Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-00334/USCOURTS-cand-5_05-cv-00334-31/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 CONVERTING RAMBUS'S MOTION TO DISMISS COUNTS IV-VII OF SAMSUNG'S SECOND AMENDED COUNTERCLAIMS TO A

MOTION FOR PARTIAL SUMMARY JUDGMENT

Nos. C-00-20905; C-05-02298; C-05-00334 RMW

TSF

E-FILED on 11/2/07

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. CV-00-20905 RMW

ORDER CONVERTING RAMBUS'S

MOTION TO DISMISS COUNTS IV-VII OF

SAMSUNG'S SECOND AMENDED

COUNTERCLAIMS TO A MOTION FOR

PARTIAL SUMMARY JUDGMENT

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 No. 90, 141]

Case 5:05-cv-00334-RMW Document 655 Filed 11/02/07 Page 1 of 7
United States District Court

For the Northern District of California

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1

 Samsung also filed a motion to file a surreply in which it argues that Rambus's filing of the excerpt

of deposition testimony by Charles Donohoe, see Decl. of Burton A. Gross Supp. Rambus's Reply,

Ex. A, is inappropriate on a motion to dismiss. Samsung's motion to file a surreply and to strike the

reply declaration were well-taken given that Rambus's motion was for dismissal based upon the

pleadings. Now that the court has converted the motion, however, Rambus can offer the declaration

if it chooses.

ORDER CONVERTING RAMBUS'S MOTION TO DISMISS COUNTS IV-VII OF SAMSUNG'S SECOND AMENDED COUNTERCLAIMS TO A

MOTION FOR PARTIAL SUMMARY JUDGMENT

Nos. C-00-20905; C-05-02298; C-05-00334 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 No. 143, 209]

Rambus Inc. ("Rambus") moves to dismiss counts IV through VII of the Second Amended

Counterclaims ("SAC") filed by defendants Samsung Electronics Co., Ltd., Samsung America

Electronics, Inc., Samsung Semiconductor, Inc., and Samsung Austin Semiconductor, L.P.

("Samsung"), for failure to state a claim because the events at issue occurred outside the applicable

limitations periods. Samsung opposes the motion.1

 The court has read the moving and responding

papers on this motion, considered the argument of counsel, and, since submission, reviewed the

moving and responding papers on a number of other motions in these related actions. The court

believes that judicial economy and fairness can best be accomplished by converting the current

motions to dismiss to ones for summary judgment and by tentatively ruling on some issues and by

Case 5:05-cv-00334-RMW Document 655 Filed 11/02/07 Page 2 of 7
United States District Court

For the Northern District of California

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2

 The court made the decision to convert this motion before it started to review the objections to the

Special Master's orders which are set to be heard on November 7. Those papers further support the

wisdom of converting the motion.

ORDER CONVERTING RAMBUS'S MOTION TO DISMISS COUNTS IV-VII OF SAMSUNG'S SECOND AMENDED COUNTERCLAIMS TO A

MOTION FOR PARTIAL SUMMARY JUDGMENT

Nos. C-00-20905; C-05-02298; C-05-00334 RMW

TSF 3

identifying questions it would like the parties to address on summary judgment.2

I. COUNTERCLAIMS AT ISSUE

Count IV alleges that Rambus aided and abetted a breach of fiduciary duty by Neil Steinberg

("Steinberg"), an attorney formerly employed by Samsung who allegedly did work for Rambus

while still employed at Samsung. Samsung employed Steinberg full-time as in-house counsel from

November 16, 1994 until August 7, 1998, the date of his resignation. SAC ¶ 99. Throughout that

time, Steinberg had employment agreements with Samsung that provided, inter alia, that Steinberg

could not engage in any alternative employment during the term of his employment agreements

without Samsung's prior written consent. Id. In February 1998, without Samsung's knowledge,

Rambus allegedly engaged Steinberg to provide legal services for enforcing patent claims against

DRAM manufacturers. Id. ¶ 100. Neither Rambus nor Steinberg ever informed Samsung of

Steinberg's "dual employment" and Samsung was not asked and did not give informed consent to

Steinberg's legal representation of Rambus during this time period. Id. ¶¶110-13. Steinberg

allegedly passed on confidential Samsung information such as Samsung's plans to protect its specific

implementation of features adopted by JEDEC, a standards setting organization, and how Samsung

planned to protect those features. SAC ¶¶ 102-109. Samsung claims it was "harmed by Rambus's

aiding and abetting Mr. Steinberg's breach of his fiduciary duty to Samsung." SAC ¶ 216. 

Count VI essentially alleges that this same aiding and abetting conduct was an intentional

interference by Rambus with Steinberg's contractual relationships with Samsung. SAC ¶¶ 243-245.

Count V alleges that Rambus aided and abetted a breach of fiduciary duty by Steinberg after

he left Samsung's employ and began to work full-time for Rambus. Steinberg's duties at Rambus

included actively working to help Rambus plan patent prosecution and enforcement strategies

against DRAM manufacturers, such as Samsung, and prosecuting Rambus patents relating to

SDRAM and DDR SDRAM technology. Id. ¶¶ 100, 105-09, 235. Steinberg allegedly used Samsung

confidential information for the benefit of Rambus during his full-time employment at Rambus.

Case 5:05-cv-00334-RMW Document 655 Filed 11/02/07 Page 3 of 7
United States District Court

For the Northern District of California

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ORDER CONVERTING RAMBUS'S MOTION TO DISMISS COUNTS IV-VII OF SAMSUNG'S SECOND AMENDED COUNTERCLAIMS TO A

MOTION FOR PARTIAL SUMMARY JUDGMENT

Nos. C-00-20905; C-05-02298; C-05-00334 RMW

TSF 4

SAC ¶¶ 224-226.

Count VII alleges that Rambus violated California Business & Professions Code § 17200 by

aiding and abetting Steinberg's breaches of fiduciary duties to Samsung, by intentionally interfering

with Samsung's contractual relationship with Steinberg, by improperly using information learned at

JEDEC to craft patent claims to cover JEDEC-compliant products (including Samsung's), and by

destroying evidence to prevent its use in litigation Rambus intended to bring against DRAM

manufacturers, Id. ¶¶ 259(a)-(e). 

II. TOLLING OF THE STATUTE OF LIMITATIONS

Rambus moves to dismiss each of these counts as time-barred. Samsung opposes the motion

on the ground that the statute of limitations was tolled until early 2005 when Samsung learned the

full scope of Steinberg's employment by Rambus from the Rambus v. Infineon litigation pending in

the Eastern District of Virginia. See, e.g., SAC at ¶ 239. The statute of limitations for an unfair

competition claim is four years and the limitations period for breach of fiduciary duty and

interference with contract claims appears to be two years. Cal. Bus. & Prof. Code § 17208, Cal.

Code Civ. Proc. § 339; see Rambus Inc. v. Samsung Elecs. Co., Ltd., 2007 WL 39374 at *3 fn. 4

(N.D. Cal Jan. 4, 2007). Without the benefit of tolling, Counts IV through VII appear barred on

their face because the latest of Rambus's alleged wrongdoing appears to be December 2000. 

Therefore, the critical question is whether conduct by Steinberg and Rambus entitles Samsung to

tolling under either the discovery rule or the doctrine of equitable tolling. 

Although Steinberg had a fiduciary relationship with Samsung during his alleged dual

employment and had a continuing fiduciary obligation not to disclose or use confidential Samsung

information after he left Samsung and during his subsequent employment by Rambus, his

employment by Rambus did not create a fiduciary relationship between Samsung and Rambus. 

Nevertheless, since Rambus allegedly aided, or at least took advantage of, Steinberg's alleged

wrongful conduct and Samsung could reasonably have assumed that Steinberg would obey his

obligations to Samsung, it seems logical that the same tolling rules governing breach of fiduciary

duty claims should apply to Samsung's claims against Rambus based upon Steinberg's conduct.

Case 5:05-cv-00334-RMW Document 655 Filed 11/02/07 Page 4 of 7
United States District Court

For the Northern District of California

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3

 Although this court in its order dismissing the FAC stated that the discovery rule does not apply to

unfair competition cases, a recent California supreme court opinion says the issue is not settled

under California law. Grisham v. Philip Morris U.S.A., Inc., 40 Cal. 4th 623, 635 fn. 7 (2007).

ORDER CONVERTING RAMBUS'S MOTION TO DISMISS COUNTS IV-VII OF SAMSUNG'S SECOND AMENDED COUNTERCLAIMS TO A

MOTION FOR PARTIAL SUMMARY JUDGMENT

Nos. C-00-20905; C-05-02298; C-05-00334 RMW

TSF 5

Whether the discovery rule or the doctrine of equitable tolling applies, the date of the

commencement of the running of the statute of limitations would seem to be the same.3

 In Bennett v.

Hibernia Bank, 47 Cal.2d 540 (1957), the California supreme court, in holding a complaint

sufficient against a general demurrer, stated:

Plaintiffs must allege and prove facts showing the time and surrounding

circumstances of the discovery of the cause of action upon which they rely. The

purpose of this requirement is to afford the court a means of determining whether or

not the discovery of the asserted invasion was made within the time alleged, that is,

whether plaintiffs actually learned something they did not know before. In applying

this rule it is important to recognize the distinction between cases where a plaintiff is

under a duty to inquire and those in which he has no such duty until he has notice of

facts sufficient to arouse the suspicions of a reasonable man. Where there is no such

duty, for example, because of the existence of a fiduciary relationship, a plaintiff need

not disprove that an earlier discovery could have been made upon a diligent inquiry

but need show only that he made an actual discovery of hitherto unknown

information within the statutory period before filing the action.

Id. at 573. Thus, a plaintiff has a duty to investigate even where a fiduciary relationship exists, but

only once "he has notice of facts sufficient to arouse the suspicions of a reasonable man." Id. at 563;

Electronic Equipment Express, Inc. v. Donald H. Seiler & Co., 122 Cal.App. 834, 855 (1981)

(quoting Bennett). However, as pointed out by the court in Snapp & Associates Ins. Services, Inc. v.

Malcolm Bruce Burlingame, 96 Cal.App. 4th 884, 890-91 (2002), the fraudulent concealment

doctrine does not toll the statute of limitations, no matter what the defendant has done to conceal his

wrongs, if a plaintiff has a suspicion of wrongdoing and knowledge of the harm and its cause.

The essential question to be resolved on these converted motions is when uncontradicted

facts establish that Samsung had notice sufficient to reasonably arouse suspicions of Rambus's

alleged wrongdoing.

In their briefing on the summary judgment motion, the parties should address at least the

following:

1. What specific Samsung confidential information did Rambus obtain through Steinberg as

a result of the wrongdoing of Steinberg and Rambus? When did Samsung first become suspicious

Case 5:05-cv-00334-RMW Document 655 Filed 11/02/07 Page 5 of 7
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ORDER CONVERTING RAMBUS'S MOTION TO DISMISS COUNTS IV-VII OF SAMSUNG'S SECOND AMENDED COUNTERCLAIMS TO A

MOTION FOR PARTIAL SUMMARY JUDGMENT

Nos. C-00-20905; C-05-02298; C-05-00334 RMW

TSF 6

that Rambus was using such information? If dates vary depending on the type of confidential

information, specify the date that Samsung reasonably became suspicious for each type of

confidential information. For example, what significance should be given to Samsung's purported

April 2000 waiver of Steinberg's conflicts?

2. If Samsung became suspicious that Rambus was using confidential Samsung information,

does it make any difference that Samsung did not learn until some time later that Steinberg worked

for Rambus while still employed by Samsung?

The parties are to agree on a briefing schedule by November 7, 2007, and, if they cannot

agree, the court will set one on that date. 

DATED: 11/2/07

RONALD M. WHYTE

United States District Judge

Case 5:05-cv-00334-RMW Document 655 Filed 11/02/07 Page 6 of 7
United States District Court

For the Northern District of California

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ORDER CONVERTING RAMBUS'S MOTION TO DISMISS COUNTS IV-VII OF SAMSUNG'S SECOND AMENDED COUNTERCLAIMS TO A

MOTION FOR PARTIAL SUMMARY JUDGMENT

Nos. C-00-20905; C-05-02298; C-05-00334 RMW

TSF 7

Notice of this document has been electronically sent to:

Counsel for Plaintiff:

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

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: 11/2/07 TSF

Chambers of Judge Whyte

Case 5:05-cv-00334-RMW Document 655 Filed 11/02/07 Page 7 of 7