Rambus Suffers Loss at ITC, Destruction of Evidence Cited

On Thursday, July 25, 2012, the International Trade Commission (ITC) terminated an investigation into whether certain Rambus patents were being infringed by Garmin International, Cisco Systems, Seagate Technologies and others. In closing this investigation the ITC affirmed the initial determination of Administrative Law Judge (ALJ) that there was no violation of Section 337 of the Tariff Act of 1930 with respect to the asserted patents. The patents in question are “the Barth patents” (U.S. Patent Nos. 6,470,405; 6,591,353; 7,287,109) and “the Dally patents” (U.S. Patent Nos. 7,602,857 and 7,715,494).

The notice of termination is subject to appeal. “We are evaluating our next steps in this matter, which may include a possible appeal to the Federal Circuit. We remain steadfast in our commitment to protecting our patented inventions from unlicensed use,” said Thomas Lavelle, senior vice president and general counsel at Rambus.

In December 2010, Rambus filed a complaint with the ITC requesting an investigation. The complaint sought an exclusion order barring the importation, sale for importation and sale after importation of products that infringe the Rambus patents from the Dally and Barth families. For the Dally patents, the accused semiconductor products included those that incorporate PCI Express, certain Serial ATA, certain Serial Attached SCSI (SAS) and DisplayPort interfaces. In the case of the Barth patents, the accused semiconductor products included those that incorporate DDR, DDR2, DDR3, mobile DDR, LPDDR, LPDDR2, and GDDR3 memory controllers. Accused semiconductor products in the complaint include graphics processors, media processors, communications processors, chip sets and other logic integrated circuits (ICs).

The Commission instituted this investigation on January 4, 2011, based on a complaint filed by Rambus Inc. of Sunnyvale, California (“Rambus”), alleging a violation of section 337 in the importation, sale for importation, and sale within the United States after importation of certain semiconductor chips and products containing the same.  76 Fed. Reg. 384 (Jan. 4, 2011).

On March 2, 2012, the ALJ issued the final Initial Determination (ID). The ID found no violation of section 337. Furthermore, the ID determined that all of the asserted claims were invalid or obvious in view of the prior  art under 35 U.S.C. § 102 or 103. The Barth patents were found to be unenforceable under the doctrine of unclean hands by virtue of Rambus’s destruction of documents. The ID also found  that Rambus had exhausted its rights under the Barth patents as to certain products of one  Respondent. The ID also found that all of the asserted patent claims were infringed, and rejected  numerous affirmative defenses raised by the Respondents.

On March 19, 2012, Rambus, the Respondents and the Commission investigative attorney (“IA”)  each filed a petition for review of the ID. On March 27, 2012, these parties each filed a response to the others’ petitions.  On May 3, 2012, the Commission determined to review the ID in its entirety. 77 Fed. Reg. 27,249 (May 9, 2012). The notice of review asked the parties to brief certain questions.

An evidentiary hearing was held before the ALJ in October 2011. On March 2, 2012, the ALJ issued an initial determination finding the asserted patents infringed by the Respondents but invalid over prior art. The ALJ also found the asserted Barth patents to be unenforceable.

Since the investigation was instituted, Rambus signed settlement and patent license agreements with former Respondents Broadcom, Freescale, MediaTek and NVIDIA.  This terminated the investigation relative to those Respondents.

Leading into the ultimate termination of the ITC investigation on July 25, 2012, LSI and STMicro were the only two manufacturer respondents remaining. Joining them as Respondents were their customers Asustek Computer, Inc. and Asus Computer International, Inc.;  Cisco Systems, Inc.; Garmin International Inc.; Hewlett-Packard Company; Hitachi Global Storage Technologies; and Seagate Technology.

After considering the record of the investigation the Commission determined the following:

• The Commission affirmed the ALJ’s conclusion that all of the asserted patent claims are invalid under 35 U.S.C. § 102 or 103, except for the asserted Dally multiple-transmitter claims (’857 claims 11-13, 32-34, 50-52).
• The Commission found no demonstrated infringement for the asserted Dally multiple-transmitter claims (’857 claims 11-13, 32-34, 50-52).
• The Commission reversed the ALJ’s determination that Rambus demonstrated the existence of a domestic industry under 19 U.S.C. § 1337(a) for both the Barth patents and Dally patents.
• The Commission affirmed the ALJ’s determination that the Barth patents are unenforceable under the doctrine of unclean hands.
• The Commission affirmed the ALJ’s finding of exhaustion of the Barth patents as to one respondent.

The Commission’s determinations, including non-dispositive findings, will be set forth more fully in the Commission’s opinion, which will be forthcoming.

It seems that Rambus cannot shake the mistakes of the past.  The Barth patents being unenforceable due to the destruction of documents relates to the Rambus’ choice to destroy documents rather than have them discoverable during litigation proceedings.

On May 13, 2011, in Micron Technology Inc. v. Rambus, Inc., a five judge panel of the Federal Circuit (per Judge Linn) affirmed the district court’s determination that Rambus destroyed documents in contravention of a duty to preserve them and, thus, engaged in spoliation. At the time I wrote that this decision would be virtually assured to result in Rambus losing all opportunity to seek redress for patent infringement.  This document shredding has lead to tremendous problems for Rambus over the years, litigation opportunities lost, Antitrust inquiries and more than a decade of needless turmoil.  Regardless of whether Rambus should have been drug through the mud for more than a decade, when you engage in overtly nefarious activity like destroying evidence few will be on your side and stand up for you.

Rambus acknowledged in the aforementioned Micron case that at least between July 1998 and November 1999 they shredded numerous paper documents and magnetically erased all but 1 of 1,269 backup tapes storing e-mail backups.  The only one not destroyed was recovered because it was needed to establish a priority date during patent prosecution.  Therefore, the issue wasn’t whether there was a destruction of evidence, that was clear.  The question was two-fold: (1) did the destruction of evidence occur after Rambus had a duty to retain the evidence in anticipation of litigation; and (2) what is the appropriate sanction for spoliation.  The Federal Circuit did find spoliation.

Rambus will undoubtedly appeal the ITC determination, so the saga is likely to continue.