More Bad Patent News for Rambus

The U.S. District Court for the Northern District of California has orderd a stay in the patent infringement case filed by Rambus Inc. against Micron Technology, Inc., Samsung Electronics Co. Ltd., and Nanya Technology Corporation.  The order staying the litigation was issued by the District Court Judge Ronald M. Whyte, and comes after a decision earlier this month by the U.S. District Court of Delaware that Rambus’ patents in that case were unenforceable against Micron.  On January 9, 2009, the District Court Juge Sue L. Robinson of the U.S. District Court of Delaware held that because Rambus’ “spoliation conduct was extensive, including within its scope the destruction of innumerable documents relating to all aspects of Rambus’ business,” and concluded that the only appropriate sanction for the conduct was “to declare the patents in suit unenforceable against Micron.”  What this means is more bad news for Rambus, who has been dogged for some time now by allegations of unscrupulous behavior associated with reportedly withholding patent information from the JEDEC standard setting body. 

Rambus had accused various manufacturers, including Micron Technologies, of infringing various patents. In response, the manufacturers each asserted the defense of unenforceability alleging that Rambus has unclean hands resulting from its destruction of documents in the late 1990’s. In Hynix Semiconductor Inc. v. Rambus, Inc. (N.D. Cal. Jan. 5, 2006)(“Hynix I Action”), the District Court in the Northern District of California determined after a bench trial that Hynix had not established the unclean hands defense. In 2008, however, the district court in Delaware held a bench trial with respect to Micron’s spoliation allegations and on January 9, 2009 issued a decision that Rambus’s patents were unenforceable against Micron. Micron Tech., Inc. v. Rambus Inc. (D. Del. Jan. 9, 2009) (“Micron Del. Action”).  Specifically, the Delaware court held that Rambus’s destruction of documents compelled a finding that the patents at issue in that case are unenforceable. Four of those patents are also selected for trial in the Micron N. Cal. Action, HNS Action, and Samsung Action. The remaining patents-in-suit are in the same family as those held unenforceable in Delaware. 

The District Court in the Northern District of California had scheduled a consolidated patent trial for February 17, 2009 between Rambus and the four Manufacturers.  But subsequent to the Micron Del. Action, Micron moved for summary judgment in the Northern District of California, invoking the doctrine of issue preclusion.  The Micron Del. Action and the Micron N. Cal. Action involve essentially the same unenforceability allegations, but with some difference in the patents asserted and products accused.  Nanya and Samsung likewise move for summary judgment of unenforceability based on the argument that the Micron Del. Action must be given preclusive effect in the actions against them.  Hynix also moves in both the HNS Action and the Hynix I Action for summary judgment of unenforceability, as well as raising a  variety of issues unique to the posture of its litigation with Rambus. Rambus, not surprisingly, opposed the motions. 

Judge Whyte ruled that due to the inconsistency of this decision of the Northern District of California in Hynix I with that in the Micron Del. Action prudence dictates staying the trial scheduled to begin on February 17, 2009, pending the resolution of the appeal of the Micron Del. Action to the United States Court of Appeals for the Federal Circuit.  Judge Whyte explained:

In light of the unenforceability opinion in the Micron Del. Action, however, maintaining the February 17, 2009 trial date no longer serves judicial economy and fairness. The Micron Del. Action raises difficult issues of preclusion that put into question the wisdom of proceeding to trial while that opinion is in place. The desire to prevent inconsistent outcomes persuades this court that the fairest and most economically efficient way to proceed is to expeditiously enter judgment in the Hynix I Action so that the Federal Circuit can undertake a consolidated review of the spoliation question and bring some finality to the issue. This lingering issue of whether or not Rambus’s patents are enforceable (or subject to some lesser sanction) creates a pressing need for this court to postpone the patent infringement trial and work swiftly to prepare the Hynix I Action for appellate review.

Given that the Hynix I Action is nearing completion Judge Whyte explained that he felt it appropriate to expeditiously wind up those proceedings so that a consolidated appeal could be heard by the United States Court of Appeals for the Federal Circuit.

Regardless of whether Rambus acted appropriately (as many believe) with JEDEC, and whether Judge Robinson is wrong, you have to wonder what is going on inside the company.  Endless litigation and legal battles continue to drain company resources, and on news of Judge Whyte’s stay the company closed down over 15% at $7.59, after opening the day at $7.05, off from Tuesday’s close of $8.95. 

About the Author

Eugene R. Quinn, Jr.
President & Founder of IPWatchdog, Inc.
US Patent Attorney (Reg. No. 44,294)

B.S. in Electrical Engineering, Rutgers University
J.D., Franklin Pierce Law Center
L.L.M. in Intellectual Property, Franklin Pierce Law Center
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Gene is a US Patent Attorney, Law Professor and the founder of He teaches patent bar review courses and is a member of the Board of Directors of the United Inventors Association. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, CNN Money and various other newspapers and magazines worldwide


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