to review the judgments of the Delaware court and this Court at the time
24 those judgments were made. Those judgments were not based on the conduct trial evidence and
25 thus the Federal Circuit need not have that record before it. To the extent the Federal Circuit will
26
2
27 Curiously, Rambus omits one issue from its proposed omnibus appeal: claims construction.
Under Rambus’s proposed approach, the omission of claims construction from the appeal makes
28 no sense.
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CASE NO. C00-20905; CASE NO. C05-00334
1 consider prejudice in connection with the question of whether dismissal was a proper sanction,
2 evaluation of that argument does not require the appeals court to review and rule on all the
3 complex legal and factual issues in the conduct trial. Instead, Rambus is free to make its “no
4 prejudice” arguments based on the same record that was before the district courts.
5 There is agreement that an appeal from the Delaware decision is proper, and there will be
6 no conduct trial record before the Federal Circuit for purposes of that appeal.3 It is unlikely that
7 the Federal Circuit would consolidate with the Delaware appeal an appeal from this Court that
8 includes issues beyond the unclean hands issue.4 The Federal Circuit consolidates cases, not
9 issues, and thus would not simply “carve out” this Court’s unclean hands decision from a larger
10 California appeal. The Federal Circuit may consolidate appeals “on motion or by the court sua
11 sponte.” Fed. Cir. L.R. 12, Practice Note. A joint motion by all parties to consolidate a unclean
12 hands-only appeal with the Delaware case could be granted by the Clerk. See Fed. Cir. L.R.
13 27(h). But an opposed motion must be ruled on the Federal Circuit. Ibid. And the more parties
14 that object to the proposed consolidation and the more the two appeals appear to involve distinct
15 issues, the less likely consolidation becomes. Thus, to the extent issues beyond certification are
16 included in the appeal, the odds of the Federal Circuit reviewing the Delaware decision first and
17 separately increase accordingly.5
18
19 3
In Delaware, Rambus argues that it is necessary that “the ultimate fate of the spoliation issues []
be known with certainty before the Court proceeds” with Micron’s remaining conduct claims in
20 that case, “which parallel those Micron has asserted in California.” Rambus Del. Letter, pp. 4-5.
Rambus here takes the opposite position, arguing that spoliation and conduct claims should be
21 appealed together. Rambus Cal. Letter, p. 3.
22 4
Under Hynix’s approach, the procedural posture would closely resemble the posture in Emergis
Technologies, Inc. v. PNM Resources, TNMP, 263 Fed. Appx. 63 (unpublished) (Jan. 31, 2008).
23 There, the district court of New Mexico and the district court of Minnesota both granted summary
judgment of non-infringement in favor of different defendants. The Federal Circuit consolidated
24 the appeals because although each appeal was factually unique, they presented similar legal
issues. In contrast, under Rambus’s approach the procedural posture will more closely resemble
25 the posture in Broadcom Corp. v. Int’l Trade Comm’n, 542 F.3d 894 (2008). There, the Federal
Circuit noted that a separate appeal involving the same patent, the same parties, and the same
26 administrative order was pending but did not consolidate the appeals, no doubt due to the
complexity of the matters.
27
5
Hynix believes that an appeal limited to unclean hands has the greatest odds of a prompt
28 resolution. However, if the Court is inclined to also now certify claim construction issues for
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1 Pushing ahead with the cases here serves only Rambus’s private commercial interests, not
2 those of this Court, the Federal Circuit, the other parties, or the public. Rambus’s arguments of
3 course assume that it has valid and enforceable patents. But there is genuine doubt that this is
4 true, given the pendency of reexamination proceedings on nearly all of Rambus’s patent-in-suit
5 here (in which the PTO has rejected all claims-in-suit that have been considered thus far) as well
6 as the existence of multiple decisions finding that Rambus engaged in spoliation.
7 C. A Stay Of The ‘334 Case Is Necessary Regardless of Approach.
8 Whether the Court packages an unclean hands-only appeal or certifies additional issues, a
9 stay of the scheduled trial in the ‘334 case is critical. In arguing against any stay, Rambus
10 asserts – at least in this Court – that any appeal is unlikely to affect the patent trial. That is not
11 so.
12 Certainly, the proposed stay would result in a significant savings of judicial and party
13 resources if the Federal Circuit concludes that Rambus cannot enforce its patents due to spoliation
14 of evidence. Rambus states that the “Manufacturers overestimate the chance that the Federal
15 Circuit will reverse the Hynix I spoliation ruling.” Rambus Cal. Letter, p. 9. But the
16 Manufacturers never offered such an estimate. Instead, Hynix noted that the Eastern District of
17 Virginia, the Federal Trade Commission, and now the Delaware District Court all saw the
18 evidence very differently than this Court. Hynix Motion, p. 11. Where a district court is out-of-
19 step with numerous courts reviewing the same evidence, appellate reversal is certainly a distinct
20 possibility. If the Federal Circuit affirms the Delaware decision (and makes the equivalent ruling
21 in the ‘905 appeal here), then no trial will be needed.
22 Even if the Federal Circuit does not endorse the entire Delaware decision, the proposed
23 stay could result in a significant savings of resources in avoiding the need for re-trial. It would
24 not be feasible to try the ‘334 case now in a way that accounts for all possible outcomes on
25 appeal, and it does not serve judicial economy to engage in such guesswork. See Coast Fed.
26 Bank, FSB v. U.S., 49 Fed.Cl. 11, 12 (2001). For example, the Court would have several
27
appeal, that should be the only issue certified along with unclean hands. Because claim
28 construction is reviewed de novo, it is not as factually intensive as the conduct trial issues.
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1 remedies available if the Federal Circuit affirms the finding of spoliation but reverses the remedy
2 of dismissal, including adverse inference jury instructions and the exclusion of witness testimony
3 based on the spoliated evidence. See Nursing Home Pension Fund v. Oracle Corp., 2008 U.S.
4 Dist. LEXIS 66740, *14 (N.D. Cal. 2008); and see Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th
5 Cir. 1993). If the Federal Circuit were to find spoliation but impose a sanction short of dismissal,
6 this Court would have to retry the patent case if trial proceeds now on the assumption of no
7 spoliation by Rambus.
8 Against this real chance of not needing any patent trial at all, or needing a patent trial
9 different from the one proposed by Rambus, the Court must weigh the minimal prejudice of the
10 parties needing to wait as little as seven months. Hynix acknowledges that the parties have
11 devoted significant resources to getting ready for this trial. But, as this Court well knows, there
12 are numerous reasons why trials at this stage of preparation are postponed, and there is no
13 persuasive reason to risk many more millions of dollars in a speculative trial while a case-
14 dispositive issue is on appeal.
15 Hynix notes that Rambus has insisted on a stay of all non-spoliation issues in the
16 Delaware case. See Rambus Del. Letter, pp. 3-5. Rambus suggested, as Hynix does here, that
17 further proceedings await appellate resolution of the spoliation question: “With a stay, the
18 ultimate fate of the spoliation issues will be known with certainty before the Court proceeds with
19 Micron’s remaining claims, which should remove any chance that the Federal Circuit will see the
20 spoliation issues again or that this Court will have to re-litigate the remaining issues in the event
21 of a reversal of the January 9th Order.” Id., p. 5 (citing case law showing that the “Federal
22 Circuit routinely consider appeals under Rule 54(b) while the remaining claims are stayed in the
23 district court”). Here as in Delaware, there are still conduct issues remaining to be decided and
24 the spoliation ruling is relevant not just to the conduct case but to the enforceability of all the
25 patents, so a stay here will remove “any chance” that this Court will have to relitigate issues in the
26 event of a reversal.
27 If the Court rejects the unclean hands-only approach in favor of an approach that involves
28 entering judgment in the ‘905 case, there is a heightened need for a stay of the ‘334 case as to
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1 Hynix. Trying a patent case while some of the same patents are on appeal is senseless and would
2 be fundamentally unfair to Hynix. Without a stay, “the parties could be faced with the prospect
3 of another jury trial by the same plaintiffs against the same defendant based upon a common, or at
4 least overlapping, set of facts. This would not only cause inefficiencies for the court, but would
5 also result in the needless expenditure of time and resources by the parties.” McConnell v. Lassen
6 County, 2007 U.S. Dist. LEXIS 85752, *9 (E.D. Cal. 2007) (staying case pending an en banc
7 decision of an appeal involving similar issues). If disputed patent claim terms are on appeal in
8 the ‘905 case, there is a high potential for irreparable harm if a stay is denied. See Astec America,
9 Inc. v. Power-One, Inc., 2008 U.S. Dist. LEXIS 55100, *13-*14 (E.D. Tex. 2008) (patent case
10 stayed where earlier patent case involving the same patents was on appeal; “[s]hould the Federal
11 Circuit alter the prior claim construction opinion or reverse a ruling on any of the motions
12 pursuing the invalidity arguments, the patents-at-issue could ultimately be rendered invalid, and
13 the present litigation would become moot.”) Here, there is a close relationship between the
14 claims constructions in the ‘905 and ‘334 cases, and thus further proceedings in the ‘334 case
15 should await the conclusion of the ‘905 appeal if in fact the patent issues from that case are
16 appealed. See Declaration of Theodore G. Brown III filed herewith at ¶5 and Ex. 1 thereto.
17 D. If The Court Enters Judgment In The ‘905 Case It Should Be Limited To
SDRAM And DDR SDRAM.
18
19 Rambus offers no opposition to Hynix’s argument that, if the Court enters final judgment
20 in the ‘905 case, any relief awarded for infringement after 2005 should be limited to SDRAM and
21 DDR SDRAM, and that any relief as to DDR2 SDRAM and later-generation products should be
22 decided in the ‘334 case. Hynix Motion, pp. 4-6. Rambus repeatedly refers to the subject matter
23 of the ‘334 case (together with the ‘2298 and ‘244 cases against other Manufacturers) as
24 involving Rambus’s infringement claims against the Manufacturers’ accused “DDR2+ products.”
25 See Rambus Cal. Letter, pp. 2, 4-5. In fact, Rambus relies heavily on the fact that DDR2+
26 products are at issue in the ‘334, ‘2298, and ‘244 cases here as a reason why the Court should not
27 give collateral estoppel effect to the Delaware decision, where SDRAM and DDR SDRAM
28 products were at issue. See Rambus Consol. Opp., p. 14. There is therefore no basis for
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CASE NO. C00-20905; CASE NO. C05-00334
1 including relief as to DDR2+ products in any final judgment in the ‘905 case. See generally ‘334
2 D.E. 2473 (Hynix’s motion for summary judgment to allocate Rambus’s claims for damages for
3 overlapping products).
4 III. THIS COURT SHOULD FIND IN FAVOR OF HYNIX ON UNCLEAN HANDS.
5 Hynix’s opening brief urged the Court to decide in favor of Hynix’s claims based on
6 unclean hands claims in both the ‘905 and the ‘334 cases. Hynix Motion, pp. 12-22. Because
7 unclean hands is an open issue in the ‘334 case, Hynix is entitled to the collateral estoppel effect
8 of the Delaware decision. Id., p. 15. In the ‘905 case, the same result should follow either by
9 applying settled principles of collateral estoppel to the Delaware decision or by reconsidering the
10 merits of Hynix’s spoliation claim in light of that decision. Id.
11 A. The Delaware Decision Is Entitled To Collateral Estoppel Effect.
12 Preclusion principles require the Court to abide by the Delaware Court’s decision that
13 Rambus destroyed relevant documents and that the proper sanction is a declaration that the
14 patents are unenforceable against the DRAM manufacturers. Hynix Motion, pp. 13-18. Rambus
15 does not dispute that three of the four requirements for application of collateral estoppel are met
16 here (full and fair opportunity to litigate, final judgment, and privity). Rambus makes just two
17 arguments as to why the Delaware decision should not be given collateral estoppel effect in this
18 cases pending here: (1) Rambus argues that the issues are not identical, and (2) Rambus argues it
19 would be unfair for this Court to adopt the Delaware court’s ruling. Neither argument recognizes
20 the governing legal principles.
21 1. The same spoliation and unclean hands issues were actually decided in
Delaware.
22
23 Rambus argues that its case against “each of the Manufacturers presents unique legal and
24 factual issues that preclude giving collateral estoppel effect to the Delaware Court’s spoliation
25 determinations.” Rambus Consol. Opp., p. 4. The controlling test for determining whether issues
26 are identical for collateral estoppel purposes is set forth in Kamilche Co. v. U.S., 53 F.3d 1059,
27 1062 (9th Cir. 1995):
28
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CASE NO. C00-20905; CASE NO. C05-00334
1 (1) is there a substantial overlap between the evidence or argument

to be advanced in the second proceeding and that advanced in the
2 first?
(2) does the new evidence or argument involve the application of
3 the same rule of law as that involved in the prior proceeding?
(3) could pretrial preparation and discovery related to the matter
4 presented in the first action reasonably be expected to have
embraced the matter sought to be presented in the second?
5 (4) how closely related are the claims involved in the two
proceedings?”
6
7 See Hynix Motion, p. 14 n.14. This Court has previously adopted the Kamilche test. See Ex. H to
8 Roeder Decl., p. 4. Rambus, however, neither addresses the Kamilche test nor disputes that the
9 test is met here. Ignoring Kamilche, Rambus argues for twelve pages in an effort, unlabeled as
10 such, to create a new legal test for determining if an issue is identical. Indeed, Rambus makes
11 detailed evidentiary arguments, presumably inviting this Court to disagree with Judge Robinson.
12 Because Rambus has ignored governing Ninth Circuit law, further consideration of its arguments
13 is unnecessary.
14 In any event, the issues in the ‘905 case and in the Delaware case are precisely the same
15 even under the terms set out by Rambus. Specifically, both the Delaware court and this Court
16 considered whether the spoliation of documents barred Rambus from enforcing patents
17 descending from the same parent application against SDRAM and DDR SDRAM products.
18 Thus, Rambus’s core claim that a variance in accused products defeats collateral estoppel has no
19 bearing on the ‘905 case.
20 Moreover, Rambus errs in suggesting that the difference in accused products between the
21 Delaware and ‘334 cases raises “unique” spoliation or unclean hands issues. At issue is whether
22 Rambus could permissibly destroy vast quantities of evidence potentially relevant to its
23 development of DRAM-related patents and technologies while anticipating these lawsuits.
24 Rambus argues that even if it was under a duty to preserve these materials for purposes of a suit
25 on first-generation SDRAM and DDR SDRAM technology, it could destroy the documents for
26 purposes of a suit as to the later-generation technologies at issue in the ‘334 case. But this
27 argument ignores the evolutionary nature of those later-generation technologies and the fact that
28 Rambus accuses many of the same features embodied in DDR2+ that were also embodied in
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CASE NO. C00-20905; CASE NO. C05-00334
1 SDRAM and DDR SDRAM. See ‘334 D.E. 496 (declaration of Rambus expert Robert Murphy)
2 at ¶¶ 29, 43 (arguing that devices accused in ‘905 and ‘334 cases have only “insubstantial”
3 differences). The DDR2+ lawsuits are merely a continuation of the litigation campaign Rambus
4 started planning in 1998.
5 Rambus also attempts to show that the “issues” are not identical by arguing that the
6 Delaware court relied on litigation misconduct specific to its case. Rambus Consol. Opp., pp. 4-
7 14. Not only does this argument mischaracterize the Delaware opinion, but it also misses the
8 point. The litigation misconduct issue does not alter the showing under Kamilche of substantial
9 overlap in argument in evidence. Rambus cannot establish that the spoliation ruling turns on
10 litigation misconduct.
11 2. It is fair to give collateral estoppel effect to the Delaware decision.
12 Rambus now apparently agrees with Hynix that an overly mechanical application of
13 collateral estoppel based on whether a party is a plaintiff or defendant in the current action is not
14 appropriate (Rambus Consol. Opp., at 26:2-10), but Rambus still resists the logical conclusion
15 that a prior determination of patent unenforceability, like a prior determination of patent
16 invalidity, may be asserted as a defense to a subsequent attempt to enforce the patent. See
17 Stevenson v. Sears, Roebuck & Co., 713 F.2d 705, 709 (Fed. Cir. 1983) (summarizing the holding
18 of Blonder-Tongue). The Court must look beyond the simple labels to the nature of the collateral
19 estoppel being asserted: Hynix is asserting a defense to Rambus’s attempt to enforce its patents.
20 The essential inquiry is whether the party seeking to re-litigate an issue (Rambus here)
21 had a “full and fair opportunity to litigate the issue in the first action.” See Restatement 2d of
22 Judgments, § 29. Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 329 (1971),
23 held that a ruling by one district court rejecting a claim for patent infringement was binding in a
24 lawsuit brought by the patentee against a different defendant. The Court emphasized the “goal of
25 limiting relitigation of issues where that can be achieved without compromising fairness in
26 particular cases.” Id. at 328. The Court made plain the relevant factors, namely, “whether a
27 patentee has had a full and fair chance to litigate the validity of his patent in an earlier case.” Id.
28 at 333-4. Holding a patentee to the adverse results of its litigation is a necessary counterweight,
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CASE NO. C00-20905; CASE NO. C05-00334
1 the Court explained, to other systemic features that favor a patentee. Because “patent litigation is
2 a very costly process” (id. at 334) and because, in view of the statutory presumption of patent
3 validity, “prospective defendants will often decide that paying royalties under a license or other
4 settlement is preferable” to litigation (id. at 339), a patent infringement defendant is permitted to
5 invoke the results of prior litigation on the same patent as a defense. 6
6 Blonder-Tongue establishes that the Delaware Court’s decision to reject Rambus’s patent
7 suit due to unclean hands should be applied here. Although Blonder-Tongue involved a prior
8 ruling of patent invalidity, the logic of the decision applies to any adverse patent ruling. The
9 costs of patent litigation and threat of excessive licensing fees are as present here as in Blonder-
10 Tongue. Rambus has had its opportunity to contest the unclean hands issue.7 It lost. That
11 Rambus can point to trivial differences among the various remaining cases is no different than the
12 patentee in Blonder-Tongue arguing that the question of validity raises different issues regarding
13 prior art or expert testimony. There is no reason in either justice or equity for this Court to fail to
14 apply Blonder-Tongue here after Rambus has had a full opportunity to litigate the unclean hands
15 issue. To advance the goals of a consistent patent litigation system, Rambus must be held to the
16 result of the Delaware action.8
17
18 6
As stated by the Federal Circuit, “Blonder-Tongue did not throw merely a jab at the multiplicity
19 of patent litigation; rather, it intended a knockout blow through the doctrine of collateral estoppel
so that any time a patent was found invalid in a fair fight with a knowledgeable referee, the courts
20 could count ten and the patent holder could no longer maintain he was champion.” Stevenson v.
Sears, Roebuck & Co., 713 F.2d 705, 710 (Fed. Cir. 1983) (quoting Blumcraft v. Kawneer Co.,
21 482 F.2d 542, 548-9 (5th Cir. 1973)).
7
22 Notably, Rambus does not contend that it was not afforded a full and fair opportunity to litigate
in Delaware. Its oblique arguments on the issue ignore the scope and content of the Delaware
23 trial. Moreover, as a Delaware corporation that itself contemplated filing patent lawsuits in
Delaware against Micron and other Manufacturers, Rambus is in no position to complain about
24 that forum.
8
25 Contrary to Rambus’s suggestion, Aptix Corp. v. Meta Systems, Inc., 269 F.3d 1369 (Fed. Cir.
2001), does not foreclose this result. Aptix holds only that punishment for unclean hands may not
26 impair the patent rights of one who did not engage in misconduct. See id at 1377 (“The record
does not show that either [licensee] participated in any wrongful conduct during litigation or
27 before the PTO.”). Here, however, Rambus is the “malfeasant who committed the misconduct.”
See id. at 1375. Nothing in Aptix suggests that a dismissal such as the one in Delaware is exempt
28 from the ordinary principles of collateral estoppel.
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CASE NO. C00-20905; CASE NO. C05-00334
1 The singular focus on the quality of the prior opportunity to litigate is consistent with the
2 approach the Court has taken previously in this case and others. In its April 2005 order denying
3 collateral estoppel effect for the dismissal of the Infineon case based on unclean hands the Court
4 expressed “reservations about the fairness of applying Judge Payne’s oral ruling without the
5 benefit of his specific factual findings and legal conclusions.” Ex. I to Roeder Decl., p. 7:6-8.
6 The Court’s reference to “fairness” followed its conclusion that in the absence of specific findings
7 and conclusions, it “simply cannot glean from Judge Payne’s oral ruling in Infineon the required
8 elements to apply the doctrine of unclean hands in this litigation.” Id. at 4:22-24. Read in
9 context, and considering that the Court also cited the inconsistent decision of the ALJ in the FTC
10 proceeding (since vacated), it appears that the Court was not exercising some unfettered notion of
11 “fairness” but instead was being scrupulous to ensure the elements of collateral estoppel were
12 met. There is authority for this type of approach where there are inconsistent rulings. See
13 Stevenson v. Sears, Roebuck & Co., supra, 713 F.2d at 709 (quoting Blumcraft v. Kawneer Co.,
14 supra, 482 F.2d at 548-9) (emphasizing that prior inconsistent ruling does not create an exception
15 to Blonder-Tongue but requires careful application of the full and fair criteria).9
16 Put more simply, and as stated by this Court in another collateral estoppel case: “the
17 focus for purposes of determining whether collateral estoppel applies is not whether the issue was
18 correctly decided. Rather the focus is simply whether [the patent holder] has a full and fair
19 opportunity to argue the validity of the [patents-in-suit]” in the earlier case. Cygnus Telecomm.
20 Tech., LLC v. Amer. Int’l Telephonics, LLC, 569 F.Supp.2d 1035, 1037 (N.D. Cal. 2008) (Whyte,
21 J.) (citing Stevenson v. Sears, Roebuck & Co., supra); and see generally Wright, Miller &
22 Cooper, FEDERAL PRACTICE & PROCEDURE: CIVIL 3D § 4426 (2008) (relitigation should not be
23 permitted whenever it might result in a more accurate determination, in the name of “justice”).
24 9
Rambus’s suggestion that the last in time rule set forth in Americana Fabrics, Inc. v. L&L
25 Textiles, Inc., 754 F.2d 1524 (9th Cir. 1985) applies only in the context of res judicata (claim
preclusion) is contradicted by Comment c to Restatement 2d Judgments, § 15, which states that
26 the rule also governs in cases of issue preclusion. Also, Robi v. Five Platters, Inc., 838 F.2d 318
(9th Cir. 1988), relied upon by Rambus in attacking the last in time rule, is readily distinguishable
27 because in that case the party seeking collateral estoppel had failed to appeal a previous adverse
determination. Id. at 328. Here, by contrast, Hynix has twice sought and been denied the Court’s
28 permission to appeal the adverse unclean hands spoliation decision in the ‘905 case.
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CASE NO. C00-20905; CASE NO. C05-00334
1 Rambus suggests that the Delaware court’s finding of litigation misconduct entitles it to
2 another chance to litigate the question of unclean hands. Rambus Consol. Opp., pp. 7-11. But
3 Rambus cannot use its own abuse of the earlier litigation opportunity as a reason why the earlier
4 proceeding was unfair. This is particularly true where, as here, Rambus’s litigation misconduct is
5 of a type that cannot be purged. See Narda Microwave Corp. v. General Microwave Corp., 1980
6 U.S. Dist. LEXIS 9615, *65 (E.D.N.Y. 1980) (purge of unclean hands requires that objectionable
7 activity be abandoned and that its effects have been dissipated). Unlike Aptix (where the genuine
8 inventor notebooks could be used in place of the falsified notebooks), the exposure of Rambus’s
9 spoliation does nothing to replace what was destroyed. Also, much if not all of this same
10 misconduct infected the ‘905 litigation as well. Rambus completely ignores that the misconduct
11 catalogued at length in its opposition (Rambus Consol. Opp., pp. 8-11) occurred during the time
12 period between when the ‘905 case was filed in 2000 and this Court issued its unclean hands
13 findings in 2006. Certainly this misconduct provides no basis for providing Rambus another
14 opportunity to litigate.
15 B. The Court Should Reconsider Its Unclean Hands Findings.
16 Ignoring passages of Wright and Miller cited by Hynix (Hynix Motion, pp. 19-22),
17 Rambus argues against reconsideration by implying that the Court has no authority to revisit its
18 spoliation decision and by attempting to bolster this Court’s spoliation ruling by pointing to
19 passages of the “Nuclear Winter Scenario” memorandum not mentioned by this Court. Rambus
20 Consol. Opp., pp. 16 and 30-38. None of these rationales detract from the plain point,
21 appreciated by both the Eastern District of Virginia and Delaware, that Rambus reasonably
22 anticipated this litigation by December 1998.
23 This Court has the authority to revisit its unclean hands findings. See Hynix Motion, p. 19
24 at n.19; and see generally Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1581 (Fed. Cir. 1994)
25 (issue of liability for patent infringement not barred from reconsideration even though it was
26 affirmed on interlocutory appeal; applying collateral estoppel to decision finding patents invalid).
27 Although Rambus makes much of the fact that the Court has already ruled on the spoliation issue
28
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CASE NO. C00-20905; CASE NO. C05-00334
1 in the ‘905 case, no final judgment has yet been entered here. Accordingly, the Court is as free in
2 the ‘905 case as it is in any other case to consider the evidence of spoliation.
3 As Hynix noted, this Court’s spoliation ruling does not describe or quote the litigation-
4 related aspects of the late 1998 Nuclear Winter Scenario memorandum. Hynix Motion, p. 21. In
5 contrast, the Delaware decision focuses significant attention on this memorandum, noting that
6 therein Rambus set out potential litigation targets, causes of action, and fora. See Ex. J to Roeder
7 Decl. In response, Rambus nowhere defends this Court’s spoliation orders as written. Instead,
8 Rambus takes the unusual step of supplementing this Court’s analysis with additional
9 information, not mentioned by the Court, regarding the content of the 1998 memorandum. See
10 Rambus Consol. Opp., pp. 31-32. But no amount of cherry-picking introductory verbiage from
11 that memorandum can refute the plain conclusion that the author reasonably foresaw this
12 litigation. The Court should reconsider the content and consequence of this memorandum, and
13 rule that as of December 1998 Rambus had an obligation to preserve documents relevant to this
14 litigation.
15 IV. CONCLUSION
16 For the foregoing reasons, the Court should:
17 (1) Order summary judgment on Hynix’s unclean hands claims in the ‘905 and ‘334
18 cases;
19 (2) Provide relief from its prior unclean hands order in the ‘905 case under Rule 60(b);
20 (3) Enter judgment under Rule 54(b) (or in the alternative certify its decision under 28
21 U.S.C. § 1292(b)) so that all unclean hands issues may be appealed now; and
22 (4) Stay all remaining issues in the ‘905 and ‘334 cases.
23 ///
24 ///
25 ///
26 ///
27 ///
28 ///
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CASE NO. C00-20905; CASE NO. C05-00334
1
Dated: January 28, 2009 By: /s/ Kenneth L. Nissly
2 Kenneth L. Nissly
3 KENNETH L. NISSLY
SUSAN van KEULEN
4 SUSAN ROEDER
O’MELVENY & MYERS LLP
5
KENNETH R. O’ROURKE
6 WALLACE A. ALLAN
BELINDA M. VEGA
7 O’MELVENY & MYERS LLP
8 THEODORE G. BROWN III
JULIE J. HAN
9 TOWNSEND and TOWNSEND and CREW LLP
10 Attorneys for Plaintiffs

HYNIX SEMICONDUCTOR INC.,
11 HYNIX SEMICONDUCTOR AMERICA INC.,
HYNIX SEMICONDUCTOR MANUFACTURING
12 AMERICA INC.,
HYNIX SEMICONDUCTOR U.K. LTD., and
13 HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH
14 MP1:1171921.1
15
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28
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CASE NO. C00-20905; CASE NO. C05-00334

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Case 5:05-cv-00334-RMW Document 3164 Filed 01/28/2009 Page 1 of 21

1 KENNETH L. NISSLY (SBN 77589) knissly@omm.com

6 Attorneys for Plaintiffs

1 RAMBUS INC., Case No. C-05-00334 RMW

4 II. ONLY AN APPEAL LIMITED TO UNCLEAN HANDS WILL RESULT IN

17 IV. CONCLUSION ...................................................................................................................15

8 differential treatment in regards to Rambus’s indiscriminate document destruction. Second,

14 by the Federal Circuit.

22 treatment of patents in this industry-wide dispute.

1 A. The “Unclean Hands Only” Approach Is Procedurally Sound.

8 unenforceability for unclean hands is a separate affirmative “claim” as contemplated by Rule

16 judgment under Rule 54(b).

1 B. Rambus’s “Appeal Everything Try Everything” Approach Is Likely To

1 (1) is there a substantial overlap between the evidence or argument

19 bearing on the ‘905 case.

23 development of DRAM-related patents and technologies while anticipating these lawsuits.

10 Attorneys for Plaintiffs

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