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GREGORY P. STONE (SBN 078329) gregory.stone@mto.com KATHERINE K. HUANG (SBN 219798) katherine.huang@mto.com PETER E. GRATZINGER (SBN 228764) peter.gratzinger@mto.com KEITH R.D. HAMILTON (SBN 252115) keith.hamilton@mto.com DAVID H. PENNINGTON (SBN 272238) david.pennington@mto.com MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, 35th Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 PETER A. DETRE (SBN 182619) peter.detre@mto.com MUNGER, TOLLES & OLSON LLP 560 Mission Street, 27th Floor San Francisco, CA 94105 Telephone: (415) 512-4000 Facsimile: (415) 512-4077 Attorneys for Plaintiff RAMBUS INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION RAMBUS INC., Plaintiff, v. STMICROELECTRONICS N.V.; STMICROELECTRONICS INC., Defendants. Case No. 3:10-cv-05449 RS RAMBUS INC'S OPPOSITION TO STMICRO'S MOTION FOR LEAVE TO AMEND

RAMBUS INC'S OPPOSITION TO STMICRO'S MOTION FOR LEAVE TO AMEND CASE NO. 3:10-CV-05449 RS
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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 IV. 2. 3. III. I. II.

TABLE OF CONTENTS Page INTRODUCTION .............................................................................................................. 1 FACTS ................................................................................................................................ 2 A. B. A. B. Procedural Background ........................................................................................... 2 STMicros Proposed Amendments ......................................................................... 3 Legal Standard ........................................................................................................ 5 The Court Should Deny STMicros Request to Amend its Inequitable Conduct Defense ..................................................................................................... 5 1. STMicros New Inequitable Conduct Allegations Are Insufficient As a Matter of Law ..................................................................................... 5 STMicros Inequitable Conduct Allegations Are Untimely ..................... 11 STMicros Belated Pleading, If Permitted, Would Prejudice Rambus...................................................................................................... 13

ARGUMENT ...................................................................................................................... 5

CONCLUSION ................................................................................................................. 14

-i-

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1 2 3 FEDERAL CASES 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

TABLE OF AUTHORITIES Page

Abaxis, Inc. v. Cepheid, No. 10-cv-02840-LHK, 2011 WL 3741501 (N.D. Cal. Aug. 25, 2011) ............................... 8, 9 Acri v. Int'l Ass'n of Machinists & Aerospace Workers, 781 F.2d 1393 (9th Cir. 1986)............................................................................................. 5, 14 AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946 (9th Cir. 2006)............................................................................................... 5, 12 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................................................................. 9 Contact Lumber Co. v. P.T. Moges Shipping Co., 918 F.2d 1446 (9th Cir. 1990)................................................................................................. 11 Elan Microelectronics Corp. v. Apple, Inc., No. C 09-1531 RS, 2010 WL 3069322 (N.D. Cal. Aug. 4, 2010) .......................................... 10 Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009) ........................................................................................ passim Foman v. Davis, 371 U.S. 178 (1962) .................................................................................................................. 5 Hynix Semiconductor Inc. v. Rambus Inc., No. C-00-20905, 2012 WL 4328999 (N.D. Cal. Sept. 21, 2012) ............................................. 4 In re BP Lubricants USA Inc., 637 F.3d 1307 (Fed. Cir. 2011) ............................................................................................... 10 Jackson v. Bank of Hawaii, 902 F.2d 1385 (9th Cir. 1990)....................................................................................... 5, 12, 14 Micron Tech., Inc. v. Rambus Inc., __ F. Supp. 2d __, 2013 WL 227630 (D. Del. Jan. 2, 2013) .............................................. 4, 13 Moore v. Kayport Package Express, Inc., 885 F.2d 531 (9th Cir. 1989)..................................................................................................... 5 Morongo Band of Mission Indians v. Rose, 893 F.2d 1074 (9th Cir.1990)............................................................................................ 13, 14

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TABLE OF AUTHORITIES (cont.) Page Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc) ........................................................................... 8, 10 Veliz v. Cintas Corp., No. C 03-1180 RS, 2009 WL 1110414 (N.D. Cal. Apr. 23, 2009) ........................................ 12 Wilkins-Jones v. County of Alameda, No. C-08-1485 EMC, 2012 WL 3116025 (N.D. Cal. July 31, 2012) ................................. 5, 11 Zep Solar Inc. v. Westinghouse Solar Inc., No. C 11-06493 JSW, 2012 WL 1293873 (N.D. Cal. Apr. 16, 2012) .................................... 10 FEDERAL RULES Federal Rule of Civil Procedure 9(b) ..................................................................................... passim Federal Rule of Civil Procedure 8................................................................................................... 9 Federal Rule of Civil Procedure 15................................................................................................. 5 FEDERAL REGULATIONS 37 C.F.R. 1.56(b)(1) ..................................................................................................................... 8

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I.

INTRODUCTION Two days after LSI filed a motion to amend its answer and counterclaims in this case,

STMicro filed its own motion to amend. Quoting verbatim from LSIs proposed amended answer, STMicro likewise seeks leave to add a new affirmative defense of inequitable conduct with respect to the Farmwald/Horowitz patents, based on alleged prior art developed by NeXT, Inc. See STMicros Mot. for Leave to Amend Answer and Counterclaims, Jan. 24, 2013 (Mot.) at 3; compare Ex. A to Mot., STMicros First Amended Answer to Complaint and Counterclaims (FAA), at pp. 16-18, 14-24, with Ex. A to LSIs Mot. For Leave to Amend Answer and Counterclaims, Jan. 22, 2013, at pp. 15-17, 106-116. STMicros bid to add this affirmative defense fails for the same reasons as LSIs. Consequently, the arguments set forth in this opposition in large part repeat arguments made in Rambuss Opposition to LSIs Motion for Leave to Amend, filed on February 5, 2013. As with LSI, STMicros attempt to interject this newly fashioned theory two years after filing its answer and counterclaims in this case and less than three months before the jointly proposed discovery cutoff for the unclean hands phase should be rejected, for multiple independently sufficient reasons. First, STMicros new inequitable conduct allegations for the Farmwald/Horowitz patents clearly fail to state a claim under the rigorous pleading standards of Federal Rule of Civil Procedure 9(b) and Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009). Exergen requires STMicro to plead inequitable conduct with particularity, including facts that show the who, what, when, where, and how of the material misrepresentation or omission committed before the PTO. 575 F.3d at 1327. All STMicro has alleged, however, is that NeXTs computer system and related publications constitute prior art; that it was material in some unexplained way; and that it was not disclosed to the PTO. Such threadbare allegations, which do little more than recite the elements of an inequitable conduct defense, do not come close to meeting Exergens exacting standards, and the deficiency is itself more than sufficient to justify denying leave to amend. Id. at 1331 (affirming denial of leave to add inadequately pled inequitable conduct defense).

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Second, STMicros delay in bringing the proposed inequitable conduct amendments provide further ground to deny its motion. STMicro could have pled these claims and defenses in 2011, when it was aware of all the factual predicates it needed to raise them. But STMicro sat on its hands and did nothing. STMicros lengthy delay, after knowing all the facts it needed to raise these newly minted allegations, provides an additional ground for denying leave to amend. Third, STMicros delay is not just contrary to principles of efficient judicial administration, but also prejudicial to Rambus. Permitting STMicro to plead a new defense now would force Rambus to add new dimensions to its discovery and trial preparation less than three months before the jointly proposed discovery cutoff date for unclean hands. The prejudice to Rambus is exacerbated by the vagueness and insufficiency of STMicros proposed pleading. If amendment is permitted, Rambus would need to take discovery just to find out what STMicros allegations really are before it is able to delve into those allegations on the merits. While STMicro does not even bother to try to explain its lengthy delay, it is apparent that STMicro is raising these claim and defenses at this late hour just so it can, for purposes of the unclean hands phase, have defenses it can argue were prejudiced by Rambuss document destruction. But in the almost two years since filing its answer, STMicro has never found its new theory sufficiently meritorious to warrant inclusion in this case. Indeed, even now STMicro is unable to plead it adequately under the operative pleading standards, and it appears that the new allegations have been copied from LSIs earlier motion. STMicros tactical gamesmanship does not excuse it from meeting the pleading standards set forth in Rule 9(b), or from the consequences of its own delay and the resulting prejudice to Rambus. Its bid to interject new inequitable conduct allegations must therefore be denied. II. FACTS A. Procedural Background

Rambus initiated this action against STMicro on December 1, 2010, asserting infringement of 19 patents from three families: (1) the Farmwald/Horowitz patents; (2) the Barth

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patents; and (3) the Dally patents.1 That same day, Rambus filed a complaint with the International Trade Commission (ITC) against STMicro (the 753 Investigation), alleging that certain STMicro products infringe both the Barth and the Dally patents. On March 1, 2011, STMicro filed its answer to Rambuss complaint in this case. On June 13, 2011, in light of the then ongoing 753 Investigation before the ITC, this Court stayed proceedings related to the Barth and the Dally patents in this case, while allowing Rambuss infringement claims based on the Farmwald/Horowitz patents to proceed to discovery. Notably, STMicros original answer contained no inequitable conduct defense with respect to the Farmwald/Horowitz patents. The sole inequitable conduct allegations STMicro saw fit to make pertained to the Dally patents. STMicros Answer to Complaint and Counterclaims, Mar. 1, 2011 (Answer), at pp. 13-14, 8-13. On January 4, 2013, the parties submitted to the Court a joint statement regarding the discovery and trial schedule in this case. See Joint Proposed Scheduling Order, Jan. 4, 2012. The parties agreed that a trial on STMicros unclean hands defense should take place on August 26, 2013, with a close of fact discovery on the unclean hands and spoliation issues on April 26, 2013. Rambus has proposed that April 26 also serve as the fact discovery cutoff with respect to all issues, whereas LSI and STMicro have proposed that fact discovery for issues other than unclean hands and spoliation end on September 20, 2013. The Court has yet to adopt a schedule. B. STMicros Proposed Amendments

On January 24, 2013, only two days after LSI filed a motion to amend its initial answer in this case, STMicro filed its motion to do the same. With the exception of one sentence mentioning the recent decision in Hynix, compare LSIs Proposed First Amended Answer 122 with FAA p. 17, 20, STMicros proposed amendments to its inequitable conduct defense are identical, word-for-word and line-by-line, with those submitted two days earlier by LSI. Compare LSIs Proposed First Amended Answer 106-115 with FAA pp. 16-18, 14-23. The

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declaration submitted in support of STMicros motion states that it is based on a reasonable investigation and on information currently available to STMicros counsel, but does not indicate whether STMicro undertook any independent investigation into the allegations it now belatedly seeks to raise, or whether it simply copied LSIs allegations. Declaration of Elaine Chow (Chow Decl.), at 1. STMicros motion, like that of LSI, came a few weeks after the issuance of Micron Tech., Inc. v. Rambus Inc., __ F. Supp. 2d __, 2013 WL 227630 (D. Del. Jan. 2, 2013), in which the federal district court in Delaware found that Rambuss document destruction prejudiced DRAM manufacturer Microns inequitable conduct defense as well as its JEDEC-based claims and defenses, id. at *15-*17, and held the patents-in-suit there unenforceable against Micron.2 Among the allegations STMicro seeks leave to add are those pertaining to this recent decision. See FAA p. 21, 36 (new allegations regarding recent Micron opinion for spoliation-based unclean hands defense). STMicro, like LSI, also seeks leave to amend its inequitable conduct defense in a way it could have done long ago regardless of how the Micron case might have turned out. These new allegations consist of a newly minted inequitable conduct defense directed at the Farmwald/Horowitz patents, based on alleged non-disclosure of non-patent prior art developed by NeXT, Inc. FAA pp. 16-18, 14-24. STMicro makes no effort to explain why it is amending this defense for the first time almost two years after filing its answer in this case. The declaration STMicro submitted asserts only that there is newly acquired information in STMicros Ninth Affirmative Defense (Inequitable Conduct) relat[ing] to the NeXT prior art system and publications and that STMicro learned of this information after it filed its original Answer. Chow Decl. 6. The declaration does not specify exactly what the supposedly newly acquired information is nor when it was acquired. As discussed below, there was nothing to stop STMicro from raising its NeXT defenses long ago, in 2011. The Micron court acknowledged that its findings were different from the findings of the Honorable Ronald M. Whyte in Hynix Semiconductor Inc. v. Rambus Inc., No. C-00-20905, 2012 WL 4328999 (N.D. Cal. Sept. 21, 2012). See Micron, 2013 WL 227630 at *18 n.25. -419954701.2 2

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III.

ARGUMENT A. Legal Standard

Under Rule 15, leave to amend is not to be granted automatically. Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). Grounds for denying leave to amend include undue delay, bad faith or dilatory motive on the part of the movant undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). Futility is by itself sufficient to justify denial of leave to amend. See Moore v. Kayport Package Express, Inc., 885 F.2d 531, 538 (9th Cir. 1989) (Leave to amend need not be given if a complaint, as amended, is subject to dismissal.). Thus, leave should be denied where the proposed pleading fails to state a claim or defense under the applicable pleading standards. See Exergen, 575 F.3d at 1331 (denying leave to add inadequately pled inequitable conduct defense); Moore, 885 F.2d at 540-41 (same for fraud claim). Delay and prejudice are also highly relevant factors and each suffices to deny leave to amend. A party seeking to amend its pleadings must explain any delay in seeking the amendment. See Wilkins-Jones v. County of Alameda, No. C-08-1485 EMC, 2012 WL 3116025 at *7 (N.D. Cal. Jul. 31, 2012). Delay is undue if the moving party knew or should have known the facts and theories raised by the amendment in the original pleading. AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953 (9th Cir. 2006). Prejudice can be shown where the amendments will introduce new theories requiring additional discovery, which may in turn result in further delays in the case. See Acri v. Int'l Ass'n of Machinists & Aerospace Workers, 781 F.2d 1393, 1399 (9th Cir. 1986); Jackson, 902 F.2d at 1387-88 (finding that the burden of necessary future discovery justified denying leave to amend). B. The Court Should Deny STMicros Request to Amend its Inequitable Conduct Defense 1. STMicros New Inequitable Conduct Allegations Are Insufficient As a Matter of Law

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STMicros request for leave to allege inequitable conduct with respect to the Farmwald/Horowitz patents must be denied, because STMicros new allegations plainly fail the rigorous pleading standard they must satisfy under Exergen. Inequitable conduct requires clear-519954701.2

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and-convincing proof that (1) an individual associated with the filing and prosecution of a patent application made an affirmative misrepresentation of a material fact, failed to disclose material information, or submitted false material information; and (2) the individual did so with a specific intent to deceive the PTO. Exergen, 575 F.3d at 1327 n.3. Because inequitable conduct sounds in deception, it is subject to the heightened pleading requirements of Rule 9(b). See Fed. R. Civ. P. 9(b) (In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.). As the Federal Circuit explained: Inequitable conduct, while a broader concept than fraud, must be pled with particularity under Rule 9(b). A pleading that simply avers the substantive elements of inequitable conduct, without setting forth the particularized factual bases for the allegation, does not satisfy Rule 9(b). 575 F.3d at 1326-27. Leave to amend should be denied where, as here, the proposed inequitable conduct pleading does not pass muster under Rule 9(b). Id. at 1331. Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation committed before the PTO. Id. at 1327. Further, while Rule 9(b) provides that [m]alice, intent, knowledge, and other conditions of a persons mind may be alleged generally, Fed R. Civ. P. 9(b), the Federal Circuit requires that the pleadings allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind. Exergen, 575 F.3d at 1327. STMicros proposed inequitable conduct allegations do not come close to meeting these standards. Indeed, they fail at every step. Who: STMicros proposed pleading fails at the first step because it fails to identify the who of the material omissions and misrepresentations. Exergen, 575 F.3d at 1329. To satisfy Rule 9(b), STMicro must name the specific individual associated with the filing or prosecution of the application that led to the allegedly unenforceable patents, who both knew of the material information and deliberately withheld or misrepresented it. Id. The proposed pleading fails on both prongs. STMicro does not identify any individual who knew the supposedly material information disclosed by NeXT; STMicro could allege only that material information was known to the named inventor(s) and/or those substantially involved in the prosecution ., FAA p. 18, 23 (emphasis added). See Exergen, 575 F.3d at 1329 (insufficient to allege -619954701.2

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Exergen, its agents and/or attorneys). Even with respect to Michael Farmwald, the only individual identified by name in the proposed pleading, STMicro alleges not that he had any of the (unspecified) material information found in NeXT, but only that he once met with NeXT employees to discuss Rambus and its memory protocol FAA p. 17, 18 (emphasis added). That Mr. Farmwald supposedly met to discuss Rambus does not show that he was aware of any allegedly material information regarding NeXT products, let alone the publications that STMicro identified in its allegations. Nor does STMicro identify any individual that deliberately withheld relevant information regarding NeXT from the PTO during the prosecution process. Instead, STMicro alleges in the passive voice that the NeXT references were withheld from the PTO with intent to deceive the PTO. FAA p. 18, 23. Alleging that references were withheld by some unspecified individual does not satisfy Rule 9(b). What and Where: STMicro fails to identify which claims, and which limitations in those claims, the withheld references are relevant to, and where in those references the material information is found i.e., the what and where of the material omission. Id. at 1329. STMicro baldly claims that its newly alleged prior artthe NeXT computer systemis material to the patentability of the Farmwald/Horowitz patents asserted in this case, without bothering to identify a single claim to which NeXT is supposedly relevant. FAA p. 18, 23. Nor does STMicro explain what the supposedly material information is and where it can be found in the NeXT-related references it mentions. See, e.g., FAA p. 16-17, 16 (alleging a cover story in the November 1988 BYTE magazine that discussed unspecified technical details of the NeXT Systems and Products); id. at p. 17, 17 (alleging, without further detail, that [t]he NeXT Book discussed many of the hardware and software of the NeXT Systems and Products, including discussion of the hardware architecture.). When: An inequitable conduct pleading must allege when the material omission occurred. Exergen, 575 F.3d at 1327. STMicros proposed pleading is devoid of any allegation as to the time the alleged material omission occurred. Why: STMicros pleading does not even try to explain why the withheld information is material and not cumulative. Exergen, 575 F.3d at 1329-30. STMicro just conclusorily -719954701.2

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asserts, without any factual adornment, that NeXT was material to the patentability of the asserted Farmwald/Horowitz patents. FAA p. 18, 23. STMicro claims that NeXT uses a synchronous, multiplexed, and multimaster bus, FAA p. 16, 15, but does not allege how that feature is material to the prosecution of any claim-in-suit. There are no allegations that identify any claim limitations, or combinations of limitations, that were in NeXT but missing from the prosecution record. Indeed, STMicro does not allege, not even conclusorily, that NeXT is not cumulative. How: Much less does STMicro sufficiently allege how an examiner would have used this [allegedly undisclosed material] information in assessing the patentability of the claims. Exergen, 575 F.3d at 1329-30. Under Therasense, the materiality required to establish inequitable conduct is but-for materiality, i.e. that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1291 (Fed. Cir. 2011) (en banc).3 STMicros proposed pleading is utterly devoid of any factual allegations pertaining to but-for materiality; the proposed pleading does not even allege a conclusion that the PTO would have disallowed any particular claim had NeXT been disclosed. Knowledge and Intent to Deceive the PTO: STMicros scienter allegations are deficient on their face, as the facts that are alleged do not give rise to a reasonable inference of (1) knowledge of the withheld material information or of the falsity of the material misrepresentation, and (2) specific intent to deceive the PTO. Exergen, 575 F.3d at 1330. The proposed pleading alleges nothing about Mr. Farmwald or anyone elses knowledge of the allegedly material (but unspecified) information contained in the NeXT references. STMicro does not even allege that Exergen, which was decided before Therasense, had cited the PTOs standard for materiality in discussing inequitable conduct. See Exergen, 575 F.3d at 1330 (citing 37 C.F.R. 1.56(b)(1) concept of prima facie case of unpatentability). In Therasense, the en banc Federal Circuit expressly rejected this standard and adopted the test of but-for materiality. 649 F.3d at 1294 (criticizing PTO standard as overly broad); id. at 1291 (adopting but-for test). It follows that parties alleging inequitable conduct must now also plead but-for materiality, see Abaxis, Inc. v. Cepheid, No. 10-cv-02840-LHK, 2011 WL 3741501, at *5 (N.D. Cal. Aug. 25, 2011). In any event, STMicros failure to plead any facts as to the how of the supposed omission is deficient regardless of whether the standard is but-for materiality or prima-facie unpatentability. -819954701.2 3

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anyone associated with relevant patent prosecutions ever had possession of a NeXT computer system or any of the NeXT-related publications cited by STMicro. STMicro alleges only that a book and two articles regarding NeXT were published 1988 and 1989 (FAA pp. 16-17, 16-17); the mere fact of a publications existence does not give rise to a reasonable inference that any particular individual was aware of it. Nor is it sufficient for STMicro to allege that Mr. Farmwald met with NeXT representatives at some unspecified time no later than April 1990 (FAA p. 17, 18); as noted, the alleged subject matter of that meeting was Rambus and its memory protocol, id. (emphasis added), and is therefore inadequate to support any inference that Mr. Farmwald knew the unspecified information concerning NeXT that STMicro now contends to be material. Even if Mr. Farmwald was aware of any NeXT reference (and STMicro has not so alleged), [o]ne cannot assume that an individual, who generally knew that a reference existed, also knew of the specific material information contained in that reference. Exergen, 575 F.3d at 1330. Moreover, under Therasense, STMicro must plead that a specific individual associated with the relevant prosecutions knew that the allegedly omitted art is not only relevant, but also material in the sense that the patent would not have issued had the PTO been aware of it. See Abaxis, 2011 WL 3741501, at *5 (dismissing inequitable conduct claim where [the] allegations as a whole fail to support the reasonable inference that he knew that specific information in the [alleged prior art] was but-for material .). The proposed pleading contains not a single factual allegation to that effect. The proposed pleadings inadequacy is even more striking with respect to intent to deceive. All STMicro manages to allege on that score is that the NeXT references were withheld from the PTO with intent to deceive the PTO. FAA p. 18, 23. STMicro offers not a single fact that would suggest an intent to deceive. This conclusory pleading would not pass muster even under the liberal pleading standard of Rule 8, see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining that [a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do), let alone the demanding Rule 9(b) requirement that governs allegations of inequitable conduct. Courts routinely reject inequitable conduct allegations that fail to plead intent to deceive with the requisite particularity. See, e.g, -919954701.2

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Elan Microelectronics Corp. v. Apple, Inc., No. C 09-1531 RS, 2010 WL 3069322, at *3 (N.D. Cal. Aug. 4, 2010) (Seeborg, J.) (dismissing inequitable conduct counterclaim that failed to plead specific facts showing intent to deceive); Zep Solar Inc. v. Westinghouse Solar Inc., No. C 1106493 JSW, 2012 WL 1293873, at *3 (N.D. Cal. Apr. 16, 2012) (striking inequitable conduct defense on similar grounds). Because STMicros proposed pleading has utterly failed the pleading requirements set forth in Exergen, the Court need look no further to deny leave to amend with respect to STMicros newly proposed inequitable conduct allegations. a. STMicro Cannot Avoid Rule 9(b) by Relying on its Spoliation Allegations

STMicro might argue that its allegation of document destruction by Rambus somehow excuses STMicro from the meeting the pleading requirements for inequitable conduct. But 12 STMicro would not even be entitled to discovery on inequitable conduct unless it first pleads a 13 cognizable defense that satisfies Exergen and Rule 9(b). As the Federal Circuit has explained: 14 15 16 17 18 itself contemplated that a party alleging inequitable conduct must satisfy Rule 9(b) before 19 obtaining access to its opponents internal documents. Exergen, 575 F.3d at 1330. If the 20 essential information lies uniquely within another partys control, the party alleging inequitable 21 conduct is permitted under Rule 9(b) to plead[] on information and belief, but only if the 22 pleading sets forth the specific facts upon which the belief is reasonably based. Id. (emphasis 23 added); see also id. at 1331 n.7 (collecting cases). The emphatic absence of specific facts 24 dooms STMicros proposed pleading. 25 As the en banc Court observed in Therasense, [t]he habit of charging inequitable conduct 26 in almost every major patent case has become an absolute plague[,] as allegations of fraud on the 27 PTO are frequently brought on the slenderest grounds. 649 F.3d at 1289 (citation omitted). 28 - 10 19954701.2

The Rule acts as a safety valve to assure that only viable claims alleging fraud or mistake are allowed to proceed to discovery. By eliminating insufficient pleadings at the initial stage of litigation, Rule 9(b) prevents [parties from] using discovery as a fishing expedition. In re BP Lubricants USA Inc., 637 F.3d 1307, 1310 (Fed. Cir. 2011) (citation omitted). Exergen

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Enforcing the Rule 9(b) pleading standard is one way to curb such abusive, speculative pleading. Without the safeguards of Rule 9(b), inequitable conduct [would] devolve into a magical incantation to be asserted against every patentee and its allegation established upon a mere showing that art or information having some degree of materiality was not disclosed. Exergen, 575 F.3d at 1331 (citation omitted). Here, STMicro has alleged nothing more than that NeXT constituted prior art; that it was material (though STMicro does not say why); and that it was not disclosed. Allowing such a clearly inadequate pleading to stand would not only run afoul of Rule 9(b) and Exergen, but also indulge the careless and abusive invocation of inequitable conduct the Federal Circuit has repeatedly disapproved. 2. STMicros Inequitable Conduct Allegations Are Untimely

While futility is more than sufficient ground to deny leave to amend, STMicros unexplained and inexcusable delay in seeking amendment weighs further against the relief it seeks. Contact Lumber Co. v. P.T. Moges Shipping Co., 918 F.2d 1446, 1454 (9th Cir. 1990) (Undue delay is a valid reason for denying leave to amend.). STMicro offers no explanation whatsoever why it waited until almost two years after filing its answer to plead an inequitable conduct defense with respect to the Farmwald/Horowitz patents. See Wilkins-Jones, 2012 WL 3116025 at *7 (A party seeking to amend its pleadings must explain any delay in seeking the amendment.). The declaration STMicro submitted asserts only that there is newly acquired information in STMicros Ninth Affirmative Defense (Inequitable Conduct) relat[ing] to the NeXT prior art system and publications and that STMicro learned of this information after it filed its original Answer. Declaration of Elaine Chow (Chow Decl.), at 6. But, like LSI, STMicro was aware of NeXT no later than in mid-to-late 2011. By November of that year documents related to NeXT were among those listed in an exhibit list submitted by the Respondents, including STMicro, in the 753 Investigation, and they had been disclosed in that litigation months earlier, in April 2011. See Ex. A to Pennington Decl., Nov. 8, 2011 Respondents Post-Hearing Admitted Exhibit List at 56 (describing an Email from Dally to JP (UNC) re next chip); id. at 76 (describing a NextBus Specification); id. at 81 (same); Ex. B at 47 (Broadcoms April 22, 2011 interrogatory responses served on counsel for STMicro listing - 11 19954701.2

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JNT009801 through JNT0010035, which includes NeXT documents according to the Nov. 8, 2011 Exhibit List); Pennington Decl. 4. There is thus no reason that STMicro could not have offered, by mid to late 2011, the same inequitable conduct allegations it is belatedly trying to present now. After all, as discussed above, STMicros inequitable conduct allegations, which are identical to LSIs, consist of little more than the conclusions that NeXT was prior art; that it was material in some unspecified way; and that it was not disclosed to the PTO. If STMicro believes such threadbare allegations state a cognizable defense, then there is no reason STMicro could not have moved to amend in 2011. See Veliz v. Cintas Corp., No. C 03-1180 RS, 2009 WL 1110414 at *3 (N.D. Cal. Apr. 23, 2009) (Seeborg, J.) (denying leave to amend where plaintiff delayed after becoming aware of the factual predicate undergirding amendment, even if it was not clear when plaintiff knew all facts necessary for the amendment). As this Court has recognized, late amendment is not reviewed favorably when the facts and the theory have been known to the party seeking amendment since the inception of the cause of action, and [w]hen the fact of [the partys] preexisting knowledge is added to delay, denial becomes appropriate. Id. at *3. The proper response to STMicros lengthy, unexcused delay is to deny its belated bid to amend. See id. (denying leave to amend where plaintiffs learned of factual predicate no later than February but did not seek amendment until December); Jackson, 902 F.2d at 1388 (eight month delay in between knowledge of facts and seeking to amend justifies denying motion for leave); AmerisourceBergen, 465 F.3d at 953 (We have held that an eight month delay between the time of obtaining a relevant fact and seeking a leave to amend is unreasonable.). Nothing suggests that STMicro ever had a non-speculative, good-faith basis to assert inequitable conduct with respect to NeXT and the Farmwald/Horowitz patents. STMicro did not think this supposed defense had enough merit to warrant raising until now, even though it has had, since at least mid-2011, all the facts it needed to draft the bare-bones pleading it now offers. Even the pleading it offers now appear to have been copied from LSIs earlier proposed pleading, notwithstanding that Rule 11 requires STMicros counsel to conduct an independent investigation

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into the factual basis of its allegations.4 It is apparent that STMicros motivation in asserting inequitable conduct, like LSIs, is to enable it to seize on the Micron Courts determination that Rambuss document destruction prejudiced Microns inequitable conduct defense in that case, Micron, 2013 WL 227630, at *16; in other words, STMicro has manufactured an inequitable conduct defense that it otherwise had no basis to assert in order to take advantage of the Micron ruling. That is no excuse for STMicros lengthy delays, nor for hurling speculative accusations of inequitable conduct against inventors and attorneys when it has no good faith basis to do so. 3. STMicros Belated Pleading, If Permitted, Would Prejudice Rambus

Furthermore, STMicros belated assertion of inequitable conduct would prejudice Rambus by interjecting a new dimension into this case just three months before Rambuss proposed discovery cutoff date for all issues and the jointly proposed deadline for unclean hands discovery. See Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir.1990) (affirming denial of amendment where amendment would have required defendants to have undertaken, at a late hour, an entirely new course of defense). It was not until now that STMicro has tried to assert any inequitable conduct allegations at all against the Farmwald/Horowitz patents. To respond to this new defense, Rambus would need to undertake new discovery on STMicros allegations regarding knowledge of NeXT by individuals associated with the prosecution of the allegedly affected patents, any contacts between NeXT and those individuals as far back as more than twenty years ago, the circumstances of the prosecutions, as well as whether NeXT is material and not cumulative of other prior art considered in the prosecution process, Exergen, 575 F3d at 1329-30. Given the large number of prior art disclosed to the PTOthe 037 patent alone, for example, cites over 120 patents and over 60 publicationsjust investigating any

See In re Connetics Corp. Securities Litigation, 542 F.Supp.2d 996, 1005 (N.D. Cal. 2008) (an attorney may not rely entirely on another complaint as the sole basis for his or her allegations nor rely on the analysis of attorneys in different actions and who are presumably from different law firms); id. at 1006 (striking paragraphs in complaint that were taken directly from [an] SEC complaint with no additional investigation); Fraker v. Bayer Corp., No. CV F 081564 AWI GSA, 2009 WL 5865687 at *3-*5 (E.D. Cal. Oct. 6, 2009) (striking paragraphs quoted directly from an FTC complaint because of the absence of independently investigated evidence). - 13 19954701.2

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allegation that NeXT is non-cumulative would require the expenditure of substantial time and resources, likely including analysis by a technical expert. All this would be made more difficult by the inadequacy of STMicros pleading. Since STMicros proposed pleading does not allege the who, what, when, where, how and why of the supposed inequitable conduct, Rambus would need to take discovery from STMicro just to figure out what its inequitable conduct contentions are, resulting in further delays and expense before Rambus would be able to take meaningful discovery at all. All this would have to begin less than three months before the agreed-upon discovery cutoff for the unclean hands phase, and the discovery cutoff Rambus proposed for the case as a whole. STMicro cannot downplay the prejudice simply by proposing that the Court adopt its proposed September 2013 discovery cutoff for non-spoliation issues. As an initial matter, STMicro should not be able to push the Court toward its favored schedule just by seeking to interject a new defense that it could have raised long ago. More importantly, it is clear that STMicro will try to leverage its inequitable conduct allegations to support its unclean hands defense. See FAA p. 17, 20 (alleging, on information and belief, destruction of NeXT-related documents). It is imperative for Rambus to know exactly what STMicros allegations are, and any evidence supporting or contradicting them, before the unclean hands trial. Allowing the interjection of this newly minted defense less than three months before the end of discovery is substantially prejudicial. See Morongo Band, 893 F.2d at 1079. In these circumstances, denial of STMicros motion for leave to amend is appropriate. See Acri, 781 F.2d at 1399 (affirming denial of leave to amend when allowing amendment would prejudice the defendant because of the necessity for further discovery); Jackson, 902 F.2d at 1387-88 (finding that the burden of necessary future discovery justified denying leave to amend). IV. CONCLUSION For all of the foregoing reasons, STMicros Motion for Leave to Amend Answer and Counterclaims should be DENIED with respect to its inequitable conduct allegations.

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Respectfully Submitted, DATED: February 7, 2013 MUNGER, TOLLES & OLSON LLP

By:

/s/ David H. Pennington

Attorneys for Plaintiff RAMBUS INC.

RAMBUS INC'S OPPOSITION TO STMICRO'S MOTION FOR LEAVE TO AMEND CASE NO. 3:10-CV-05449 RS