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KENNETH L. 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, CA 94025 Telephone: (650) 473-2600 Facsimile: (650) 473-2601 KENNETH R. O’ROURKE (SBN 120144) korourke@omm.com O’MELVENY & MYERS LLP 400 South Hope Street Los Angeles, CA 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 14 FOR THE NORTHERN DISTRICT OF CALIFORNIA 15 SAN JOSE DIVISION 16 17 18 19 Plaintiffs, 20 21 RAMBUS INC., 22 23 24 25 26 27 28
OMM_US:70111447.1 HYNIX’S RESPONSE TO RAMBUS’S BRIEF ON REMAND PROCEEDINGS CASE NO. C00-20905

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

Case No. C-00-20905 RMW HYNIX’S RESPONSE TO RAMBUS’S BRIEF ON REMAND PROCEEDINGS CMC Date: October 21, 2011 Time: 10:30 a.m. Ctrm: 6, 4th Floor Judge: Hon. Ronald M. Whyte

v.

Defendant.

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TABLE OF CONTENTS Page I. II. INTRODUCTION .............................................................................................................. 1 RE-ENTRY OF JUDGMENT AS REQUESTED BY RAMBUS WOULD VIOLATE THE LETTER AND SPIRIT OF THE FEDERAL CIRCUIT’S MANDATE......................................................................................................................... 2 A. The letter of the Federal Circuit’s mandate requires this Court to reevaluate collateral estoppel, bad faith, prejudice, and appropriate sanction under the correct legal standards............................................................................................. 2 The spirit of the Federal Circuit’s mandate would be violated by re-entry of judgment in Rambus’ s favor .................................................................................. 3 RAMBUS IS NOT ENTITLED TO JUDGMENT UNDER THE CORRECT LEGAL STANDARDS....................................................................................................... 4 A. Collateral estoppel remains an open issue .............................................................. 5 B. C. D. Rambus’s spoliation has been established, with the extent of that spoliation yet to be determined ................................................................................................ 6 On remand, the Court must evaluate whether Rambus acted in bad faith in the context of its proven spoliation ......................................................................... 6 The Court employed the wrong legal standard on prejudice and must reevaluate that issue on remand .............................................................................. 8 1. Under Micron II, Rambus must demonstrate that all documents destroyed were either redundant or irrelevant............................................. 8 2. Rambus cannot carry its heavy burden of showing there was no prejudice because Rambus kept no records of and does not know what was destroyed ..................................................................................... 8 a. The Federal Circuit has found that relevant documents were destroyed ......................................................................................... 9 Rambus cannot demonstrate that all relevant materials were destroyed before Rambus’s 1999 shred day ................................... 9 B.

III.

3. E.

If Hynix is required to make plausible, concrete suggestions of what was destroyed, it will do so .............................................................. 10

IV. V.

The Court must determine what sanction is appropriate for Rambus’s spoliation............................................................................................................... 12 THE COURT SHOULD ORDER RAMBUS TO PRODUCE MATERIALS FROM OTHER ACTIONS INVOLVING RAMBUS’S SPOLIATION ......................... 13 THE COURT SHOULD AWAIT THE DELAWARE COURT’S DECISION ON REMAND AND THEN EVALUATE ITS EFFECT ON THIS CASE ........................... 14

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TABLE OF AUTHORITIES Page CASES Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369 (Fed. Cir. 2001)................................................................................................ 5 Exxon Chem. Patents, Inc. v. Lubrizol Corp., 137 F.3d 1475 (Fed. Cir. 1998)............................................................................................. 2, 3 Hoffman v. Tonnemacher, No. CIV F 04-5714 AUW(DLB), 2006 WL 3457201 (E.D. Cal. Nov. 30, 2006) ....................................................................................................................................... 13 Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011)....................................................................................... passim In re Sealed Case, 754 F.2d 395 (D.C. Cir. 1985) .................................................................................................. 5 Keystone Driller Co. v. Gen’l Excavator Co., 290 U.S. 240 (1933) .................................................................................................................. 5 Laitram Corp. v. NEC Corp., 115 F.3d 947 (Fed. Cir. 1997)............................................................................................... 2, 6 Leon v. IDX Sys. Corp., 464 F.3d 951, 960 (9th Cir. 2006)............................................................ 8 Markman v. Westview Instruments, 517 U.S. 370 (1996) ................................................................................................................ 15 Mendenhall v. Barber-Green Co., 26 F.3d 1573 (Fed. Cir. 1994)................................................................................................. 15 Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011)........................................................................................ passim Nguyen v. United States, 792 F.2d 1500 (9th Cir. 1986)................................................................................................. 12 Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945) .................................................................................................................. 5 Quern v. Jordan, 440 U.S. 332 (1979) .................................................................................................................. 2 Republic Molding, Inc. v. B.W. Photo Utils., 319 F.2d 347 (9th Cir. 1963)..................................................................................................... 5 Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76 (3d Cir. 1994)......................................................................................................... 7

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TABLE OF AUTHORITIES (continued) Page Smiddy v. Varney, 803 F.2d 1469 (9th Cir. 1986).................................................................................................. 4 Therasense, Inc. v. Becton, Dickinson & Co., Nos. 2008-1512-14, 2008-1595, 20011 U.S. App. LEXIS 10590 (Fed. Cir. May 25, 2011) ......................................................................................................................... 11 United States v. Paul, 561 F.3d 970 (9th Cir. 2009)............................................................................................. 2, 3, 4 Vendo Co. v. Lektro-Vend Corp., 434 U.S. 425 (1978) .................................................................................................................. 2 Vodusek v. Bayliner Marine Corp., 71 F.3d 148 (4th Cir. 1995)....................................................................................................... 8

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I.

INTRODUCTION The Federal Circuit vacated all of this Court’s Findings of Fact and Conclusions of Law

regarding Rambus’s spoliation. Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1341, 1347 (Fed. Cir. 2011) (“Hynix II”). The Federal Circuit then remanded to this Court with express instructions to consider issues including when Rambus’s duty to preserve documents began and what sanction is appropriate. Id. at 1341. The Federal Circuit specifically stated that the questions of bad faith and prejudice, as well as the collateral estoppel effect of the companion Micron II decision, all remain for consideration on remand. Id. at 1347 n.2. Rambus ignores the Federal Circuit’s directions and, relying on now-vacated findings and discredited legal standards, urges this Court to simply re-enter judgment in Rambus’s favor, without revisiting the questions of bad faith, prejudice, or appropriate sanction. This marks a change in Rambus’s position since the September 2, 2011 Case Management Conference, at which Rambus agreed that, if spoliation occurred, the Court would need to decide on remand whether Rambus was in bad faith and whether Hynix was prejudiced. D.E. 4051 (9/2/11 Case Management Conference Tr.) at 18:13-16 (Rambus counsel stating that Court’s list of issues “is consistent with I think the issues we need to address”) and 28:19-20 (Rambus counsel stating, “That’s everything on my list, Your Honor.”) In its brief, Rambus does not even mention the issue of collateral estoppel, which the Federal Circuit expressly left open. Rambus’s new arguments invite this Court to commit new error. If this Court submits to Rambus’s request to re-enter judgment without further proceedings, the Court will violate both the letter and spirit of the Federal Circuit’s mandate. Rather than embarking on this perilous course, the Court should do as Hynix suggests: wait for the Delaware district court to conclude its remand proceedings within the next few months, then determine the collateral estoppel effect of the Micron appellate and remand decisions on this case. Rambus is in no position to object to proceeding in this way because it has already agreed that this case and the Micron case should be resolved consistently (Hynix II, 645 F.3d at 1347), and Rambus has offered the Court no other option. Hynix’s proposal offers the best, most judicially efficient way to resolve the issues on remand.
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II.

RE-ENTRY OF JUDGMENT AS REQUESTED BY RAMBUS WOULD VIOLATE THE LETTER AND SPIRIT OF THE FEDERAL CIRCUIT’S MANDATE The scope of issues to be determined on remand is defined by the mandate of the appellate

court. “[T]he district court’s actions on remand should not be inconsistent with either the letter or the spirit of the mandate.” Laitram Corp. v. NEC Corp., 115 F.3d 947, 951 (Fed. Cir. 1997) (citing Quern v. Jordan, 440 U.S. 332, 347 n.18 (1979)). The only issues removed from the district court’s consideration on remand are those that were decided by the appellate court either expressly or by necessary implication. Laitram, 115 F.3d at 951. The meaning of the mandate can be ascertained by consulting the appellate court’s opinion accompanying the mandate. Id. at 952; Exxon Chem. Patents, Inc. v. Lubrizol Corp., 137 F.3d 1475, 1483 (Fed. Cir. 1998).1 Rambus repeatedly asserts that the Federal Circuit left this Court’s conclusions on bad faith and prejudice “unscathed” or “undisturbed.” See, e.g., Rambus Opening Brief (“RB”) at 1:9, 9:13, 15:1-2, 18:3-4. This is nonsense. The Federal Circuit “disturbed” this Court’s conclusions by vacating all of this Court’s Findings of Fact and Conclusions of Law from the Phase I spoliation trial. Hynix II, 645 F.3d at 1341, 1347. This fact -- which Rambus itself acknowledges (see, e.g., RB at 4:15-16, 8:16-17, 9:8-9) -- renders irrelevant Rambus’s five-page recitation of this Court’s vacated findings and conclusions. See RB at pp. 4-8. Because no findings on the spoliation issues in this case exist at present, there is no basis upon which the Court can now re-enter judgment in favor of Rambus. A. THE LETTER OF THE FEDERAL CIRCUIT’S MANDATE REQUIRES THIS COURT TO REEVALUATE COLLATERAL ESTOPPEL, BAD FAITH, PREJUDICE, AND APPROPRIATE SANCTION UNDER THE CORRECT LEGAL STANDARDS

Rambus attempts to create an impression that the Federal Circuit affirmed this Court’s rulings on bad faith and prejudice, but the Federal Circuit did no such thing. The Federal Circuit expressly stated that issues including “whether [the] Micron II decision should be given any
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The rule of mandate may be enforced through mandamus or by way of a second appeal. See Vendo Co. v. Lektro-Vend Corp., 434 U.S. 425, 427-28 (1978) (district court may be compelled to give full effect to mandate by writ of mandamus); United States v. Paul, 561 F.3d 970, 973 (9th Cir. 2009) (vacating district court’s decision on remand where it “flouts” appellate court’s prior mandate). OMM_US:70111447.1 -2HYNIX’S RESPONSE TO RAMBUS’S BRIEF ON REMAND PROCEEDINGS CASE NO. C00-20905

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preclusive effect” and this Court’s “determinations on prejudice and good faith” “remain for consideration . . . on remand.” Hynix II, 645 F.3d at 1347 n.2. Where an appellate court “expresses no view” on a question under review, “it is clear that [the appellate] court’s mandate was not intended to address the question.” Exxon, 137 F.3d at 1478. “Under the general rule that an appellate mandate governs only that which was actually decided, the district court [is] therefore free to consider” the unresolved issue. Id. Elsewhere, Hynix II makes clear that this Court should revisit the bad faith and prejudice issues in order to carry out the Federal Circuit’s mandate. The Federal Circuit remanded “for the district court to determine when Rambus’s duty to preserve documents began under the framework set forth in Micron II, and the appropriate sanction, if any.” Hynix II, 645 F.3d at 1341. Under the Micron II framework, a determination of what sanction is appropriate under the Court’s inherent powers must consider “the degree of bad faith and prejudice.” Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1328-29 (Fed. Cir. 2011) (“Micron II”). Accordingly, for this Court to carry out the Federal Circuit’s mandate to “determine . . . what sanction is appropriate,” this Court must necessarily consider the issues of bad faith and prejudice anew. See generally United States v. Paul, 561 F.3d at 973, 975 (district court on remand is “required to follow the principles announced” in prior decision that directed district court to give “appropriate consideration” to various factors). B. THE SPIRIT OF THE FEDERAL CIRCUIT’S MANDATE WOULD BE VIOLATED BY RE-ENTRY OF JUDGMENT IN RAMBUS’ S FAVOR

Just as the letter of the Federal Circuit’s decisions is clear that this Court must re-evaluate the collateral estoppel, bad faith, prejudice, and appropriate sanction issues, the spirit of those decisions also dictates that this Court’s prior conclusions on those issues cannot stand. The Federal Circuit stated that “key items” in the record support a finding of bad faith, that the element of bad faith is largely determinative of the element of prejudice, and that “the record evidence may indeed justify a dispositive sanction.” Micron II, 645 F.3d at 1326-29. No fair reading of the Federal Circuit’s opinions supports re-entry of judgment in Rambus’s favor. Had the Federal Circuit agreed with this Court’s rulings on bad faith and prejudice, there
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would have been no need to remand the case. See generally Smiddy v. Varney, 803 F.2d 1469, 1472-73 (9th Cir. 1986). Indeed, Rambus argued on appeal that, independent of this Court’s determination regarding when the duty to preserve documents attached, Hynix’s unclean hands defense was “foreclosed by [this] district court’s determinations that Rambus did not act in bad faith when it implemented the document retention policy, and that Hynix suffered no material prejudice.” Rambus’s Brief on Appeal at 28. The Federal Circuit rejected this argument, however, and instead expressly stated that the issues of bad faith and prejudice remain for consideration on remand. Hynix II, 645 F.3d at 1347 n.2. Therefore, unless these issues are resolved by collateral estoppel, not only can this Court revisit the issues of bad faith, prejudice, and appropriate sanction on remand, it must do so in order to carry out the Federal Circuit’s mandate. III. RAMBUS IS NOT ENTITLED TO JUDGMENT UNDER THE CORRECT LEGAL STANDARDS If a district court reaches a nearly identical result on remand by relying on reasoning and justifications that the appellate court has previously declared insufficient, its decision may be vacated on a second appeal. See United States v. Paul, 561 F.3d at 973. In United States v. Paul, the Ninth Circuit had previously vacated and remanded a criminal case for resentencing after determining that the district court had not adequately taken into consideration numerous factors that demonstrated that a 16-month sentence was unreasonably high. Id. at 972. On remand, the district court reduced the sentence to 15 months. Id. at 973. On a second appeal, the Ninth Circuit vacated the reduced sentence and remanded to a different judge. The Ninth Circuit held that the district court had violated “both the spirit and express instructions” of the Ninth Circuit’s mandate because the district court on remand “primarily relied upon the reasoning and justifications that [the Ninth Circuit] declared insufficient in [its] prior disposition.” Id. The Ninth Circuit noted that, “[w]hile the district judge on remand explained some of the reasoning behind his resentencing . . . he clearly did not put out of his mind his previously expressed view.” Id. at 975. Rambus invites this Court to make the same mistake by suggesting that the Court re-enter
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judgment in Rambus’s favor based on its previous findings regarding bad faith and prejudice. Preliminarily, it should be noted that Micron II discusses bad faith in the context of “imposition of dispositive sanctions for spoliation under the district court’s inherent power.” Micron II, 645 F.3d at 1327.2 If this case on remand is analyzed, instead, in terms of Hynix’s unclean hands defense, Rambus’s established spoliation can constitute the “inequitableness or bad faith” necessary to sustain that defense, without a requirement that Hynix make any additional showing of bad faith. See Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945); and see generally In re Sealed Case, 754 F.2d 395, 401-02 (D.C. Cir. 1985). Moreover, because the unclean hands doctrine protects the “public interest,” not only the interests of private litigants (Republic Molding, Inc. v. B.W. Photo Utils., 319 F.2d 347, 349-50 (9th Cir. 1963)), a showing of prejudice is not required. See, e.g., Keystone Driller Co. v. Gen’l Excavator Co., 290 U.S. 240, 247 (1933) (patentee denied relief even though suppression of a prior use was exposed at trial); Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369, 1374 (Fed. Cir. 2001) (patentee denied relief even though fraudulent changes to inventor notebooks were uncovered prior to trial). Whether Rambus’s spoliation is analyzed in terms of the unclean hands doctrine or pursuant to this Court’s inherent powers, the Court should evaluate the necessary issues under the correct legal standards and in light of the letter and spirit of the Federal Circuit’s decisions. A proper analysis of these issues will establish that Rambus is not entitled to judgment in its favor. A. COLLATERAL ESTOPPEL REMAINS AN OPEN ISSUE

Collateral estoppel is one issue expressly left open by the Federal Circuit for consideration on remand. Hynix II, 645 F.3d at 1347 n.2. The fact that Rambus engaged in spoliation, as well

Rambus notes that Micron II involved dismissal under the Court’s inherent powers rather than under the unclean hands doctrine. See RB at 14:14-15. The Federal Circuit found in that case that the Delaware district court “stopp[ed] short of reaching the unclean-hands claim” and instead dismissed the case under its inherent powers as a sanction for spoliation. Micron II, 645 F.3d at 1319. Here, too, Hynix argued as an alternative to its unclean hands defense that the Court had the inherent power to dismiss the case as a sanction for Rambus’s spoliation. See, e.g., D.E. 1353 (Hynix’s Trial Brief on Unclean Hands and Litigation Misconduct dated October 4, 2005) at 11:12-13:23; D.E. 1545 (Hynix’s Proposed Findings of Fact and Conclusions of Law for Unclean Hands and Litigation Misconduct dated October 4, 2005) at pp. 50-52. OMM_US:70111447.1 -5HYNIX’S RESPONSE TO RAMBUS’S BRIEF ON REMAND PROCEEDINGS CASE NO. C00-20905

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as numerous other findings set forth in the Appendix attached as Exhibit A to Hynix’s Opening Brief (“HB”), are preclusively established by Micron II. See HB at 10:11-20:1. B. RAMBUS’S SPOLIATION HAS BEEN ESTABLISHED, WITH THE EXTENT OF THAT SPOLIATION YET TO BE DETERMINED

Rambus does not, and cannot, ask this Court to revisit the issue of whether Rambus’s duty to preserve documents arose any later than Rambus’s 1999 shred day. See, e.g., RB at 1:3-5 (referring to Federal Circuit’s “reversal” of this Court’s determination that Rambus was not under a duty prior to second shred day on August 26, 1999). As set forth in Hynix’s Opening Brief, that issue has already been decided, both as a matter of law of the case in Hynix II and as a collateral estoppel effect of Micron II. HB at 1:23-3:5, 10:11-19:22. Therefore, it would violate the Federal Circuit’s mandate for the district court to reconsider whether Rambus engaged in spoliation. See Laitram, 115 F.3d at 951.3 An issue that does remain for this Court to determine on remand is when, prior to Rambus’s 1999 shred day, Rambus’s duty to preserve documents first arose. See Hynix II, 645 F.3d at 1341 (remanding on issue of “when Rambus’s duty to preserve documents began under the framework set forth in Micron II”). Hynix contends, and on remand will demonstrate, that Rambus reasonably anticipated litigation prior to its destruction of backup tapes in July 1998, its September 1998 shred day, and its outside patent counsel’s cleansing of prosecution files beginning in April 1999. See HB at 3:13-4:14 and Appendix attached as Ex. A thereto. C. ON REMAND, THE COURT MUST EVALUATE WHETHER RAMBUS ACTED IN BAD FAITH IN THE CONTEXT OF ITS PROVEN SPOLIATION

It would be error for this Court to follow Rambus’s suggestion that it should simply “conclude, again, that Rambus did not destroy documents in bad faith” on the basis of what Rambus mischaracterizes as “undisturbed findings.” RB at 17:14-15. As Micron II holds, “[t]he fundamental element of bad faith spoliation is advantage-seeking behavior by the party with
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superior access to information necessary for the proper administration of justice.” Micron II, 645 F.3d at 1326. To make a “proper inquiry” on this question, the Court must consider whether Rambus “‘intended to impair the ability of the potential defendant to defend itself.’” Id. at 132627 (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 80 (3d Cir. 1994)). When this Court previously considered the issue of bad faith, it did so under the incorrect view that Rambus was not anticipating litigation at the time it destroyed tons of documents. Now that it has been established that litigation was reasonably foreseeable at the time of Rambus’s large-scale document destruction occasioned by the 1999 and 2000 shred days, this Court must now revisit the bad faith issue from the proper perspective that Rambus was anticipating litigation and must consider whether Rambus’s actions were aimed at impairing the ability of Rambus’s litigation targets to defend themselves or were otherwise carried out in bad faith. Hynix will demonstrate on remand that Rambus acted in bad faith. See HB at 4:20-6:20 and Appendix attached as Ex. A thereto. The facts of this case, whether determined by this Court independently or by giving the Micron II findings their proper collateral estoppel effect, can support no other conclusion. In Micron II, the Federal Circuit affirmed the conclusion that “the raison d’etre for Rambus’s document retention policy was to further Rambus’s litigation strategy by frustrating the fact-finding efforts of parties adverse to Rambus. This is a natural reading of getting ‘[b]attle ready.’” Micron II, 645 F.3d at 1322. And as Judge O’Malley of the Federal Circuit said in recent oral arguments in NVIDIA’s appeal of an ITC exclusion order entered in an investigation instituted by Rambus -- which involved spoliation issues arising out of the same set of facts that are involved here -- the facts showing that Rambus acted in bad faith “are about as strong as they could possibly be.” Ex. 2 (Asustek v. ITC Oral Arg. Tr.) at 58:18-19 (Audio Rec. at 52’ 51”).4 Audio recordings of the October 6, 2011 oral arguments before the Federal Circuit in two appeals related to the ITC action against NVIDIA -- Rambus v. ITC, Fed. Cir. Case No. 20101483, and Asustek v. ITC, Fed. Cir. Case No. 2010-1556 -- are available at http://www.cafc.uscourts.gov/oral-argument-recordings/search/audio.html (last visited October 10, 2011). For the Court’s ease of reference, Hynix has had the oral arguments transcribed. The transcript of the Rambus v. ITC oral argument is attached to this brief as Ex. 1, and the transcript of the Asustek v. ITC oral argument is attached to this brief as Ex. 2. Citations are to (Page):(Line) of the written transcript and (Minute)’(Second)” of the audio transcript. OMM_US:70111447.1 -7HYNIX’S RESPONSE TO RAMBUS’S BRIEF ON REMAND PROCEEDINGS CASE NO. C00-20905 4

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If, despite this compelling showing, this Court concludes that Rambus did not act in bad faith, it must still determine whether Rambus’s established spoliation warrants a remedy. As explained in Hynix’s Opening Brief, bad faith is not a prerequisite for either dismissal or lesser sanctions. See HB at 5:26-6:20. D. THE COURT EMPLOYED THE WRONG LEGAL STANDARD ON PREJUDICE AND MUST REEVALUATE THAT ISSUE ON REMAND

To carry out the Federal Circuit’s mandate, this Court must also reevaluate the issue of prejudice because Micron II makes clear that this Court previously employed the wrong legal standard. 1. Under Micron II, Rambus must demonstrate that all documents destroyed were either redundant or irrelevant

Rambus urges that it can carry its burden of disproving prejudice simply by showing that “adequate similar and material documents or classes of documents were not destroyed.” Rambus 13 Br. at 20:18-19 (citing vacated decision in Hynix I, 591 F. Supp. 2d at 1067). But that is not the 14 correct test. The duty to preserve extends to all potentially relevant material, not simply to some 15 sample of documents selected or located by Rambus. See Micron II, 645 F.3d at 1328; Hynix II, 16 645 F.3d at 1346; Leon v. IDX Sys. Corp., 464 F.3d 951, 960 (9th Cir. 2006); Vodusek v. Bayliner 17 Marine Corp., 71 F.3d 148, 156 (4th Cir. 1995); see also HB at 6:21-8:24. Under the Micron II 18 framework, where, as here, the spoliator bears the burden of proof on prejudice, the spoliator 19 must demonstrate “that all the documents destroyed were either redundant or irrelevant to the 20 trial.” Micron II, 645 F.2d at 1328. 21 22 23 24 noted that “it is not clear what documents were destroyed.” Micron II, 645 F.3d at 1328. As 25 Rambus admitted at the NVIDIA Federal Circuit oral arguments, it is in a “tough position” if it 26 bears the burden of proving lack of prejudice. Ex. 2 (Asustek v. ITC Oral Arg. Tr.) at 59:24 27 (Audio Rec. at 54’ 03”). When asked by Judge O’Malley to confirm that “you admit you have no 28
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2.

Rambus cannot carry its heavy burden of showing there was no prejudice because Rambus kept no records of and does not know what was destroyed

Because Rambus kept no records of its document destruction, the Federal Circuit has

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idea what was destroyed, you kept no record of what was destroyed, and you didn’t let people know what was destroyed,” Rambus responded, “Right.” Id. at 62:1-5 (Audio Rec. at 55’ 32”). As Judge O’Malley put the question, how can Rambus ever prove lack of prejudice when there is no record of what was destroyed and Rambus does not know what was destroyed? Id. at 11:2124, 57:22-25 (Audio Rec. at 7’ 30” and 52’ 07”). a. The Federal Circuit has found that relevant documents were destroyed

Rambus cannot now take the position that the destruction of materials during Rambus’s 1999 shred day and thereafter does not constitute spoliation by suggesting that while “documents” were destroyed, “evidence” was not destroyed. See RB 21:1-2. The Federal Circuit has made clear that Rambus’s destruction of documents during the second shred day was “in contravention of a duty to preserve them” and, as a result, constituted spoliation. Micron II, 645 F.3d at 132526. The Federal Circuit also noted the types of documents destroyed and concluded that “there is ample evidence that Rambus destroyed documents in its possession knowing that they would likely be forced to be produced in litigation and intending to prevent that production.” Id. at 132122, 1328, 1330. These findings establish that Rambus’s destruction of documents during its second shred day amounted to spoliation. b. Rambus cannot demonstrate that all relevant materials were destroyed before Rambus’s 1999 shred day

Rambus also offers a new argument in which it does not dispute that it destroyed relevant, material evidence, but claims that the key evidence would have been destroyed during the first shred day. See RB at 20:27-21:6. This argument runs afoul of Micron II because it seeks to place the burden on Hynix to prove what was destroyed during each shred day. Rambus, not Hynix, bears this burden. Of course, Rambus cannot pinpoint what was destroyed during each shred day for the same reasons discussed above -- Rambus kept no records of the destruction and admits it does not know what was destroyed. See Micron II, 645 F.3d at 1328. Moreover, the sheer volume of documents destroyed during Rambus’s second shred day belies any suggestion that nothing relevant survived the first shred day. See Micron II, 645 F.3d at 1318 (during second
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shred day, “Rambus destroyed between 9,000 and 18,000 pounds of documents in 300 boxes”). In any event, if Rambus intends to make this argument, it reinforces the need for this Court to determine in what timeframe prior to Rambus’s 1999 shred day Rambus’s duty to preserve documents attached. Hynix contends, and on remand will demonstrate, that Rambus was under a duty to preserve documents at the earlier times when it destroyed its backup tapes, held the 1998 shred day, and directed its outside patent counsel to cleanse his prosecution files. See HB at 3:134:14 and Appendix attached as Ex. A thereto. 3. If Hynix is required to make plausible, concrete suggestions of what was destroyed, it will do so

At the NVIDIA oral arguments, Judges Clevenger and O’Malley both questioned whether the victim of spoliation is required to come forward with plausible, concrete suggestions of what was destroyed in cases where the burden is on the bad faith spoliator to prove lack of prejudice. See Ex. 2 (Asustek v. ITC Oral Arg. Tr.) at 12:23-13:8, 58:5-7 (Audio Rec. at 8’ 15”and 52’ 20”) Indeed, the Micron II decision made the statement about “plausible, concrete suggestions” in the context of “satisfying that burden,” suggesting that where (as here) the spoliator carries the burden on prejudice the victim need not offer such suggestions. See Micron II, 645 F.3d at 1328. The forthcoming Federal Circuit decisions in the NVIDIA appeals may clarify this issue. Even if Hynix is required to provide “plausible, concrete suggestions,” it need only make suggestions that documents that were lost may have been relevant. HB at 6:28-7:13. Of course, the Federal Circuit has already determined that there is “ample evidence” that “Rambus destroyed relevant, discoverable documents.” Micron II, 645 F.3d at 1321-22. The Federal Circuit also described in some detail how the categories of documents that were destroyed were relevant to the defenses of a DRAM company confronted with Rambus’s patent claims: 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 references could have helped resolve Micron’s inequitable conduct claims. Id. at 1328.

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Rambus simply ignores these points. Rambus asserts that its internal communications about JEDEC would not have been relevant because Rambus’s “subjective views about its disclosure obligations” were “immaterial.” RB at 19:12-13. But Rambus’s own views would certainly be relevant and admissible. Rambus’s contemporaneous views as to whether it was required to disclose pending patent applications would be highly relevant to a jury in considering whether Rambus’s pending claims were “reasonably necessary” to practice the standards JEDEC was considering, particularly if the jury had been correctly instructed that Rambus had a disclosure duty. See Hynix II, 645 F.3d at 1348. If Rambus, which crafted the pending claims to cover the standard under discussion, admitted at the time that it believed those claims were necessary to practice the standard, that would be powerful evidence that a “reasonable person” would also have believed that to be true. Rambus’s contemporaneous views may also have been contrary to the position it took at trial. Similarly, Rambus’s argument that its destruction of internal patent documents was not prejudicial must fail. Rambus may have had prior art references in its files at the time it was prosecuting its applications that its litigation targets were unable to recreate a decade or more later. Also, prior art references found in Rambus’s files could help Hynix establish an inequitable conduct defense, whereas obtaining the same prior art references from public sources (see RB at 19:28-20:15) would not. See Therasense, Inc. v. Becton, Dickinson & Co., Nos. 2008-1512-14, 2008-1595, 20011 U.S. App. LEXIS 10590, at *32 (Fed. Cir. May 25, 2011) (inequitable conduct requires proof “that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it”) (emphasis added). The argument that “essentially the material JEDEC materials are available” and that “documents in [each] category were produced” -- even setting aside the fact that there is no record of what else once existed -- misses the point that Rambus was under a duty to preserve all documents within these and other categories of potentially relevant documents. As Judge O’Malley stated in response to Rambus’s argument that it has “tons” of documents relating to JEDEC, “having some documents, even if it’s tons, doesn’t change the fact that others were destroyed,” particularly because Rambus “saved the ones that helped” and “destroyed the ones
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that hurt.” Ex. 2 (Asustek v. ITC Oral Arg. Tr.) at 64:5-9 (Audio Rec. at 57’ 33”). Although Rambus may hyperbolically claim to have kept “tons” of documents, it is established that Rambus destroyed literally tons of documents in its 1999 shred day alone. See Micron II, 645 F.3d at 1318. In any event, the burden on Rambus as a bad faith spoliator extends beyond simply rebutting the “plausible, concrete suggestions” offered by the victim. If indeed Hynix is required to make such suggestions, the burden then shifts to Rambus to demonstrate that “all the documents that were destroyed were either redundant or irrelevant.” Id. at 1328. Rambus cannot carry this “heavy” burden. Id. E. THE COURT MUST DETERMINE WHAT SANCTION IS APPROPRIATE FOR RAMBUS’S SPOLIATION.

Dismissal is the most appropriate sanction for Rambus’s spoliation, given the degree of bad faith and prejudice. Indeed, the Federal Circuit held that Rambus’s spoliation conduct may justify a dispositive sanction. Micron II, 645 F.3d at 1329. If, however, the Court will not impose a dispositive sanction, it must impose lesser sanctions. See HB 8:25-10:9. Rambus’s claim that dismissal is the only relief Hynix has sought (RB at 4:2, 13:13) is untrue. Certainly, Hynix has argued and continues to argue that dismissal is the sanction that best fits Rambus’s far-reaching, bad faith spoliation. But Hynix has also argued that if the Court will not dismiss the case as a sanction for spoliation, it must impose lesser sanctions. See, e.g., D.E. 800 (2/18/05 Hynix Memorandum of Points and Authorities in Support of Renewed Motion to Dismiss as a Sanction for Litigation Misconduct) at 58:20-59:4 (requesting, as alternative to dismissal, that Hynix be permitted to present jury with evidence of Rambus’s spoliation, noting that the evidence would permit an adverse inference). Moreover, even if it were necessary for Hynix to “file additional pleadings, vary or expand the issues” in order to pursue different sanctions on remand, this Court may permit Hynix to do so because the Federal Circuit’s mandate does not foreclose such actions. See Nguyen v. United States, 792 F.2d 1500, 1502 (9th Cir. 1986) (citation and internal quotation marks omitted).

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IV.

THE COURT SHOULD ORDER RAMBUS TO PRODUCE MATERIALS FROM OTHER ACTIONS INVOLVING RAMBUS’S SPOLIATION As explained in Hynix’s Opening Brief, Rambus is incorrect that Hynix must show

“manifest injustice” in order to reopen the record. See HB at 21:2-14. To the contrary, this Court has discretion to reopen the record on remand. See id. at 20:15-21:2. Regardless of which standard applies, however, it would be premature for this Court to decide that it will not reopen the record before giving Hynix access to the materials it seeks and an opportunity to make the necessary showing. As discussed in Hynix’s Opening Brief, witness testimony and other evidence has been presented in other proceedings that bears directly on the issues this Court must consider on remand. See HB 22:13-25:1. Given all that has happened in the six years since the Court tried the spoliation issue -- including the issuance of the Federal Circuit’s Hynix II and Micron II decisions and decisions on spoliation from other tribunals -- there is no valid reason for the Court not to at least consider what other evidence exists and whether it justifies reopening the record. Moreover, even if the Court decides that Hynix must show “manifest injustice” before it even obtains the materials it seeks from other Rambus actions, that standard is met. The factors to be considered include: (1) the degree of prejudice or surprise to the nonmoving party if the order is modified; (2) the ability of the non-moving party to cure the prejudice; (3) any impact of modification on the orderly and efficient conduct of the trial; and (4) any willfulness or bad faith by the party seeking modification. Hoffman v. Tonnemacher, No. CIV F 04-5714 AUW(DLB), 2006 WL 3457201, at *2 (E.D. Cal. Nov. 30, 2006). Here, Hynix is not seeking new discovery but is simply seeking production of materials that are already in Rambus’s possession. Requiring Rambus to produce those materials will not prejudice Rambus or have a significant impact on the orderly and efficient conduct of this Court’s remand proceedings. There is no suggestion that Hynix has acted willfully or in bad faith. Although Rambus claims that all of the spoliation evidence offered in other proceedings was available to Hynix at the time of this Court’s spoliation trial, there is no way to determine that until the materials are actually produced to and reviewed by Hynix. Even now, it is clear that
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new information has come to light since this Court tried the unclean hands issue. For example, more than a year after the unclean hands trial in this case, Joel Karp produced thousands of pages of documents, some of which bear on the spoliation issues, and first revealed that he had retained electronic files and computer storage devices at his home. See generally D.E. 2776 (11/20/2007 Memorandum of Points and Authorities in Support of Manufacturers’ Motion to Compel Production of Electronic Documents held by Joel Karp on Behalf of Rambus). In addition, Rambus witnesses changed their testimony in later proceedings. See, e.g., HB at 24:24-25:1 (discussing Mr. Karp’s testimony in recent San Francisco Superior Court trial). Rambus makes much of the point that it produced materials to Hynix in advance of the Hynix spoliation trial, and that Hynix “chose to introduce” certain of those materials at trial. See RB at 23:13-14, 23:28. Of course, Hynix’s “choice” was limited to evidence that Rambus produced prior to the spoliation trial and by other factors, such as the trial time limits imposed by the Court. To be sure, Hynix did present evidence at trial that Hynix contends was more than sufficient to demonstrate that Rambus engaged in bad faith, prejudicial spoliation warranting a dismissal sanction. But if additional evidence now exists -- something Rambus does not deny -the Court should consider it. The Court should order Rambus to produce the materials identified by Hynix in its opening brief within 30 days. Hynix should then be given 45 days to evaluate those materials and identify to this Court which items it believes should be added to the record. V. THE COURT SHOULD AWAIT THE DELAWARE COURT’S DECISION ON REMAND AND THEN EVALUATE ITS EFFECT ON THIS CASE Because Rambus has not offered this Court any legitimate suggestion for how to proceed, the Court should follow Hynix’s suggestion that this Court await the Delaware district court’s decision on remand, then determine the effect of Micron II and the remanded Micron case on this case under collateral estoppel principles. Rambus can hardly be heard to complain because, as the Federal Circuit noted, “Rambus has agreed that whatever differences the facts present, the two cases should not be decided differently.” Hynix II, 645 F.3d at 1347. Judge Robinson recently set a schedule for her proceedings on remand. After two rounds
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of simultaneous briefing, she will hear argument on January 26, 2012. See Ex. 3 to this Brief (9/30/11 Stipulation regarding briefing schedule from Micron case in Delaware district court). The Federal Circuit’s decisions in this case and in the Micron case make clear that it is concerned about consistency. See Hynix II, 645 F.3d at 1342, 1342 n.7, 1347. This Court has similarly expressed interest in coordinating the remanded proceedings in some way. D.E. 4051 (9/2/11 CMC Tr.) at 5:3-7. Hynix’s proposal offers the only viable way for this Court to proceed on remand in order to accomplish the goal of consistency, which is important not only in the context of these coordinated cases but to the patent system as a whole. See Markman v. Westview Instruments, 517 U.S. 370, 390 (1996) (noting “importance of uniformity in the treatment of a given patent”); see also Mendenhall v. Barber-Green Co., 26 F.3d 1573, 1583 (Fed. Cir. 1994) (giving collateral estoppel effect to invalidity determination because “when the rest of the industry is not impeded by the patents, it seems manifestly unjust to rely merely on ‘judicial economy’ as justification for holding appellants liable and impairing their ability to compete”)

Dated: October 14, 2011

By: /S/ Kenneth L. Nissly KENNETH L. NISSLY KENNETH R. O’ROURKE SUSAN van KEULEN SUSAN ROEDER O’MELVENY & MYERS LLP THEODORE G. BROWN III JULIE J. HAN KILPATRICK TOWNSEND & STOCKTON LLP Attorneys for Plaintiffs HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH

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