Opinion ID: 216683
Heading Depth: 2
Heading Rank: 3

Heading: Document Retention Policy

Text: As both parties agree, the facts underlying Rambus's alleged spoliation are substantially identical in the two cases. Br. of Rambus at 21, Micron II, (noting that the facts in Hynix and Micron are virtually the same); Br. of Hynix at 21, Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1311 (Fed.Cir.2011). See also Spoliation, 591 F.Supp.2d at 1041-42 ([T]he district court in Delaware held a bench trial with respect to an essentially identical claim by Micron that Rambus spoliated evidence.). [1] Rambus took its first steps towards enforcing its IP against non-compatible DRAM in October 1997, when it hired Joel Karp as its Vice President for Intellectual Property. Karp's role was to prepare and then to negotiate to license our patents for infringing [DRAMs]. Spoliation, 591 F.Supp.2d at 1045. Rambus recognized that hiring Karp would make partners and competitors suspicious about its intellectual property plans, but it hoped to downplay the whole infringement/IP issue until there is actual infringement, by having their spin control ready to tell its partners and competitors that Karp was being hired to assist with contract negotiations. Shortly thereafter, in January 1998, Geoff Tate, Rambus's CEO, instructed Karp to prepare a licensing and litigation strategy for presentation to the Board at its March 1998 meeting. Karp enlisted Dan Leal, a Cooley Godward litigation attorney, to prepare a litigation strategy by [the] March [1998] board meeting. Cooley's notes of a follow-up February 12, 1998 meeting between Karp, Leal, Dan Johnson (another Cooley litigator), and yet another Cooley attorney state that Rambus will [n]eed to litigate against someone to establish [a] royalty rate and have [a] court declare [the] patent valid, and noted that the royalty rates proposed by Karp would probably push us into litigation quickly. Finally, the notes reference a proposal to create a document retention policy in order to [m]ake ourselves battle ready, and the need to clean out all attorney notes so that [the PTO prosecution] file is same as official file. At the March 1998 presentation to the Board, Karp proposed a litigation strategy prioritizing his choices of defendants and forums, and set a timeframe wherein Rambus would commence legal action in 4-6 months after procuring the potentially infringing parts. He also proposed a five percent royalty rate for non-compatible RAM, a rate his later memo said was for situations where Rambus was not interested in settling. Finally, he set as near term actions the creation of a document retention policy and discovery database. In April 1998, CEO Tate met with Intel, a meeting he summarized as follows: [I]ntel says they are basically going to compete with us on [the] next generation [of DRAM]. He understood that such a shift in the midterm from RDRAM to SDRAM could force [Rambus] to play [its] IP card with the [DRAM] companies earlier.  (emphasis added). Karp announced the document retention policy in May 1998, noting that he would prefer not to discuss the policy in writing. In July 1998, Tate emailed Karp that Hyundai would be a great company to start [Karp's] plan with in q1/99 potentially. The district court determined that the said plan was a licensing agreement with Hyundai. Also in July 1998, Karp made presentations on the document retention policy to engineers, where he told them to LOOK FOR THINGS TO KEEP, including documents that could potentially help establish a conception date. In September 1998, Rambus held its first Shred Day, destroying 400 boxes of documents pursuant to Karp's document retention policy. In October 1998, Karp advised Rambus executives to delay litigation, saying that there was no rush to sue until the Direct RDRAM ramp reached the point of no return, likely in the first quarter of 2000. Karp advised Rambus to stay in stealth mode, and not to ROCK THE DIRECT BOAT. Moreover, he noted that the direct infringement case against Mosel and Nanya, two RAM manufacturers, could be ready to go in Q1 '99. In November 1998, Karp sent Rambus executives the Nuclear Winter Memorandum, which detailed a course of action in the very unlikely event that Intel cancelled RDRAM in its next generation chipset in favor of SDRAM. That memorandum identified litigation targets, time frames, and causes of action for infringement. It noted that Rambus had already made claim charts detailing infringement by Micron's non-compatible RAM products. The first patent in suit, the '105 patent, issued in June 1999. Within two days, CEO Tate instructed Karp to identify and justify his choice for the first licensing or litigation target, and to set out what Rambus's strategy [would be] for the battle with the first target that we will launch in [O]ctober [1999]. Karp's goals for the third quarter of 1999 thereafter included: prepare litigation strategy against 1 of the 3 manufacturers, and be ready for litigation with 30 days notice. In July 1999, Attorney Johnson prepared duration and timing charts for litigation in the Northern District of California and the Eastern District of Virginia, with October 1, 1999 as the prospective filing date. Thereafter, on August 26, 1999, Rambus held its second Shred Day, destroying 300 additional boxes pursuant to its document retention policy. Through all the Shred Days, Rambus kept no record of what was destroyed, but admitted that some destroyed documents related to contract and licensing negotiations, patent prosecution, JEDEC participation, Board meetings, and Rambus finances. On September 24, 1999, Karp made a presentation to the Rambus board entitled, IS THERE LIFE AT RAMBUS AFTER INTEL? The district court determined that this presentation, postdating the two shred days, reflects the turning point in Rambus's litigation intentions when Rambus appear[ed] to be ready to seriously consider actually filing suit against someone. Spoliation, 591 F.Supp.2d at 1063, 1064. During that presentation, Karp told the board that Rambus must increase the industry's perception of [its] value through aggressive assertion of IP rights. . . . [i]f Rambus is to have a future. He noted that certain [c]ompanies like Micron will fight us tooth and nail and will never settle, and touted the desirability of litigation, noting that the [b]est route to IP credibility is through victory over a major DRAM manufacturer. Within a week, CEO Tate sent an e-mail recognizing the consensus that Rambus need[ed] to sue a [DRAM] company to set an example. On October 22, 1999, Karp sent Hitachi a letter referencing its patents, and sued Hitachi on January 18, 2000.