Patent Troll ‘Willfully’ Destroyed Documents

(CN) - A federal judge ruled that a supposed patent troll "willfully" destroyed documents related to a prolonged dispute with a South Korean computer chip maker, which owes the California company $397 million.

Rambus Inc. sued SK Hynix and numerous chip builders in San Jose, Calif., federal court beginning in 2000, and claimed to hold the rights to technology used in DRAMs, or dynamic random-access memory.

In 2005, South Korea's SK Hynix unsuccessfully urged a district court to rule that Rambus had spoliated evidence and that its "unclean hands" warranted dismissal of 15 infringement claims.

Separately, in 2009, the Federal Trade Commission dismissed a monopoly complaint against Rambus after the U.S. Supreme Court rejected the commission's bid to revive an antitrust action that accused the company of hiding its patent interests.

The same year, U.S. District Judge Ronald Whyte ordered SK Hynix to pay $397 million for failing to license the technology. Whyte, however, was ordered to re-examine the issue on appeal in 2011.

On Friday, Whyte found that Rambus destroyed documents when it anticipated litigation. Specifically, Whyte said, Rambus employees were told to destroy documents at annual "shred days," from 1998 to 2000, prior to filing the patent suits.

Because litigation was "reasonably foreseeable," Whyte ruled, Rambus should have preserved the documents.

"Rambus engaged in spoliation of evidence when it engaged in the destruction of documents on all three shred days," the 66-page ruling states.

Rambus countered that its engineers tended to be "pack rats" and said that its policy was justified, to which Whyte addressed the company's intent.

"The evidence does not show that Rambus knowingly destroyed damaging evidence," Whyte said.

"Although the evidence does not support a conclusion that Rambus deliberately shredded documents it knew to be damaging, the court concludes that Rambus nonetheless spoliated evidence in bad faith or at least willfully," he added.

SK Hynix claimed the $397 million fee should be reduced based on royalties paid by Samsung Electronics, Infineon Technologies and Elpida Memory.

In response, Whyte ordered SK Hynix to submit a proposal addressing "reasonable, non-discriminatory" royalties that it owes by Oct. 12, and said Rambus must respond to the proposal by Oct. 26.

Rambus was a member of the Joint Electron Device Engineering Council or JEDEC, a standard setting organization, from 1992 until it formally resigned in June 1996.

"Even if none of the destroyed documents would have shed new light on the disclosure obligation, there may have been internal Rambus documents containing information about Rambus' plans to gain market power by using information learned at [Joint Electron Device Engineering Council] JEDEC meetings. Such evidence could have been relevant and given support to Hynix's equitable claims and defenses," Whyte said.

"The court concludes that Hynix has made a plausible, concrete suggestion that it may have been prejudiced by destruction of JEDEC-related documents, and that Rambus has not overcome this suggestion of prejudice by clear and convincing evidence."

Rambus, rumored a "patent troll" for the number of suits it has filed, was launched in 1990 by Michael Farmwald and Mark Horowitz, who worked to address the gap between microprocessor performance and DRAM performance.

The professors filed a patent application, serial number 07/510,898, for DRAM technology on April 18, 1990. Rambus received its first issued U.S. patent resulting from the application in 1993.

The company does not manufacture its own products, but licenses its rights to DRAM manufacturers and collects royalties.

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