Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-02298/USCOURTS-cand-5_05-cv-02298-46/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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United States District Court

For the Northern District of California

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ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF

United States District Court

For the Northern District of California

E-filed: 1/9/2008 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

HYNIX SEMICONDUCTOR INC., HYNIX

SEMICONDUCTOR AMERICA INC.,

HYNIX SEMICONDUCTOR U.K. LTD., and

HYNIX SEMICONDUCTOR

DEUTSCHLAND GmbH,

Plaintiffs,

v.

RAMBUS INC.,

Defendant.

No. C-00-20905 RMW

ORDER DENYING MANUFACTURERS'

MOTION FOR PRIMA FACIE EFFECT AND

DENYING MANUFACTURERS' MOTION

FOR COLLATERAL ESTOPPEL

[Re Docket Nos. 2439, 2679]

RAMBUS INC.,

Plaintiff,

v.

SAMSUNG ELECTRONICS CO., LTD.,

SAMSUNG ELECTRONICS AMERICA,

INC., SAMSUNG SEMICONDUCTOR, INC.,

SAMSUNG AUSTIN SEMICONDUCTOR,

L.P.,

Defendants.

No. C-05-02298 RMW

[Re Docket Nos. [161, 454]

Case 5:05-cv-02298-RMW Document 711 Filed 01/09/08 Page 1 of 14
United States District Court

For the Northern District of California

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1

The FTC's August 2, 2006 opinion was not final at the time it issued. On February 5, 2007 the FTC

issued its opinion on remedy and its final cease and desist order against Rambus. See FTC Opinion

and Final Order, available at, http://www.ftc.gov/os/adjpro/d9302/index.shtm. Rambus moved for

reconsideration of the final order and for a stay pending appeal of the final order. On March 16,

2007 the FTC issued an order and opinion granting in part and denying in part Rambus's motion to

stay the order pending appeal. See id. On April 27, 2007 the FTC issued an order and opinion

granting in part and denying in part Rambus's motion for reconsideration of the final order. See id.

ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 2

RAMBUS INC.,

Plaintiff,

v.

HYNIX SEMICONDUCTOR INC., HYNIX

SEMICONDUCTOR AMERICA INC.,

HYNIX SEMICONDUCTOR

MANUFACTURING AMERICA INC., 

SAMSUNG ELECTRONICS CO., LTD.,

SAMSUNG ELECTRONICS AMERICA,

INC., SAMSUNG SEMICONDUCTOR, INC.,

SAMSUNG AUSTIN SEMICONDUCTOR,

L.P., 

NANYA TECHNOLOGY CORPORATION,

NANYA TECHNOLOGY CORPORATION

U.S.A.,

Defendants.

No. C-05-00334 RMW

[Re Docket Nos. 224, 225, 580]

RAMBUS INC.,

Plaintiff,

v.

MICRON TECHNOLOGY, INC., and

MICRON SEMICONDUCTOR PRODUCTS,

INC.

Defendants.

No. C-06-00244 RMW

[Re Docket Nos. 96, 97, 252]

This order addresses two motions and reconsiders a portion of a prior order which all deal

with the effect of the Federal Trade Commission's ("FTC") August 2, 2006 opinion in In the Matter

of Rambus Inc., Docket No. 9302 ("FTC Rambus") on the proceedings before this court.1

Case 5:05-cv-02298-RMW Document 711 Filed 01/09/08 Page 2 of 14
United States District Court

For the Northern District of California

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ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 3

On August 22, 2006, this court issued an order staying Phase III of the C-00-20905 case

against Hynix. Order Staying Phase III of Trial, Docket No. 2394, C-00-20905 RMW ("Stay

Order"). In that order the court concluded that under Section 5(a) of the Clayton Act "there is

sufficient potential that certain findings made by the Commission will have prima facie effect on

Phase III to support [a] decision to stay Phase III." Stay Order at 8:9-10. The court further ordered,

inter alia, that Hynix "designate[] with specificity, within ninety days of the date of this order, any

findings by the Commission that it contends should be accorded prima facie effect in Phase III

(including the reasons supporting why prima facie weighting should be granted)." Id. at 9:4-7. On

January 30, 2007 the court orally denied Rambus's request that the court reconsider its interpretation

of section 5(a) of the Clayton Act. See Docket No. 2491, C-00-20905.

On October 16, 2006, Hynix filed a motion requesting that the court grant prima facie

evidentiary weighting pursuant to section 5(a) of the Clayton Act, 15 U.S.C. § 16(a), to eleven

findings made by the FTC. Thereafter, the court consolidated the above-captioned cases and granted

Micron, Nanya, and Samsung's request to file a supplemental brief regarding prima facie evidentiary

weighting of the FTC's August 2, 2006 opinion. On June 28, 2007 Micron, Nanya, and Samsung

(together with Hynix "the Manufacturers") filed a supplemental motion.

On October 18, 2007, while the motions seeking prima facie weighting were under

submission, the Manufacturers2 moved for an order that certain findings in FTC Rambus are entitled

to collateral estoppel effect on the Manufacturers' claims for fraud and their defenses of equitable

estoppel. Rambus opposes the Manufacturers' motions and submits that the FTC findings in FTC

Rambus should not be admissible in Phase III for any purpose.

The court held a hearing on the collateral estoppel motion on November 21, 2007. Prior to

the hearing, the court shared with counsel a tentative ruling reconsidering that portion of the court's

August 22, 2006 Stay Order dealing with prima facie weighting. At the hearing, the parties

presented their views on prima face weighting and collateral estoppel. The court granted the parties

leave to file additional briefing regarding prima facie weighting. The court has considered this

further briefing, and for the reasons set forth below, the court: (1) vacates that portion of the Stay

Case 5:05-cv-02298-RMW Document 711 Filed 01/09/08 Page 3 of 14
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2 Section 45 is the provision that outlaws unfair methods of competition and empowers

the Federal Trade Commission to prevent them. See 15 U.S.C. § 45(a)(1)-(a)(2).

ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 4

Order holding that findings of the FTC in FTC Rambus could be given prima facie weighting in

Phase III and enters an order precluding the giving of prima facie weighting to any FTC finding; (2)

denies the Manufacturers' motion for prima facie weighting; and (3) denies the Manufacturers'

motion that seeks to preclude Rambus from contesting various elements of the Manufacturers' fraud

claims and equitable estoppel defenses.

I. ANALYSIS

A. Prima Facie Weighting in Private Antitrust Proceedings

Section 5(a) of the Clayton Act provides that:

A final judgment or decree heretofore or hereafter rendered in any civil or criminal

proceeding brought by or on behalf of the United States under the antitrust laws to

the effect that a defendant has violated said laws shall be prima facie evidence

against such defendant in any action or proceeding brought by any other party

against such defendant under said laws as to all matters respecting which said

judgment or decree would be an estoppel as between the parties thereto: Provided, That this section shall not apply to consent judgments or decrees entered before any

testimony has been taken. Nothing contained in this section shall be construed to

impose any limitation on the application of collateral estoppel, except that, in any

action or proceeding brought under the antitrust laws, collateral estoppel effect shall

not be given to any finding made by the Federal Trade Commission under the

antitrust laws or under section 45 of this title which could give rise to a claim for

relief under the antitrust laws.

15 U.S.C. § 16(a). The Manufacturers argue that this section entitles them to introduce at trial

multiple findings from the FTC's Rambus opinion as prima facie evidence in support of their

antitrust claims. Despite its prior conclusion, the court, upon further research and consideration

finds that Section 5(a) does not allow this.

Section 5(a) accords prima facie weight to a final judgment brought "under the antitrust

laws." The Clayton Act specifically defines the phrase "antitrust laws." See 15 U.S.C. § 12(a). The

definition includes the Sherman Act and the Clayton Act, but it does not list the Federal Trade

Commission Act (15 U.S.C. §§ 41, et seq). This exclusion accords with the final sentence of section

5(a), which distinguishes "the antitrust laws" from "section 45."2

The Federal Trade Commission brought its proceeding against Rambus pursuant to Section

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3 Specifically, the Administrative Complaint begins, "Pursuant to the provisions of the

Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the [FTC], having

reason to believe that [Rambus] has violated Section 5 of the Federal Trade Commission (“FTC”) Act,

as amended, 15 U.S.C. § 45, and it appearing to the Commission that a proceeding in respect thereof

would be in the public interest, hereby issues its complaint[.]"

ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 5

45, which is also known as Section 5 of the FTC Act. See In re Rambus, Administrative Complaint,

Docket No. 9302, at 1, 31-33 (FTC June 18, 2002).3

 The FTC's final order found that "Rambus's

acts of deception constituted exclusionary conduct under Section 2 of the Sherman Act, and that

Rambus unlawfully monopolized the markets for four technologies incorporated into the JEDEC

standards in violation of Section 5 of the FTC Act." In re Rambus, Opinion of the Commission,

Docket No. 9302, at 3 (FTC August 2, 2006). Section 5 of the FTC Act incorporates various

standards from the antitrust laws and also forbids practices the FTC deems against public policy for

other reasons. FTC v. Indiana Federation of Dentists, 476 U.S. 447, 454 (1986). Although the

FTC found that Rambus violated the Sherman Act, the FTC's order was in a proceeding under

Section 5 of the FTC Act.

Because an administrative action brought to enforce Section 5 of the FTC Act is not a

proceeding "under the antitrust laws" as defined in Section 2 of the Clayton Act, an opinion of the

FTC cannot receive prima facie weighting. This interpretation squares with a plain reading of

Section 5. It also squares with the private opinions of FTC attorneys and the American Bar

Association's section on Antitrust Law. See Alden F. Abbott & Theodore F. Gebhard, StandardSetting Disclosure Policies: Evaluating Antitrust Concerns in Light of Rambus, 16-SUM Antitrust

29, 34 (2002); Report of the American Bar Association Section of Antitrust Law Special Committee

to Study the Role of the Federal Trade Commission, 58 Antitrust L.J. 43, 62 (1989) ("The FTC is a

less dangerous forum than the federal courts for testing legal theories and considering their

application in difficult cases since the FTC's sanctions are civil and prospective and its decisions

cannot be used as prima facie evidence to support treble damages awards."). Furthermore, the Ninth

Circuit's prior decision in Pool Water Products v. Olin Corp. suggests that "prima facie weight is

given only to violations of the 'antitrust laws' as defined by the Clayton Act [and this] does not

include violations of the FTC Act," although the court specifically noted that it was not addressing

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4 The Manufacturers point out that the Supreme Court favors applying preclusion to

administrative orders. Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 107 (1991). That

presumption evaporates, however, where Congress intends to prevent an administrative decision from

having preclusive effect. Id. at 108-09. The text of this section of the Clayton Act demonstrates such

an intent with respect to the findings of the FTC in proceedings under the antitrust laws.

ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 6

whether the FTC's Section 5 enforcement actions are proceedings under the "antitrust laws" because

the parties did not contest the issue. 258 F.3d 1024, 1032 & fn. 4 (9th Cir. 2001). Finally, this is the

same interpretation of section 5(a) that the Southern District of New York reached in identical

circumstances. In re Antibiotic Antitrust Actions, 333 F. Supp. 317, 322-23 (S.D.N.Y. 1971)

(collecting and distinguishing cases applying section 5(a) to FTC decisions based on whether the

FTC's action was brought under the FTC Act or under the Clayton Act).

 A second textual basis for denying prima facie weighting reinforces this interpretation. 

Section 5(a) of the Clayton Act permits prima facie weighting "as to all matters respecting which

said judgment or decree would be an estoppel as between the parties thereto." 15 U.S.C. § 16(a). 

This provision limits prima facie weighting to those findings that the defendant would be precluded

from relitigating in later proceedings with the government. Pool Water Products, 258 F.3d at 1030-

31. Section 5(a) further notes that it imposes no limits on the doctrine of collateral estoppel, but that

"in any action or proceeding brought under the antitrust laws, collateral estoppel effect shall not be

given to any finding made by the Federal Trade Commission under the antitrust laws or under

section 45 of this title which could give rise to a claim for relief under the antitrust laws." 15 U.S.C.

§ 16(a).

While convoluted, the meaning of section 5(a) becomes clear when its language is unraveled. 

In later proceedings brought under the antitrust laws, no finding made by the FTC (under either the

antitrust laws or section 45) may receive collateral estoppel effect. This provision applies regardless

of who brings suit, including the government. To be clear, the government cannot win before the

FTC and then use the FTC's findings to preclude the defendant in a later action. The last sentence of

section 5(a) forbids it. Because the government cannot receive collateral estoppel effect for FTC

findings,4

 the first sentence of section 5(a) also precludes a private antitrust plaintiff from according

prima facie weight to the FTC's findings.

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ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 7

The court acknowledges that it previously concluded that applying prima facie weighting to

the FTC's findings appeared consistent with a Congressional intent to ease the burdens of litigation

for injured private parties. See Stay Order at 5:7-6:2 (citing Emich Motors Corp. v. Gen. Motors

Corp., 340 U.S. 558, 568 (1951)). However, upon further analysis and reflection, the court now

believes that the language of Section 5(a) precludes affording prima facie weighting to FTC

findings. With respect to the policy behind section 5(a), the court previously failed to give sufficient

consideration to the difference between according prima facie weight to criminal proceedings

brought by the Department of Justice in an Article III court (as in Emich, 340 U.S. at 559) and civil

administrative proceedings brought before the FTC. Aside from the differing burdens of proof, the

potential unfairness of affording prima facie weighting is exacerbated by the FTC's lack of

independence, given the fact that the FTC essentially acts as both the complainant and decision

maker. An independent decision maker is particularly important when the administrative goals of

the FTC in a particular area, here the setting of policies regarding disclosures to standard setting

organizations, is at issue. Cf. In re House of Lord's, Inc., 69 F.T.C. 44, 1966 WL 88206 (1966)

(Elman, Comm'r, dissenting).

In their further briefing, Micron and Nanya suggest that section 5(a) is ambiguous and that

the legislative history supports their interpretation. The court finds the statute convoluted, but not

ambiguous. Even if the court were to consider the legislative history behind section 5(a), the court

is not convinced the full breadth of material supports Nanya and Micron's interpretation. 

For the above reasons, the court hereby vacates that portion of the Stay Order holding that

findings of the FTC in FTC Rambus could be given prima facie weighting in Phase III and enters an

order precluding the giving of prima facie weighting to any FTC finding.

B. Collateral Estoppel Effect

1. Fraud Claims

In addition to their antitrust claims, the Manufacturers have alleged a variety of other claims

against Rambus. With respect to their fraud claims and equitable estoppel defenses, the

Manufacturers ask the court to preclude Rambus from contesting various findings of the FTC.

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ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 8

As a preliminary matter, courts favor applying preclusion to at least some types of final

agency decisions. Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 107 (1991). Courts

presume that Congress legislates with the expectation that principles of preclusion apply to an

administrative scheme unless Congress demonstrates an opposite intent. Id. at 108. Rambus argues

that Section 5(a) of the Clayton Act demonstrates such an intent.

As previously discussed, Section 5(a) explicitly disclaims any effect on the doctrine of

collateral estoppel, "except that, in any action or proceeding brought under the antitrust laws,

collateral estoppel effect shall not be given to any finding made by the Federal Trade Commission

under the antitrust laws or under section 45 of this title which could give rise to a claim for relief

under the antitrust laws." 15 U.S.C. § 16(a). The court has previously held that, "'any action or

proceeding under the antitrust laws' as used in Section 5(a) means all claims that are asserted under

the antitrust laws or that are based upon essentially the same factual predicate." Hynix

Semiconductor, Inc. v. Rambus, Inc., 2007 WL 2814654, at *5 (N.D. Cal. 2007). This means that

Section 5(a) only bars the use of FTC findings in "claims brought under the antitrust laws including

claims that are based upon [sic] same nucleus of facts." Id. "It does not include unrelated claims or

defenses in a consolidated action." Id.

Turning to the present case, the first element of section 5(a) is met. The Manufacturers

(other than Samsung) allege that Rambus has violated section 2 of the Sherman Act. Accordingly,

section 5(a) prevents the court from according preclusive effect to any FTC finding that satisfies the

second element of section 5(a), i.e., that "could give rise to a claim for relief under the antitrust

laws."

The Manufacturers request collateral estoppel effect for a variety of FTC findings. The first

group of findings would establish Rambus's allegedly deceptive course of conduct, which the

Manufacturers argue is relevant to their fraud claims and equitable estoppel defenses:

Finding 1: JEDEC’s policies and practices, considered as a whole, gave JEDEC’s

members reason to believe the standard-setting process would be cooperative and

free from deceptive conduct. Op. at 52.

Finding 2: JEDEC’s policies (fairly read) and practices, as well as the actions of

JEDEC participants, provide a basis for the expectation that JEDEC’s standard

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5 C-05-00334 RMW, Docket No. 295, Attachment 1.

6 C-05-00334 RMW, Docket No. 295, Attachment 2.

7 C-05-00334 RMW, Docket No. 295, Attachment 3.

ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 9

setting activity would be conducted cooperatively and that members would not try

to distort the process by acting deceptively with respect to the patents they possessed

or expected to possess. Op. at 66.

Finding 3: JEDEC presented the type of consensus-oriented environment in which

deception is most likely to contribute to competitive harm. Op. at 66.

Finding 4: JEDEC’s members expected disclosure of both patents and patent

applications that might be applicable to the work JEDEC was undertaking, if the

patents ever were going to be enforced against JEDEC-compliant products. Op. at

66, 53.

Mot. at 8 (cites in quotation are to the FTC's Rambus opinion). Each of these findings are on issues

that are also relevant to the Manufacturers' antitrust claims. The Manufacturers conceded as much

when they defined their antitrust claims in the Joint Case Management Statement, filed on July 31,

2007:

Claim: Hynix5 Micron6 Nanya7

Monopolization

/ Attempted

Monopolization

Claim arises out of Rambus's

anticompetitive conduct at

JEDEC; the continuing exercise

of its unlawful monopoly and

deception outside of JEDEC; . . .

This arises, without

limitation, out of Rambus's

anticompetitive conduct at

JEDEC; the continuing

exercises of its unlawful

monopoly and deception

outside of JEDEC . . . 

This claim arises, without

limitation, out of Rambus's

anticompetitive conduct at

JEDEC; the continuing exercises

of its unlawful monopoly and

deception outside of JEDEC . . . 

Fraud Claim arises out of Rambus's

misrepresentations and

omissions inside and outside of

JEDEC . . . 

This arises, without

limitation, out of Rambus's

misrepresentations and

omissions at JEDEC . . . 

This claim arises, without

limitation, from Rambus's

omissions and

misrepresentations at and

outside of JEDEC . . .

Equitable

Estoppel /

Estoppel

Related to

JEDEC

Defense arises out of Rambus's

deception of the industry as to

the scope of its proprietary

technology . . . 

This arises, without

limitation, out of Rambus's

deception of the industry

by virtue of its

representations, partial

disclosures, and failures to

disclose . . .

Defense arises out of Rambus's

conduct during and after its

participation in JEDEC

meetings.

Because each of the findings are also relevant to the Manufacturers' antitrust claims, section 5(a)

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ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 10

forbids the court from granting collateral estoppel effect to them.

The second group of findings that the Manufacturers propose according preclusive effect

further establish Rambus's allegedly fraudulent conduct:

Finding 5: Rambus engaged in a course of deceptive conduct before JEDEC, which

included selective omissions and outright misrepresentations relating to its

intellectual property with respect to the four technologies at issue before the FTC:

CAS latency, programmable burst length, data acceleration technology, and onchip

PLL/DLL technology (“the technologies”). Op. at 69, 9-12.

Finding 6: Rambus concealed its patent applications, patents, and evolving patent

claims as to the technologies until after JEDEC had adopted its SDRAM standard.

Op. at 37, 66.

Finding 7: Rambus concealed its patent applications, patents, and evolving patent

claims as to the technologies until after JEDEC had adopted its DDR SDRAM

standard. Op. at 37, 66.

Finding 8: Rambus, through its participation in JEDEC, gained information about the

pending standard(s), and then amended its patent applications in an effort to ensure

that its patent portfolio would cover the ultimate standard. Op. at 4, 46.

Finding 9: Regarding Rambus’s two claimed instances where it allegedly gave notice

to JEDEC of its patents and patent applications in response to questions (May 1992

and May 1995), Rambus’s responses did not give notice, but were evasive and

misleading. Op. at 48.

Finding 10: On June 17, 1996, Rambus sent a resignation letter to JEDEC that did

not disclose relevant patents and applications, even though it appeared to disclose

relevant patents. Op. at 46.

Finding 11: After resigning from JEDEC, Rambus continued to deceive JEDEC and

its members. Op. at 46 n. 251.

Mot. at 9-10. While establishing the Manufacturers' fraud and estoppel claims, these findings are

also highly relevant to the Manufacturers' antitrust claims. Because this is an action or proceeding

under the antitrust laws and because these findings could give rise to a claim of relief under the

antitrust laws, section 5(a) bars the application of collateral estoppel to these findings.

The Manufacturers next request that the court prevent Rambus from litigating "Finding 12:

Rambus committed its deceptive conduct knowingly and willfully and with the intent to deceive

JEDEC members. Op. at 30, 53, 68." Mot. at 12. While Rambus's intent to deceive is relevant to the

Manufacturers' fraud and estoppel claims, it is also highly relevant to the Manufacturers' attempted

monopolization claim. Because this is a finding that could give rise to a claim under the antitrust

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ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

MOTION FOR COLLATERAL ESTOPPEL —C-00-20905; C-05-00334; C-05-02298; C-06-00244 RMW

TSF 11

laws, it cannot receive preclusive effect.

The final set of findings the Manufacturers wish to bar Rambus from contesting "in the

context of Manufacturers' fraud claims and equitable estoppel defenses" relate to "causation,

inevitability, and lock-in":

Finding 13: But for Rambus’s course of deceptive conduct, JEDEC either would

have excluded Rambus’s claimed technologies from the JEDEC SDRAM and DDR

SDRAM standards, or would have demanded reasonable and non-discriminatory

license terms. Op. at 68, 74.

Finding 14: Alternative technologies were available when JEDEC chose the

technologies at issue and could have been substituted for the technologies had

Rambus disclosed its patent position. Op. at 76.

Finding 15: JEDEC members gave these alternatives serious consideration. Op. at

76.

Finding 16: The evidence does not establish that the technologies incorporated by

JEDEC were superior to these alternative technologies on a cost/performance basis.

Op. at 82.

Finding 17: Rambus concealed its patents and patent applications until after the

standards were adopted and the market was locked into the SDRAM and DDR

SDRAM standards by 2000. Op. at 4, 37, 99.

Finding 18: High direct switching costs, combined with significant delays from

revising standards and reworking products, rendered infeasible a change in SDRAM

and DDR SDRAM to avoid Rambus’s patented technologies in 2000. Op. at 107.

Mot. at 13-15. While these findings could all be relevant to establishing the Manufacturers' "actual

but unquantifiable" fraud damages, they seem more relevant to establishing the market definitions

and market power elements of the Manufacturer's antitrust claims. The resulting prejudice from

according preclusive effect to these findings "in the context of the fraud claims and estoppel

defenses" while still allowing the underlying issues to be litigated with respect to the antitrust claims

would result in the prejudice that Section 5(a) seeks to prevent.

Accordingly, the court denies the Manufacturers' motion for collateral estoppel because

section 5(a) expressly prohibits according preclusive weight to these FTC findings in an antitrust

proceeding.

2. Equitable Estoppel Defense

The Manufacturers' equitable defenses are not asserted in actions brought in "an action or

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proceeding brought under the antitrust laws." The defenses are asserted to infringement claims in an

action or proceeding brought under the patent laws. Nevertheless, sound reasons support the court's

exercising its discretion to deny application of collateral estoppel. See Parklane Hosiery Co. v.

Shore, 439 U.S. 322, 331 (1979). In Parklane, the Supreme Court recognized that a wide variety of

reasons could justify denying preclusive effect. Id.; Western Oil and Gas Ass'n v. E.P.A., 633 F.2d

803, 809-10 (9th Cir. 1980) (noting that courts had differed on the legality of the defendant's

conduct, and that "[t]he circumstances of each case must provide the touchstone for decision"). In

this case, multiple factors counsel against applying collateral estoppel. First, as noted earlier, the

FTC findings were not made in the independent forum of an Article III court. The Supreme Court's

Parklane opinion suggests that offensive collateral estoppel may be unfair "where the second action

affords the defendant procedural opportunities unavailable in the first action that could readily cause

a different result." Id. at 331 & n.15; see also id. at 351-54 (Rehnquist, J., dissenting). Then-Justice

Rehnquist argued that the difference between a jury trial and a bench trial counsels against imposing

offensive collateral estoppel. The difference between the two litigation forums here is even more

striking. Second, the various findings the Manufacturers request estopping Rambus from contesting

will have to be litigated to establish the Manufacturers' antitrust claims. No trial time would be

saved. Instead, according collateral estoppel effect would be highly prejudicial and "substantially

distort the decision of the issues that remain open." See generally Wright, Miller & Cooper, Federal

Practice and Procedure § 4465, at 738-39 (2d ed. 2002). Third, the same issues that will be tried at

the January 29 trial have generated a broad spectrum of responses from those that have considered

them. The Supreme Court has noted that "[a]llowing offensive collateral estoppel may also be unfair

to a defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or

more previous judgments in favor of the defendant." Parklane, 439 U.S. at 330. The full

Commission of the FTC, which issued the opinion the Manufacturers wish to accord preclusive

effect to, had to reverse the administrative law judge that heard the evidence and ruled in Rambus's

favor. See FTC Rambus, at 15-16 (noting various ALJ findings in Rambus's favor and that

Complaint Counsel "challenge[ed] virtually all of the ALJ's rulings and ask[ed] that the Initial

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ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

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Decision be set aside in its entirety"). Considered together, these factors counsel against according

collateral estoppel effect to the FTC's findings with respect to the Manufacturers' equitable estoppel

defenses.

II. ORDER

For the foregoing reasons, the court: (1) vacates that portion of the Stay Order holding that

findings of the FTC in FTC Rambus could be given prima facie weighting in Phase III and enters an

order precluding the giving of prima facie weighting to any FTC finding; (2) denies the

Manufacturers' motion for prima facie weighting; and (3) denies the Manufacturers' motion that

seeks to preclude Rambus from contesting various elements of the Manufacturers' fraud claims and

equitable estoppel defenses.

DATED: 1/9/2008 

RONALD M. WHYTE

United States District Judge

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ORDER DENYING MANUFACTURERS' MOTION FOR PRIMA FACIE EFFECT AND DENYING MANUFACTURERS'

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Notice of this document has been electronically sent to:

Counsel for Plaintiff(s):

Craig N. Tolliver ctolliver@mckoolsmith.com 

Pierre J. Hubert phubert@mckoolsmith.com 

Brian K. Erickson berickson@dbllp.com, 

David C. Vondle dvondle@akingump.com 

Gregory P. Stone gregory.stone@mto.com 

Carolyn Hoecker Luedtke luedtkech@mto.com 

Peter A. Detre detrepa@mto.com 

Burton Alexander Gross burton.gross@mto.com, 

Steven McCall Perry steven.perry@mto.com

Jeannine Y. Sano sanoj@howrey.com 

Counsel for Defendant(s):

Matthew D. Powers matthew.powers@weil.com 

David J. Healey david.healey@weil.com 

Edward R. Reines Edward.Reines@weil.com

John D Beynon john.beynon@weil.com

Jared Bobrow jared.bobrow@weil.com

Leeron Kalay leeron.kalay@weil.com

Theodore G. Brown, III tgbrown@townsend.com

Daniel J. Furniss djfurniss@townsend.com

Jordan Trent Jones jtjones@townsend.com

Kenneth L. Nissly kennissly@thelenreid.com 

Geoffrey H. Yost gyost@thelenreid.com 

Susan Gregory van Keulen svankeulen@thelenreid.com

Patrick Lynch plynch@omm.com 

Jason Sheffield Angell jangell@orrick.com

Vickie L. Feeman vfeeman@orrick.com

Mark Shean mshean@orrick.com 

Kai Tseng hlee@orrick.com

Counsel are responsible for distributing copies of this document to co-counsel that have not registered

for e-filing under the court's CM/ECF program.

Dated: 1/9/08 TSF

Chambers of Judge Whyte

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