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KENNETH NISSLY (SBN 77589) knissly@omm.com SUSAN VAN KEULEN (SBN 136060) svankeulen@omm.com SUSAN ROEDER (SBN 160897) sroeder@omm.com O'MELVENY & MYERS LLP 2765 Sand Hill Road Menlo Park, California 94025 Telephone: (650) 473-2600 Facsimile: (650) 473-2601 KENNETH OROURKE (SBN 120144) korourke@omm.com OMELVENY & MYERS LLP 400 South Hope Street Los Angeles, California 90071-2899 Telephone: (213) 430-6000 Facsimile: (213) 430-6407 [Additional counsel listed on signature page.] Attorneys for Plaintiffs HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH, Plaintiffs, v. RAMBUS INC., Defendant.

Case No. CV 00-20905 RMW SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION Hearing Date: Time: Place: Judge: TBD TBD Courtroom 6, 4th Floor Hon. Ronald M. Whyte

REDACTED PUBLIC VERSION

SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

Case5:00-cv-20905-RMW Document4176 Filed10/30/12 Page2 of 20 TABLE OF CONTENTS Page I. II. INTRODUCTION .............................................................................................................. 1 HYNIXS RELEVANT COMPETITORS PAID RAMBUS EFFECTIVE ROYALTY RATES OF , WHICH SHOULD BE ADJUSTED SIGNIFICANTLY DOWNWARD ............................................................... 4 A. B. Hynixs relevant competitors are Infineon, Samsung, Elpida, and Micron ............ 4 Hynixs relevant competitors paid Rambus overall ERRs ranging from ............................................ 4 1. 2. 3. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -iSK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

1 2 3 4 5 6 7 8 9

Calculation of ERRs.................................................................................... 4 Infineon ....................................................................................................... 5 Samsung ...................................................................................................... 6 Elpida .......................................................................................................... 7 Micron ......................................................................................................... 7

4. 5. C. III.

The ERRs paid by Hynixs competitors should be adjusted significantly downward ................................................................................................................ 8

THE COURT SHOULD NOT ORDER HYNIX TO PAY MORE THAN THE ERRS PAID BY HYNIXS RELEVANT COMPETITORS ............................................. 9 A. B. A RAND rate cannot be calculated based on the current record here and would fail to ensure that Hynix is not placed at a competitive disadvantage ......... 9 All of Rambuss SDR SDRAM and DDR SDRAM licenses from 2000 contain stated rates in excess of RAND rates and have been stricken by the Court...................................................................................................................... 10 ..................................................... 12 D. No grounds exist to adjust upward the ERRs under Rambuss post-2000 licenses .................................................................................................................. 13

C.

IV.

MORE APPROPRIATELY, THE COURT SHOULD NOT AWARD RAMBUS ANY ROYALTIES ........................................................................................................... 14 A. B. C. There is no evidence in the record to support an award of royalties to Rambus.................................................................................................................. 14 A remedy under which Rambus would be awarded royalties would not achieve the Federal Circuits trifold aims for a spoliation sanction .................. 15 The claims-in-suit and related claims have been rejected in reexamination ......... 16

V.

CONCLUSION ................................................................................................................. 16

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CASES Apple, Inc. v. Motorola, Inc., --- F. Supp. 2d ----, No. 1:11-cv-08540, 2012 WL 2376664 (N.D. Ill. June 22, 2012) ........................................................................................................................................ 11 Duhn Oil Tool, Inc. v. Cooper Cameron Corp., 818 F. Supp. 2d 1193 (E.D. Cal. 2011) ................................................................................... 14 Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011) ("Hynix II") ............................................................................. 8 In re Rambus Inc., 2007 FTC LEXIS 214 (F.T.C., Feb. 2, 2007) ......................................................................... 12 Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) (Micron II) ..................................................................... 4, 15 Microsoft Corp. v. Motorola, Inc., --- F.3d ----, No. 12-35352, 2012 WL 4477215 (9th Cir. Sept. 28, 2012) .............................. 11 Rambus Inc. v. Fed. Trade Commn, 522 F.3d 456 (D.C. Cir. 2008) ................................................................................................. 12 Rambus Inc. v. Hynix Semiconductor Inc., 629 F. Supp. 2d 979 (N.D. Cal. 2009) ............................................................................... 1, 5, 6

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I.

INTRODUCTION This Courts now-vacated 2009 judgment ordered Hynix1 to pay royalties to Rambus at

rates

than what Hynixs competitors have paid. This Court has since

found that Rambus in bad faith or willfully destroyed a huge number of documents on multiple occasions in order to dispose of potentially harmful documents relevant to Hynixs defense of Rambuss patent infringement claims. Findings of Fact and Conclusions of Law on Spoliation, entered Sept. 21, 2012 (D.E. 4160) (Sept. 21 Order), p. 57:10-15. As directed by the Court in its September 21, 2012 order, Hynix submits this brief and the accompanying declarations to address the royalty rates obtained by Infineon, Samsung, and any other relevant competitors of Hynix so that the Court can identify a royalty rate that will ensure that Rambuss misconduct does not place Hynix at a competitive disadvantage. Id., p. 65:10-18.

Of those licensee companies, Infineon is the most relevant point of comparison because Infineon is the only Rambus licensee that obtained a court determination that Rambus had engaged in spoliation, as Hynix has now done. In addition, this Court previously ruled that Rambus should have offered Samsung, another Hynix competitor, the Infineon rate to protect Samsung from competitive disadvantage, as intended by the Most Favored Licensee provision in Samsungs 2000 license with Rambus. Rambus Inc. v. Hynix Semiconductor Inc., 629 F. Supp. 2d 979, 1011, 1013 (N.D. Cal. 2009). The Court has now articulated the same goal of protection against competitive disadvantage with respect to Hynix (Sept. 21 Order, p. 65:14-15), and Hynix is likewise entitled to the Infineon rate. To ensure competitive parity, however, the Infineon rate must be adjusted significantly downward

On October 5, 2012, the parties formerly collectively referred to as Hynix filed an Administrative Motion informing the Court of changes to the those parties names. As of the date of filing this motion, the Administrative Motion had not been granted. For purposes of this motion, these parties continue to be referred to as Hynix.
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Calculating the ERR paid to Rambus by each of Hynixs relevant competitors (Infineon, Samsung, Elpida, and Micron) is straightforward:

The correct royalty base of Hynixs sales of SDR and DDR is established. The parties have stipulated as to the relevant sales figure through January 31, 2009, and Hynix has previously provided Rambus with sales data for the remainder of the Damages Period. For the entire Damages Period, the relevant Hynix sales total approximately $

Applying the ERRs of Hynixs four relevant competitors to the Hynix royalty base yields total royalties as follows: Overall ERR Total Hynix Royalties (ERR x Hynix sales base) rounded to nearest 0.1M

Competitor Micron Infineon Samsung Elpida Weighted average of Infineon, Samsung, and Elpida ERRs

As with the Infineon rate, however, the ERRs paid by Hynixs competitors must be adjusted significantly downward

As used in this brief, SDR or SDR SDRAM refer to Single Data Rate Synchronous DRAM devices as defined in the now-vacated March 2009 judgment, and DDR or DDR SDRAM refer to Double Data Rate Synchronous DRAM devices as that term is defined in the vacated judgment. See [Vacated] Final Judgment, entered March 10, 2009 (D.E. 3911), at 7(a) and (b). -2SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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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 Such an insignificant adjustment to the previous royalty award would also be an wholly inadequate sanction for Rambuss spoliation, which this Court has now held to be bad faith and prejudicial under the applicable legal standards. See Sept. 21 Order, p. 64:24. -3SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

Rambus surely recognizes that the vacated judgment of approximately $400 million was

Nonetheless, immediately following the Courts September 21 Order, Rambus issued a press release proclaiming that the order was a positive result and that, notwithstanding the spoliation finding, Rambus would still be able to capture from Hynix what weve been seeking all along. Declaration of Susan Roeder submitted herewith (Roeder Decl.), 2 and Ex. A thereto. In other public discussions regarding the September 21 Order, Rambus executives went so far as to suggest that although the Courts recalculation of royalty rates could possibly lead to a different award, Rambus may argue that the rates incorporated in the vacated judgment are themselves the reasonable royalty rate. Id., 2 and Ex. B thereto at pp. 2 and 5. This suggests, first, that Rambus may argue for a minimal or no adjustment to the amount previously awarded, and second, that Rambus seeks to avoid any sanction for its spoliation. Any such argument must fail. The previous award was based on SDR and DDR licenses that Rambus entered into in 2000, which included stated rates of 3.5 to 4.25% for DDR SDRAM and 0.75 to 1.0% for SDR SDRAM. As a matter of law, those licenses do not reflect reasonable and non-discriminatory (RAND) rates because they were not signed until years after JEDEC incorporated Rambuss claimed inventions into the industry standards and after the industry was locked into using those features. RAND rates, by contrast, would be have been negotiated before JEDEC incorporated Rambuss claimed features into the industry standards. Because the 2000 licenses are at higher-than-RAND rates, all evidence relating to those licenses has been stricken from the record. See Sept. 21 Order, 65:11-12.

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3

Indeed, Hynix maintains that the award of any royalties to Rambus would be improper, and that a terminating sanction is the only appropriate remedy for Rambuss spoliation. The Courts contemplated sanction, which is premised on a faulty assumption regarding the validity of Rambuss patents, would not achieve the trifold aims of a spoliation sanction. See Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1329 (Fed. Cir. 2011) (Micron II). By submitting this brief as directed by the Court, Hynix does not concede that the sanction contemplated by the Courts September 21 Order is proper, that a royalty rate may be determined by the Court instead of damages being tried to a jury, that there is any evidentiary support in the record for an award of royalties to Rambus, or that the Courts rulings in connection with the unclean hands and spoliation issues were correct. Hynix respectfully reserves all rights to challenge the Courts rulings. II. HYNIXS RELEVANT COMPETITORS PAID RAMBUS EFFECTIVE ROYALTY RATES OF , WHICH SHOULD BE ADJUSTED SIGNIFICANTLY DOWNWARD A. Hynixs relevant competitors are Infineon, Samsung, Elpida, and Micron

The Court held that Rambuss spoliation should preclude it from entitlement to a royalty that places Hynix at a competitive disadvantage and ordered the parties to address specifically the royalty rates obtained by Infineon, Samsung, and any other relevant competitors of Hynix. Id. at 65:14-18. In addition to the competitors identified by the Court (Infineon and Samsung), Elpida and Micron are also relevant competitors of Hynix.

Hynixs relevant competitors paid Rambus overall ERRs ranging from 1. Calculation of ERRs

-4-

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Thus, as this Court held in a related case between Rambus and Samsung, ERRs facilitate comparisons between licenses with different royalty structures. Rambus Inc. v. Hynix Semiconductor Inc., 629 F. Supp. 2d at 989 (When comparing licensing terms, it is common in a wide variety of industries, including with respect to patent licensing, to compare a running royalty with a periodic, lumpsum royalty by calculating an effective royalty rate or by simply comparing the lump sum amounts due on a quarterly basis for various types of royalty structures.).

Any award of royalties should be at rates significantly lower than these competitors ERRs, for the reasons discussed in Section II.C., infra, but in no event should be higher than these ERRs.

2.

Infineon

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5

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The Infineon license is the most relevant point of comparison for the Court in identifying a royalty that will not place[] Hynix at a competitive disadvantage. Sept. 21 Order, p. 65:1415. Infineon is the only Rambus licensee that obtained a court ruling that Rambus had engaged in spoliation, as Hynix has now done. Also, this Court has previously held that Rambus breached a most favored licensee provision in its 2000 license with Samsung by not offering Samsung the lower rates paid by Infineon. Rambus Inc. v. Hynix Semiconductor Inc., 629 F. Supp. 2d at 1011, 1013. This Court found that the most favored licensee provision in the Samsung license was intended to protect Samsung from competitive disadvantage, which is the same goal articulated by the Court with respect to the remedy in this case. Compare id. at 1011 with Sept. 21 Order at 65:14-15. Accordingly, the Infineon ERR is the maximum the Court should award in order to ensure that Hynix does not suffer a competitive disadvantage. 3. Samsung

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7 6

4.

Elpida

5.

Micron

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On remand to the Delaware district court, Micron continues to advocate for a terminating sanction for Rambuss spoliation. See Roeder Decl., 4 and Ex. C thereto. As the Federal Circuit held and this Court recognized, Rambus has waived any argument that two cases should come out differently (September 21 Order at 47:23-24; see also id. at 2-3 n.2 (citing Hynix II, 645 F.3d 1336, 1342 n.1) (Fed. Cir. 2011)). Hynix reserves all rights to raise the issue of the effect of any subsequent ruling in the Micron case on Rambuss claims against Hynix. C. The ERRs paid by Hynixs competitors should be adjusted significantly downward

Accordingly, the ERRs paid by Hynixs competitors are more than Rambus should recover from Hynix. In order to achieve the Courts goal of ensuring that Hynix is not placed at a competitive disadvantage (Sept. 21 Order, p. 65:14-15), the Court should exercise its discretion to adjust the ERRs paid by Hynixs competitors significantly downward -8SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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III.

THE COURT SHOULD NOT ORDER HYNIX TO PAY MORE THAN THE ERRS PAID BY HYNIXS RELEVANT COMPETITORS A. A RAND rate cannot be calculated based on the current record here and would fail to ensure that Hynix is not placed at a competitive disadvantage

Rambus may seize on language in the September 21 Order regarding a reasonable, nondiscriminatory royalty rate (see, e.g., Sept. 21 Order, p. 65:16) as an opportunity to argue about what royalty rate Rambus and other JEDEC members would have agreed upon had Rambus made the necessary patent disclosures before its claimed features were incorporated into JEDEC standards.8 But as discussed in the following section, although it is clear that the royalty rates that served as the basis for the Courts previous award to Rambus are far in excess of RAND rates, for Rambus to carry its burden of pinpointing a hypothetical RAND rate is a complicated matter and would require evidence that is not in the record in this proceeding. And to engage in such an analysis, the Court would have to take into account that JEDEC likely would have turned to noninfringing alternatives if Rambus had made the requisite disclosures, thus precluding any recovery of royalties by Rambus. More fundamentally, retroactive calculation of a hypothetical RAND rate does not answer the Courts question, which focuses on the royalty rates obtained by Infineon, Samsung, and any other relevant competitors of Hynix to ensure that Rambus is precluded from entitlement to a royalty that places Hynix at a competitive disadvantage. Sept. 21 Order, p. 65:14-18. Applying the Courts ruling that it should not order a royalty rate more than Hynixs competitors have paid, the Court must look at the rates Hynixs competitors actually paid, as discussed in Section II.B., supra, rather than what RAND rates might have been in a but for world. There is simply no need to engage in a hypothetical analysis because the parties know exactly what rates Hynixs competitors paid and can answer the Courts question with certainty.

Although Hynix addresses several of Rambuss anticipated arguments in this brief, Hynix reserves the right to seek leave to file a reply brief depending on the contents of Rambuss forthcoming brief. -9SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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B.

All of Rambuss SDR SDRAM and DDR SDRAM licenses from 2000 contain stated rates in excess of RAND rates and have been stricken by the Court

To achieve its publicly stated goal of obtaining close to the original amount awarded, Rambus may argue that the Court should apply the royalty rates stated in the group

of licenses Rambus entered into in 2000which served as the basis for the original award in this case The royalty evidence

that Rambus introduced at the patent trial consisted of a chart summarizing seven Rambus SDR and DDR licenses entered into in 2000: the Toshiba, Hitachi, Oki, NEC, Samsung, Elpida, and Mitsubishi licenses. See Patent Trial Ex. 5661. That chart was accompanied by testimony by Rambuss economist expert, David Teece. But at the time in 2000 when Rambus entered into these licenses, JEDEC had adopted standards for SDR and DDR and was finalizing the standard for DDR2, all of which incorporated features over which Rambus later claimed patent coverage. See Order Granting in Part and Denying in Part Rambuss Motion for Post-Verdict Relief, dated February 23, 2009 -- public redacted version (D.E. 3900) (Post-Verdict Relief Order) at 31:27-32:16; . As a consequence of its claiming patents on features incorporated into the industry standards, Rambus had market power as of 2000. See generally Conduct Trial Special Verdict Form dated March 26, 2008 (D.E. 3613) at p. 2 question 3; By 2000, Hynix was already producing SDR and DDR and designing its DDR2 part. See PostVerdict Relief Order at p. 33 n.19. Thus, as this Court has held, Hynix and other industry participants were locked into using the accused features at the time Rambus entered into licenses with various manufacturers in 2000: [B]y the time Hynix became aware of Rambuss asserted patents, Rambuss technologies were entrenched in the industry standard DRAM interface. The lock-in testimony persuasively demonstrated that changing to a non-infringing technology would have cost the electronics industry hundreds of millions of dollars and many years for no reason but to avoid infringement of claims that had no yet been adjudicated valid and enforceable. The lock-in resulted in large part because Rambus did not disclose and, in fact, did not obtain the patents-in-suit until its efforts to establish RDRAM as the industry standard faltered and the JEDEC standards had enjoyed nearly five years of success. The lock-in testimony also established that no amount of unilateral effort by Hynix would have allowed it to swap out of its DRAMs Rambuss technologies for non-infringing alternatives. - 10 SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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Post-Verdict Relief Order, 45:10-19.

The proper method of computing a FRAND9 royalty starts with what the cost to the licensee would have been of obtaining, just before the patented invention was declared essential to compliance with the industry standard, a license for the function performed by the patent. Apple, Inc. v. Motorola, Inc., --- F. Supp. 2d ----, No. 1:11-cv-08540, 2012 WL 2376664, at *11 (N.D. Ill. June 22, 2012) (Posner, J., sitting by designation). RAND rates are meant to mitigate the threat of patent holdup. Microsoft Corp. v. Motorola, Inc., --- F.3d ----, No. 12-35352, 2012 WL 4477215, at *1 (9th Cir. Sept. 28, 2012). [O]nce a standard has gained such widespread acceptance that compliance is effectively required to compete in a particular market, anyone holding a standardessential patent could extract unreasonably high royalties from suppliers of standard-complaint products and services. This problem is a form of patent holdup. Id. (internal citation omitted) (emphasis added). The purpose of RAND requirements is to confine the patentees royalty demand to the value conferred by the patent itself as distinct from the additional valuethe holdup valueconferred by the patents being designated as standard-essential. Apple, Inc., 2012 WL 2376664, at *11. In other words, RAND rates are those rates that would have been obtained just before the patented inventions were incorporated into the industry standard (Apple, Inc., 2012 WL 2376664 at *11), whereas the jury here was told to calculate a reasonable royalty based on a hypothetical negotiation at a different point in timewhen sales had begun in early 2000. See Patent Trial Jury Instruction No. 20. (D.E. 2050). Rambus took the position that the 2000 licenses represented the terms that would have been negotiated in a hypothetical negotiation in early 2000.

The term FRAND (fair, reasonable, and non-discriminatory) is legally equivalent to the term RAND. Microsoft Corp., 2012 WL 4477215, at *15 n.2. - 11 SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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The conclusion that the rates in the 2000 licenses are not RAND is reinforced by the results of the Federal Trade Commissions action against Rambus. The FTC extensively analyzed the issue of what royalty rates would have been negotiated under the constraint of a RAND commitment and concluded, based on the record in that case, that maximum royalty rates of 0.5% for DDR and 0.25% for SDR were reasonable and appropriate. In re Rambus Inc., 2007 FTC LEXIS 214, at *47, *62 (F.T.C., Feb. 2, 2007) (revd on other grounds in Rambus Inc. v. Fed. Trade Commn, 522 F.3d 456 (D.C. Cir. 2008)).

Because the licenses Rambus granted in 2000 contain unreasonably high royalty rates due to the locked-in condition of the market at that time, they do not reflect and are inconsistent with RAND rates. Accordingly, evidence regarding the 2000 licenses, including the testimony of Dr. Teece on royalties, has been stricken from the record. See Sept. 21 Order, 65:11-12. Rambus cannot simply resubmit the same evidence now; to permit Rambus to do so would render the Courts sanction for Rambuss spoliation meaningless.

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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 A U.S.-only D. No grounds exist to adjust upward the ERRs under Rambuss post-2000 licenses

The Court should reject any argument by Rambus that the ERRs actually paid by Hynixs competitors should be adjusted upward.

sales base was used to calculate the prior vacated judgment and ongoing royalty payments, which is appropriate because this Court cannot award damages for infringement that takes place outside the U.S. Rambus should not be permitted to do an end-run around this established principle by artificially manipulating the ERR in an effort to inflate any damages award in this case. There is also no justification for increasing the ERRs paid by Hynixs competitors to attempt to account for those competitors various litigation postures. For example, the fact that Judge Payne stated that he intended to dismiss Rambuss case against Infineon as a sanction for spoliation, whereas this Court has refused to dismiss the case, does not justify imposing a rate on Hynix that is higher than the Infineon ERR. Hynix has obtained a Federal Circuit ruling that Rambus engaged in spoliation, which this Court has held to be preclusive on the issue (see Sept. 21 Order, 48:23-49:1). Infineon, by contrast, had only Judge Paynes announcement from the bench of his intended ruling, which was never memorialized in a written order and was still - 13 SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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subject to appeal.

IV.

MORE APPROPRIATELY, THE COURT SHOULD NOT AWARD RAMBUS ANY ROYALTIES Hynix maintains that a terminating sanction is the only appropriate sanction for Rambuss

spoliation for the reasons discussed in Hynixs briefs on remand, which are incorporated by this reference and are not repeated here. But as discussed below, there are several reasons why the specific sanction contemplated by the Court, under which Hynix would be required to pay royalties to Rambus, would be particularly inappropriate and unjust. A. There is no evidence in the record to support an award of royalties to Rambus

All of the evidence Rambus introduced on the issue of royalties has been stricken (see Section III.B., supra), and therefore Rambus cannot carry its burden of proving damages. See Remittitur Order, p. 2:14 (The burden of proving damages rests with Rambus.). Rambus made the strategic decision at trial to rely only on the 2000 licenses, and successfully objected to the admission of evidence of post-2000 events relating to licensing, such as the Infineon license. Now that all of the royalty evidence upon which Rambus relied has been stricken, there is no basis for any award of damages to Rambus. Assessing a royalty against Hynix with no record evidence amounts to denying Hynix its right to a jury trial on damages. See Duhn Oil Tool, Inc. v. Cooper Cameron Corp., 818 F. Supp. 2d 1193, 1204 (E.D. Cal. 2011). Hynix respectfully submits that to do so would not be a proper exercise of the Courts discretion to fashion a remedy for spoliation. - 14 SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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B.

A remedy under which Rambus would be awarded royalties would not achieve the Federal Circuits trifold aims for a spoliation sanction royalties would not serve what the

Awarding Rambus

Federal Circuit has held are the trifold aims of a sanction for spoliation: (1) deterring future spoliation of evidence; (2) protecting [Hynixs] interests; and (3) remedying the prejudice [Hynix] suffered as a result of [Rambuss] actions. Micron II, 645 F.3d at 1329. Awarding Rambus any royaltieseven an award that purports to be limited to competitively neutral RAND rateswould not serve as a deterrent because it would put Rambus in the same position it would have been in had it made full disclosure to JEDEC. Rambus would suffer no consequences for attempting to conceal information from JEDEC. This would incentivize other participants in standards setting organizations to evade their disclosure obligations and to cover up their misconduct: if they succeed, they stand to gain a windfall from holding up those who practice the standard, and if they are caught, they are no worse off. Not only would the contemplated sanction fail to deter others, even Rambus is unrepentant, as evidenced by the fact that it claimed victory after the Court issued its September 21 Order, proclaiming that the order was a positive result because it would allow Rambus to collect what weve been seeking all along. Roeder Decl., 2 and Ex. A thereto. Moreover, an award of royalties would also fail to achieve the remedial aims of a spoliation sanction. In its September 21 Order, this Court concluded that the JEDEC-related documents that Rambus spoliated could have affected the Federal Circuits analysis of the JEDEC disclosure duty in Infineon (which had a significant impact on the course of the present litigation) and could have been relevant and given support to Hynixs equitable claims and defenses. Sept. 21 Order, 61:16-19, 61:22-23. Had Hynix prevailed on any of its equitable claims and defenseswhich included theories of equitable estoppel, waiver, unfair competition, and (non-spoliation based) unclean hands (see Phase III (Conduct Trial) Findings of Fact and Conclusions of Law, filed March 3, 2009 (D.E. 3904), pp. 45-54)Rambus could have been precluded from recovering any royalties from Hynix. Thus the punishment of limiting Rambuss recovery does not fit Rambuss spoliation crime because it ignores the possibility - 15 SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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that Hynix could have won the case had Rambus not spoliated evidence. Respectfully, by awarding royalties to Rambus, the Courts order implicitly approves of the outcome of trials tainted by Rambuss spoliation. C. The claims-in-suit and related claims have been rejected in reexamination

In declining to impose terminating sanctions, the Court repeatedly cited the purported validity of the patents-in-suit. Sept. 21 Order, 64:22-23 (the court is reluctant to impose a dispositive sanction given that Rambuss patents otherwise are valid ) and 65:13 (award of royalty recognizes that Rambuss patents have been determined to be valid). But as explained in three motions recently filed by Hynix, rulings in reexamination proceedings that have taken place since the 2006 patent trial have established the invalidity of the claims-in-suit. See Hynixs Motion to Supplement its Reply, Motion for Summary Judgment, and Motion for New Trial or for Stay, filed October 17, 2012 (D.E. 4164-4166). In light of the rejection of Rambuss patents in reexamination, the Court cannot premise its denial of a terminating sanction on the patent jurys finding in 2006 that Hynix had not carried its burden of proving invalidity. V. CONCLUSION The Court should impose terminating sanctions. If, however, the Court instead sanctions Rambuss spoliation by awarding Rambus reduced royalties, those royalties should be calculated using Infineon rate, with a significant downward adjustment to reflect the additional benefits that Infineon obtained in exchange for those royalty payments. In no event should Rambus be awarded royalties at greater than the average ERR paid by Hynixs relevant competitors. Dated: October 30, 2012 By: /s/ Kenneth L. Nissly Kenneth L. Nissly KENNETH L. NISSLY SUSAN van KEULEN SUSAN ROEDER OMELVENY & MYERS LLP KENNETH R. OROURKE OMELVENY & MYERS LLP THEODORE G. BROWN III KILPATRICK TOWNSEND & STOCKTON LLP - 16 SK HYNIXS BRIEF REGARDING SANCTIONS FOR RAMBUSS SPOLIATION CV 00-20905 RMW

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Attorneys for Plaintiffs HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH

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