4241

Case5:00-cv-20905-RMW Document4241 Filed02/15/13 Page1 of 29
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Gregory P. Stone (SBN 078329) Fred A. Rowley, Jr. (SBN 192298) Jeffrey Y. Wu (SBN 248784) MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, 35th Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 Email: Gregory.Stone@mto.com Email: Fred.Rowley@mto.com Email: Jeffrey.Wu@mto.com Peter A. Detre (SBN 182619) MUNGER, TOLLES & OLSON LLP 560 Mission Street, 27th Floor San Francisco, CA 94105-2907 Telephone: (415) 512-4000 Facsimile: (415) 512-4077 Email: Peter.Detre@mto.com Attorneys for RAMBUS INC.
Rollin A. Ransom (SBN 196192) SIDLEY AUSTIN LLP 555 West Fifth Street, Suite 4000 Los Angeles, CA 90013-1010 Telephone: (213) 896-6000 Facsimile: (213) 896-6600 Email: rransom@sidley.com
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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION
SK HYNIX INC., et al., Plaintiffs, vs. RAMBUS INC., Defendant.
CASE NO. CV 00-20905 RMW RAMBUS INC.S OPPOSITION TO SK HYNIXS MOTION FOR SUMMARY JUDGMENT OF UNENFORCEABILITY BASED ON COLLATERAL ESTOPPEL Date: Time: Place: Judge: March 1, 2013 9:00 a.m. Courtroom 6 Hon. Ronald M. Whyte
RAMBUSS OPP. TO SK HYNIXS MOT. FOR SUMMARY JUDGMENT CASE NO. 00-20905-RMW
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TABLE OF CONTENTS Page INTRODUCTION .......................................................................................................................... 1 ARGUMENT .................................................................................................................................. 4 I. This Court Has Correctly Recognized that It Has Discretion to Consider Whether Preclusion Is Warranted by Fairness and Efficiency................................ 4 A. Nonmutual Preclusion Is Discretionary Regardless of Whether It Is Asserted Offensively or Defensively .......................................................... 4 Hynix Seeks to Assert Micron III Offensively, Not Defensively ............... 7
II.
The Discretionary Factors Invoked by this Court in Denying Preclusive Effect to Micron I Apply with Equal Force to Micron III ...................................... 9 A. B. Inconsistent Decisions Remain a Prominent Factor Here......................... 10 This Court and the Delaware Court Reached Materially Different Conclusions on Bad Faith, Prejudice, and the Proper Sanction................ 13 1. 2. 3. C. Micron IIIs Findings Regarding Intent Directly Conflicts with Hynix III ................................................................................ 13 Micron IIIs Prejudice Findings Directly Conflict with Hynix III ........................................................................................ 15 The Different Sanctions Fixed by this Court and the Delaware Court Make Preclusion Unjustified .............................. 17
Hynixs Initiation and Exploitation of Multi-Forum Litigation Weighs Against Preclusion ....................................................................... 18 No Efficiency Would Be Gained by Applying Preclusion, and Indeed the Public Interest Favors Denial of Estoppel............................... 20
III.
The Issues Decided in Micron III Are Not Identical to those Decided by this Court............................................................................................................... 23
CONCLUSION ............................................................................................................................. 24
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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 FEDERAL CASES
TABLE OF AUTHORITIES Page(s)
Allstate Ins. Co. v. Blount, 491 F.3d 903 (8th Cir. 2007)..................................................................................................... 9 Axiom Worldwide, Inc. v. HTRD Group Hong Kong Ltd., 8:11-CV-1468-T-33TBM, 2012 WL 4077238 (M.D. Fla. Sept. 17, 2012) .............................. 5 Blankner v. City of Chicago, 504 F.2d 1037 (7th Cir. 1974)................................................................................................. 11 Blonder-Tongue Labs., Inc. v. Univ. of Illinois Found., 402 U.S. 313 (1971) ......................................................................................................... passim Central Delta Water Agency v. United States, 306 F.3d 938 (9th Cir. 2002)................................................................................................... 22 Charles J. Arndt, Inc. v. City of Birmingham, 748 F.2d 1486 (11th Cir. 1984)............................................................................................... 20 Chisholm v. Def. Logistics Agency, 656 F.2d 42 (3d Cir. 1981)...................................................................................................... 18 Collins v. D. R. Horton Inc., 505 F.3d 874 (9th Cir. 2003)..................................................................................................... 7 Crawford v. Ranger Ins. Co., 653 F.2d 1248 (9th Cir. 1981)................................................................................................. 10 Cygnus Telecomm. Tech., LLC v. American Intl Telephonics, LLC, 569 F. Supp. 2d 1035 (N.D. Cal. 2008) .................................................................................... 7 Del. River Port Auth. v. Fraternal Order of Police, 290 F.3d 567 (3d Cir. 2002)...................................................................................................... 7 Delgado v. United States, 536 F. Supp. 2d 1328 (Ct. Intl Trade 2007)......................................................................... 6, 7 Gough v. Natural Gas Pipeline Co. of Am., 996 F.2d 763 (5th Cir. 1993)................................................................................. 10, 11, 18, 22 Haberer v. Woodbury County, 188 F.3d 957 (8th Cir. 1999)..................................................................................................... 9 Hauser v. Krupp Steel Producers, Inc., 761 F.2d 204 (5th Cir. 1985)................................................................................................... 20
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TABLE OF AUTHORITIES (continued) Page(s) Hynix Semiconductor, Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011)............................................................................................... 12 Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 2d 1038 (N.D. Cal. 2006) .................................................................................. 12 In re Reynoso, 477 F.3d 1117 (9th Cir. 2007)................................................................................................. 23 Jean Alexander Cosmetics, Inc. v. LOreal USA, Inc., 458 F.3d 244 (3d Cir. 2006)...................................................................................................... 6 Kent v. United of Omaha Life Ins. Co., 484 F.3d 988 (8th Cir. 2007)................................................................................................. 6, 7 Liberty Mut. Ins. Co. v. FAG Bearings Corp., 335 F.3d 752 (8th Cir. 2003)..................................................................................................... 6 Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011)........................................................................................ passim Micron Tech., Inc. v. Rambus Inc., 255 F.R.D. 135 (D. Del. 2009)................................................................................................ 12 Mozart Co. v. Mercedes-Benz of N. Am., Inc., 833 F.2d 1342 (9th Cir. 1987)........................................................................................... 10, 11 Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) ......................................................................................................... passim Provau v. State Farm Mut. Auto Ins. Co., 772 F.2d 817 (11th Cir. 1985)................................................................................................... 8 Robi v. Five Platters, Inc., 838 F.2d 318 (9th Cir. 1988)............................................................................................. 10, 11 Rodriguez-Garcia v. Miranda-Marin, 610 F.3d 756 (1st Cir. 2010) ................................................................................................... 20 Roybal v. City of Albuquerque, CIV08-0181JB/LFG, 2009 WL 1329834 (D.N.M. Apr. 28, 2009) ........................................ 20 SEC v. Monarch Funding Corp., 192 F.3d 295 (2d Cir. 1999).................................................................................................... 20
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TABLE OF AUTHORITIES (continued) Page(s) Sw. Bell Tel., L.P. v. Arthur Collins, Inc., CIV.A. 304-CV-0669B, 2005 WL 6225305 (N.D. Tex. Oct. 14, 2005) .................................. 5 Watts v. XL Sys., L.P., CIV.A. 1:06-CV-653LY, 2008 WL 5731945 (W.D. Tex. July 2, 2008).................................. 5 TREATISES 18 Wright, Miller & Cooper, Federal Practice and Procedure 4416 ................................... 2, 11 18 Wright, Miller & Cooper, Federal Practice and Procedure 4426 ....................................... 11
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18A Wright, Miller & Cooper, Federal Practice and Procedure 4465.1 .................................... 8 18A Wright, Miller & Cooper, Federal Practice and Procedure 4465 ...................................... 5 18A Wright, Miller & Cooper, Federal Practice and Procedure 4465.2 ........................... 10, 17 Restatement (Second) of Judgments 29(4) (1982)..................................................................... 10 LAW REVIEWS Currie, Brainerd, Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine, 9 Stan. L. Rev. 281 (1957) ....................................................................................................... 2, 8
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INTRODUCTION Collateral estoppel is not supposed to be a gaming table artifice for litigation advantage. Blonder-Tongue Labs., Inc. v. Univ. of Illinois Found., 402 U.S. 313, 329 (1971). Its objective, instead, is to promot[e] judicial economy by preventing needless litigation. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979). Considered against these policies, Hynixs renewed effort to invoke estoppel is not just aggressive, but off base. Hynix chose this forum when it brought a declaratory relief action against Rambus. In the ensuing decade-plus of litigation here, this Court has adjudicated Hynixs unclean hands defense not once, but twice, issuing detailed rulings in 2006 and in its recent Findings of Fact and Conclusions of Law on Spoliation and the Unclean Hands Defense dated September 21, 2012 (Dkt. 4160) (Hynix III). In between, this Court conducted two jury trials, one on patent issues and the other on Hynixs and MicronsJEDEC-based claims and defenses. These trials were followed by an appeal that largely affirmed this Courts determinations, remanding only for application of the Federal Circuits new spoliation standard. Having now issued its remand spoliation ruling, this Court is nearing the entry of its second final judgment in this case. By seeking to cast aside these proceedings, and to displace Hynix III with the dispositive sanction in Micron Tech., Inc. v. Rambus Inc., Memorandum Opinion, Jan. 2, 2013 (Micron III),1 Hynix would deploy collateral estoppel not to serve efficiency or fairness, but as a gambit for obtaining the best outcome possible notwithstanding its own litigation choices. Hynix coordinated the filing of this action with Micron, which filed its Delaware suit one day earlier. As in 2009, it invokes a Delaware Court decision that was issued months after this Courts own unclean hands ruling, and yet departs widelyon both the facts and the lawfrom this Courts ruling. Hynix asks this Court to substitute the Delaware Courts unenforceability sanction, and its predicate findings of bad faith and prejudice, in spite of the fact that they differ in critical respects from this Courts sanction and supporting analysis. Hynix asks for deference to Micron III even though this Court, unlike the Delaware Court, had the benefit of having tried
1
Attached to Letter from Kenneth L. Nissly to the Hon. Ronald M. Whyte, Jan. 2, 2013 (Dkt. 4229).
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the substantive claims and defenses bearing on these issues. And it asks for deference to this ruling even though the Federal Circuit had previously reversed the Delaware Court on these very issues in Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) (Micron II). The driving principle of Hynixs preclusion theory is not fairness or conserving judicial resources, but heads I win, tails you lose. This is a jaundiced theory of collateral estoppel, and it finds no support in law or policy. Hynix is wrong in asserting that collateral estoppel applies here in a mandatory fashion because it is defensive. Hynix Mot. for Summ. J. of Unenforceability, Jan. 25, 2013 (Dkt. 4238), at 4. There is no dispute that Hynixs preclusion request is nonmutual, and that defining characteristic makes the bar distinctively risky. 18 Wright, Miller & Cooper, Federal Practice and Procedure 4416, at 402 (2d ed. 2002). From the get-go, the Supreme Court recognized the discretion of courts to weigh the risks of unfairness and inefficiency in considering whether to apply nonmutual collateral estoppel. In the very cases that adopted the doctrine, Blonder Tongue and Parklane, the Supreme Court emphasized the importance of the trial courts sense of justice and equity. Blonder-Tongue, 402 U.S. at 333-34; accord Parklane, 439 U.S. at 331. With respect to these concerns, there is no intrinsic difference between offensive as distinct from defensive issue preclusion. Parklane, 439 U.S. at 331 n.16 (citation omitted). As explained by the proceduralist Brainerd Currie, whose work was cited repeatedly in Parklane and Blonder-Tongue, the concern is with nonmutuality, and in particular with binding a party who has lost a case in which he had no control over such factors as the time and place for action. Brainerd Currie, Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine, 9 Stan. L. Rev. 281, 302-03 (1957). Even if the label mattersand it does notHynixs assertion of preclusion is clearly offensive in posture, because Rambus is the defendant in both this case and in Micron, and there is no question that a district court has broad discretion with respect to offensive preclusion, Hynix III at 46. Whether the discretion is framed in terms of mutuality or the offensive label, this Court has stood firmly in the law in recognizing its power to grant or refuse preclusion. Hynix is equally wrong in arguing that this Court ought to exercise its discretion
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in the face of Hynixs litigation choices and the multiple trials and hearings conducted by this Courtin favor of preclusion. At this juncture, just as in 2009, the factors that inform the Courts exercise of discretion weigh decisively against giving collateral estoppel effect to the Delaware Courts ruling. See Order Denying Hynixs Mot. for Summ. J. of Unclean Hands, Feb. 3, 2009 (Dkt. 3897) (09 Coll. Estop. Order). First, Micron IIIs unenforceability sanction is flatly contrary to this Courts holding in Hynix III that Rambuss patents should not be held unenforceable. The inconsistency goes further; the sanction inquiry is itself predicated on factual findings and legal conclusions regarding the extent of bad faith and the extent of prejudice, on which Hynix III and Micron III differ substantially. As this Court held in 2009, it would be neither fair nor equitable to Rambus to discard the Courts own prior decision merely because another court reached a different result. Second, Hynixs deliberate multiplication of litigation turns the purpose of estoppel doctrine on its head, inviting parallel lawsuits aimed at hedging against a bad result in the plaintiffs own suit. Third, applying preclusion at this late stage would undercut rather than promote judicial efficiency. In contrast to the Federal Circuits Micron II decision, which this Court deemed binding on spoliation, the Delaware Courts conflicting sanction does not justify undoing the multiple trials convened by this Court to adjudicate Hynixs lawsuit. Hynixs only policy justification for replacing this Courts decision with Micron III is to manufacture artificial consistency between the two cases. But it would be highly unfair to prevent Rambus from enforcing the ground-breaking Farmwald/Horowitz patents against an adjudged infringer, after the Courts rulings regarding validity have already been affirmed by the Federal Circuit. Furthermore, Hynix ignores that it was its own conduct that paved the way for the inconsistent decisions it now complains about. If Hynix wanted its claims and defenses to be adjudicated in Delaware, nothing stopped Hynix from joining the earlier-filed Micron action. Instead, Hynix filed suit in this Court in coordination with Micron, forcing Rambus to bear the burden and expense of litigating separate actions on opposite coasts. By rewarding this strategy, and endorsing Hynixs warped theory of preclusion, the Court would create perverse incentives for litigants to increase litigation and further burden already-crowded patent dockets.
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Hynixs motion should be denied. ARGUMENT This Court Has Correctly Recognized that It Has Discretion to Consider Whether Preclusion Is Warranted by Fairness and Efficiency Hynixs lead argument is that Micron III carries preclusive effect as a compulsory matter here, leaving this Court with no discretion to decide whether it should apply Micron III in
6 place of its own recent decision. That argument is wrong. The Supreme Court adopted 7 nonmutual collateral estoppel on the premise that courts would have discretion to apply or reject 8 it. That discretion is critical, because nonmutual preclusion creates unique opportunities for the 9 invoking party to game the courts, and a substantial risk that imposing the bar will waste judicial 10 resources and work an injustice. Indeed, Hynixs motion presents a case-book example of how 11 these policy concerns arise. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A. Nonmutual Preclusion Is Discretionary Regardless of Whether It Is Asserted Offensively or Defensively According to Hynix, the litigation position of the party asserting collateral estoppel, and not mutuality, determines whether or not a court has discretion to bar relitigation. Mot. at 4-5. This approach elevates form over substance, and cannot be squared with the Supreme Courts focus on the actual effect of applying preclusion in a given case. In Blonder-Tongue, where the Supreme Court first recognized nonmutual collateral estoppel, it specifically noted that no one set of facts, no one collection of words or phrases, will provide an automatic formula for proper rulings on estoppel pleas. In the end, decision will necessarily rest on the trial courts sense of justice and equity. Blonder-Tongue, 402 U.S. at 333-34. Given that Blonder-Tongue involved the application of defensive nonmutual collateral estoppel, id. at 334, there was no question, from the outset, that nonmutual estoppel was discretionary and non-automatic regardless of whether a party invoked it defensively or offensively. And the Supreme Court put any lingering doubt about that issue to rest in Parklane, where it observed that there is no intrinsic difference between offensive as distinct from defensive issue preclusion, although a stronger showing that the prior opportunity to litigate was adequate may be required in the former situation. Parklane, 439 U.S. at 331 n.16 (quoting
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Restatement (Second) of Judgments 88 (Tent. Draft No. 2, Apr. 15, 1975)). The leading treatise has thus observed that there is discretion to deny nonmutual preclusion when preclusion would not be fair or in order to achieve justice and equity. See 18A Wright, Miller & Cooper, Federal Practice & Procedure, 4465 at 730 (2d ed. 2002). In its latest collateral estoppel motion, Hynix insists that this Court lacks discretion to deny defensive collateral estoppel, Mot. at 5, yet fails to address the foundational principles outlined in Blonder-Tongue and Parklane. Hynix does not explain why the BlonderTongue Court characterized nonmutual preclusion in a defensive case as resting on the trial courts sense of justice and equity, 402 U.S. at 334, if the Supreme Court really believed discretion was available only in cases involving offensive collateral estoppel, Mot. at 5 (emphasis in original). Hynix does not explain why the Parklane Court expressly rejected any categorical distinction between defensive and offensive uses of nonmutual collateral estoppel, 439 U.S. at 331 n.16, if the Supreme Court actually believed that defensive applications were compulsory, and that [c]ourts do not have discretion to consider additional factors beyond the four [general] requirements when a party seeks to apply collateral estoppel defensively, Mot. at 5. And Hynix does not explain why, if the Supreme Courts approach is wrongand the approach would be binding regardlesssubsequent cases and the leading federal procedure treatise have likewise stressed that it is mutuality, and not the posture of the parties, that determines the courts discretion on matters of preclusion. See, e.g., Axiom Worldwide, Inc. v. HTRD Group Hong Kong Ltd., 8:11-CV-1468-T-33TBM, 2012 WL 4077238, at *5 (M.D. Fla. Sept. 17, 2012) ([W]hile defensive use of nonmutual collateral estoppel is an accepted practice, it must still conform to the requirements of fairness ....) (citation omitted); Watts v. XL Sys., L.P., CIV.A. 1:06-CV-653LY, 2008 WL 5731945, at *11 (W.D. Tex. July 2, 2008) ([T]his Court need not determine whether offensive or defensive collateral estoppel is involved here because precedent illustrates that fairness is always an appropriate factor when considering collateral estoppel.); Sw. Bell Tel., L.P. v. Arthur Collins, Inc., CIV.A. 304-CV-0669B, 2005 WL 6225305, at *3-*4 (N.D. Tex. Oct. 14, 2005) (similar). Hynix does not address these critical issues because it has no persuasive arguments
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to present. The rigorous inquiry into whether it would be just or equitable to give another courts decision nonmutual preclusive effect cannot be reduced to a collection of labels. 09 Coll. Estop. Order at 2. The special risks attending nonmutual preclusion instead require the Court to weigh fairness and efficiency concerns, and thus to exercise its discretion. The specific considerations set out in Parklane illustrate this point, for they apply without regard to whether the party seeking to invoke collateral estoppel is the defendant or the plaintiffin either the first or the second action. For example, whether the party to be estopped had an incentive to litigate the first action, the adequacy of procedural opportunities in the first action, and the presence of inconsistent decisions, see 439 U.S. at 330-331, are all factors that do not turn on who initiated the litigation. That is why the Parklane Court, in the course of analyzing offensive estoppel, presupposed that fairness matters for defensive estoppel, noting only that [t]he problem of unfairness is particularly acute in cases of offensive estoppel. 439 U.S. at 331 n.15 (emphasis added). In its motion, as in its past collateral estoppel briefing, Hynix has cited no binding authority treating defensive nonmutual collateral estoppel as mandatory. In urging that discretion is available only in an offensive situation, Hynix invokes two cases that this Court specifically addressed in its 2009 ruling: Liberty Mut. Ins. Co. v. FAG Bearings Corp., 335 F.3d 752, 757 (8th Cir. 2003), and Jean Alexander Cosmetics, Inc. v. LOreal USA, Inc., 458 F.3d 244, 248 (3d Cir. 2006). See Mot. at 5. Liberty Mutual merely recognizes the Supreme Courts discussion of the need for careful, equitable consideration when applying non-mutual issue preclusion. 09 Coll. Estop. Order at 3. Such careful exercise of discretion is exactly what the Court has done in the past (id. at 4-9) and should do again. Jean Alexander is both non-binding and not persuasive (id.) because, among other things, it merely addresses the standard of review for an appeals court in a case that did not involve the discretionary factors now at issue. Hynix fares no better by re-citing two other cases it previously relied upon without success, Kent v. United of Omaha Life Ins. Co., 484 F.3d 988, 994 (8th Cir. 2007) and Delgado v. United States, 536 F. Supp. 2d 1328, 1339 n.8 (Ct. Intl Trade 2007). Compare Mot. at 5 with Hynixs Mot. for Summ. J. of Unclean Hands, Jan. 19, 2009 (Dkt. 3879) (Hynix 1/19/2009 Mot.), at 17. Kent essentially
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tracks the holding of Jean Alexander, which, as noted, avails Hynix of nothing. See 484 F.3d at 994. And Delgado merely holds that a magistrate judge may not bypass the mandatory factors in weighing offensive nonmutual collateral estoppel. 536 F. Supp. 2d at 1339 n.8. Finally, the new cases Hynix cites do not purport to foreclose the consideration of general fairness and equity concerns in the context of defensive nonmutual collateral estoppel: Collins v. D. R. Horton Inc., 505 F.3d 874, 881 (9th Cir. 2003) merely recognizes the discretion afforded offensive estoppel courts (without addressing defensive estoppel), and Del. River Port Auth. v. Fraternal Order of Police, 290 F.3d 567, 572 n.6 (3d Cir. 2002), holds only that a de novo standard of review applies in reviewing summary judgment on preclusion grounds. And Cygnus Telecomm. Tech., LLC v. American Intl Telephonics, LLC, 569 F. Supp. 2d 1035 (N.D. Cal. 2008), applied preclusion after a patentee had a full and fair opportunity to litigate and lost, but nothing in it even hinted at the presence of other factorssuch as the existence of inconsistent decisions and/or a failure to join an earlier action that militate in favor of a different result in this case. Even if Hynixs authorities supported an inflexible approach to discretion in preclusion cases, they would merely illustrate that despite the clear language of Blonder-Tongue and Parklane, litigants and the courts all too frequently reduce this rigorous inquiry [into the equities] to a collection of labels. 09 Coll. Estop. Order at 2. This Court was right to reject this approach in its 2009 and 2012 preclusion rulings, and to recognize its discretion to give or refuse preclusive effect to a Delaware Court ruling. 09 Coll. Estop. Order at 2-3; Hynix III at 45-46. This Courts reasoning stands on the bedrock principles of nonmutual preclusion, regardless of whether other courts examine them deeply, and applies with equal force here. B. Hynix Seeks to Assert Micron III Offensively, Not Defensively Even if the label of offensive or defensive is legally significant, Hynix is asserting Micron III under a theory of offensive, nonmutual collateral estoppel. The main problem with Hynixs arguments on this score is that they gloss[] over the fact that it sued Rambus for declaratory judgment in this forum (Hynix III at 46), while Micron sued Rambus for declaratory judgment in Delaware. Unlike the litigation scenario assumed by some formulations of preclusion
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doctrine, cf. Parklane, 439 U.S. at 329-30 ([d]efensive collateral estoppel gives a plaintiff a strong incentive to join all potential defendants in the first action if possible), the preclusion issue here involves two declaratory relief actions that forced Rambus to litigate patent infringement counterclaims in two cross-continental forums. In this situation, it matters not that Rambus is the party asserting patent claims; what matters is that Hynix and Micron chose the forum and brought suit, raising substantial concern about the application of non-mutual issue preclusion and the need for a trial court to exercise discretion. 09 Coll. Estop. Order at 3-4. This concern is reflected both in the case law, see Provau v. State Farm Mut. Auto Ins. Co., 772 F.2d 817, 822 (11th Cir. 1985) (Special difficulties arise when precluding a party who did not have the initiative in the first action), and the commentary, see 18A Wright, Miller & Cooper, supra, 4465.1 at 741 (One of the most general concerns attending the abandonment of mutuality has been that it may be unfair to bind a party who did not take the initiative in the first action.) Indeed, Professor Currie was so concerned that the defendants ability to litigate the first action may be impaired by the plaintiffs strategic use of the initiative that he initially suggested a categorical bar against a party invok[ing] the former judgment against one who was a defendant in the prior action. Currie, Mutuality of Collateral Estoppel, supra, at 304. Consistent with these policies, the Blonder-Tongue and Parklane Courts focused on the circumstances of the first lawsuit, and in particular on whether it is fair to bind the defendant in that action. Thus, among other things, the Parklane Court examined whether the defendant in the first action was forced to defend in an inconvenient forum[.] 439 U.S. at 331 n.15 (emphasis added); see also id. at 329-31; Blonder-Tongue, 402 U.S. at 333. That is why Hynixs assertion of preclusion here raises the same offensive estoppel concerns that would attach if a nonmutual plaintiff sought to assert an adverse ruling against a defendant who also was the defendant in the prior proceeding: the defendant against whom estoppel is asserted [here, Rambus qua declaratory relief defendant] typically will not have chosen the forum in the first action [as Rambus, being a declaratory relief defendant, did not in Delaware]. Parklane, 439 U.S. at 331 n.15. In Hynix III, the Court rightly found that Hynixs assertion of the doctrine
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properly could be considered offensive, or at least quasi-offensive, in this case. Hynix III at 46. Hynix acknowledges that ruling (Mot. at 4), but again relies primarily on the same unpersuasive authorities that it advanced in its 2009 collateral estoppel motion: Haberer v. Woodbury County, 188 F.3d 957, 962 n.3 (8th Cir. 1999), and Allstate Ins. Co. v. Blount, 491 F.3d 903 (8th Cir. 2007). See Hynix 1/19/2009 Mot. at 16. But Haberer merely sets out a paradigmatic defensive collateral estoppel scenario, in which ordinarily the defendant in the second action asserts it. 188 F.3d at 962 n.3. Nothing in that decision deals with the assertion of a ruling against the defendant in a prior case who did not choose the time, venue, or adversary. Hynix III at 46. Blount did not in any way hold, as Hynix claims, that additional factors for offensive collateral estoppel should not be considered (Mot. at 4); in fact, Blount treated the assertion of preclusion by a declaratory-judgment plaintiff against a party who was a defendant in the prior action as a type of offensive collateral estoppel, 491 F.3d at 912, and noted that [t]he doctrine will not apply where doing so would be inequitable, id. at 909 (applying Missouri law). Whether it is because Hynixs assertion of Micron III here is offensive, or simply because it is indisputably nonmutual, this Court has the discretion to consider fairness and efficiency in deciding whether to replace its spoliation decision with that of another court. II. The Discretionary Factors Invoked by this Court in Denying Preclusive Effect to Micron I Apply with Equal Force to Micron III [T]he general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where the application of offensive estoppel would be unfair to a
20 defendant, a trial judge should not allow the use of offensive collateral estoppel. Parklane, 439 21 U.S. at 331 (emphasis added). One key indicator of unfairness is if the judgment relied upon as 22 a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the 23 defendant. Id. at 330. These factors, considered in light of the procedural postures of this case 24 and the Delaware case (Order Setting Deadline for Response to SK Hynixs Mot., Jan. 29, 2013 25 (Dkt. 4240)), weigh decisively against giving preclusive effect to Micron III. 26 Hynix requests that this Court resolve the inconsistencies between its ruling and 27 Micron III in favor of the latter decision. It urges this deference even though Hynix forwent the 28
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opportunity to join the Delaware litigation in favor of filing suit here. This Court has since presided over three trials in this case. It has seen the full range of evidence on spoliation, JEDEC, and patent issues. And it has concluded that unenforceability is not an appropriate sanction. Both fairness and efficiency weigh in favor of adhering to these determinations, and against displacing them with the conflicting Micron III determinations bearing on the appropriate sanction. A. Inconsistent Decisions Remain a Prominent Factor Here The existence of inconsistent prior judgments is perhaps the single most easily identified factor that suggests strongly that neither should be given preclusive effect. 09 Coll. Estop. Order at 4 (quoting 18A Wright, Miller & Cooper, supra, 4465.2 at 764); accord Restatement (Second) of Judgments 29(4) (1982). The judicious application of issue preclusion rests on an assumption that a prior decision was more or less correct, but [t]his assumption is not warranted where inconsistent decisions have been reached[.] 09 Coll. Estop. Order at 6 (citing Crawford v. Ranger Ins. Co., 653 F.2d 1248, 1252 (9th Cir. 1981)). The presence of inconsistent decisions suggests that the outcomes may have been based on equally reasonable resolutions of doubt as to the probative strength of the evidence, Restatement (Second) of Judgments 29 cmt. f, and is sufficient by itself to defeat estoppel, e.g., Crawford, 653 F.2d at 1252. See also Gough v. Natural Gas Pipeline Co. of Am., 996 F.2d 763, 768 (5th Cir. 1993) ([O]nce inconsistent decisions have been reached, none may be given preclusive effect.); Parklane, 439 U.S. at 330 (noting unfairness of estoppel where allegedly preclusive judgment is itself inconsistent with one or more previous judgments). Here, the unfairness of nonmutual preclusion is magnified enormously because Hynix has itself already unsuccessfully litigated its bid for unenforceability in the forum of its choosing. See Robi v. Five Platters, Inc., 838 F.2d 318, 330 (9th Cir. 1988); see also Mozart Co. v. Mercedes-Benz of N. Am., Inc., 833 F.2d 1342, 1350 (9th Cir. 1987) (It would be a curious use of affirmative collateral estoppel to permit one who had lost before the jury on certain facts to overturn that verdict by pointing out that on different facts, but identical legal principles, the winner before the jury had lost a jury verdict to a stranger on an earlier day and in a different
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court. Issue preclusion in its affirmative form is not that expansive.).2 Indeed, the Ninth Circuit has reversed the application of nonmutual preclusion in just such circumstances. Robi, 838 F.2d at 330 (denying preclusion where the judgment which generates issue preclusion is itself inconsistent with a judgment which the [defendant] has obtained against the very plaintiff on whose behalf issue preclusion is asserted). Hynix makes no effort to grapple with the conflict between Hynix III and Micron III, nor with the authorities, including Parklane, that caution against preclusion in these circumstances. Rather, Hynix insists that Micron III should be blindly followed even if it is wrong. Mot. at 6 (justice is better served in most cases by perpetuating a possibly mistaken decision than by permitting relitigation .). But the Wright & Miller passage Hynix quotes is based on cases addressing mutual preclusion. See 18 Wright, Miller & Cooper, supra, 4426 at 684 & n.3 (citing Aircraft Braking Sys. Corp. v. Local 856, 97 F.3d 155, 159 (6th Cir. 1996) (addressing matter previously litigated in federal court between the same parties), and Blankner v. City of Chicago, 504 F.2d 1037, 1039-40 (7th Cir. 1974) (similar)). Where a dispute between the same parties has already been adjudicated, issue preclusion is the essential means for protecting the most fundamental purposes of achieving finality by adjudication. 18 Wright, Miller & Cooper, supra, 4416 at 394. Nonmutual preclusion would not further that objective. See 09 Coll. Estop. Order at 6 (finality as between two parties is value lacking in the nonmutual context). There is, moreover, no issue here of permitting relitigation. Cf. Mot. at 6. Hynix has already litigated its spoliation claim; the consistent results it seeks (id.) would be achieved not by avoiding relitigation, but by vacating this Courts previously-rendered ruling for no reason other than that another district court subsequently chose a different remedy based on different factual findings and legal conclusions. See Gough, 996 F.2d at 769 (collateral estoppel would not eliminate the inconsistent decisions, because they happened already). As this Court
2
This Court previously observed that the reasoning of Mozart likely stems from the complete absence of efficiency gained by reversing an existing decision simply because a second, contrary decision now exists. 09 Coll. Estop. Order at 8. But the Ninth Circuit also emphasized the inconsistency of the two determinations. Mozart, 833 F.2d at 1348 (explaining that MBNA in this case established to the satisfaction of the jury that a business justification exist[ed] for its challenged business practice, whereas the allegedly preclusive decision upheld a verdict finding no such business justification). - 11 RAMBUSS OPP. TO SK HYNIXS MOT. FOR SUMMARY JUDGMENT CASE NO. 00-20905-RMW
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held in 2009, the unfairness of that outcome weighs decisively against preclusion. 09 Coll. Estop. Order at 4-6; Parklane, 439 U.S. at 330. In this respect, the sanction issues for which Hynix seeks preclusion stand on a fundamentally different footing from the spoliation-related issues on which this Court granted limited preclusion in Hynix III. Nor can Hynix make Hynix III disappear by positing a supposed waiver of different outcomes by Rambus. Cf. Mot. at 6. Rambus never made any such concession; otherwise the Federal Circuit would not have needed to reserve the question of collateral estoppel as to spoliation for this Court to decide in the first instance. See Hynix Semiconductor, Inc. v. Rambus Inc., 645 F.3d 1336, 1347 n.2 (Fed. Cir. 2011) (Hynix II). The supposed waiver was, in fact, nothing more than an argument Rambus made on appeal that the evidence in the Micron I record, but not in the Hynix I record,3 did not support Micron Is determination of spoliation. See Rambus Reply Br. at 3, Micron II, 645 F.3d 1311 (No. 2009-1263), available at 2009 WL 3657821. In other words, Rambus argued for reversal of the spoliation determination in Micron I, not that the outcome in this case should mechanically follow whatever happens in Micron. Unable to wish away the inconsistency between the two decisions, Hynix tries to minimize it. Mot. at 1-2 (arguing that both courts found bad faith and prejudice). Hynixs position is belied by Micron III itself, which expressly acknowledged that [Judge Whytes] findings of fact are different from those of the [Micron] case. Micron III at 38 n.25. The difference goes beyond the ultimate question of sanction, because the choice of sanction turns on predicate findings and conclusions, including : (1) the degree of fault of the party that altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future. Micron II, 645 F.3d at 1329 (citation omitted). With respect to each factor bearing on the proper sanction, the Delaware Courts findings and conclusions differ from those made by this Court, thereby triggering the general rule against preclusion when there are inconsistent prior
3
Micron I refers to Micron Tech., Inc. v. Rambus Inc., 255 F.R.D. 135 (D. Del. 2009). Hynix I refers to Hynix Semiconductor Inc. v. Rambus Inc., 591 F. Supp. 2d 1038 (N.D. Cal. 2006).
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decisions. See Parklane, 439 U.S. at 330-31. B. This Court and the Delaware Court Reached Materially Different Conclusions on Bad Faith, Prejudice, and the Proper Sanction 1. Micron IIIs Findings Regarding Intent Directly Conflict with Hynix III
This Court held, after extensive briefing and consideration of both the record in this case and evidence from the Micron record, that the evidence does not show that Rambus knowingly destroyed damaging evidence. Hynix III at 56. The Delaware Court, in contrast, concluded that Rambus attempted to destroy evidence that would be unfavorable to its litigation position and to keep other, more favorable evidence. Micron III at 25. These different determinations were, in turn, predicated on varying assessments of specific facts and evidence. As this Court found, Rambus was alerted to the need for a document retention policy by attorney Johnson. Hynix III at 54. Johnson used the phrase battle-ready at a March 1998 meeting with Rambus to refer to the need to organize documents in connection with a general concern for litigation. Id. at 12-13. It seems clear that Johnson was concerned about Rambus getting entangled in litigation with its records in the shape that they were in at the time, whether it was litigation brought by Rambus, initiated against Rambus, or in some way involving Rambuss records. Id. at 21. The advice Johnson gave to Rambus was commonplace, id. at 21, and [t]here is no evidence that Johnson knew of any particular documents that would actually be damaging to Rambus if it should engage in patent infringement litigation at some time in the future, id. at 54. Rambuss destruction of backup tapes in July 1998 reflected nothing more than this general concern. The tape destruction was carried out at Johnsons recommendation primarily as a housekeeping measure and to minimize the expense of complying with discovery requests in any litigation in which Rambus might become involved. Id. at 52. As this Court further found, Rambus disseminated its Document Retention Policy openly and broadly throughout the company, and [s]uch openness about the process seems inconsistent with knowing destruction of documents in violation of a duty to maintain them. Id. at 55. Joel Karps advice to keep documents that showed proof of invention does not suggest selective enforcement, and was consistent with the terms of Rambuss policy and the industry
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standard template provided by outside counsel. Id. at 56. Karps retrieval of conception date information for Direct Rambus material from a backup tapewhich in any event predated the adoption of the document retention policywas likewise consistent with [outside counsel] Cooleys recommendation to preserve intellectual property materials . Id. at 28.4 If Karp in fact requested that employees destroy potentially damaging evidence, it is surprising that there was not a single whistle blower out of the approximately 145 and 165 employees . Id. at 55. The Court also considered the somewhat unclear testimony by Craig Hampel regarding a Karp remark about hypothetical e-mails or conversations concerning the patentability of an idea. Id. at 27. The Court found that Karp was not concerned about any actual damaging e-mails or records that he knew existed but rather about the possibility that there could be speculative adverse comments by a third party or other stray remarks that might be found by an adversary in the course of discovery. Id. at 27. Thus, while the Court concluded that willful spoliation is treated the same as bad faith spoliation and that Rambus destroyed evidence in bad faith or at least willfully, the evidence does not support a conclusion that Rambus deliberately shredded documents it knew to be damaging. Id. at 57. The Delaware Court saw things differently. For example, it found that the phrase battle-ready was not a phrase that Johnson used, and concluded that the use of the phrase in March 1998 meant Rambuss policy was adopted to further Rambuss litigation strategy by frustrating the fact-finding efforts of parties adverse to Rambus. Micron III at 23 (citation omitted). It also determined that Rambus engaged in selective enforcement of the document retention policy, id., at 24, which goes toward showing that Rambus tried to use the policy to seek an advantage in litigation, id. at 25. The instances of purported selective enforcement cited by the Delaware Court include the destruction of backup tapes coupled with one instance of retrieval of conception date information from one particular tape; Karps advice to keep documents that help establish Rambuss intellectual property; and the Hampel testimony which Micron III construed as evidencing an intent on Karps part to expunge harmful documents. Id. at
4
The retrieval was necessary because a files date information changed when it was pulled up from a computer. Hynix III at 28.
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24-25. These determinations flatly conflict with the prior decision made by this Court. 2. Micron IIIs Prejudice Findings Directly Conflict with Hynix III
This Court and the Delaware Court also made different determinations regarding the extent of prejudice. The Delaware Courts prejudice determination was influenced by its perception of Rambuss intent. See Micron III at 39-40 (The wide range and sheer amount of materials destroyed, along with Rambuss bad faith, make it almost certain that misconduct interfered with the rightful resolution of the case.); id. at 40 n.26 (noting that selective execution of the document retention policy relating to Rambus position on patentability also increases the likelihood that the document destruction interfered with the rightful resolution of the case.). This Court, on the other hand, recognized that [t]here is a possibility that Rambus did not destroy any evidence that would have been beneficial to Hynixs litigation position. Id. at 64; see also id. (stating that Hynix was arguably prejudiced). The Court determined that Rambus must suffer the consequences of that uncertainty, id., not because Rambus knowingly destroyed adverse information (it did not), but because, according to the Court, Rambus is the party that destroyed documents by the box and bag without keeping any record of what was destroyed, id. Each courts prejudice analysis, in turn, was based on different findings and conclusions regarding the effects of Rambuss alleged spoliation on Hynixs and Microns respective defenses. For example, this Courts prejudice determination focused on the question of JEDEC participants disclosure duty, noting that it appears plausible that spoliated evidence might have shed additional light on the scope of Rambuss disclosure obligation. Id. at 60. Micron III, in contrast, based its JEDEC prejudice determination on claims and defenses that do not, in fact, require proof that Rambus breached a duty of disclosure to JEDEC, Micron III at 31. These include claims and defenses based on misrepresentations or intentionally false promises, id. at 31 n.19, for which Rambuss internal documents may have revealed any deceptive intent behind the representations Rambus made during JEDEC meetings or to JEDEC participants, id. at 32. This Court, however, did not find prejudice as to any misrepresentationbased claims or defenses. Indeed, the Delaware Courts prejudice determination on this score
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cannot be squared with the jury and this Courts finding that Rambus did not make affirmative misrepresentations at JEDEC. See Special Verdict Form, Mar. 26, 2008 (Dkt. 3613), at 19, 31; Phase III (Conduct Trial) Findings of Fact and Conclusions of Law, Mar. 3, 2009 (Dkt. 3904), at 37 (Consistent with the jurys finding, the Court agrees that Rambus made no misrepresentations and uttered no deceptive half-truths to JEDEC and its members.); id. at 31-37 (finding that the allegedly false statements were not false or misleading).5 For example, this Court found that Rambuss statement regarding SyncLink was replete with warnings, including a disclaimer that Rambuss presence at committee meetings did not constitute any statement regarding potential infringement of Rambuss intellectual property, id. at 35. Since the accused representations were not false, any destruction of internal Rambus documents related to Rambuss intent behind the statements, if it occurred, could not have been materially prejudicial. But the Delaware Court ignored these conduct trial findings, even though they apply to Micron no less so than to Hynix. Unlike this Court, Micron III further found prejudice as to Microns inequitable conduct defense, on the ground that [w]hether a patentee knew of any specific reference is not a fact that can be gleaned from public documents; rather, non-public documents will be instrumental in showing that the patentee purposely chose not to disclose a known reference to the PTO. Id. at 36. While inequitable conduct was not directly discussed in Hynix III (and is not even at issue in this case, infra at 22-23), the Courts findings make clear that there was no such prejudice. As this Court found, the evidence is convincing that no prior art was destroyed, Hynix III at 42, and Hynix had available to it all the prior art patent references considered by Rambus, id. at 41. [N]o evidence suggests that any material documents were discarded from any prosecution files as a result of Karps request that BSTZ clean out its files. Id. at 31. Rambuss own patent files are no different; it is highly unlikely that they contained any invalidating prior art. Id. at 42; see also id. at 40 ([i]t seems extremely unlikely that Rambus destroyed documents prepared by the inventors that would have been of benefit to Hynix). Given that all prior art references in Rambuss possession were retained, and that Rambuss prosecution counsel retained all communications with the PTO (id. at 30), Rambuss adversaries
5
Hynix did not appeal these findings. - 16 RAMBUSS OPP. TO SK HYNIXS MOT. FOR SUMMARY JUDGMENT CASE NO. 00-20905-RMW
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could not have been prejudiced in their ability to determine whether there were specific material, non-cumulative prior art references that were known to Rambus but not disclosed to the PTO.6 3. The Different Sanctions Fixed by this Court and the Delaware Court Make Preclusion Unjustified
The unfairness of applying non-mutual issue preclusion in the face of conflicting adjudications is heightened when those issues are slippery subjective appraisals or applications 6 of generalized standards of conduct. 09 Coll. Estop. Order at 6 (quoting 18A Wright, Miller & 7 Cooper, supra, 4465.2 at 764). Applying preclusion to the issue of sanction is especially unfair; 8 not only does the choice of sanction involve general standards, but the sanction analysis is driven 9 by factual findings and legal conclusions regarding fault and prejudice that are based on highly 10 specific facts and evidence. See Micron II, 645 F.3d at 1329. 11 The Federal Circuit emphasized that dismissal is a harsh sanction, to be 12 imposed only in particularly egregious situations where a party has engaged deliberately in 13 deceptive practices that undermine the integrity of judicial proceedings. Id. at 1328 (citation 14 omitted). The presence of bad faith and prejudice, without more, do not justify the imposition of 15 dispositive sanctions. Id. at 1329. This Court held that a dispositive sanction would be 16 inappropriate given that Rambuss patents otherwise are valid, and given that Rambuss 17 spoliation, while meeting the standards articulated above with respect to bad faith and prejudice, 18 did not involve intentional destruction of particular damaging documents. Hynix III at 64 19 (emphasis added). The Delaware Court, however, concluded that the criteria for a dispositive 20 sanction were met and that there was no appropriate lesser sanction available. Micron III, as 21 noted, expressly distinguished Hynix III on the ground that the two courts relied on different 22 findings: Judge Whytes decision is not binding on this court and, in any case, his findings of 23 fact were different from those in the instant case. Micron III at 38 n.25. Indeed, because this 24 25 26 27 28 Although inequitable conduct also requires proof of the materiality of the undisclosed art under an objective standard, the Delaware Court found prejudice even as to that element on the ground that Rambuss spoliation precluded Micron from possibly obtaining evidence of affirmative acts of egregious conduct [before the PTO], such as perjury, the manufacture of false arguments, or deliberate fraud during prosecution Micron III at 37. That is sheer speculation, as Micron III does not even identify any allegation of such misrepresentation before the PTO, let alone explain how the document destruction might have caused material prejudice on that score.
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Courts conflicting determinations are informed by the experience of having tried the substantive claims and defenses, casting aside those findings in favor of Micron III would be inefficient, unfair to Rambus, and multiply the Delaware Courts errors. C. Hynixs Initiation and Exploitation of Multi-Forum Litigation Weighs Against Preclusion In Parklane, the Supreme Court specifically singled out the situation where a plaintiff could easily have joined in the earlier action but failed to do so as one in which courts
7 generally should deny preclusion. 439 U.S. at 331. That was also the first factor Parklane 8 addressed in its discussion of considerations that weigh against preclusion. Id. at 329-330. The 9 factor is critical because it goes to the heart of nonmutual preclusions justification, which is to 10 promot[e] judicial economy by preventing needless litigation. Parklane, 439 U.S. at 326; 11 Chisholm v. Def. Logistics Agency, 656 F.2d 42, 46 (3d Cir. 1981) (It is well established that the 12 doctrine of collateral estoppel contributes to efficient judicial administration, serving the public 13 interest in judicial economy as well as the parties' interests in finality, certainty of affairs and 14 avoidance of unnecessary relitigation.); Gough, 996 F.2d at 768 (efficiency is [offensive] 15 collateral estoppels only true justification) (alteration in original and citation omitted). 16 The goal of efficiency would be frustrated if preclusion were applied in a way that 17 actually encouraged parties to multiply litigation. By applying nonmutual preclusion 18 automaticallywhenever the mandatory factors are metcourts would give plaintiffs every 19 incentive to adopt a wait and see attitude, in the hope that the first action by another plaintiff 20 will result in a favorable judgment. Parklane, 439 U.S. at 330. Those plaintiffs would be 21 incentivized to file separate actions in order to take multiple bites at the apple: one in their own 22 actions, one in the earlier-filed actions. That would be neither efficient for the judicial system, 23 nor fair to defendants such as Rambus, who would then be forced to litigate multiple actions in 24 disparate forums. Furthermore, allowing plaintiffs to coordinate so that each gets multiple shots 25 at the same defendant creates the aura of the gaming table that Blonder-Tongue specifically 26 warned against. 402 U.S. at 329. 27 This Court was right when it stressed that Micron and Hynix coordinated their 28
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filing of the declaratory judgment lawsuits, with Hynix filing a separate suit, in the 00-20905 case, in this Court just one day after Micron filed its action in Delaware. 09 Coll. Estop. Order at 7. The parallel appeals litigated and adjudicated in the Federal Circuit have only multiplied further the litigation flowing from Hynixs and Microns dual-front strategy. Hynix and Microns gamesmanship continues to realize the Supreme Courts concern that indiscriminate application of preclusion will likely increase rather than decrease the total amount of litigation, Parklane, 439 U.S. at 330. In Hynix III, this Court recognized that [t]he forum selection gamesmanship engaged in by Hynix and Micron is troubling and weighs against preclusion, but also deemed it insufficient to outweigh all the other factors favoring issue preclusion as to spoliation. Hynix III at 48. But the factors that Hynix III found to favor preclusion as to spoliation do not apply to the question of sanction, nor to the predicate issues of fault and prejudice. Cf. Hynix III at 48. The principal factor cited by the Courtand the one which it viewed as having changed since it denied preclusion in 2009was that Hynix II had vacated its ruling regarding the duty to preserve and the Delaware courts Micron I decision to the contrary has been affirmed. Id. at 47. The Court concluded that it was no longer is confronted with two inconsistent decisions. Id. The same is not true of the issues of bad faith, prejudice, and the spoliation sanction. The Delaware Courts prior determinations on those issues were themselves reversed by the Federal Circuit. See Micron II, 645 F.3d at 1326-29. In vacating the Delaware Courts dispositive sanction, the Federal Circuit emphasized that even the presence of bad faith and prejudice, without more, do not justify the imposition of dispositive sanctions. Id. at 1329. On remand, this Court and the Delaware Court reached different outcomes. Given that Hynix initiated this action and has been given extensive process by this Court, the fact that it did not achieve the results it wanted, and would prefer the result achieved by another party on different factual findings made by a different court, cannot justify preclusion. Even if Hynix may not have lost, Hynix by its own reckoning has not won here, and it therefore remains difficult to see how it would be just or equitable to give Hynix the benefit of a decision between Rambus and a third party. 09 Coll. Estop. Order at 2.
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In any event, given Parklanes general rule that preclusion should be denied if a plaintiff could easily have joined in an earlier action, 439 U.S. at 331, Hynixs strategic behavior is enough to defeat preclusion. See, e.g., Hauser v. Krupp Steel Producers, Inc., 761 F.2d 204, 207 (5th Cir. 1985) (denying preclusion where plaintiff could have joined in earlier filed action); Charles J. Arndt, Inc. v. City of Birmingham, 748 F.2d 1486, 1494-95 (11th Cir. 1984) (similar); Roybal v. City of Albuquerque, CIV08-0181JB/LFG, 2009 WL 1329834, at *11 (D.N.M. Apr. 28, 2009) (similar). Indeed, Hynixs conduct goes beyond taking a wait and see attitude with respect to a prior action; Hynix actively coordinated with Micron to increase the number of proceedings against Rambus. It is difficult to imagine a stronger case for implementing Parklanes admonition to not use preclusion to reward plaintiffs who strategically multiply litigation. 439 U.S. at 331. Tellingly, Hynixs motion does not even attempt to address the implications of its strategic conduct. D. No Efficiency Would Be Gained by Applying Preclusion, and Indeed the Public Interest Favors Denial of Estoppel Because a fundamental rationale for collateral estoppel is to promote efficient judicial administration by preventing unnecessary litigation, courts have refused to apply
16 collateral estoppel to bar relitigation in situations where it would not further efficiency. E.g., 17 Rodriguez-Garcia v. Miranda-Marin, 610 F.3d 756, 772 (1st Cir. 2010) (noting that a district 18 court may refuse to apply nonmutual collateral estoppel when, for example, it would not result 19 in efficiency gains.); accord SEC v. Monarch Funding Corp., 192 F.3d 295, 304 (2d Cir. 1999) 20 (When the efficiency rationale for collateral estoppel fails, however, courts have understandably 21 declined to apply the doctrine.). Here, Hynix has already fully litigated its spoliation claim, 22 foreclosing any efficiency gain from applying preclusion. Cf. 09 Coll. Estop. Order at 9. This 23 case has been pending for over 12 years. The Court has presided over full trials on not just the 24 spoliation issue, but also on the patent and JEDEC claims and defenses. After the Federal Circuit 25 appeal and the 2011 Hynix II decision, this Court convened extensive remand proceedings that 26 included four rounds of briefing, extensive oral argument, and, following the Hynix III decision, 27 further briefing on the proper sanction. These are substantial sunk costs, and they weigh strongly 28
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against vacating this Courts determinations on prejudice and the proper remedy in favor of a coordinate courts materially different spoliation findings. In Hynix III, this Court acknowledged that collateral estoppel may be appropriate even when both actions that have been fully litigated. Hynix III at 48 (emphasis added). But in this situation, where other key factors already support the denial of estoppel, efficiency concerns confirm that this Court should not defer to the Delaware Court. As noted above, the preclusion issue in Hynix III was different in important ways: the Court addressed the collateral estoppel effect of the Federal Circuits spoliation ruling in Micron II, in light of the Federal Circuits reversal of this Courts prior finding of no spoliation. Id. at 47-48. Now, Hynix is seeking preclusion on the sanction issue on the basis of the Delaware Courts decision, even though that courts sanction determination was reversed in Micron II, and even though the Delaware Court has on remand reached a decision flatly inconsistent with Hynix III. There is simply no principled basis to set aside this Courts own decision in these circumstances. Hynixs efforts to justify preclusion on the basis of the public interest are unavailing. To begin with, Hynix misses the mark in arguing that the integrity of the patent system, not to mention the integrity of the judicial system, would somehow be undermined if the Court does not cast away its decision in favor of one preferred by Hynix. Mot. at 8. Whether Rambuss patent counterclaims should be dismissed in this case for what Hynix calls fraud or other inequitable conduct (id.) is precisely what this Court decidedagainst Hynix. See Hynix III at 64 (rejecting dispositive sanction because Rambuss patents are otherwise valid and because there was no intentional destruction of particular damaging documents). There is thus nothing wrong with enforcing Rambuss patents against Hynix. Rambuss patents have been adjudged valid and enforceable after no less than three trials and a full appeal in which the Federal Circuit affirmed this Court on all issues other than spoliation, not to mention the PTO reexamination proceedings that have confirmed, in some cases repeatedly, the patentability of the majority of the claims Hynix has been found to infringe. See Rambus Consolidated Opp. to Hynix Mot. for Summ. J. on the Issue of the Collateral Estoppel Effect of Reexaminations, Nov. 20, 2012 (Dkt. 4193).
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Nor is it unfair, as Hynix argues, for Rambuss patents to be enforced against Hynix and (for the moment) not Micron. Hynix invited that inconsistency through its forum selection gamesmanship. What would be unfair would be to not allow Rambus to enforce valid patentspatents awarded in recognition of the revolutionary inventions of Mike Farmwald and Mark Horowitzmerely because another district court, which has not considered their validity, reached a different and erroneous conclusion on the issue of spoliation sanction. Given these facts, the public interest in sound judicial administration and fostering innovation weighs strongly against preclusion. The implications of Hynixs gamesmanship are far-reaching. If Hynix is successful in invoking nonmutual preclusion, many other infringers will likewise find it advantageous to launch multiforum litigation against patent holders. The result could be a proliferation of complex parallel proceedings that further burden already crowded patent dockets. It is frequently the case, after all, that the patent holder is one and the infringers many. By initiating parallel litigation, infringers, especially large manufacturers, can hedge against a bad result in the first-filed action, while applying pressure on comparatively small patent holders like Rambus. Nothing in nonmutual preclusion doctrine justifies such an anomalous result. In Blonder-Tongue, the Supreme Court justified departing from the long-standing rule against nonmutual preclusion largely on efficiency grounds, and emphasized the patent litigation costs that could be saved, particularly for smaller businesses, if non-mutual estoppel is used to prevent the relitigation of previously decided issues. See 402 U.S. at 334-35 (patent litigation is a very costly process, where the expense is often staggering to the small businessman). It would make no sense to apply nonmutual preclusion, as Hynix would have it, in a way that would encourage the multiplication of litigation and disadvantage small innovators, despite the warnings against such applications the Supreme Court voiced in Parklane. III. The Issues Decided in Micron III Are Not Identical to those Decided by this Court As discussed above, the Court has discretion and should exercise its discretion to deny estoppel. But Hynixs preclusion bid also fails for a further, independent reason. A mandatory requirement for issue preclusion is that the issues litigated must not be merely similar, but must be identical across the two cases. Central Delta Water Agency v. United
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States, 306 F.3d 938, 953 (9th Cir. 2002); In re Reynoso, 477 F.3d 1117, 1123 (9th Cir. 2007) (denying preclusion because there remains some possibility that the issues are not identical). The issues of prejudice and sanction in the two cases are not identical. While the Delaware Court based its prejudice ruling and therefore its determination of sanction in substantial part on Microns inequitable conduct defense, Micron III at 34-37, 40, inequitable conduct is simply not at issue in this case because Hynix abandoned that defense long ago. See Final Judgment, Mar. 10, 2009 (Dkt. 3911), at 1 (Hynixs defense of inequitable conduct [was] abandoned by Hynix prior to the trial of the third phase and [is] therefore dismissed with prejudice.); see also Joint Pretrial Statement for the Patent Trial, Feb. 2, 2006 (Dkt. 1649), at 4 n.2 (Hynix will not present an inequitable conduct defense as to only the 10 asserted patent claims Rambus has elected for trial in this case.). And the inequitable conduct issue was different even before Hynix abandoned it. The Delaware Court based its prejudice determination in part on speculation that the destroyed documents might have been probative of manufacture of false arguments or perjury before the PTO, without even describing what the supposed misrepresentation was. Micron III, at 37. The inequitable conduct defense Hynix formerly pled in this case, however, was grounded solely in alleged nondisclosure of prior art. See Hynixs Reply to Defendant and Counterclaim Plaintiff Rambus Inc.s Amended Counterclaim, Dec. 16, 2002 (Dkt. 252), at 209-219. The issues of prejudice and the appropriate sanction in this case and Micron are therefore not identical, precluding the application of estoppel. // // // // // // // // //
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CONCLUSION For all of the foregoing reasons, Hynixs Motion for Summary Judgment of Unenforceability Based on Collateral Estoppel must be DENIED. Dated: February 15, 2013 MUNGER, TOLLES & OLSON LLP SIDLEY AUSTIN LLP
By:
/s/ Gregory P. Stone Gregory P. Stone Attorneys for RAMBUS INC.
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Case5:00-cv-20905-RMW Document4241 Filed02/15/13 Page1 of 29

SK HYNIX INC., et al., Plaintiffs, vs. RAMBUS INC., Defendant.

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/s/ Gregory P. Stone Gregory P. Stone Attorneys for RAMBUS INC.

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