Federal Circuit Reverses Ruling That Spoliation Made Patents Unenforceable

Federal Circuit Reverses Ruling That Spoliation Made Patents Unenforceable

WASHINGTON, D.C. - (Mealey's) A ruling that Rambus Inc.'s patents in suit for various aspects of its dynamic random access memory (DRAM) chips were unenforceable as a result of the company's spoliation of evidence was reversed May 13 when a Federal Circuit U.S. Court of Appeals panel voted 4-1 to find that the trial court judge needs to fully examine whether Rambus acted in bad faith when it destroyed relevant information (Micron Technology Inc., et al. v. Rambus Inc., No. 2009-1263, Fed. Cir.). 

The panel found that Rambus intentionally destroyed relevant information at a time that it could reasonably foresee litigation, but the majority concluded that U.S. Judge Sue L. Robinson of the District of Delaware erred in concluding that Rambus' spoliation was done in bad faith and that plaintiffs Micron Technology Inc., Micron Electronics Inc. and Micron Semiconductor Products Inc. were prejudiced by the loss of the information. 

The plaintiffs filed a declaratory judgment action against Rambus in 2000, claiming that their production of synchronous dynamic random access memory (SDRAM) did not infringe on Rambus' patents and that Rambus' patents are void, unenforceable and violate antitrust laws.  Judge Robinson divided the case into three proceedings: unenforceability due to spoliation, invalidity and infringement.  After holding a bench trial on the spoliation issue, Judge Robinson concluded that the patents in suit were unenforceable because Rambus intentionally destroyed relevant documents in derogation of a duty to preserve them.  Rambus appealed, arguing that the District Court erred in finding that it destroyed information, acted in bad faith and prejudiced the plaintiffs.  Rambus further contended that Judge Robinson erred in finding that the crime-fraud exception applied to some of its documents protected by the attorney-client privilege and that she abused her discretion in denying its motion to transfer the case to the Northern District of California. 

Although the panel found that Rambus did delete information, the majority held that the judge erred in dismissing the case as a sanction because she did not provide factual support for her finding of bad faith. 

The majority - Judges Richard Linn, Pauline Newman, Alan D. Lourie and William C. Bryson - also held that the bad faith issue impacts which party has the burden of showing prejudice as a result of the destroyed documents.  As a result, the majority concluded that Judge Robinson should reconsider the issue. 

The majority further found that Judge Robinson was correct in applying the crime-fraud exception to the attorney-client privilege because it revealed information about Rambus' deletion of information. 

Judge Arthur J. Gajarsa wrote in a concurring-in-part and dissenting-in-part opinion that he agreed with the majority's finding that Rambus deleted evidence but disagreed with the decision to remand the bad faith and sanctions issues. 

[Editor's Note:  Full coverage will be in the June issue.  In the meantime, the opinion is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #68-110617-001Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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