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Gregory P. Stone (SBN 078329) Steven M. Perry (SBN 106154) MUNGER TOLLES & OLSON LLP 355 South Grand Avenue, 35th Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 Email: gregory.stone@mto.com; steven.perry@mto.com Peter A. Detre (SBN 182619) MUNGER TOLLES & OLSON LLP 560 Mission Street, 27th Floor San Francisco, California 94105 Telephone: (415) 512-4000 Facsimile: (415) 512-4077 Email: peter.detre@mto.com Attorneys for RAMBUS INC.

Rollin A. Ransom (SBN 196126) SIDLEY AUSTIN LLP 555 West Fifth Street, Suite 4000 Los Angeles, CA 90013-1010 Telephone: (213) 896-6000; Facsimile: (213) 896-6600 Email: rransom@sidley.com

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION

HYNIX SEMICONDUCTOR INC., et al., Plaintiffs, v. RAMBUS INC., Defendant.

CASE NO. CV 00-20905 RMW RAMBUSS [PROPOSED] SUPPLEMENTAL BRIEF REGARDING THE COURTS DETERMINATION OF A RAND RATE PURSUANT TO ITS SEPTEMBER 21, 2012 ORDER Date: Time: Ctrm: Judge: December 19, 2012 2:00 p.m. 6 Hon. Ronald M. Whyte

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I.

INTRODUCTION In its September 21, 2012 Order, the Court determined that the sanction most

commensurate with Rambuss conduct was an order strik[ing] from the record evidence supporting a royalty in excess of a reasonable, non-discriminatory royalty. 9/21/12 Order at 65:10-11. The Court instructed the parties to file a single round of briefs addressing what a reasonable, non-discriminatory royalty rate would be with respect to the patents-in-suit. Id. at 65:15-66:1. In accordance with the Order and the parties stipulations regarding the briefing schedule, Hynix filed its remedy brief on October 30, 2012 and Rambus filed its remedy brief on November 13, 2012. Despite the Courts order, Hynix filed an Administrative Motion on November 20, 2012 seeking leave to file a supplemental brief, which it attached to its motion (Hynixs Supp. Brief). On November 26, 2012, Rambus filed its Opposition to Hynixs motion. As of this date, the Court has not ruled on the motion. Rambus therefore submits this supplemental brief in an abundance of caution. Rambuss supplemental brief is necessary because Hynix did not address in its October 30, 2012 brief the available evidence regarding a reasonable and nondiscriminatory (RAND) rate. See Hynix 10/30/12 Remedy Brief at 9:9-23 (stating that calculating a RAND rate is a complicated matter and that there is no need to do so). Instead, Hynix waited to address the RAND issues in its supplemental brief. In order for Rambus to have an opportunity to respond to Hynixs arguments regarding RAND issues, as Rambus believes the Court intended, see 9/21/12 Order at 65:18-66:1, Rambus respectfully requests that the Court consider this brief if Hynixs supplemental brief is considered.1

Rambus notes that Hynix has separately filed objections to the Declaration of Brian Hammer that Rambus filed on November 13, 2012. Rambus will separately respond to Hynixs objections prior to the December 19, 2012 hearing.
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II.

ARGUMENT A. Hynixs Argument That Rambus Should Have Presented Its Other DRAM Evidence At The Patent Trial Has No Merit.

Hynix argues in its supplemental brief that the Court should not consider the Other DRAM rate in connection with a RAND analysis because Rambus did not offer evidence at the patent trial concerning the Other DRAM clause. Hynix Supp. Brief at 2:1-2. Hynixs argument is unavailing, for two reasons. First, as Hynix concedes, the patent jury was told to calculate a reasonable royalty based on a hypothetical negotiation . . . when sales had begun in early 2000. Hynix 10/30/12 Remedy Brief at 11:20-22, citing Patent Trial Jury Instruction No. 20. In contrast, the Other DRAM clause was negotiated in the 1995-1996 time period, four or more years prior to the hypothetical negotiation described in the jury instruction. Second, the Court had bifurcated the patent and conduct issues and had ordered that Hynixs claims that Rambus had misled it during the Other DRAM negotiations would be tried in the conduct phase. See generally Phase III (Conduct Trial) Findings of Fact and Conclusions of Law (Phase III Findings), March 3, 2009 (D.E. 3904), at 4:195:11; 6:13-25. As Rambus explained in its 11/13/12 Remedy Brief, the relevance of the Other DRAM negotiations to the RAND issue arises from the fact that, as the Court has found, Hynix deliberately sought patent coverage of products like SDRAM in 1995 when it sought the expansive language in the Other DRAM clause . . . . Phase III Findings at 42:4-7. It is the close factual connection between the Other DRAM negotiations in 1995 and the hypothetical RAND negotiations in the same time period that makes the former relevant to the latter.2 It is thus self-evident that issues relating to the Other DRAM negotiations were to be addressed, under the Courts bifurcation order, at the conduct trial, not the patent trial. See Order on Patent Trial Motions In Limine, March 9,

The parties agree that the RAND negotiations would have occurred in the 1995-96 timeframe. See Hynix 10/30/12 Remedy Brief at 11:25; Weinstein Decl. at 20:14-15.
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2006 at 14:17-17:26 (excluding conduct evidence, such as evidence that Rambus had misled Hynix about the scope of its intellectual property rights, from the patent trial). B. Hynixs Argument That The Other DRAM Rate Is Irrelevant Because Hynix Was Not Aware Of Rambuss Patents On SDRAM Or DDR In The 1995-1996 Time Period Is Specious.

Hynix also contends that the Other DRAM clause was not negotiated under the same conditions as a RAND rate would have been negotiated because in the 1995-96 time frame, Hynix was not aware of Rambuss patents on SDR SDRAM or DDR SDRAM. Hynix Supp. Brief at 4:16-27. There are two fundamental problems with this argument. First, this Court has found that Hynix suspected that Rambus might have patent coverage of products like SDRAM in 1995 when it sought the expansive language in the Other DRAM clause. . . . Id. at 42:4-6. Hynix did not appeal from this finding. Second, Hynixs suggestion that in a RAND negotiation in 1995 or 1996, Rambus could have presented Hynix with its patents on SDR SDRAM or DDR SDRAM, Hynix Supp. Brief at 4:16-27, is simply wrong, for Rambus did not have such patents (or even patent applications) at the time. See Phase III Findings at 31:1-3 (By the time it withdrew from JEDEC, Rambus had not filed a patent application claiming a standardized feature under consideration during its JEDEC membership.). Consequently, as Rambus explained in its 11/13/12 Remedy Brief, both the Other DRAM and the RAND negotiations would necessarily have been preceded by a nonspecific warning by Rambus that Hynixs future high-volume DRAMs would likely infringe unspecified Rambus patents or patent applications that Rambus intended to file. See Rambus 11/13/12 Remedy Brief at 7:26-28, citing TX3078 at 58 and TX6121 at 1. C. Hynixs Argument That The Court Has Found That Hynix Did Not Seek Broad Protection For SDRAM Devices In The Other DRAM Negotiations Is Both False And Irrelevant.

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have agreed to pay the Other DRAM rate on sales of SDR SDRAM and DDR SDRAM. . . . Hynix Suppl. Brief at 1:19-20. Hynix further states that [t]he Court has found that at the time of the negotiation of the Other DRAM clause, Dr. K.H. Oh of Hynix did not believe Other DRAM encompassed Hynixs JEDEC-standard SDRAM. . . . Id. at 3:25-27, citing Phase III Findings at 37:24-38:1. Both statements are untrue. The Court explicitly found that Dr. Ohs credibility on this issue was questionable. Phase III Findings at 52:22-24. Moreover, as noted above, the Court found that Hynix deliberately sought broad coverage for products like SDRAM when it was negotiating the Other DRAM rate. Id. at 42:4-6. See also Rambus Remedy Brief at 5:3-24. In any event, Hynixs contention that Dr. Oh or others at Hynix were only seeking protection for SLDRAM, Hynix Supp. Brief at 3:27-4:5, even if true, would not be a basis for deeming the Other DRAM negotiations to be irrelevant to a RAND analysis. Hynix cannot dispute that it believed in 1995 that SLDRAM was a candidate technolog[y] to become the next generation standard. Patent Trial Tr. at 1470:23-1471:2; 1475:3-13 (Lee testimony). The Other DRAM negotiations therefore mirror the hypothetical RAND negotiations at issue here and provide the best possible evidence of a negotiation between Rambus and Hynix in the 1995-1996 time period about a license to Rambuss patents covering Hynixs future high-volume DRAM devices. D. Hynixs Argument Regarding The Worldwide Nature Of The Licenses Granted To Other Manufacturers Misses The Point.

Hynix also addresses in its supplemental brief the ERRs it has calculated based on Rambuss post-litigation licenses with Infineon, Samsung and Elpida. Rambus has previously demonstrated that those post-litigation license agreements are not RAND licenses and are inadmissible in any event under LaserDynamics. But if the Court were to rely upon any of them (and it should not), it cannot simply borrow the royalty rates they contain, for several reasons. First, all of the licenses that Hynix relies upon for its ERR analysis have a worldwide royalty base. In its supplemental brief, Hynix argues that the Court should adopt the rates from those licenses without adjustment because to do
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otherwise would result in an award based on Hynixs extraterritorial activities. Hynix Supp. Brief at 8:23-24. Hynix misses the point. When a license with a worldwide royalty base is used as a comparator under Georgia-Pacific, it would be illogical to borrow the rate from that same license without adjustment. As one court has explained: [I]t makes neither logical nor factual sense to suggest, as defendant does, that the royalty rate here should correspond precisely to the 1.25 percent rate in those agreements, yet argue that the royalty base should be defined in a fashion dramatically different from how it is defined in those licensesa formulation that would significantly diminish the royalties recovered by Boeing. . . . [S]ee also Bendix Corp., 676 F.2d at 612; Gargoyles, Inc. v. United States, 37 Fed.Cl. 95, 103 (1997) (Generally speaking, the royalty rate and royalty base have an inverse relationship, so that when the base goes down the rate goes up, and vice-versa). Boeing Co. v. U.S., 86 Fed. Cl. 303, 319 (2009) (citation omitted). Second, Hynixs arguments about competitive disadvantage have no basis in fact or law and do not provide any foundation for the punitive result Hynix seeks. Hynix has now filed two briefs that assert repeatedly that virtually any royalty payment by Hynix for its decade-long use of the Farmwald-Horowitz inventions would put it at a competitive disadvantage as compared to other manufacturers. But Hynix has made no showing that it is similarly situated with the licensees in question, and it has not provided any evidence about current or future competitive conditions in the DRAM industry. For example, although Hynix insists that it would be at a competitive disadvantage if it had to pay more than Infineon, it never addresses the fact that, as Mr. Weinstein acknowledges, Infineon declared bankruptcy in 2009 and was subsequently liquidated. Weinstein Decl. at 7:16. Hynix has also provided no information at all about when it intends to pay the judgment and has not even revealed whether it is the ongoing manufacturing entity (SK Hynix) or its predecessor, Hynix Semiconductor, that will be responsible for the judgment in this case. As a consequence, Hynixs arguments regarding future competitive disadvantage should be ignored. See Civil L.R. 7-5(a). III. CONCLUSION For the foregoing reasons, and as discussed in Rambuss Remedy Brief, the Court should enter its judgment in the amount set forth in that brief at 20:13 and n.7.
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DATED: November 30, 2012

MUNGER, TOLLES & OLSON LLP SIDLEY AUSTIN LLP By: /s/ Steven M. Perry Steven M. Perry

Attorneys for RAMBUS, INC.

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