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1 K&L GATES LLP Michael J. Bettinger (Bar No. 122196) 2 mike.bettinger@klgates.com Stephen M. Everett (Bar No. 121619) 3 stephen.everett@klgates.com Curt Holbreich (Bar No. 168053) 4 curt.holbreich@klgates.com Elaine Y. Chow (State Bar No. 194063) 5 elaine.chow@klgates.com Four Embarcadero Center, Suite 1200 6 San Francisco, CA 94111 Tel: (415) 882-8200 7 Fax: (415) 882-8220 8 QUINN EMANUEL URQUHART & SULLIVAN, LLP 9 Sean Pak (Bar No. 219032) seanpak@quinnemanuel.com 10 Peter A. Klivans (Bar No. 236673) peterklivans@quinnemanuel.com 11 50 California Street, 22nd Floor San Francisco, California 94111-4788 12 Telephone: (415) 875-6600 Facsimile: (415) 875-6700 13 QUINN EMANUEL URQUHART & 14 SULLIVAN, LLP Michael D. Powell (Bar No. 202850) 15 mikepowell@quinnemanuel.com 555 Twin Dolphin Drive, 5 th Floor 16 Redwood Shores, CA 94065 Telephone: (650) 801-5000 17 Facsimile: (650) 801-5100 18 Attorneys for Defendants & Counterclaimants STMICROELECTRONICS N.V. and 19 STMICROELECTRONICS INC. 20 21 RAMBUS INC., 22 Plaintiff, 23 vs. 24 STMICROELECTRONICS N.V.; 25 STMICROELECTRONICS INC., 26 27 28
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QUINN EMANUEL URQUHART & SULLIVAN, LLP Thomas D. Pease (admitted pro hac vice) thomaspease@quinnemanuel.com 51 Madison Avenue, 22 nd Floor New York, NY 10010 Telephone: (212) 849-7000 Facsimile: (212) 849-7100 QUINN EMANUEL URQUHART & SULLIVAN, LLP Robert J. Becher (Bar No. 193431) robertbecher@quinnemanuel.com 865 S. Figueroa St., 10th Floor Los Angeles, California 90017 Telephone: (213) 443-3000 Facsimile: (213) 443-3100

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION CASE NO. C 10-05449 NOTICE OF MOTION AND MOTION OF STMICROELECTRONICS N.V. AND STMICROELECTRONICS INC. FOR PARTIAL SUMMARY JUDGMENT ESTABLISHING CERTAIN FINDINGS REGARDING RAMBUS S UNCLEAN HANDS BASED ON COLLATERAL ESTOPPEL Date: July 11, 2013 Time: 1:30 pm Crtrm.: Courtroom 3, 17th Floor
NOTICE OF MOTION AND MOTION OF STMICROELECTRONICS N.V. AND STMICROELECTRONICS INC. FOR PARTIAL SUMMARY JUDGMENT

Defendants.

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1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD: 2 PLEASE TAKE NOTICE that on July 11, 2013, at 1:30 p.m. or as soon thereafter as the

3 matter may be heard before the Honorable Richard Seeborg, United States District Court for the 4 Northern District of California, San Francisco Courthouse, Courtroom 3-17th Floor, 450 Golden 5 Gate Avenue, San Francisco, CA 94102, defendants STMicroelectronics N.V. and 6 STMicroelectronics Inc. will and hereby do move this Court for an order granting partial summary 7 judgment that the following findings regarding Rambus s unclean hands from the Micron v. 8 Rambus action in the United States District Court for the District of Delaware and the Hynix v. 9 Rambus action in the United States District Court for the Northern District of California are 10 entitled to collateral estoppel effect and should be treated as binding on Rambus Inc.: 11 (i) the finding of the Micron court, affirmed by the Federal Circuit Court of Appeals

12 and accorded collateral estoppel effect by the Hynix court, that litigation was reasonably 13 foreseeable to Rambus by no later than December 1998 and Rambus destroyed documents during 14 its second shred day in 1999 in violation of its duty to preserve; 15 (ii) the finding supported by both the Micron and Hynix courts that Rambus s

16 destruction was willful; 17 (iii) the finding of both the Micron and Hynix courts that Rambus bears the burden to

18 show that its litigation opponents were not prejudiced by its destruction; and 19 (iv) the finding of both the Micron and Hynix courts that the destruction prejudiced the

20 assertion of JEDEC-based defenses by Rambus s litigation opponents. 21 Because all of the requisites for the application of the doctrine of collateral estoppel are satisfied, 22 the Court should treat these findings as binding on Rambus in this action. 23 24 25 26 27 28
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This motion is based on the following memorandum of points and authorities, the

2 accompanying declaration of Robert J. Becher, documentary evidence submitted herewith or cited 3 herein, the evidence and argument presented at the hearing on this motion, and all matters of 4 which the Court may take judicial notice. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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1 2 3 4

TABLE OF CONTENTS

Page

5 MEMORANDUM OF POINTS AND AUTHORITIES ..................................................................... 1 6 PRELIMINARY STATEMENT ........................................................................................................... 1 7 STATEMENT OF FACTS .................................................................................................................... 2 8 9 B. 10 11 12 13 C. D. E. On Remand, Judge Robinson Finds Rambus Acted In Bad Faith And Prejudiced Micron And Issues A Dispositive Sanction .............................................. 4 The Federal Circuits Decision in Hynix v. Rambus ................................................... 4 Judge Whytes Decision on Remand in Hynix v. Rambus .......................................... 4 The ALJs Decision and The Commissions Affirmance ........................................... 5 A. Judge Robinsons 2009 Decision and the Federal Circuits 2011 Decision in Micron v. Rambus .......................................................................................................... 2

14 ARGUMENT .......................................................................................................................................... 6 15 I. 16 A. 17 18 19 1. 20 21 22 3. 23 24 25 26 D. 27 28
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UNDER THE DOCTRINE OF COLLATERAL ESTOPPEL, RAMBUS IS PRECLUDED FROM RE-LITIGATING ITS SPOLIATION ............................................... 6 Rambus Had a Full and Fair Opportunity to Litigate the Spoliation Issue in the Prior Action .............................................................................................................. 7 STMicro Has Demonstrated The Issues On Which It Seeks Collateral Estoppel Were Actually Litigated ................................................................................ 9 There is Substantial Overlap Between Evidence And Argument In All Three Proceedings..................................................................................... 10 The Same Rule Of Law That Applies Here Was Applied In Prior Cases ................................................................................................................ 10 Pretrial Preparation And Discovery Dramatically Overlap In Both Matters ............................................................................................................. 13 The Claims In Both Proceedings Are Closely Related ................................. 13

B.

2.

4. C.

The Issues Raised In This Motion Were Lost As A Result Of A Final Judgment and Rambus Was a Party to the Prior Actions .......................................... 14 The Decision of the International Trade Commission in the 753 Investigation Further Supports STMicros Motion ................................................... 14

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1 II. 2 3

COLLATERAL ESTOPPEL IS NOT DISCRETIONARY AND ITS APPLICATION WOULD CONSERVE JUDICIAL RESOURCES, AVOID UNNECESSARY EXPENSES, AND MINIMIZE THE POSSIBILITY OF INCONSISTENT DECISIONS .............................................................................................. 15

CONCLUSION ..................................................................................................................................... 16 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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1 2 3 4

TABLE OF AUTHORITIES

Page Cases

5 Americana Fabrics, Inc. v. L&L Textiles, Inc., 754 F.2d 1524 (9th Cir. 1985) ......................................................................................................... 7 6 Arkla, Inc. v. United States, 7 37 F.3d 621 (Fed. Cir. 1994) ......................................................................................................... 15 8 Hynix Semiconductor Inc., et al v. Rambus Inc. , 897 F. Supp. 2d 939 (N.D. Cal. Sept. 21, 2012).................................................... 4, 11, 12, 13, 14 9 Hynix Semiconductor, Inc. v. Rambus, Inc. , 10 591 F. Supp. 2d 1038 (N.D. Cal. 2006) ................................................................................. passim 11 Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011) .................................................................................4, 8, 10, 11, 13 12 Hynix Semiconductor Inc., et al v. Rambus Inc., 13 897 F.Supp.2d 939 (N.D. Cal. Sept. 21, 2012) ................................................................... 4, 11, 12 14 Kamilche Co. v. United States, 53 F.3d 1059 (9th Cir. 1995), amended by 75 F.3d 1391 (9th Cir. 1996) .................................... 9 15 Kendall v. Visa U.S.A., Inc., 16 518 F.3d 1042 (9th Cir. 2008) ................................................................................................. 6, 14 17 Leon v. IDX Systems Corp., 464 F.3d 951 (9th Cir. 2006) ............................................................................................... 5, 11, 12 18 Luben Indus., Inc. v. United States , 19 707 F.2d 1037 (9th Cir. 1983) ....................................................................................................... 14 20 Maciel v. Comm'r of Internal Revenue , 489 F.3d 1018 (9th Cir. 2007) ......................................................................................................... 7 21 Micron Technology, Inc. v. Rambus Inc., 22 255 F.R.D. 135 (D.Del. 2009) ............................................................................................. 2, 11, 13 23 Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) .............................................................................................. passim 24 Micron Technology, Inc. v. Rambus Inc., 25 --- F. Supp. 2d ---, 2013 WL 227630 (D. Del. Jan. 2, 2013) ............................................. 4, 12, 13 26 Montana v. United States, 440 U.S. 147 (1979) ................................................................................................................... 6, 16 27 SK hynix Inc. v. Rambus Inc., 28 2013 WL 1915865 (N.D. Cal. 2013) ......................................................................................... 5, 14
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1 Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir. 2001) ................................................................................................... 10, 11 2 Stevenson v. Sears, Roebuck & Co. , 3 713 F.2d 705 (Fed. Cir. 1983) ....................................................................................................... 16 4 Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558 (Fed. Cir. 1996) ....................................................................................................... 15 5 United States Internal Revenue Serv. v. Palmer (In re Palmer) , 6 207 F.3d 566 (9th Cir. 2000) ........................................................................................................... 7 7 United States v. Kitsap Physician Serv., 314 F.3d 995 (9th Cir. 2002) ..................................................................................................... 5, 11 8 United States v. Mendoza , 9 464 U.S. 154 (1984) ............................................................................................................. 6, 12, 13 10 United States v. Rubenstein , 971 F.2d 288 (9th Cir. 1992) ......................................................................................................... 15 11 12 Statutes/Rules

13 Fed. R. Civ. P. 54(b) ............................................................................................................................... 9 14 Miscellaneous 15 Restatement (Second) of Judgments 13 ........................................................................................... 14 16 Restatement (Second) of Judgments 27 ............................................................................................. 9 17 18 19 20 21 22 23 24 25 26 27 28
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1 2 3

MEMORANDUM OF POINTS AND AUTHORITIES Preliminary Statement Rambus has filed patent infringement actions against numerous defendants since 2000 and

4 multiple judicial bodies have held Rambus s patents unenforceable due to unclean hands based on 5 its spoliation of evidence. This Court has instructed the parties that they are expected to take 6 advantage of the prior record and decisions regarding Rambus s spoliation, stating: And so I 7 think we should all operate on the notion that we can derive some benefit from other judicial 8 officers having developed a record on this point. 1 To take advantage of the prior judicial 9 decisions, defendants STMicroelectronics N.V. and STMicroelectronics Inc. (STMicro) move 10 this Court to accord collateral estoppel effect to the following legal and factual findings from prior 11 cases: 12 (i) the finding of the Micron court, affirmed by the Federal Circuit Court of Appeals

13 and accorded collateral estoppel effect by the Hynix court, that litigation was reasonably 14 foreseeable to Rambus by no later than December 1998 and Rambus destroyed documents during 15 its second shred day in 1999 in violation of its duty to preserve; 16 (ii) the finding supported by both the Micron and Hynix courts that Rambus s

17 destruction was willful; 18 (iii) the finding of both the Micron and Hynix courts that Rambus bears the burden to

19 show that its litigation opponents were not prejudiced by its destruction; and 20 (iv) the finding of both the Micron and Hynix courts that the destruction prejudiced the

21 assertion of JEDEC-based defenses by Rambus s litigation opponents. 22 All of the requisites for the application of collateral estoppel are present here. The first

23 requirement that Rambus had a full and fair opportunity to litigate its unclean hands is 24 satisfied. The courts in both prior actions held bench trials, heard live testimony and admitted 25 exhibits. The courts also had the benefit of guidance from the Federal Circuit because both cases 26 were appealed and remanded for further proceedings. 27
1 December 20, 2012 Hearing Transcript, at 25:18-22 (Declaration of Robert J. Becher, 28 dated June 6, 2013 (Becher Decl.), Exh. Z).
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As to the second requirement for collateral estoppel, the findings that are the subject of this

2 motion were actually litigated. Each of the factors considered in making this determination are 3 satisfied. First, there is a substantial overlap between the evidence and arguments to be advanced 4 by STMicro in this proceeding and the evidence of Rambus s unclean hands presented in prior 5 cases. Second, the legal standards regarding spoliation, willful destruction, the burden to show 6 prejudice and prejudice applied in the Hynix and Micron actions are either the same or less 7 demanding than the rules to be applied here. Third, pretrial preparation and discovery in the prior 8 actions embraced the matters covered in this case. Fourth, the claims in the Micron and Hynix 9 cases are closely related to this case in that both involve unclean hands defenses that are based on 10 Rambus s document destruction. 11 The last two requisites for collateral estoppel are also satisfied. A judgment has been

12 entered in the Micron action and one is expected to be entered in Hynix. Both are considered 13 final for purposes of collateral estoppel because they are not tentative, are reasoned, and the 14 parties were fully heard. And, finally, there is no question that Rambus was a party to the prior 15 actions. 16 As a result, the Court is required to accord collateral estoppel effect to the findings that are

17 the subject of this motion. 18 19 20 21 A. Statement Of Facts Judge Robinsons 2009 Decision and the Federal Circuits 2011 Decision in Micron v. Rambus Judge Robinson of the United States District Court for the District of Delaware concluded

22 in her first opinion after a bench trial in the case between Micron and Rambus that litigation was 23 reasonably foreseeable no later than December 1998, when [Rambus s Vice President of 24 Litigation] Karp had articulated a time frame and a motive for implementation of the Rambus 25 litigation strategy. Micron Technology, Inc. v. Rambus Inc., 255 F.R.D. 135 (D.Del. 2009) 26 (Micron I). She also stated: Rambus knew, or should have known, that a general 27 implementation of the policy was inappropriate because the documents destroyed would become 28 material at some point in the future. Micron I., 255 F.R.D. at *150. The Federal Circuit
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1 subsequently affirm[ed] the district court s determination that Rambus destroyed documents 2 during its second shred day in contravention of a duty to preserve them and, thus, engaged in 3 spoliation. Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311, 1325-1326 (Fed. Cir. 4 2011). 5 Although Judge Robinson found in her 2009 opinion that Rambus acted in bad faith, the

6 Federal Circuit remanded with instructions that the district court should limit its inquiry to 7 whether Rambus intended to impair the ability of the potential defendant to defend itself. Id. at 8 1327. The Federal Circuit observed that categories of evidence relied on by the district court 9 included (1) facts tending to show that Rambus s document retention policy was adopted within 10 the auspices of a litigation plan rather than merely carried out despite the reasonable foreseeability 11 of such litigation, . . . ; (2) facts tending to show the selective execution of the document retention 12 policy . . .; (3) facts tending to show Rambus s acknowledgement of the impropriety of the 13 document retention policy . . .; and (4) Rambus s litigation misconduct. Id. at 1327. It held 14 [w]hile these items may lead to a determination of bad faith, the district court did not make clear 15 the basis on which it reached that conclusion. Id. at 1327. Describing the standard for bad 16 faith, it said: 17 18 19 20 Id. at 1327. 21 Turning to the subject of prejudice, the Federal Circuit noted that, 22 23 24 25 Documents relating to Rambus s conduct at JEDEC, together with documents reflecting Rambus s instructions to its patent prosecution counsel concerning its conduct at JEDEC, could have helped resolve Micron s claims relating to patent misuse, antitrust violations, and unfair competition. Documents reflecting Rambus s knowledge of relevant prior art reference could have helped resolve Micron s inequitable conduct claims. If the district court finds facts to conclude that Rambus s goal in implementing its document retention policy was to obtain an advantage in litigation through the 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.

26 Id. at 1328. The court then remanded the question of prejudice, stating that the proper resolution 27 of the issue turns on whether Rambus or Micron has the burden to show prejudice. Id. at 1328. 28
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1 It also remanded for consideration of the proper sanction and supplied specific guidance regarding 2 the standard to be applied. Id. at 1329. 3 4 5 B. On Remand, Judge Robinson Finds Rambus Acted In Bad Faith And Prejudiced Micron And Issues A Dispositive Sanction On remand from the Federal Circuit, Judge Robinson again found clear and convincing

6 evidence of bad faith, relying on the four categories of evidence specifically identified by the 7 Federal Circuit in Micron. Micron Technology, Inc. v. Rambus Inc., --- F. Supp. 2d ---, 2013 WL 8 227630, *11-*14 (D. Del. Jan. 2, 2013)(Micron II). She found that Rambus not only intended 9 to destroy selective documents, it did so to impair the ability of potential defendants, such as 10 Micron, to defend themselves. Id. at *14. Holding that Rambus had the burden to show lack of 11 prejudice due to its bad faith, the court found that Rambus did not meet its burden and found the 12 spoliation prejudiced Micron, including its JEDEC-based claims and defenses and its inequitable 13 conduct defense. Id. at *15-*18. The court found that the only appropriate sanction was to hold 14 the patents-in-suit unenforceable. Id. at *21. 15 16 C. The Federal Circuits Decision in Hynix v. Rambus

In its opinion in Hynix Semiconductor Inc. v. Rambus Inc. that issued the same day as the

17 Micron decision, the Federal Circuit issued a consistent directive regarding when litigation was 18 reasonably foreseeable: Applying the correct standard of reasonable foreseeability, without the 19 immediacy gloss, these considerations compel a finding that litigation was reasonably foreseeable 20 prior to Rambus s Second Shred Day. Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 21 1347 (Fed. Cir. 2011). 22 23 D. Judge Whytes Decision on Remand in Hynix v. Rambus

On remand, Judge Whyte held he would accord collateral estoppel effect to the findings in

24 Micron II regarding when Rambus s duty to preserve began and whether Rambus spoliated 25 documents. Hynix Semiconductor Inc., et al v. Rambus Inc., 897 F.Supp.2d 939, 975 (N.D. Cal. 26 Sept. 21, 2012). Indeed, Judge Whyte found litigation was reasonably foreseeable by the 1998 27 shred day. Id. at 978. 28
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1 2 3 4 5

Under governing Ninth Circuit law, willful spoliation is treated the same as bad faith spoliation insofar as it may justify dismissal and places the burden on the spoliator to show that its adversary was not prejudiced. Leon v. IDX Systems Corp., 464 F.3d 951, 980 (9th Cir. 2006). Under Leon, [a] party s destruction of evidence qualifies as willful spoliation if the party has some notice that the documents were potentially relevant to the litigation before they were destroyed. Id. at 959 (quoting United States v. Kitsap Physician Serv., 314 F.3d 995, 1001 (9th Cir. 2002)). Id. at 980. After observing that the classic case of bad faith involves intentionally destroying

6 7 8 9 10

documents to hide adverse information, he found the evidence does not show that Rambus knowingly destroyed damaging evidence. Id. He concluded that Rambus spoliated evidence in bad faith or at least willfully. Id. On the subject of prejudice, Judge Whyte concluded that Hynix has made a plausible, concrete suggestion that it may have been prejudiced by destruction of JEDEC-related documents,

11 and that Rambus has not overcome the presumption of prejudice by clear and convincing 12 13 14 15 1915865 at *22 (N.D. Cal. 2013). 16 E. 17 18 19 Administrative Law Judge Essex issued his Initial Determination on Violation of Section 337 and 20 21 22 investigation. Judge Essex applied the Federal Circuit standard regarding spoliation from Micron 23 Tech, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011). Relying on most of the same facts 24 discussed in Micron and Hynix, he found Rambus could foresee and was planning litigation on the 25 26 acted in bad faith and, therefore, Rambus had the burden to show by clear and convincing 27
2

evidence. Id. at 984. In May 2013, Judge Whyte found that a monetary sanction of $250,000,000 to be applied as a credit against Rambus s judgment against SK hynix was the appropriate sanction for Rambus s unclean hands. SK hynix Inc. v. Rambus Inc., 2013 WL

The ALJs Decision and The Commissions Affirmance

The issue of Rambus s spoliation was also addressed by the International Trade Commission in connection with Rambus s assertion of the Barth patents. On March 2, 2012,

Recommended Determination on Remedy and Bond (Initial Determination) in Investigation No. 337-TA-753.2 STMicroelectronics Inc. and STMicroelectronics NV were respondents in the

Barth patents as early as July 1998 and had a duty to preserve evidence. 3 He also found Rambus

28
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1 evidence that the material it destroyed was inconsequential. 4 The ALJ found Rambus failed to 2 show by clear and convincing evidence that its bad faith spoliation did not prejudice respondents. 3 He held that the destroyed documents included documents Mr. Barth received regarding JEDEC 4 that would likely be at the heart of the respondents invalidity defenses and he held the Barth 5 patents unenforceable. 5 On July 31, 2012, the International Trade Commission affirmed the 6 ALJ s opinion on spoliation. 6 Although Rambus appealed from portions of the Commission s 7 decision, it did not challenge the portion of the decision regarding unclean hands on appeal.7 8 9 I. 10 11 Argument UNDER THE DOCTRINE OF COLLATERAL ESTOPPEL, RAMBUS IS PRECLUDED FROM RE-LITIGATING ITS SPOLIATION A fundamental precept of common law adjudication is that once an issue is actually and

12 necessarily determined by a court of competent jurisdiction, that determination is conclusive in 13 subsequent suits based on a different cause of action involving a party to the prior litigation. 14 Montana v. United States, 440 U.S. 147, 153 (1979). Collateral estoppel applies not only to 15 findings of fact, but also to conclusions of law. See United States v. Mendoza, 464 U.S. 154, 158 16 (1984). As the Supreme Court has stated, To preclude parties from contesting matters that they 17 have had a full and fair opportunity to litigate protects their adversaries from the expense and 18 vexation attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial 19 action by minimizing the possibility of inconsistent decisions. Montana, 440 U.S. at 153. 20 Issue preclusion applies where four requirements are met: (1) there was a full and fair

21 opportunity to litigate the issue in the previous action; (2) the issue was actually litigated in that 22 action; (3) the issue was lost as a result of a final judgment in that action; and (4) the person 23 against whom collateral estoppel is asserted in the present action was a party or in privity with a 24 party in the previous action. Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1050 (9th Cir. 25 26 27 28
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4 5 6 7

Id. at 266, 312. Id. at 314, 316. Commission Opinion, dated July 31, 2012 at 51-55 (Becher Decl., Exh. HH). May 23, 2013 Nonconfidential Brief for Appellant Rambus Inc. (Becher Decl., Exh. FF). -6NOTICE OF MOTION AND MOTION OF STMICROELECTRONICS N.V. AND STMICROELECTRONICS INC. FOR PARTIAL SUMMARY JUDGMENT

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1 2008)(citing United States Internal Revenue Serv. v. Palmer (In re Palmer), 207 F.3d 566, 568 2 (9th Cir. 2000)). 3 ST Micro seeks to narrow and simplify the issues to be tried by having the Court accord

4 collateral estoppel effect to findings that are common to, and supported by, the opinions of both 5 Judge Robinson and Judge Whyte. Although STMicro does not agree with all of the conclusions 6 reached by Judge Whyte and believes that the proper remedy here is to dismiss Rambus s claims, 7 according collateral estoppel effect to prior court rulings will simplify this case.8 8 9 The requirements of collateral estoppel are met with respect to the following findings: (i) the finding of the Micron court, affirmed by the Federal Circuit Court of Appeals

10 and accorded collateral estoppel effect by the Hynix court, that litigation was reasonably 11 foreseeable to Rambus by no later than December 1998 and Rambus destroyed documents during 12 its second shred day in 1999 in violation of its duty to preserve; 13 (ii) the finding supported by both the Micron and Hynix courts that Rambus s

14 destruction was willful 9; 15 (iii) the finding of both the Micron and Hynix courts that Rambus bears the burden to

16 show that its litigation opponents were not prejudiced by its destruction; and 17 (iv) the finding of both the Micron and Hynix courts that the destruction prejudiced the

18 assertion of JEDEC-based defenses by Rambus s litigation opponents. 19 20 21 A. Rambus Had a Full and Fair Opportunity to Litigate the Spoliation Issue in the Prior Action Rambus had a full and fair opportunity to litigate the issue of its unclean hands in prior

22 cases involving Micron and Hynix. An opportunity to litigate is full and fair when: (1) the 23 procedures in the prior and subsequent actions are similar; and (2) the parties had an incentive to 24 litigate. See Maciel v. Commr of Internal Revenue, 489 F.3d 1018, 1023 (9th Cir. 2007). In the 25 While Rambus may argue that the court needs to apply the last ruling because Judge Whyte and Judge Robinson reached different conclusions, this doctrine is inapposite because STMicro is 27 asking the Court to accord collateral estoppel effect to the findings that are supported by both courts. See, e.g., Americana Fabrics, Inc. v. L&L Textiles, Inc., 754 F.2d 1524 (9th Cir. 1985). 9 28 STMicro will separately prove at trial that Rambus acted in bad faith. 26
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1 Micron case in the District of Delaware, Rambus had the same procedural rights that are available 2 in this action. Judge Robinson s decision was based on a fully developed record that resulted 3 from a five day bench trial that began on November 15, 2007.10 Almost three hundred exhibits 4 were admitted into evidence during the trial. 11 The Court heard the testimony of more than 5 twenty witnesses, including live testimony from Rambus witnesses who live beyond the subpoena 6 power of the Delaware court (such as Joel Karp, Lester Vincent, Sean Cunningham, Allen Roberts 7 and Dan Johnson). 12 The record was further developed through four hours of prior deposition and 8 trial testimony from twenty-two witnesses. 13 On appeal, the Federal Circuit had the benefit of 9 this extensive record. Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011). 10 The procedures in the bench trial before Judge Whyte were similar to the procedures

11 applicable here. The trial lasted 10 days and featured 22 witnesses. 14 The parties had a full 12 opportunity to develop the record and offered numerous exhibits into evidence. Hynix 13 Semiconductor, Inc. v. Rambus, Inc., 591 F.Supp.2d 1038 (N.D. Cal. 2006). Indeed, Rambus has 14 contended that the differences between the extensive Delaware trial record and the record before 15 Judge Whyte were makeweight and insignificant. Hynix Semiconductor Inc. v. Rambus Inc., 16 645 F.3d 1336, 1342 n.1 (Fed. Cir. 2011). Moreover, Rambus appealed Judge Whyte s initial 17 unclean hands decision to the Federal Circuit and the court had the benefit of the extensive trial 18 court record. Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011). 19 Rambus also had every incentive to vigorously defend itself against the unclean hands

20 defenses asserted by Micron and Hynix. It has been litigating against Micron in the District of 21 Delaware for almost thirteen years.15 The fact Rambus has challenged Judge Robinson s 22 decisions on appeal also shows that it has been incentivized to defend itself. Rambus appealed 23 her 2009 ruling holding Rambus s patents unenforceable due to unclean hands and it is now 24 25 26 27 28
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Micron Trial Transcript Face Pages (Becher Decl., Exhs. B-F). the Joint List of Admitted Exhibits Unclean Hands Trial, dated December 6, 2007 (Becher Decl., Exh. A). 12 Becher Decl., 3. 13 Reporters transcripts and designated t estimony from Delaware trial (Becher Decl., Exhs. B-G). 14 Hynix Trial Transcript Face Pages (Becher Decl., Exhs. M-V). 15 Docket Report from Micron case (Becher Decl., Exh. K).
11

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1 pursuing a second appeal from Judge Robinson s 2013 decision on remand. 16 Rambus has also 2 been incentivized to defend itself because it was well aware the decisions by Judge Robinson and 3 the Federal Circuit had potential ramifications for its other cases. After all, Rambus s litigation 4 opponents in various cases have often asked courts to accord collateral estoppel effect to prior 5 decisions regarding Rambus s unclean hands.17 6 Rambus had every incentive to defend itself in litigation against Hynix too. Rambus s

7 litigation with Hynix has also been ongoing for almost 13 years.18 Rambus was seeking--and 8 obtained--a substantial jury verdict against Hynix.19 And Rambus tried to defend Judge Whyte s 9 first unclean hands decision on appeal. Id. 10 11 12 B. STMicro Has Demonstrated The Issues On Which It Seeks Collateral Estoppel Were Actually Litigated For purposes of issue preclusion, whether an issue was actually litigated is determined

13 under a four-factor test followed by the Ninth Circuit: 14 15 [2] 16 17 18 19 [4] [3] Does the new evidence or argument involve application of the same rule of law as that involved in the prior proceeding? Could pretrial preparation and discovery relating to the matter presented in the first action reasonably be expected to have embraced the matter sought to be presented in the second? How closely related are the claims involved in the two proceedings? [1] Is there a substantial overlap between the evidence or argument to be advanced in the second proceeding and that advanced in the first?

20 Restatement (Second) of Judgments 27, cmt. c; Kamilche Co. v. United States, 53 F.3d 1059, 21 1062 (9th Cir. 1995), amended by 75 F.3d 1391 (9th Cir. 1996). Under this four-part test, the 22 unclean hands findings that are the subject of this motion were actually litigated before the United 23
16

24 I).
17

Notice of Appeal, dated March 28, 2013 (Dkt. 1157 before Robinson)(Becher Decl., Exh.

See, e.g., Microns Motion for Summary Judgment of Unenforceability Based on Collateral Estoppel, dated January 19, 2009 (Becher Decl., Exh. J); Notice of Motion and Motion of Hynix 26 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, dated January 19, 2009 27 (Becher Decl., Exh. X). 18 Docket Report from Hynix case (Becher Decl., Exh. Y). 19 28 April 24, 2006 Verdict Form from Hynix case (Becher Decl., Exh. W). 25
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1 States District Court for the District of Delaware in Micron and the United States District Court 2 for the Northern District of California in Hynix. 3 4 5 1. There is Substantial Overlap Between Evidence And Argument In All Three Proceedings As to the first factor, substantially the same evidence and arguments regarding spoliation

6 are at issue here as in the Micron and Hynix actions. Just like in Micron and Hynix, STMicro s 7 unclean hands defenses is based on Rambus s destruction of evidence in anticipation of litigation. 8 STMicro will use much of the same evidence presented in the Micron action to prove spoliation 9 here, including evidence of: (1) the same destruction of 1180 boxes of documents on the shred 10 days in 1998, 1999, and 2000 and degaussing of backup tapes in July 1998;20 (2) the same 11 document retention policy, which was part of Rambus s litigation strategy; and the same 12 evidence regarding the reasons Rambus implemented it; 21 (3) the same factual details showing 13 Rambus s anticipation of litigation;22 and (4) the same evidence of Rambus s participation in the 14 standards setting organization JEDEC and its destruction of documents regarding JEDEC. 23 15 Rambus itself has stated that the differences in the record between the evidence presented in the 16 Hynix action and the evidence from the Micron action are makeweight and insignificant, 17 Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1342, n.1 (Fed. Cir. 2011). As a result, 18 it follows logically that the evidence STMicro will present at trial will also substantially overlap 19 with the evidence from the Hynix case. 20 21 2. The Same Rule Of Law That Applies Here Was Applied In Prior Cases

With respect to the second factor, Judge Robinson, the Federal Circuit and Judge Whyte all

22 applied the same general rule of law with respect to the matters on which collateral estoppel is 23 requested. As to the standard for spoliation, the Federal Circuit in Micron held that, The duty to 24 preserve evidence begins when litigation is pending or reasonably foreseeable. Silvestri v. 25 General Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001). Micron, 645 F.3d at 1320. It then 26 27 28
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20 21 22 23

Micron II, at *7, *8, *9. Micron II, at *7. Micron II, at *2-*6. Micron II, at *2, *8. -10NOTICE OF MOTION AND MOTION OF STMICROELECTRONICS N.V. AND STMICROELECTRONICS INC. FOR PARTIAL SUMMARY JUDGMENT

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1 stated: Thus, [s]poliation refers to the destruction or material alteration of evidence or to the 2 failure to preserve property for another s use as evidence in pending or reasonably foreseeable 3 litigation. Silvestri, 271 F.3d at 590. Micron, 654 F.3d at 1320; see also Micron I, 255 F.R.D. 4 at 148 (D.Del. 2009)(stating same rule of law). The Federal Circuit in Hynix Semiconductor 5 Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011), applied the same definition of spoliation as 6 the Federal Circuit in Micron. Id. at 1344-1345. And Judge Whyte took direction from the 7 Federal Circuit regarding the definition of spoliation and on remand he accorded collateral 8 estoppel effect to Judge Robinson s decision. Hynix Semiconductor, Inc. et. al. v. Rambus Inc., 9 897 F. Supp. 2d 939, 975 (N.D. Cal. Sept. 21, 2012). The same standard for defining spoliation 10 set forth in the Federal Circuit s opinions in Micron and Hynix applies in this case which, like the 11 Hynix case, is venued in the Northern District of California. 12 In finding that Rambus acted willfully, Judge Whyte applied the Ninth Circuit standard

13 for willfulness that applies in this case too. He stated: 14 15 16 17 18 19 does not support a conclusion that Rambus deliberately shredded documents it knew to be 20 damaging, the court concludes that Rambus nonetheless spoliated evidence in bad faith or at least 21 22 23 implementation of the policy was inappropriate because the documents destroyed would become 24 25 26 27 28
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Under governing Ninth Circuit law, willful spoliation is treated the same as bad faith spoliation insofar as it may justify dismissal and places the burden on the spoliator to show that its adversary was not prejudiced. Leon v. IDX Systems Corp., 464 F.3d 951, 959-960 (9th Cir. 2006). Under Leon, [a] party s destruction of evidence qualifies as willful spoliation if the party has some notice that the documents were potentially relevant to the litigation before they were destroyed. Id. at 959 (quoting United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002)). Hynix, 897 F.Supp.2d at 980. Applying this standard, he concluded that, Although the evidence

willfully. Id. Judge Robinson s opinion certainly contained the type of findings needed to show willfulness as she stated: Rambus knew, or should have known, that a general

material at some point in the future. Micron I., 255 F.R.D. at 150 (D.Del. 2009); see also

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1 Micron II, at *11. The same Ninth Circuit legal standard for evaluating willfulness that Judge 2 Whyte applied will apply here too.24 3 Turning to prejudice, both Judge Whyte and Judge Robinson found Rambus had the

4 burden to show its litigation adversaries were not prejudiced. Judge Whyte held that a willful 5 spoliator bears the burden to show a lack of prejudice: Under governing Ninth Circuit law, 6 willful spoliation is treated the same as bad faith spoliation insofar as it may justify dismissal and 7 places the burden on the spoliator to show that its adversary was not prejudiced. Leon v. IDX 8 Systems Corp., 464 F.3d 951, 959-960 (9th Cir. 2006). Hynix, 897 F.Supp. 2d at 980. This 9 same Ninth Circuit rule of law applies here. In the same vein, Judge Robinson found Rambus 10 acted in bad faith and that this shifted the burden to Rambus to show a lack of prejudice: She 11 stated: [I]f the spoliation was done in bad faith, the burden shifts to the spoliating party to show 12 lack of prejudice. Micron II, 2013 WL 227630, at *14. And, as explained above, Judge 13 Robinson s findings are also consistent with the separate conclusion that Rambus acted willfully. 14 Finally, both the Micron court and the Hynix court required Rambus to prove by clear and

15 convincing evidence that it did not prejudice its adversaries and held Rambus could not meet this 16 burden. After concluding that Rambus bore the burden to show a lack of prejudice, Judge 17 Robinson held that there was clear and convincing evidence that Rambus prejudiced Micron s 18 JEDEC-based claims and defenses, including patent misuse. Micron II, 2013 WL 227630, at *16. 19 Similarly, Judge Whyte required Rambus to show by clear and convincing evidence it did not 20 prejudice Hynix and held: The court concludes that Hynix has made a plausible, concrete 21 suggestion that it may have been prejudiced by destruction of JEDEC-related documents, and that 22 Rambus has not overcome this suggestion of prejudice by clear and convincing evidence. 23 Hynix, 897 F.Supp.2d at 984. Again, the same standard for prejudice applied in Micron and 24 Hynix applies in this case too. 25 Judge Robinson also found -- and STMicro will demonstrate at trial -- that Rambus acted in bad faith: Rambus not only intended to destroy selective documents, it did so to impair the 27 ability of potential defendants, such as Micron, to defend themselves. It is in light of this cumulative evidence that the court finds clear and convincing evidence that Rambus spoliation 28 was carried out in bad faith. 2013 WL 227630 at *14. 26
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1 2 3

3.

Pretrial Preparation And Discovery Dramatically Overlap In Both Matters

On the third consideration, pretrial preparation and discovery regarding unclean hands in

4 both actions were substantially the same. In the Micron and Hynix actions, the parties took fact 5 discovery regarding unclean hands and spoliation, including the destruction of documents related 6 to JEDEC, and the court held a bench trial on those issues. 25 In addition, the court pierced the 7 attorney-client privilege under the crime-fraud exception in both actions based on, among other 8 things, Rambus s spoliation. Micron Technology Inc. v. Rambus Inc., 645 F.3d 1311, 1319-1320 9 (Fed. Cir. 2011); Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1347 (Fed. Cir. 2011). 10 In this action, Rambus has produced materials produced pursuant to prior piercing orders and has 11 produced depositions and discovery from the Micron and Hynix cases.26 12 13 4. The Claims In Both Proceedings Are Closely Related

Finally, the claims in all three actions are closely related. All actions involve the assertion

14 of an unclean hands defense to Rambus s assertion of patent claims based on the Farmwald15 Horowitz patents, four of the patents asserted in the Delaware action are also asserted in this 16 action 6,034,918; 6,038,195; 6,426,916 and 6,715,020 and three of the patents asserted in 17 Northern District of California Hynix action are asserted in this action 6,034,918; 6,426,916 and 18 6,715,020. Hynix Semiconductor, Inc. v. Rambus Inc., 645 F.3d 1336, 1340 (Fed. Cir. 2011); 19 Micron II, 2013 WL 227630 at *1 (D. Del. 2013). Just like Hynix and Micron, STMicro alleges 20 that Rambus intentionally destroyed evidence in anticipation of litigation as part of a litigation 21 plan. Just like Hynix and Micron, STMicro alleges that its JEDEC-based defenses were 22 prejudiced. 27 Micron II, 2013 WL 227630, at *16; Hynix, 897 F.Supp.2d at 984. And, as 23 Micron I, 255 F.R.D. at 137; Delaware District Courts Scheduling Order Re -Setting Case 24 for Trial, dated March 16, 2006 (Becher Decl., Exh. L), Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 2d 1038 (N.D. Cal. 2006). 25 26 Order Regarding the Production of Privileged Documents Previously Ordered Produced, dated December 7, 2011 (Becher Decl., Exh. AA); Order Regarding the Production of Documents, 26 dated January 14, 2013 (Becher Decl., Exh. BB); December 9, 2011 Letter from Peter Detre 27 (Becher Decl., Exh. CC). 27 STMicro has asserted the affirmative defenses of patent misuse, waiver, estoppel and 28 acquiescence based on Rambuss conduct at JEDEC. (Becher Decl., Exhs. DD and EE).
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1 discussed above, the parties in all three actions rely on substantially the same evidence of 2 spoliation. The claims in this case are therefore closely related to the claims decided by Judge 3 Robinson in the District of Delaware and Judge Whyte in the Northern District of California. 4 5 6 C. The Issues Raised In This Motion Were Lost As A Result Of A Final Judgment and Rambus Was a Party to the Prior Actions The factors considered in making a finality determination for purposes of collateral

7 estoppel are: (1) whether the decision was not avowedly tentative; (2) whether the parties were 8 fully heard; (3) whether the court supported its decision with a reasoned opinion; and (4) whether 9 the decision was subject to an appeal or was reviewed on appeal. Luben Indus., Inc. v. United 10 States, 707 F.2d 1037, 1040 (9th Cir. 1983); RESTATEMENT (SECOND) OF JUDGMENTS 11 (1982) 13. Here, the decision by Judge Robinson resulted in entry of a final judgment and was 12 not tentative. 28 And Judge Whyte issued a final opinion in Hynix and will ultimately be issuing a 13 judgment.29 Hynix Semiconductor Inc., et al v. Rambus Inc., 897 F.Supp.2d 939, 975(N.D. Cal. 14 Sept. 21, 2012); SK hynix Inc. v. Rambus Inc., 2013 WL 1915865 (N.D. Cal. 2013). The parties 15 were fully heard because there was a trial, post-trial briefing and briefing on remand in both 16 cases.30 While STMicro disagrees with some of Judge Whyte s conclusions, both courts set forth 17 the basis for their decisions in reasoned opinions. Moreover, the decisions are subject to appeal. 18 Rambus has already filed a notice of appeal with the Federal Circuit in Micron.31 19 As to the final requirement for collateral estoppel, it is undisputed that Rambus was a party

20 in the Delaware and Northern District of California actions. Kendall v. Visa U.S.A., Inc., 518 21 F.3d 1042, 1050 (9th Cir. 2008). 22 23 24 D. The Decision of the International Trade Commission in the 753 Investigation Further Supports STMicros Motion The International Trade Commission s decision in Investigation No. 337-TA-753 in which

25 Rambus was a complainant and STMicroelectronics N.V. and STMicroelectronics Inc. were 26 27 28
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28 29 30 31

Judgment in a Civil Case, dated February 25, 2013 from Micron (Becher Decl., Exh. H). Docket in Hynix case (Becher Decl., Exh. Y). Docket in Hynix (Becher Decl., Exh. Y); Docket in Micron (Becher Decl., Exh. K). Notice of Appeal, dated March 28, 2013 (Becher Decl., Exh. I). -14NOTICE OF MOTION AND MOTION OF STMICROELECTRONICS N.V. AND STMICROELECTRONICS INC. FOR PARTIAL SUMMARY JUDGMENT

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1 respondents further supports STMicro s motion. The Commission found Rambus s Barth patents 2 invalid based on the same facts that support STMicro s unclean hands defense here. The ALJ 3 found--and the Commission affirmed--that: (i) Rambus could foresee and was planning litigation 4 as early as July 1998 and had a duty to preserve evidence; (ii) Rambus acted in bad faith and had 5 the burden to show by clear and convincing evidence that the destroyed material was 6 inconsequential; and (iii) Rambus failed to show that its bad faith spoliation did not prejudice 7 respondents. 32 And Rambus has decided to let the unclean hands portion of the decision stand 8 and is not appealing it, even though it has pursued an appeal with respect to other issues.33 Under 9 these circumstances, the findings from the International Trade Commission should be recognized 10 in this case. The Federal Circuit In Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 11 F.3d 1558 (Fed. Cir. 1996), stated: The district court can attribute whatever persuasive value to 12 the prior ITC decision that it considers justified. Id. at 1569. But Texas Instruments also 13 counseled that: District courts are not free to ignore holdings of this court that bear on cases 14 before them. Id. at 1569. The fact that STMicro was a party to this prior action, the 15 Commission reached many of the same findings that are the subject of this motion, and Rambus is 16 not challenging the findings on appeal, all weigh in support of STMicro s motion. 17 II. 18 19 20 21 COLLATERAL ESTOPPEL IS NOT DISCRETIONARY AND ITS APPLICATION WOULD CONSERVE JUDICIAL RESOURCES, AVOID UNNECESSARY EXPENSES, AND MINIMIZE THE POSSIBILITY OF INCONSISTENT DECISIONS The application of collateral estoppel here is not optional. Under Ninth Circuit law, a

22 court should not consider whether it would reach a different conclusion if it were deciding the 23 issue for the first time. United States v. Rubenstein, 971 F.2d 288, 293 (9th Cir. 1992)(holding 24 court s review of the correctness of the prior court s factual determination inconsistent with the 25 application of collateral estoppel); Arkla, Inc. v. United States, 37 F.3d 621, 626 (Fed. Cir. 26 27 Initial Determination, at 257, 266, 312, 314, 316 (Becher Decl., Exh. GG); Commission Opinion dated July 31, 2012 at 51-55 (Becher Decl., Exh. HH). 33 28 May 23, 2013 Nonconfidential Brief for Appellant Rambus Inc. (Becher Decl., Exh. FF).
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1 1994)(The Court that considers the question of collateral estoppel does not examine the reasoning 2 of the court that decided the issue.); Stevenson v. Sears, Roebuck & Co., 713 F.2d 705, 709 (Fed. 3 Cir. 1983) ([A]n inappropriate inquiry is whether the prior finding of invalidity was correct ). 4 Moreover, all of the policy reasons behind the doctrine of issue preclusion support its

5 application in this case. Given the number of courts and administrative bodies that have already 6 considered Rambus s spoliation, applying collateral estoppel will conserve judicial resources and 7 minimize the possibility of inconsistent decisions. Montana, 440 U.S. at 153. It will also protect 8 STMicro from the expense of relitigating issues. Id. at 153. There is no sensible reason to 9 relitigate issues that have already been decided consistently by multiple courts. Indeed, when 10 discussing scheduling of the unclean hands trial, the Court recognized the importance of prior 11 decisions by other judicial officers by stating: And so I think we should all operate on the notion 12 that we can derive some benefit from other judicial officers having developed a record on this 13 point. And were not starting from scratch in front of me. 34 14 15 Conclusion For the above reasons, collateral estoppel is warranted and the Court is required to adopt

16 certain findings regarding Rambus s unclean hands from prior litigations. 17 18 Dated: 19 20 21 22 23 24 25 26 27 28
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June 6, 2013

/s/ Michael J. Bettinger Michael J. Bettinger Stephen M. Everett Curt Holbreich Elaine Y. Chow K&L GATES LLP Four Embarcadero Center, Suite 1200 San Francisco, CA 94111 Tel.: (415) 882-8200 Fax: (415) 882-8220 Sean S. Pak Peter Klivans Q UINN EMANUEL URQUHART & SULLIVAN, LLP 50 California Street, 22nd Floor San Francisco, CA 94111

34

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
04395.52001/5341702.6

Tel.: (415) 875-6600 Fax: (415) 875-6700 Robert J. Becher Q UINN EMANUEL URQUHART & SULLIVAN, LLP 865 S. Figueroa St., 10F Los Angeles, CA 90017 Tel.: (213) 443-3000 Fax: (213) 443-3100 Attorneys for Defendants STMicroelectronics N.V. and STMicroelectronics Inc.

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1 2

E-FILING ATTESTATION I hereby attest that I have on file all holograph signatures for any signatures indicated by a

3 conformed signature (/s/) within this e-filed document. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

04395.52001/5341702.6

/s/ Peter Klivans Peter Klivans

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