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KENNETH L. NISSLY (SBN 77589) knissly@omm.com SUSAN van KEULEN (SBN 136060) svankeulen@omm.com SUSAN ROEDER (SBN 160897) sroeder@omm.com MISHIMA ALAM (SBN 271621) malam@omm.com OMELVENY & MYERS LLP 2765 Sand Hill Road Menlo Park, California 94025 Telephone: (650) 473-2600 Facsimile: (650) 473-2601 KENNETH OROURKE (SBN 120144) korourke@omm.com OMELVENY & MYERS LLP 400 South Hope Street Los Angeles, California 90071-2899 Telephone: (213) 430-6000 Facsimile: (213) 430-6407 [Additional counsel listed on signature page.] Attorneys for Plaintiffs HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH UNITED STATES DISTRICT COURT 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. Case No. CV 00-20905 RMW HYNIXS CONSOLIDATED REPLY ON (1) MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF THE COLLATERAL ESTOPPEL EFFECT OF REEXAMINATIONS OF RAMBUSS PATENTS; (2) MOTION FOR NEW TRIAL, OR IN THE ALTERNATIVE, MOTION FOR STAY; AND (3) MOTION FOR LEAVE TO FILE SUPPLEMENTAL REPLY TO RAMBUSS AMENDED COUNTERCLAIM Hearing Date: Time: Place: Judge: December 19, 2012 2:00 p.m. Courtroom 6 Hon. Ronald M. Whyte
HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
Case5:00-cv-20905-RMW Document4200 Filed12/04/12 Page2 of 48 TABLE OF CONTENTS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -iHYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
Page I. II. INTRODUCTION AND SUMMARY OF ARGUMENT ................................................. 1 HYNIX IS ENTITLED TO SUMMARY JUDGMENT OF INVALIDITY BASED ON COLLATERAL ESTOPPEL ....................................................................................... 5 A. Rambuss Meritless Attacks On Hynix Do Not Justify the Enforcement of Invalid Patents ............................................................................................................... 5 1. 2. Hynix did not engage in improper reexamination/litigation gamesmanship ...................................................................................................... 5 It is of no consequence that PTO examiners, not the Board, found seven of the claims-in-suit valid in reexamination where the Board has overruled the examiners conclusions .................................................................. 9 Patent validity may properly be subject to repeated attacks .............................. 10
3.
B. Collateral Estoppel Based Upon the Board Decisions Was Not Within the Scope of the Judgment Previously Appealed to the Federal Circuit and Therefore Is Not Excluded by the Mandate Rule ................................................................................... 11 C. The Board Decisions Rejecting Rambuss Patent Claims Are Entitled to Collateral Estoppel Effect in This Litigation .............................................................. 14 1. The Different Burdens of Proof In District Court Actions and Reexamination Proceedings Do Not Bar The Application of Collateral Estoppel .............................................................................................................. 14 a. b. c. 2. 3. The heightened burden of proof at trial does not bar collateral estoppel for a PTO decision that the patent should not have issued ......... 14 PTO determinations of invalidity routinely impact court proceedings on those same patents ........................................................... 15 Rambuss reliance on non-patent case authority is misplaced .................. 16
The Board Decisions Are Final for Collateral Estoppel Purposes ..................... 17 Rambus Does Not Dispute That Collateral Estoppel Supports Finding Related Patent Claims Invalid And Offers No Evidence Of Patentably Significant Differences Between The Invalidated Claims And The Claims-In-Suit .................................................................................................... 18 Denying Collateral Estoppel Would Be An Abuse of Discretion ...................... 23 a. b. c. Collateral estoppel is not barred by the fact that Hynix did not join Microns case against Rambus .................................................................. 25 There are no inconsistent results that justify denial of collateral estoppel ..................................................................................................... 27 Refusing to give Board decisions collateral estoppel effect would lead to inconsistent results that will hurt competition and the public ....... 27
4.
Case5:00-cv-20905-RMW Document4200 Filed12/04/12 Page3 of 48 TABLE OF CONTENTS (continued) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - ii VI. V. IV. III.
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HYNIX IS ENTITLED TO A NEW PATENT TRIAL.................................................... 28 A. The Reexaminations are Newly Discovered, Admissible Evidence Warranting a New Trial on Validity ................................................................................................. 29 B. The Federal Circuits Construction of the Term Memory Device Also Warrants a New Trial .................................................................................................. 32 C. Hynix is Entitled to a New Trial on Damages ............................................................ 33 ALTERNATIVELY, THE COURT SHOULD STAY THIS ACTION ........................... 34 A. Hynix has not delayed in seeking a stay ..................................................................... 34 B. Rambus will not be prejudiced by a stay .................................................................... 35 THE COURT SHOULD GRANT HYNIX LEAVE TO ADD A COLLATERAL ESTOPPEL DEFENSE ..................................................................................................... 36 A. There is Good Cause to Permit Hynix to Supplement its Reply ................................. 36 B. Supplementation is Proper under Rule 15 Standards .................................................. 37 CONCLUSION ................................................................................................................. 39
Case5:00-cv-20905-RMW Document4200 Filed12/04/12 Page4 of 48 TABLE OF AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Page CASES Allstate Ins. Co. v. Blount, 491 F.3d 903 (8th Cir. 2007).................................................................................................... 24 Amado vs. Microsoft Corp., 517 F.3d 1353 (Fed. Cir. 2008) ................................................................................ 3, 11, 13, 30 Argus Inc. v. Eastman Kodak Co., 552 F. Supp. 589 (S.D.N.Y. 1982) ........................................................................................... 25 ASCII Corp. v. STD Entmt USA, Inc., 844 F. Supp. 1378 (N.D. Cal. 1994) .................................................................................... 3, 16 Barrow v. Falck, 11 F.3d 729 (7th Cir. 1993)...................................................................................................... 11 Bettcher Industries, Inc. v. Bunzl USA, Inc., 661 F.3d 629 (Fed. Cir. 2011) .................................................................................................. 17 Biggins v. Hazen Paper Co., 111 F.3d 205 (1st Cir.1997) ..................................................................................................... 11 Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (1971) .............................................................................................. 11, 24, 28, 37 Burson v. Carmichael, 731 F.2d 849 (Fed. Cir. 1984) .................................................................................................. 24 Cable Elec. Prods., Inc. v. Genmark, Inc., 770 F.2d 1015 (Fed. Cir. 1985) ................................................................................................ 19 Cardiac Pacemakers Inc. v St. Jude Med., Inc., 576 F.3d 1348 (Fed. Cir. 2009) ................................................................................................ 12 Carter-Wallace, Inc. v. United States, 496 F.2d 535 (Ct. Cl. 1974) ..................................................................................................... 31 Centricut, LLC v. Esab Grp., Inc., 390 F.3d 1361 (Fed. Cir. 2004) ................................................................................................ 20 Collegenet, Inc. v. Applyyourself, Inc., No. CV-02-484-HU, 2008 U.S. Dist. LEXIS 90156 (D. Or. Oct. 28, 2008) ........................... 16 DataTreasury Corp. v. Wells Fargo & Co., 490 F. Supp. 2d 749 (E.D. Tex. 2006) ..................................................................................... 29 Deters v. Equifax Credit Info. Servs., Inc., 202 F.3d 1262 (10th Cir. 2000)................................................................................................ 31 - iii HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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Engel Indus., Inc. v. Lockformer Co., 166 F.3d 1379 (Fed. Cir. 1999) .................................................................................... 11, 12, 13 Ethicon, Inc. v. Quigg, 849 F.2d 1422 (Fed. Cir. 1988) .......................................................................................... 11, 27 Exxon Chem. Patents, Inc. v. Lubrizol Corp., 137 F.3d 1475 (Fed. Cir. 1998) ...................................................................................... 2, 11, 12 Ferring B.V. v. Barr Labs., Inc., 437 F.3d 1181 (Fed. Cir. 2006) ................................................................................................ 20 Flexiteek Americas, Inc. v. Plasteak, Inc., No. 08-60996-CIV, 2012 WL 5364263 (S.D. Fla. Sept. 10, 2012) ........................................... 7 Galdamez v. Potter, 415 F.3d 1015 (9th Cir. 2005).................................................................................................. 33 Ganem v. Heckler, 746 F.2d 844 (D.C. Cir. 1984) ................................................................................................. 24 Gould v. Control Laser Corp., 705 F.2d 1340 (Fed. Cir. 1983) .......................................................................................... 16, 34 Green Edge Enters., LLC v. Rubber Mulch Etc., LLC, 620 F.3d 1287 (Fed. Cir. 2010) ................................................................................................ 39 Haberer v. Woodbury Candy, 188 F.3d 957 (8th Cir. 1999).................................................................................................... 24 Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed. Cir. 2011) .......................................................................................... 26, 29 In re Baxter Intl, Inc., 678 F.3d 1357, rehearing/rehearing en banc denied, 698 F.3d 1349 (Fed. Cir. 2012) ............................................................................................................ 11, 14, 17 In re Rambus, 694 F.3d 42 (Fed. Cir. 2012) ...................................................................................... 4, 9, 17, 32 In re Tableware Antitrust Litig., No. C04-3514 VRW, 2007 WL 781960 (N.D. Cal. Mar. 13, 2007)........................................ 31 Keith v. Volpe, 858 F.2d 467 (9th Cir. 1988).................................................................................................... 38 Luben Indus., Inc. v. United States, 707 F.2d 1037 (9th Cir. 1983).................................................................................................. 17
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Lucent Techs. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) ................................................................................................ 34 Medtronic, Inc. v. White, 526 F.3d 487 (9th Cir. 2008).................................................................................................... 33 Mendenhall v. Barber-Green Co., 26 F.3d 1573 (Fed. Cir. 1994) ........................................................................................... passim MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556 (E.D. Va. 2007)....................................................................................... 34 Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) ................................................................................................ 26 Microsoft Corp. v. i4i Ltd. Pship, 131 S. Ct. 2238 (2011) ....................................................................................................... 15, 28 Miller v. Rykoff-Sexton, Inc., 845 F.2d 209 (9th Cir. 1988).................................................................................................... 38 Nations v. Sun Oil Co., 695 F.2d 933 (5th Cir. 1983).................................................................................................... 26 NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005) ................................................................................................ 34 Ohio Willow Wood Co. v. ALPS South, LLC, No. 2:04-cv-1223, 2012 WL 2196083 (S.D. Ohio June 15, 2012) ................................... passim Oracle Am. Inc. v. Google, Inc., No. C10-03561 WHA, 2012 WL 1189898 (N.D. Cal. Jan. 4, 2012) ................................... 4, 31 Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322 (1979) ................................................................................................................. 24 Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985) ........................................................................................... passim Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170 F.3d 1373 (Fed. Cir. 1999) .......................................................................................... 17, 18 PlaSmart, Inc. v. Kappos, No. 2011-1570, 2012 WL 1850650 (Fed. Cir. May 22, 2012) ................................................ 17 Precision Instrument Mfg. Co. v. Auto Maint. Mach. Co., 324 U.S. 806 (1945) ....................................................................................................... 5, 28, 36 Proveris Scientific Corp. v. Innovasystems, Inc., 536 F.3d 1256 (Fed. Cir. 2008) ................................................................................................ 20 -vHYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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Quock Ting v. United States, 140 U.S. 417 (1891) ................................................................................................................. 20 Rambus Inc. v. Hynix Semiconductor Inc., et al., United States District Court, Northern District of California, Case No. C 05-00334 RMW ...................................................................................................... 8 Rambus Inc. v. Micron Technology, Inc., et al., United States District Court, Northern District of California, Case No. C 06-00244 RMW ...................................................................................................... 8 Rambus Inc. v. Samsung Electronics Co., Ltd., et al., United States District Court, Northern District of California, Case No. C 05-02298 RMW ...................................................................................................... 8 Singleton v. Wulff, 428 U.S. 106 (1976) ................................................................................................................. 38 SKF Condition Monitoring, Inc. v. Invensys Sys., Inc., No. 07cv1116 BTM(BGS), 2010 U.S. Dist. LEXIS 90305 (S.D. Cal. Aug. 31, 2010)......................................................................................................... 38 Slip Track Sys., Inc. v. Metal Lite, Inc., 159 F.3d 1337 (Fed. Cir. 1998) ................................................................................................ 16 Standard Havens Prods., Inc. v. Gencor Indus., Inc., No. 93-1208, 1993 U.S. App. LEXIS 11963 (Fed. Cir. May 21, 1993) .............................. 7, 16 Starker v. United States, 602 F.2d 1341 (9th Cir. 1979).................................................................................................. 25 Tierravision, Inc. v. Google, Inc., No. 11cv2170 DMS(BGS), 2012 WL 559993 (S.D. Cal. Feb. 21, 2012) ............................... 35 Translogic Tech., Inc. v. Hitachi Ltd., 250 Fed. Appx 988 (Fed. Cir. 2007) ....................................................................................... 15 Translogic Tech., Inc. v. Hitachi Ltd., 404 F. Supp. 2d 1250 (D. Or. 2005) .................................................................................. 15, 16 Union Carbide Corp. v. Am. Can Co., 724 F.2d 1567 (Fed. Cir. 1984) ................................................................................................ 20 United States v. Kellington, 217 F.3d 1084 (9th Cir. 2000).................................................................................................. 11 United States v. Mende, 43 F.3d 1298 (9th Cir. 1995).................................................................................................... 31
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United States v. Patterson, 819 F.2d 1495 (9th Cir. 1987).................................................................................................. 31 United States v. Roberts, 88 F.3d 872 (10th Cir. 1996).................................................................................................... 32 Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295 (Fed. Cir. 2007) ................................................................................................ 34 Westwood Chem., Inc. v. United States, 525 F.2d 1367 (Ct. Cl. 1975) ................................................................................................... 19 STATUTES 25 U.S.C. 317(b) ........................................................................................................................... 8 28 U.S.C. 1407 ............................................................................................................................ 26 35 U.S.C. 282 ........................................................................................................................ 15, 27 35 U.S.C. 282(b)(2)..................................................................................................................... 24 35 U.S.C. 301 ................................................................................................................................ 3 35 U.S.C. 307(a) ........................................................................................................................... 9 35 U.S.C. 318(b) ..................................................................................................................... 9, 21 American Inventors Protection Act of 1999, Pub. L. 106-113, 113 Stat. 1501 (Nov. 29, 1999) .................................................................. 6, 7 RULES 37 C.F.R. 1.550(g) ...................................................................................................................... 10 37 C.F.R. 41.31(a)(2) .................................................................................................................. 10 Fed. Cir. R. 32.1(c) ........................................................................................................................ 15 Fed. Cir. R. 32.1(d). ....................................................................................................................... 16 Fed. R. App. P. 32.1(a) .................................................................................................................. 15 Fed. R. Civ. P. 15 Advisory Committee Notes .............................................................................. 36 Fed. R. Civ. P. 59(b) ...................................................................................................................... 29 Fed. R. Evid. 403 ........................................................................................................................... 31
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3 James W. Moore, et al., Moores Federal Practice - Civil 15.15[3] (2012) ..................................................................................................................... 38 Application No. 95/000020, Decision Dismissing Petition (Sept. 16, 2005), http://portal.uspto.gov. ............................................................................................................. 26 Greg H. Gardella & Emily A. Berger, United States Reexamination Procedures: Recent Trends, Strategies And Impact On Patent Practice, 8 J. Marshall Rev. Intell. Prop. L. 381 (2009) ....................................................................... 6, 8 Restatement (Second) of Judgments 29(3) reporters note to cmt. e (1982) ................................................................................... 25 Robert L. Harmon, et al., Patents and the Federal Circuit 780 (10th ed. 2011) .................................................................................................................. 20 U.S. Patent & Trademark Office Manual of Patent Examining Procedure 2242 (8th ed. 2001) ................................................................................................................. 7
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I.
INTRODUCTION AND SUMMARY OF ARGUMENT It is difficult to conceive of a development in a pending patent suit more worthy of the
Courts attention and action than appellate determinations by the Patent Trial and Appeals Board1 of the United States Patent and Trademark Office that the claims-in-suit are invalid. Yet ignoring the Boards decisions is exactly what Rambus urges, pushing for entry of judgment on expired, invalid patents that cannot be asserted against anyone else in the world. Perhaps the one point on which the parties and the Court can agree is that there has indeed been a long arc of litigation. It is an arc born of a trifurcated trial dealing with complex spoliation, patent and antitrust issues, an appeal, a vacated judgment, and a lengthy remand process, with intermittent stays attributable to Rambuss loss to Infineon in the Eastern District of Virginia and the Federal Trade Commissions ruling against Rambus. It is not, as Rambus suggests, a result of Hynixs2 litigation tactics either in this Court or in the reexamination process. The arc now brings the Court and the parties to this juncture: whether to proceed and enter judgment on invalid patents or, by the Hynix motions, not. Since January of this year, Rambuss Farmwald/Horowitz patents have been disappearing under rigorous reexamination proceedings before the Board. Here, Rambus does not even attempt to argue that the three claims-in-suit rejected by the Board are likely to be resuscitated on appeal, noting only when, not if, certificates of cancellation will issue. As for the remaining seven claims-in-suit for which the Board has found closely related claims invalid (because the feature combinations are either anticipated or obvious) Rambus offers only lawyer argument, not admissible evidence, that the claims are not sufficiently related under Ohio Willow Wood Co. v. ALPS South, LLC, No. 2:04-cv-1223, 2012 WL 2196083 (S.D. Ohio June 15, 2012). Indeed, Rambus did not even submit a declaration in opposition to David Taylors declaration, which
On September 16, 2012, the name of the Board of Patent Appeals and Interferences (BPAI) was changed to the Patent Trials and Appeals Board (PTAB). In this Consolidated Reply Hynix will refer to the BPAI and PTAB as the Board. 2 On October 5, 2012, the parties formerly collectively referred to as Hynix filed an Administrative Motion informing the Court of changes to those parties names. As of the date of filing this Consolidated Reply, the Administrative Motion had not been granted. For ease of reference here, those parties shall continue to be referred to as Hynix.
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establishes the absence of any patentable significant difference between the claims-in-suit and related claims rejected by the Board. Rambuss evidentiary concession highlights the driving force behind Hynixs motions: the Farmwald/Horowitz patent claims have not survived reexamination, are no longer valid, and cannot be enforced by this Court. Unable to argue against the substantive findings of invalidity, Rambus instead proffers a meritless attack on the process and timing of the relevant reexaminations, following the age-old litigation tactic of trying to put its opponent on trial when it has neither the law nor facts to rely upon. Rambuss construct of Hynixs alleged reexamination laches is wholly unsupported by legal or equitable principles and ignores the simple fact that Hynix is not relying on its ex parte reexaminations as the basis for collateral estoppel. Rambuss suggestion that the only plausible inference is that Hynix manipulated the reexaminations filed by Micron and Samsung for tactical advantage is absurd, a story concocted by hindsight and speculation. As for Rambuss legal challenges to the Hynix motions, each fails. This Action is Pending Rambus fails to acknowledge that the Federal Circuit vacated this Courts judgment in its entirety, that this action is still pending, and that therefore, as directed by the Federal Circuit, this Court can and should reconsider liability issues. Mendenhall v. Barber-Green Co., 26 F.3d 1573, 1581 (Fed. Cir. 1994). The mandate rule, which reaches only that which was actually decided, is of no use to Rambus here. Exxon Chem. Patents, Inc. v. Lubrizol Corp., 137 F.3d 1475, 1478 (Fed. Cir. 1998). In the appeal, the Federal Circuit could not have addressed the impact of the recent Farmwald/Horowitz Board rejections for the simple reason, ignored by Rambus, that the rulings did not yet exist. Summary Judgment Rambus is no more successful in its efforts to avoid the collateral estoppel impact of the Boards rulings. First, the different standards of proof employed at the PTO and in district court do not limit the impact of the Boards findings here. Rambus argues that because the Board uses a preponderance standard and district courts use a clear and convincing standard, Board decisions cannot have collateral estoppel effect. If Rambus were correct, no patent owner would ever be -2HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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estopped in a district court proceeding based on a reexamination finding of invalidity, which would render the reexamination procedure established by Congress (35 U.S.C. 301, et seq.) pointless. Notably, Rambus cites no Federal Circuit case in support of such a proposition. The law is clear that district court patent cases must be dismissed when the patent is held invalid on reexamination. ASCII Corp. v. STD Entmt USA, Inc., 844 F. Supp. 1378, 1380 (N.D. Cal. 1994). Moreover, the heightened burden of proof at trial is due to the presumption of validitya presumption of administrative correctnesswhich the reexamination proceedings in this case have directly undermined. Second, Rambuss argument that the reexamination results are not yet final highlights Rambuss key objective: encourage this Court to act quickly to enter judgment on invalid patents before the certificates of cancellation issue. Again, Rambus makes this argument without once suggesting that any of the claims-in-suit or relevant related claims are likely to be resurrected. The actions of the Board are final for purposes of collateral estoppel. If the Court were to give credence to Rambuss argument, it would dictate a stay, not a hurried judgment before the final stroke of the pen on cancellation. Third, Rambuss argument that the Court should exercise discretion to deny collateral estoppel complains about Hynixs conduct with regard to the various co-pending litigation and reexamination proceedings. Rambuss true complaints are with the system designed by Congress and implemented by the courts, in which the non-final determination in this case that Rambuss patents were not invalid is no bar to subsequent decisions invalidating Rambuss patents, by Hynix or other parties, in courts or at the PTO. Rambuss unhappiness with the system does not justify denial of collateral estoppel for the Boards invalidity determinations. Motion for New Trial In the guise of argument that the Board decisions are not new evidence, Rambus first retreats to its reexamination laches construct, arguing that Amado vs. Microsoft Corp., 517 F.3d 1353 (Fed. Cir. 2008) created some sort of free-floating doctrine of reexamination laches. Rambus overreads Amado, which does not apply here. Neither Amado nor Rambuss argument address the collateral estoppel impact of the Boards determinations of invalidity. Rambus then -3HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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argues that the Board decisions should be excluded under Federal Rule of Evidence 403, which is neither an appropriate ground to deny a new trial nor an availing argument. As the Northern District has previously held, the jury should be informed when the PTO has taken corrective action in a reexamination decision to withdraw the presumption of validity. Oracle Am. Inc. v. Google, Inc., No. C10-03561 WHA, 2012 WL 1189898, at *3 (N.D. Cal. Jan. 4, 2012). Hynix is also entitled to a new trial in light of the Federal Circuits recent construction of the term memory device in In re Rambus, 694 F.3d 42 (Fed. Cir. 2012). Contrary to Rambuss argument, Hynixs previous agreement to the construction of memory device expressly is not a bar to the jury now being properly instructed as to this term. The previously agreed construction of memory device was an integrated circuit device in which information can be stored and retrieved automatically. See, Joint Claim Construction Statement 1, Sept. 12, 2003 (D.E. 326). Hynix made clear in claim construction briefing its view that an integrated circuit device encompassed more than a single chip, just as the Federal Circuit ruled in In re Rambus. Hynix did not waive this point. Curiously, in opposing this motion, Rambus deflects the key issue of the relevance of the Board decisions in a new trial on liability, turning instead to damages. Simply put, in light of the outright rejection of three of the Farmwald/Horowitz claims-in-suit, and the rejection of closely related Farmwald/Horowitz claims not patently distinct from the remaining seven claims-in-suit, all of the claims at issue will fail, and Rambus will not be entitled to damages. Even if fewer than all claims-in-suit are held invalid, Hynix will nonetheless be entitled to a new trial on damages because the normal rule requires it, and because the basis for Rambuss claimed damages has been undermined. Alternative Motion for Stay Summary judgment based upon collateral estoppel is the right result of the Hynix motions, for all of the reasons argued in Hynixs opening briefs. If, however, the Court is hesitant to grant summary judgment, then Rambuss own arguments to wait for certificates of cancellation particularly since Rambus offers no argument or evidence that the Board decisions will be overturneddemonstrate that a stay is appropriate to avoid entering judgment on invalid patents. -4HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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Motion to Supplement The Board determinations of invalidity affecting all of the claims-in-suit are not only good cause but invoke the strongest possible public policy in favor of amendment. See, Precision Instrument Mfg. Co. v. Auto Maint. Mach. Co., 324 U.S. 806, 815-16 (1945) (discussing public interests involved in patent rights); Patlex Corp. v. Mossinghoff, 758 F.2d 594, 604 (Fed. Cir. 1985) (same). Rambus fails to carry its burden of demonstrating prejudice, and indeed its arguments on this point reveal Rambuss motive to obtain judgment based on patents that have been rescinded by the PTO. Summation Understandably, this Court may question the expenditure of additional time and resources on a case that, on the surface, would appear to be wending toward resolution. But the Federal Circuit instructs that it would be manifestly unjust to hold Hynix alone liable on patents that are invalid against the rest of the world merely for reasons of judicial economyas substantial as those reasons may be. Mendenhall, 26 F.3d at 1583. The PTO has determined that these patents should never have been issued, and the strong public policy in favor of not enforcing invalid patents requires that the Court grant Hynixs motion for summary judgment or in the alternative, motion for new trial or stay, as well as its motion to amend. II. HYNIX IS ENTITLED TO SUMMARY JUDGMENT OF INVALIDITY BASED ON COLLATERAL ESTOPPEL A. Rambuss Meritless Attacks On Hynix Do Not Justify the Enforcement of Invalid Patents 1. Hynix did not engage in improper reexamination/litigation gamesmanship
As discussed in section II.C., infra, Rambus has no meritorious response to Hynixs argument that the Board decisions on the claims-in-suit and related claims preclusively establish the invalidity of all ten claims at issue here. Instead, Rambuss brief complains that Hynix is now in the position to invoke collateral estoppel based upon Board decisions in reexaminations to which Hynix is not a party. Rambuss tirade about the alleged litigation and reexamination strategy of Hynix and its so-called allies has no basis in fact, and Rambus presents no evidence -5HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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to support it. Rambuss primary accusation is that there was an inexcusable delay in Hynixs decision to pursue reexamination of Rambuss patents. See, Rambus Inc.s Consolidated Opposition3 1:16. Rambus points to no statutory or case law to support its novel reexamination laches argument, and indeed there is none. In the first place, Hynix is not relying on its ex parte reexaminations as the basis for collateral estoppel. As is perfectly appropriate, Hynix is relying on the Boards decisions in reexaminations filed by Micron and Samsung, where the Board decided that the various features in the Farmwald/Horowitz patents were anticipated or obvious. Second, Hynix followed all applicable rules and regulations with regard to its reexaminations, and notably Rambus does not contend otherwise. Rambus argues that Hynix could have sought reexamination years ago, before its invalidity challenge was tried to a jury in early 2006. Id., 1:8-11. This argument ignores the fact that the reexamination procedures available to a party in Hynixs position were dramatically different in the early 2000s than at the time of the patent trial in 2006. This case was filed in August 2000, less than a year after Congress created a new inter partes reexamination avenue for challenging the validity of issued patents. See, American Inventors Protection Act of 1999, Pub. L. 106-113, 113 Stat. 1501 (Nov. 29, 1999). Until 2002, a third party who initiated an inter partes reexamination had no right to appeal. See, Greg H. Gardella & Emily A. Berger, United States Reexamination Procedures: Recent Trends, Strategies And Impact On Patent Practice, 8 J. Marshall Rev. Intell. Prop. L. 381, 390-391 (2009) and authorities cited therein. It was not until 2005, when the PTO formed the Central Reexamination Unit, that reexaminations were assigned to specialized CRU examiners rather than to the original patent examiner. Id. As a result of these improvements in reexamination procedures, reexamination went from being used sparingly in the 1990s and early 2000s (id. at 381) to experiencing a dramatic increase in the number of reexamination filings between 2006 and 2008 (id. at 394). If Rambus is suggesting that there is
3
Rambus Inc.s Consolidated Opposition to (1) Hynixs Motion for Summary Judgment or Partial Summary Judgment on the Issue of the Collateral Estoppel Effect of Reexaminations of Rambuss Patents; (2) Hynixs Motion for New Trial or, in the Alternative, for Stay; (3) Hynixs Motion for Leave to File Supplemental Reply (Rambus Consol. Oppn), Nov. 20, 2012, (D.E. 4193). -6HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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something sinister in Hynix not filing an inter partes reexamination in 2000, the suggestion falls away in light of the reality at the time. Indeed, as to the two original patents-in-suitthe 105 and 918 patentsHynix could not have sought inter partes reexamination because by statute inter partes reexamination is not available on those patents where a patents immediate application was filed before November 1999. See, Pub. L. No 106-113, 4608. The other four patents from which Rambus selected claims to trythe 120, 020, 916, and 863 patentswere not added to the case until late 2002.4 Rambus also faults Hynix for continu[ing] to sit on its hands even as Samsung and Micron began to request reexaminations of Rambuss patents. Rambus Consol. Oppn 1:12-14. Again, Rambus mischaracterizes the options available to Hynix. There was and is no procedural mechanism by which Hynix could join as a party to the Micron or Samsung reexaminations. Moreover, once those reexaminations were underway, the PTO would not have initiated additional reexaminations on the same claims unless Hynix came forward with different, noncumulative prior art references or offered a new light as to how the proffered prior art rendered the claims invalid. U.S. Patent & Trademark Office Manual of Patent Examining Procedure 2242 (8th ed. 2001). Simply put, any party is entitled to claim the benefit of a PTO finding of invalidity. See, Flexiteek Americas, Inc. v. Plasteak, Inc., No. 08-60996-CIV, 2012 WL 5364263, at *9 (S.D. Fla. Sept. 10, 2012) (citing Standard Havens Prods., Inc. v. Gencor Indus., Inc., No. 93-1208, 1993 U.S. App. LEXIS 11963 (Fed. Cir. May 21, 1993)) (unpublished) (reexamination determination of unpatentability may mean patent was void ab initio); Patlex Corp. v. Mossinghoff, 758 F.2d at 604 (reexamination may result in removal of patents that should have never been granted). Accordingly, there is no basis to deny Hynix the right to rely on reexaminations filed by others. Nor is there any basis for Rambuss argument that the only plausible inference is that Hynix improperly presented defenses seriatim in the hope that something would eventually stick.
4
See, Motion by Defendant Rambus Inc. for Leave to File Answer to Second Amended Complaint and Amended Complaint and Amended Counterclaim, October 4, 2002 (D.E. 226) and Order Granting Defendant Leave to File Answer to Second Amended Complaint and Amended Counterclaim, Nov. 18, 2002 (D.E. 248). -7HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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See, Rambus Consol. Oppn 1:15-18. Rambus suggests that Hynix intentionally decided not to file inter partes reexaminations, and as part of this amazingly prescient strategy in August 2000, did not join Microns suit in Delaware, so as to cleverly avoid the statutory bar of 25 U.S.C. 317(b). See, Rambus Consol. Oppn 26:2-25. But just as the procedures for reexamination have changed in ways that were not foreseeable to Hynix when this case was filed in 2000, the litigation has taken an unexpected path. For Rambuss theory to be true, Hynix would have had to have predicted in 2000 these, among many other events: That Rambus would add patents to the case in late 2002 for which inter partes reexamination would be available, even though inter partes reexamination was not available for the patents Rambus originally asserted; That Rambus would sue Hynix a second time in 2005, that it would then sue Samsung in 2005 and Micron in 2006 on an overlapping set of patents,5 and that those other manufacturers would pursue the reexamination strategy they did; and That the final resolution of this case would be delayed for many reasons, such as a stay pending the appeal in Infineon (D.E. 199), a stay connected with the FTCs proceedings against Rambus (D.E. 2394), numerous additional proceedings once Rambuss spoliation came to light including trial, an appeal to the Federal Circuit that required two oral arguments, and a remand of the case to this Court. Putting aside that there is no evidence for Rambuss so-called inference, it is simply implausible to infer that Hynix decided in 2000 not to file reexaminations, then made another calculated decision in 2006 not to join the Micron and Samsung reexaminations (even if that were possible, which it is not), all in anticipation that this case would still be in the district court in 2012 when positive reexamination decisions would be issued. See, Rambus Inc. v. Hynix Semiconductor Inc., et al., United States District Court, Northern District of California, Case No. C 05-00334 RMW; Rambus Inc. v. Samsung Electronics Co., Ltd., et al., United States District Court, Northern District of California, Case No. C 05-02298 RMW; Rambus Inc. v. Micron Technology, Inc., et al., United States District Court, Northern District of California, Case No. C 06-00244 RMW. Rambus ignores the fact that it filed these additional lawsuits in 2005-06, which posed reexamination questions for the defendants at a time when inter partes reexaminations were becoming more common. See, Gardella & Berger, supra, 394-96. -8HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
5
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6
2.
It is of no consequence that PTO examiners, not the Board, found seven of the claims-in-suit valid in reexamination where the Board has overruled the examiners conclusions
Rambuss brief makes prominent and frequent reference to the fact that some of the claims-in-suit were found valid by PTO examiners. See, e.g., Rambus Consol. Oppn 1:7-8, 2:1-3; Part II. It is of no consequence that an examiner, in an unreviewed interlocutory decision, found a claim valid when the Board finds the same claim invalid, or completely undermines the basis of the examiners decision in other Farmwald/Horowitz reexamination cases. A claim found invalid by the Board cannot be enforced, regardless of a prior ruling by an examiner. 35 U.S.C. 307(a), 318(b); see, Hynixs Motion for Summary Judgment6 9:10-11:4. Rambuss assertions arise out of ex parte reexaminations for four of the patents and seven of the claims-in-suit filed by Hynix. See, Taylor Decl., 112-119. These reexaminations are summarized in the following chart. Claim-in-Suit 105 patent claim 34 Examiner Decision Hynix filed three ex parte reexaminations on the 105 patent. The first did not include the Bennett patent, the second was rejected as not presenting a substantial new question of patentability, and in the third the examiner concluded that Bennett would not be combined by a person of skill with Inagaki or Lofgren. See, Taylor Decl., 113-114. 918 patent claims 24 and 33 Hynix contended claims 24 and 33 (and claim 18, see below) were invalid over a combination of iAPX with Lofgren or Bazes, and/or Bennett with Lofgren or Bazes. After a personal interview with Rambuss representatives the examiner reversed his initial rejection and confirmed claims 24 and 33. See, Taylor Decl., 115-117. The examiner refused to reverse his The examiners conclusions regarding the various combinations of prior art references were rejected by the Board in its decisions on the 184 patent and 446 patent. See, Taylor Decl., 117. Relevant Board Analysis The examiners conclusions on combining Bennett with Lofgren and Inagaki were rejected by the Board in its decision regarding the 446 patent. See, Taylor Decl., 114.
Hynixs Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment on the Issue of the Collateral Estoppel Effect of Reexaminations of Rambuss Patents (Hynix Mot. Summ. J.), Oct. 17, 2012 (D.E. 4164). -9HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 916 patent claims 9 and 40 020 patent claims 31 and 33
initial rejection of claim 18 (from which both claims 24 and 33 depend) and Rambus appealed to the Board. The Board upheld the rejection and Rambus appealed to the Federal Circuit. It was this appeal that resulted in the Federal Circuits decision in In re Rambus Inc., 694 F.2d 42 (Fed. Cir. 2012), upholding the Boards decision. See, Taylor Decl., 115. The examiner confirmed the claims, concluding that a person of skill would not have combined Bennett and Inagaki. See, Taylor Decl., 118. The examiner confirmed the claims, concluding that Bennett did not disclose programmable CAS latency. See, Taylor Decl., 119. This conclusion was rejected by the Board in its 446 decision, which found it obvious to combine Bennett and Inagaki. See, Taylor Decl., 118. This conclusion was rejected by the Board in its 916 decision, which found Bennett did disclose a register which stores a value that is representative of an amount of time to transpire after which the memory device outputs the first amount of date - i.e., programmable CAS latency. See, Taylor Decl., 119.
Rambuss argument based on examiner confirmations of claims in Hynixs ex parte reexaminations falls apart when the relevant Board decisions are considered. Because they were ex parte reexaminations, Hynix had no right to participate in the reexamination or to appeal. See, 37 C.F.R. 41.31(a)(2) (permitting only the owner of the patent to appeal); 37 C.F.R. 1.550(g) (prohibiting participation by third party requestor in reexamination proceedings). When the Board had an opportunity to review the grounds for the various confirmations in inter partes reexaminations presenting the same reference combinations and arguments, however, the Board overruled the conclusions reached by the examiners. 3. Patent validity may properly be subject to repeated attacks
In reality, Rambuss complaint about Hynixs alleged litigation/reexamination strategy as an attempt to obtain repeated bites of the apple is a complaint about well-settled principles regarding challenges to patent validity. Courts do not hold a patent valid as against all potential - 10 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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challenges; a finding in any given case that a patent is not invalid means only that the patent remains valid until another challenger carries the 282 burden in the courts or the PTO. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1429 n.3 (Fed. Cir. 1988) (citations and internal quotation marks omitted). Similarly, the law is clear that subsequent attacks on validity may be mounted even by a party who has lost a prior validity challenge in court, at least where (as here) there is no final judgment in the litigation. In re Baxter Intl, Inc., 678 F.3d 1357, 1365, rehearing/rehearing en banc denied, 698 F.3d 1349 (Fed. Cir. 2012); see also, Mendenhall, 26 F.3d at 1580-81. To be sure, this means that patent holders may have to fend off multiple validity attacks, while a single loss on validity renders the patent invalid as to all, but the Supreme Court has held that nonmutual estoppel is not unfair: the achievement of substantial justice rather than symmetry is the measure of the fairness of the rules of res judicata. Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 325 (1971) (citation and internal quotation marks omitted). B. Collateral Estoppel Based Upon the Board Decisions Was Not Within the Scope of the Judgment Previously Appealed to the Federal Circuit and Therefore Is Not Excluded by the Mandate Rule
The rule of mandate does not bar this Court from determining the impact of the recent Board rejections of Farmwald/Horowitz claims. [A]n appellate mandate governs only that which was actually decided. Exxon Chem. Patents, Inc., 137 F.3d at 1478. When, on remand, a district court is confronted with issues that were never considered by the remanding court the rule of mandate poses no obstacle. United States v. Kellington, 217 F.3d 1084, 1092-93 (9th Cir. 2000) (quoting Biggins v. Hazen Paper Co., 111 F.3d 205, 209 (1st Cir.1997)). An appellate mandate does not turn a district judge into a robot, mechanically carrying out orders that become inappropriate in light of subsequent factual discoveries or changes in the law. Amado, 517 F.3d at 1359 (quoting Barrow v. Falck, 11 F.3d 729, 731 (7th Cir. 1993)). Even the cases upon which Rambus relies hold that a proper analysis of the mandate rule must begin with the scope of the judgment from which the appeal arose. Engel Indus., Inc. v. Lockformer Co., 166 F.3d 1379, 1382-83 (Fed. Cir. 1999). The district court judgment defines the scope of what may, indeed must, be appealed. An issue that falls within the scope of the judgment appealed from but is not raised by the appellant in its opening brief on appeal is - 11 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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necessarily waived. Id. at 1383. Accordingly, [o]nly the issues actually decided - - those within the scope of the judgment appealed from, minus those explicitly reserved or remanded by the court - - are foreclosed from further consideration. Id. Having thus defined the scope of a mandate by the judgment below, then and only then does the scope of the remand come into the analysis. Unless remanded by this court, all issues within the scope of the appealed judgment are deemed incorporated within the mandate and thus are precluded from further adjudication. Id. Here, the mandate analysis begins and ends with this question: What issues were included in the judgment that was appealed to the Federal Circuit? More particularly, was collateral estoppel based upon the Board decisions of 2012 included in the judgment entered in 2009? Obviously not. Thwarted by the scope of the judgment below, Rambus urges the Court to apply the mandate rule by skipping the critical initial step and instead focusing on the issues identified for remand. But without an affirmative answer to the necessary and proper initial inquiry, what was actually decided below and therefore brought before the appellate court, the Court never gets to the issue of the remand mandate. See, Engel Indus., 155 F.3d at 1382-83; Exxon Chem. Patents, Inc., 137 F.3d at 1483 (holding that the scope of the judgment appealed from, limited to literal infringement, did not preclude adjudication of infringement by the doctrine of equivalents). The additional cases cited by Rambus for a proposition of limited remand without regard for the scope of the judgment below are similarly unhelpful to its argument. Cardiac Pacemakers is premised upon critical distinguishing facts, including a revised claim construction and, most significantly, the reinstatement of the jurys validity verdict below. Cardiac Pacemakers Inc. v St. Jude Med., Inc., 576 F.3d 1348, 1353 (Fed. Cir. 2009). Specifically, the court held that the district court had exceeded the scope of the remand, in light of the jurys verdict and our previous mandates unique to this case. Id. at 1357 (emphasis added).7 The issue in Amado was whether a permanent injunction issued below was included
7
Cardiac is, however, instructive, in that the court recognized that new issues arising out of its reformed claim construction, which would obviously have not been included in the previous judgment below, were outside the scope of its mandate. 576 F.3d at 1353. Similarly here, collateral estoppel arising out of the 2012 Board decisions are new issues, not included in the judgment below, and therefore not within the Federal Circuits mandate in Hynix II. - 12 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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within the Federal Circuits mandate such that it could not be disturbed by the district court on remand. Amado restates the well-established principle that a mandate analysis begins with the scope of the original judgment below, The mandate rule provides that issues actually decided [on appeal]those within the scope of the judgment appealed from, minus those explicitly reserved or remanded by the courtare foreclosed from further consideration. 517 F.3d at 1360 (emphasis added) (quoting Engel Indus., 166 F.3d at 1383). The mandate law could not be more clearthe analysis begins with the scope of the judgment below. Rambus does not, because it cannot, argue that the 2012 Board decisions were included in the 2009 judgment at issue in Hynix II. Like trying to fit the proverbial square peg into the round hole, the mandate rule simply does not arise under the facts of this case, and no amount of rhetoric by Rambus can make it so. Similarly, contrary to Rambuss assertion, there was no sidestepping the mandate in Mendenhall. Indeed, there is no discussion of the mandate rule in Mendenhall because the facts simply did not call for it. There, it was after the first action had been remanded and while issues on remand were still pending that the patent-in-suit was held invalid in a second action. Correctly, there was no argument that the mandate rule interfered with the exercise of collateral estoppel based on invalidity in the first action. Mendenhall, 26 F.3d at 1577-80. Indeed, particularly instructive here, the Federal Circuit in Mendenhall articulates an overarching policy in support of challenging validity at any stage of the proceedings. Id. at 1578-79. Further, the Federal Circuit expressly rejects the argument, urged by Rambus throughout its brief, that its affirmance of findings of non-invalidity below is a mandate against or bar to further consideration of validity while the case is pending. Mendenhall, 26 F.3d at 1580; Rambus Consol. Oppn 14. To the contrary, the Federal Circuits affirmance of this Courts rejection of Hynixs validity challenges to the claims-in-suit does not bar Hynixs assertion of collateral estoppel based on the intervening Board rulings. Mendenhall, 26 F.3d at 1580-81; Hynix Mot. Summ. J. 8:4-7. Rambus next attempts to distinguish Mendenhall because it involved the same patent-in-suit in both the first and second actions. Rambus Consol. Oppn 14:3-24. Here of - 13 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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course, three of the claims rejected by the Board were claims-in-suit in this Court. The remaining seven claims-in-suit are not distinct in any patentably significant way from closely related Farmwald/Horowitz claims which have already been rejected by the Board as invalid, and Rambus offers no evidence to the contrary. Ohio Willow Wood, at *9; see also, section II.C.3., infra. Rambus hints at but does not identify purported separation of powers concerns. Rambus Consol. Oppn 15:23-16:11. But no constitutional concerns are implicated here because, among other reasons, giving collateral estoppel effect to the Board decisions will have no impact on any court judgment. There is no judgment in this case (much less a final judgment), nor is the issue within the Federal Circuits mandate in Hynix II. See generally, In re Baxter Intl, Inc., 678 F.3d at 1365. C. The Board Decisions Rejecting Rambuss Patent Claims Are Entitled to Collateral Estoppel Effect in This Litigation
Rambus does not deny that, if its patents-in-suit had been ruled invalid in another district court action, it would be collaterally estopped from asserting those patents here under the wellsettled principles set forth in Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found. and Mendenhall. Instead, Rambus tries to avoid these principles by arguing that a different rule should apply where the invalidity ruling comes from a PTO reexamination. Rambus states that the precise effect of a PTO reexamination on a court decision, if any, has not been settled by the Federal Circuit (Rambus Consol. Oppn 16:4-5), dismissing applicable statutory and case authority that guide the Court to the correct decision here: Rambus may not enforce the claims-in-suit in this pending litigation because the Board has ruled that those claims or related claims are invalid. 1. The Different Burdens of Proof In District Court Actions and Reexamination Proceedings Do Not Bar The Application of Collateral Estoppel a. The heightened burden of proof at trial does not bar collateral estoppel for a PTO decision that the patent should not have issued
Rambuss argument that collateral estoppel should not apply because the burden of proving patent invalidity in district court is higher than the burden of proof in PTO reexamination - 14 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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proceedings ignores the reason why there is a heightened burden of proof in litigation. The clear and convincing burden of proving invalidity in litigation originates with the statutory presumption that issued patents are valid. 35 U.S.C. 282; Microsoft Corp. v. i4i Ltd. Pship, 131 S. Ct. 2238, 2246 (2011) ([B]y the time Congress enacted 282 and declared that a patent is presumed valid, the presumption of patent validity had long been a fixture of the common law. According to its settled meaning, a defendant raising an invalidity defense bore a heavy burden of persuasion, requiring proof of the defense by clear and convincing evidence. (citation omitted)). Where the PTOthe same governmental agency that issued the patents in the first place reexamines the patents and determines that they should not have been issued, the foundation for the higher burden of proof in litigation collapses. Here, the PTO has corrected its error and canceled patent claims that should never have been granted. It is perverse for Rambus to ask this Court to enforce the claims-in-suit based on a burden of proof argument that arises from the PTOs initial mistake in granting those claims. b. PTO determinations of invalidity routinely impact court proceedings on those same patents
Rambuss argument that there can be no collateral estoppel effect of Board decisions because of differing burdens of proof is effectively an argument that reexamination decisions could never have any preclusive effect in litigation. Yet the law clearly provides for preclusive collateral estoppel effect of Board decisions. For example, in the illustrative case of Translogic Technology, Inc. v. Hitachi Ltd.,8 the Federal Circuit recognized the preclusive effect of its judgment in a related reexamination appeal and dismissed the district court case even though the patent owner had won a district court judgment for damages and a permanent injunction. See, Translogic Tech., Inc. v. Hitachi Ltd., 250 Fed. Appx 988 (Fed. Cir. 2007) (non-precedential); and see, Translogic Tech., Inc. v. Hitachi Ltd., 404 F. Supp. 2d 1250, 1253 (D. Or. 2005). If the different burdens of proof between actions in a district court and the PTO prevented estoppel, the Court in Translogic would not have remanded the district court action with instructions to dismiss Hynix appropriately cited Translogicwhich Hynix pointed out was non-precedential but illustrative (Hynix Mot. Summ. J. 10:22-24)pursuant to Federal Rule of Appellate Procedure Rule 32.1(a) and Federal Circuit Rule 32.1(c). - 15 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
8
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the case. Id.; see also, Standard Havens Prods., Inc., 1993 U.S. App. LEXIS 11963, at *29 (as a matter of law, once there is a final reexamination decision of unpatentability, a district court injunction would thereby immediately become inoperative and damages would also be precluded). The flaw in Rambuss argument regarding the different burdens of proof is further demonstrated by the fact that district courts routinely stay infringement actions pending the outcome of reexamination proceedings, in recognition of the fact that the district court action must be dismissed if the PTO finds the patent to be invalid. See, ASCII Corp., 844 F. Supp. at 1381 (noting that this district has liberal policy in favor of granting motions to stay proceedings pending the outcome of USPTO reexamination or reissue proceedings).10 Under Rambuss proposed argument, reexamination would be an empty exercise. c. Rambuss reliance on non-patent case authority is misplaced
Instead of addressing the law regarding the preclusive effect of reexaminations on litigation, discussed above, Rambus retreats to general case law from the Ninth Circuit and elsewhere to argue that preclusion does not apply where, as here, the decision asserted as the basis of estoppel applied a less strict legal standard than the case in which the estoppel is invoked. Rambus Consol. Oppn 16:17-19. [T]he effect of a prior determination of invalidity on current patent claims is one of patent law, however, and thus Federal Circuit law applies to that issue. Ohio Willow Wood Co., 2012 WL 2196083, at *8 (quoting Collegenet, Inc. v. Applyyourself, Inc., No. CV-02-484-HU, 2008 U.S. Dist. LEXIS 90156, at *8 (D. Or. Oct. 28, 2008)). None of the cases cited by Rambus justify ignoring Blonder-Tongue, Mendenhall, and
9
As it did when it cited Translogic, Hynix pointed out that Standard Havens was an unpublished decision. Hynix Mot. Summ. J. 9:26-27. Although not binding, the Federal Circuit may look to a nonprecedential disposition for guidance or persuasive reasoning. Fed. Cir. R. 32.1(d). Accordingly, it is appropriate for Hynix to make this Court aware of such on-point authorities. 10 The Federal Circuit has recognized that the power of district courts to stay litigation until completion of reexaminations serves the purpose of the reexamination statute, which includes eliminat[ing] trial on the issue of patent claim validity when the claim is canceled in reexamination. Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983); see also, Slip Track Sys., Inc. v. Metal Lite, Inc., 159 F.3d 1337, 1341 (Fed. Cir. 1998) (holding that district courts stay of action pending reexamination was justified because if the claims were cancelled in the reexamination, [it] would eliminate the need to try the infringement issue). - 16 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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other relevant patent case law regard the preclusive effect of determinations of patent invalidity. 2. The Board Decisions Are Final for Collateral Estoppel Purposes
The fact that certificates of cancellation have not yet issued in the reexaminations does not mean that the reexaminations are not final for collateral estoppel purposes. To be accorded collateral estoppel effect, a prior adjudication need not be final after all appeals but need only be sufficiently firm to be considered conclusive and not avowedly tentative. Luben Indus., Inc. v. United States, 707 F.2d 1037, 1939-40 (9th Cir. 1983).11 The Boards decisions, each set forth in a written opinion setting forth the Boards detailed analysis, easily satisfy the finality requirement for the application of collateral estoppel. Rambus does not contend that the Federal Circuit is likely to reverse the Board decisions, nor could Rambus credibly make such an argument. The Federal Circuit has a limited scope of review in an appeal from a Board decision, under which it reviews the Boards factual findings only to determine if they are supported by substantial evidence. In re Rambus, 694 F.3d at 46; PlaSmart, Inc. v. Kappos, No. 2011-1570, 2012 WL 1850650, at *2 (Fed. Cir. May 22, 2012). Among the findings the Federal Circuit reviews for substantial evidence are the differences between the claimed invention and the prior art and the determination of what a reference teaches. In re Baxter Intl, Inc., 678 F.3d at 1361. Here, there is ample evidence to support all of the Boards findings, and Rambus does not even attempt to explain why the Board decisions would be subject to reversal. See, section II.C.3., infra. Rambus tries to muddy the waters on finality by pointing to estoppel provisions in the inter partes reexamination statute. Rambus Consol. Oppn 19:5-21:5.12 But Hynixs motion for summary judgment is not based not on statutory cancellation but on the collateral estoppel effect of the Board decisions. See, Hynix Mot. Summ. J. pp. 11:5-23:23. Although the Rambus
11
Regional circuit precedent applies to non-patent aspects of collateral estoppel, particularly on issues where the Federal Circuit has not articulated a specific rule that would apply in the patent context, such as the finality of Board decisions. See, Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170 F.3d 1373, 1381 (Fed. Cir. 1999). 12 Bettcher Industries, Inc. v. Bunzl USA, Inc., 661 F.3d 629, 642-48 (Fed. Cir. 2011), cited by Rambus, addresses only statutory estoppel provisions, not collateral estoppel. Of course, there is no statutory estoppel in this case because the relevant claims have been revoked. - 17 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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reexaminations have not yet reached the stage where the statutory estoppel provisions are triggered, that does not mean the Board decisions are not presently entitled to collateral estoppel effect. In this situation, the normal rules of finality for collateral estoppel purposes apply, under which the availability or even pendency of an appeal has no effect on the finality or binding effect of a trial courts holding. Pharmacia & Upjohn Co.,170 F.3d at 1381 (affirming grant of summary judgment in favor of accused infringer based on collateral estoppel effect of prior determination that asserted patent was invalid and unenforceable, even though prior determination was still subject to post-trial motions and appeal). That rule is applicable to holdings of patent invalidity. Id. Thus, although Rambus contends that it would be beyond strange for the Board decisions to be final for preclusion purposes with respect to Hynix before those decisions are final with respect to the party who requested the reexaminations (Rambus Consol. Oppn 20:14-16), that is precisely the way the collateral estoppel doctrine works.13 Rambus wrongly urges the Court to race to enter judgment before the reexaminations can reach their ultimate end. This approach is at odds with the strong public policy against enforcement of invalid patents. If the Court has concerns about the stage of the reexamination proceedings, it should stay this litigation to await completion of the remaining proceedings, rather than plowing ahead with enforcement of patents cancelled by the PTO. 3. Rambus Does Not Dispute That Collateral Estoppel Supports Finding Related Patent Claims Invalid And Offers No Evidence Of Patentably Significant Differences Between The Invalidated Claims And The Claims-In-Suit
When forced to deal with the merits of Hynixs summary judgment motion of invalidity, Rambus does not dispute the collateral estoppel principles governing claim validity set forth in Hynix Mot. Summ. J., pp. 11:7-12:7, nor does Rambus offer any admissible evidence of any patentably significant differences between the Farmwald/Horowitz claims invalidated by the Even though the statutory estoppel provisions have not yet been triggered in the Micron reexaminations, Rambus cannot seriously contend that any court handling litigation on the claims that have been rejected in those reexaminations (such as this Court) would proceed at this juncture to enter judgment in Rambuss favor and against Micron on those claims. But that is exactly what Rambus contends this Court should do as to Hynix. Hynix should not be singled out for enforcement of patents rejected in reexamination. - 18 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
13
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Board and the claims tried here. The Federal Circuits predecessor court addressed these issues in Westwood Chemical, Inc. v. United States, 525 F.2d 1367 (Ct. Cl. 1975), holding that a finding of invalidity can bar, under collateral estoppel principles, related but not identical claims. It is the issues litigated, not the specific claims around which the issues were framed, that is determinative. Id. at 1372. Here Rambus framed the issues by trying the ten claims-in-suit as a collection of features (programmable CAS latency, programmable burst length, autoprecharge, dual edge clocking and on-chip DLL), arguing that the alleged inventions were the implementation of these features, alone or in various combinations, on SDR and DDR SDRAMs. Conduct Trial Tr. vol. 21, 4361:4-4362:5, March 11, 2008; see generally, February 23, 2009 Order (D.E. 3897) (Feb. 23 Order) 25-30. In a series of decisions the Board has now held that claims with these features, alone or in combination, are not patentable. These decisions have pulled the rug from underneath the validity of the Farmwald/Horowitz claims asserted here. The Westwood analysis was carefully applied by the District Court in Ohio Willow Wood, and Rambus accepts the holding from Ohio Willow Wood that the determinative issue is whether there is a patentably significant difference between the invalidated patent claim and claim at issue. Rambus Consol. Oppn 21:13-17. Having accepted that governing test, Rambus offers no evidence of any patentably significant differences. First, Rambus does not defend at all the three claimsclaim 33 of the 120 patent, claim 28 of the 916 patent, and claim 16 of the 863 patentthat the Board has held invalid and that are also at issue here. Rambus Consol. Oppn 21:21-25:18. Summary judgment of invalidity is therefore appropriate as to those claims. Second, in response to the detailed declaration of David Taylor, for the remaining seven claims Rambus offers only lawyer argument, not admissible evidence sufficient to raise a material triable issue of fact as required by the familiar law of summary judgment. Once Hynix established a prima facie case for overcoming the presumption of validity, the burden shifted to Rambus to submit evidence setting forth specific facts raising a genuine issue for trial. Cable Elec. Prods., Inc. v. Genmark, Inc., 770 F.2d 1015, 1022-23 (Fed. Cir. 1985); see also, Robert L. - 19 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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Harmon et al., Patents and the Federal Circuit, 780 (10th ed. 2011). In cases like this one, involving complex technology, expert testimony is generally required, but Rambus submitted none. See, Centricut, LLC v. Esab Grp., Inc., 390 F.3d 1361, 1370 (Fed. Cir. 2004) (holding that typically expert testimony will be necessary in cases involving complex technology (citation and internal quotation marks omitted)); Proveris Scientific Corp. v. Innovasystems, Inc., 536 F.3d 1256, 1267 (Fed. Cir. 2008) (affirming the district courts holding that expert testimony was required to establish invalidity on grounds of anticipation and obviousness where the subject matter was sufficiently complex to fall beyond the grasp of an ordinary layperson). Instead, Rambuss opposition consisted only of denials and attorney argument, which are insufficient to overcome a motion for summary judgment. Ferring B.V. v. Barr Labs., Inc., 437 F.3d 1181, 1193 (Fed. Cir. 2006) (holding that [c]onclusory allegations and attorney arguments are insufficient to overcome a motion for summary judgment and that [i]n order to raise a genuine issue of fact, a party must submit conflicting evidence in the form of an affidavit or other admissible evidence); Union Carbide Corp. v. Am. Can Co., 724 F.2d 1567, 1571 (Fed. Cir. 1984) (affirming the district courts grant of summary judgment on invalidity due to obviousness and holding that it is incumbent on the trial judge to look beyond mere denials or arguments with respect to the issues of scope and content of the prior art, differences between the prior art and the invention in suit, level of skill in the art, or other factual issues).14 Simply put, arguing differences between invalidated claims and the claims-in-suit is not sufficient; to avoid summary judgment Rambus must show a triable issue of material fact as to why those asserted differences affect the invalidity determination. Ohio Willow Wood, 2012 WL 2196083, at *11. In response to Hynixs prima facie case, Rambus has not carried its burden to show a genuine triable issue of material fact. Rambus also admitted in its brief that the Board decision in the 184 case is now final and Rambus did not appeal that decision to the Federal Circuit. Rambus Consol. Oppn 12:7-14.
14
By failing to submit expert testimony, Rambus effectively asks the Court to reject the uncontradicted testimony of Hynixs expert, which would be appropriate only in extreme cases, such as where the experts testimony contains an inherent improbability or is contradicted by the facts [the expert] states as completely as by direct adverse testimony. Quock Ting v. United States, 140 U.S. 417, 420-21 (1891). No such extreme circumstances exist here. - 20 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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Indeed, the PTO has now issued a Notice of Intent to Issue a Reexamination Certificate cancelling claims 1-23 of the 184 patent. See, Hynixs Second Supplemental Request for Judicial Notice, filed together with this Reply, Ex. A. The Boards 184 decision now final and binding on Rambus (35 U.S.C. 318(b)), and it was a key element of Mr. Taylors analysis. See, Supplemental Memorandum in Support of Hynixs Opening Briefs15 3:2-4:17. For clarity Hynix updates the charts found on pages 5-6 of its Suppl. Memo. ISO Hynix Opening Brs., summarizing the seven claims Rambus does discuss in its brief. Claims-in-Suit 020 patent claim 36 Reexamination Status Pending (Micron appeal) Related claims rejected by BPAI decision dated January 19, 2012 See, Taylor Decl., 73-84, (relying inter alia upon the 184 patent, claim 22); Exhs. 6 and 16. Related claims rejected by BPAI decision dated January 19, 2012 See, Taylor Decl., 62-72; 118 (relying inter alia upon the 184 patent, claim 14); Exhs. 5 and 16. Summary of Argument Without any supporting evidence Rambus argues that integrated circuit device is different from memory device. Rambus Consol. Oppn 23:22-26. Mr. Taylor explained why there was no difference (and thus no patentable distinction over the prior art) between integrated circuit device of the 020 patent claims and the memory device in the 020 patent claims. Taylor Dec. 66 and 77. Rambus does not address this evidence. Rambus argues, without evidence (Rambus Consol. Oppn 23:8-20), that the memory module of the iAPX reference is not an integrated circuit device. The Boards decision in the 184 case invalidated claim 14 over a combination of iAPX and Inagaki. Taylor Dec. 66. Mr. Taylor explained that the Inagaki reference disclosed a single chip (a MOS RAM) integrated memory device. Id. Mr. Taylor explained why there was no difference (and thus no patentable distinction over the prior art) between integrated circuit device recited in the 020 claims and memory device claimed in the 020 patent. Taylor Dec. 66 and 77. Rambus does not address this evidence. Rambus relies solely on lawyer argument, including an irrelevant analogy to wheeled or rocking chairs. Rambus first contends that
020 patent claim 32
105 patent claim 34

15
Related claims rejected by BPAI decision dated
Supplemental Memorandum in Support of (1) Motion for Summary Judgment on the Issue of the Collateral Estoppel Effect of Reexaminations of Rambuss Patents; (2) Motion for Leave to File Supplemental Reply to Defendant and Counterclaim of Plaintiff Rambus Inc.s Amended Counterclaim of Plaintiff Rambus Inc.s Amended Counterclaim; and (3) Motion for New Trial for Stay (Suppl. Memo. ISO Hynix Opening Brs.) Nov. 2, 2012 (D.E. 4179) - 21 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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16
January 19, 2012 See, Taylor Decl., 27-35; 113-114 (relying inter alia upon the 184 patent, claim 22); Exhs. 2 and 16.
although the Boards decisions establish that it would be obvious to combine iAPX with Lofgren and Inagaki, it does not follow that the Boards decisions establish that it would be obvious to combine iAPX with Lofgren and Inagaki individually. Rambus Consol. Oppn 25:1-6. But Mr. Taylor explained the Boards decisions and how a combination of iAPX with Inagaki, and iAPX with Lofgren, disclosed the elements of 105 claim 34. Taylor Dec. 27-34. Rambus does not respond. Rambus next argues the scope of the Lofgren disclosure of first and second clocks. Rambus Consol. Oppn 25:7-18. Lofgrens disclosure is not limited to delayed data signals, as Rambus implies. The disclosure cited by Mr. Taylor (Taylor Decl., 34) refers to other outputs i.e., other than data. In addition, Rambus acknowledges that the Boards decision in the 863 case renders a claim that requires the generation of first and second clocks with a DLL obvious. Rambus Consol. Oppn 25 n 15. The Board decision in the 863 case was issued after Hynix filed its opening papers and was included in Hynixs Supplemental Memorandum. Hynix relies on it as additional support for invalidating 105 claim 34. Finally, Rambus does not offer any expert opinion on the scope of the Lofgren disclosure and thus fails to raise a trial issue of material fact. Rambuss argument is a patent lawyers hand wave, discussing the Courts prior rulings on read request and concluding with an unsupported assertion that Mr. Taylors Declaration raises at least a triable issue of fact. Rambus Consol. Oppn 22:13-23:7. This appears to be a concession that at least a new trial is appropriate as to this claim, but Rambus simply avoids addressing the key issue: whether there is any patentably significant difference over the prior art between 120 claim 4 and 184 claim 22, which the Board has found invalid, and 918 claim 33. To defeat a motion for summary judgment Rambus must proffer admissible evidence, which it has not done, and thus has pointed to no disputed issue.16
918 patent claim 33
Related claims rejected by BPAI decision dated January 19, 2012 See, Taylor Decl., 53-61; 115-117, (relying inter alia upon the 184 patent, claim 22); Exhs. 4 and 16.
Further, Mr. Taylors prior declaration regarding infringement related to the types of reads in the accused DRAMs; the current Taylor Declaration addresses what types of reads are performed in iAPX, a prior art reference. - 22 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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916 - claim 40
Related claims rejected by BPAI decisions dated January 19, 2012; June 14, 2012; September 27, 2012 See, Taylor Del. at 95100; 119-120, (relying inter alia upon the 184 patent, claim 22); Exhs. 8, 14, 16 and 21.
916 claim 40 depends on 916 claim 26, which the Board invalidated as anticipated by Bennett. Taylor Del. at 96. 916 claim 40 adds only a DLL as an additional element, and the Board has already found it is obvious to combine Bennett and a DLL. Taylor Del. at 99. (See, the further discussion of the invalidating Board decisions at Taylor Del. at 95-98.) Rambuss response (Rambus Consol. Oppn 24:17-23) asserts that the Board never found it was obvious to combine Bennett, iAPX and Lofgren; this both ignores and mischaracterizes Mr. Taylors analysis, and particularly Mr. Taylors discussion of the Boards determination that it would be obvious to combine Bennett (alone) with a DLL. (Taylor Decl., 99) In argument Rambus disputes the scope of the Bennett disclosure, incorrectly claiming that Mr. Taylor did not explain how the bus controller of Bennett could be distributed between two devices. Rambus Consol. Oppn 21:22-22:12. But, Mr. Taylor addressed this point directly. ( Taylor Decl., 45-47) Rambus has not addressed the decisive issue: whether there are patentably significant differences between the relevant claim the Board invalidated (916 claim 26), and 918 claim 24 over the prior art. Nor did Rambus submit admissible evidence in opposition. Again Rambus ignores the determinative issue of patentably significant differences between the claims in view of the prior art, and the requirement of submitting admissible evidence in opposition, instead arguing based on perceived differences between the Courts claim construction and the Boards decisions. Rambus Consol. Oppn 23:27-24:15. Rambus misses the fundamental points that 120 claim 33 and 916 claim 9 have identical limitations regarding precharge information and that it litigated and lost this issue at the Board.
918 patent claim 24
Related claims rejected by BPAI decision dated June 14, 2012 See,Taylor Decl., 36-52; 115-117, Exhs. 3 and 14.
916 patent claim 9
Related claims rejected by BPAI decisions dated January 19, 2012; January 27, 2012; June 14, 2012 See, Taylor Decl., 85-94; 119-120, Exhs. 7, 14, 16 and 18.
4.
Denying Collateral Estoppel Would Be An Abuse of Discretion
Rambus is unable to establish that the reexamination decisions lack the necessary qualities to be entitled to collateral estoppel. Instead, Rambus asserts baseless allegations against Hynix and argues that Hynix is somehow ineligible to claim collateral estoppel. Like Rambuss flawed reexamination laches argument, Rambuss emotion-charged discretion argument finds no - 23 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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support in fact or law. In arguing that a district court has discretion to deny collateral estoppel to Board invalidity determinations, even where the other requirements for application of collateral estoppel are satisfied, Rambus focuses on two points: (1) Hynixs decision to sue Rambus in this district rather than join Microns suit against Rambus in Delaware, and (2) the alleged existence of inconsistent decisions on the validity of the claims-in-suit. Rambus Consol. Oppn 25:19-28:16. Neither is sufficient. Notably, the only case involving collateral estoppel that Rambus cites in support of its discretion argument involved the application of offensive collateral estoppel. See, Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 330-31 (1979) (applying collateral estoppel offensively to prove that defendant in a securities action made statements that were materially false and misleading).17 Here, by contrast, Hynix invokes collateral estoppel to establish the invalidity of Rambuss claims-in-suit, which is indisputably a defense to a claim of patent infringement. 35 U.S.C. 282(b)(2) (identifying invalidity as a defense).18 Therefore, Rambuss Parklane based analysis is inapplicable. Here, the issue is the collateral estoppel effect of a prior determination of patent invalidity, which requires application of the principles of Blonder-Tongue. Using the proper BlonderTongue focus, the core question is whether the patentee had a full and fair chance to litigate the validity of his patent in the earlier proceeding. 402 U.S. at 333. The inter partes reexamination procedures that resulted in the Boards invalidity decisions provided Rambus with a procedurally fair and complete opportunity to litigate validity issues, and Rambus does not argue otherwise. The other two cases Rambus cites in connection with its discretion argumentGanem v. Heckler, 746 F.2d 844, 854 (D.C. Cir. 1984) and Burson v. Carmichael, 731 F.2d 849, 854 (Fed. Cir. 1984)do not involve or discuss collateral estoppel. 18 Although Hynix is the plaintiff in this declaratory judgment action, the Court must look to the actual posture of the parties. Defensive collateral estoppel is where a stranger to the judgment in the former action, ordinarily the defendant in the second action, relies upon that judgment as conclusively establishing in his [or her] favor an issue which he [or she] must prove as an element of his [or her] defense. Haberer v. Woodbury Candy, 188 F.3d 957, 962 n.3 (8th Cir. 1999) (emphasis added) (citation and internal quotation marks omitted); Allstate Ins. Co. v. Blount, 491 F.3d 903, 912 n.9 (8th Cir. 2007). Here, Hynixs posture is that of the defendant, as evidenced by the fact that Rambus requested, and the Court agreed, that it be treated as the plaintiff in the patent trial. See, Final Pretrial Hrg. Tr., 14:5-7, Feb. 23, 2006. - 24 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
17
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See, Hynix Mot. Summ. J. 14:12-15:12. Further, the rule that a district court has little or no discretion to deny collateral estoppel where the basic collateral estoppel elements are satisfied is particularly warranted in the context of patent invalidity determinations. To leave the preclusive effect of PTO reexamination decisions to the discretion of district courts would create an intolerable situation where patents that the PTO has invalidated remain enforceable in some cases but not in others. Once the Court finds that Rambus had a full and fair opportunity to litigate validity in the Board casesa point Rambus does not contestHynix respectfully submits that the Court does not have discretion to deny application of collateral estoppel. a. Collateral estoppel is not barred by the fact that Hynix did not join Microns case against Rambus
Rambus complains that Hynix seeks the benefit of reexaminations filed by others even though Hynix did not join in those reexaminations, and Rambus directs general criticism towards the alleged coordinated, dual-front litigation brought by Micron and Hynix. As explained above, the reexaminations and litigation proceeded in the fashion they did for entirely legitimate reasons. See, section II.A., supra. The fact that Hynix did not join[] the action Micron filed a day earlier (Rambus Consol. Oppn 26:12) does not mean that Hynix is not entitled to the collateral estoppel effect of the reexamination decisions. A claimant who simply stayed out of a prior action between others may ordinarily invoke the benefits of a judgment where the prior action otherwise fulfills the criteria for preclusion. Restatement (Second) of Judgments 29(3) reporters note to cmt. e (1982). Where, as here, there are numerous reasons why a party may not have joined in an earlier action and the case is not one in which a litigant adopted a wait-and-see attitude for the obvious purpose of eluding the binding force of an initial resolution of a simple issue, the Ninth Circuit has decline[d] to speculate on motivation and has applied collateral estoppel. Starker v. United States, 602 F.2d 1341, 1349-50 (9th Cir. 1979); see also, Argus Inc. v. Eastman Kodak Co., 552 F. Supp. 589, 602 (S.D.N.Y. 1982) (holding that it would not have been easy for party invoking collateral estoppel to join prior action where the two cases were complex, the defendant asserted counterclaims in the prior action, and both cases were jury trials). Even where there is a - 25 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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delay in filing a second suit (which is not the case here), that fact alone is not proof of purposeful delay, and the second plaintiff is entitled to the collateral estoppel effect of a decision made in earlier proceedings where the defendant had a full and fair opportunity to litigate the issue. Nations v. Sun Oil Co., 695 F.2d 933, 938 (5th Cir. 1983). Rambus also ignores its own role in permitting the Micron and Hynix cases to proceed separately. Rambus never sought to transfer this case to Delaware, nor did it avail itself of the procedures available through the Judicial Panel on Multidistrict Litigation. See, 28 U.S.C. 1407. Rambus made the same accusations about Hynixs alleged litigation strategy when this case was appealed to the Federal Circuit, and that court rightly rejected them. Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1347 (Fed. Cir. 2011) (Hynix II) (stating that the Hynix and Micron cases should not be decided differently). Indeed, the Federal Circuit affirmed the Delaware district courts denial of Rambuss motion to transfer the Micron case to this Court, stating that Rambuss forum-shopping should be discouraged. Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1332 (Fed. Cir. 2011) (affirming Delaware district courts denial of Rambuss motion to transfer case to Northern District of California, which was not filed until five years into the case, and a month after the Northern District of California rejected Hynixs unclean hands defense). As a party who has been adjudged to have engaged in forum-shopping (id.), Rambus is hardly in a position to argue that Hynixs decision to file suit against Rambus in the district in which both parties have headquarters should make Hynix ineligible to invoke collateral estoppel.19
19
The parties would find themselves in exactly the same situation they are today even if Hynix had joined the Micron litigation. The patent issues have not yet been tried in Delaware, so there would have been no final litigation decision adverse to Hynix and Micron in that case that would have estopped either of them from pursuing reexamination. Even if Micron had joined the Hynix litigation here and had been a party to the Federal Circuits decision in Hynix II, that was not a final decision sufficient to have estopped Micron and Hynix from continuing to pursue inter partes reexaminations. See, inter partes reexamination Application No. 95/000020, Decision Dismissing Petition, 5-8 (Sept. 16, 2005), http://portal.uspto.gov. (PTO holding that where the Federal Circuit has remanded to the district court for further proceedingsthe Patent Holders petition to terminate the reexamination may be denied because there is not a final decision.). And, of course, the reexaminations would not have terminated the invalidity challenges mounted by Hynix and Micron in district court because the reexaminations have determined that the claims-in-suit and related claims are invalid. - 26 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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b.
There are no inconsistent results that justify denial of collateral estoppel
Rambus argues that inconsistent prior judgments dictate against the application of collateral estoppel. Rambus Consol. Oppn 27:18-28:2. Of course, this principle has no application here, where no judgment exists. Moreover, settled Federal Circuit case law makes clear that inconsistent rulings on patent validity do not bar the application of collateral estoppel. Mendenhall, 26 F.3d at 1580-81. More fundamentally, the Board rulings are not inconsistent with the prior invalidity determination here because Courts do not find patents valid, only that the patent challenger did not carry the burden of establishing validity in the particular case before the court under 35 U.S.C. 282. Thereupon, the patent simply remains valid until another challenger carries the 282 burden. Ethicon, Inc., 849 F.2d at 1429 (citations and internal quotation marks omitted). With respect to the seven claims-in-suit that were confirmed by a PTO examiner but were not, for procedural reasons, appealed to the Board, Rambuss unfairness arguments are similarly misplaced. There is no conflict among the Boards decisions in reexamination of Rambuss patents; the conflict cited by Rambus is between the Boards decisions finding Rambuss claims invalid and unappealable examiner decisions. The Board decisions make clear that the examiners were wrong. See, section II.A.2., supra. Rambus argues that it would be highly unfair, to say the least, to preclude Rambus from disputing the patentability of claims that the Court and the Federal Circuit have held not invalid, and that the PTO has confirmed in reexamination. Rambus Consol. Oppn 28:13-15. But Rambus had an opportunity in opposition to Hynixs motion for summary judgment to dispute the correctness of the Boards rejection of claims-in-suit and to challenge Mr. Taylors analysis of why the Boards rejection of related claims extends to the remaining claims-in-suit. Rambus did not do so. c. Refusing to give Board decisions collateral estoppel effect would lead to inconsistent results that will hurt competition and the public
There are absolutely no grounds that could justify punishing Hynix by enforcing invalid - 27 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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patents against it. As the Supreme Court explained in Blonder-Tongue, if a patent is held invalid as to some alleged infringers but not invalid as to others, it creates a situation where a manufacturer who is free of royalty payments may price his products higher than competitive levels absent the invalid patent, yet just below the levels set by those manufacturers who must pay royalties and, as a result, consumers will pay higher prices for goods covered by the invalid patent than would be true had the initial ruling of invalidity had at least the potential for broader effect. Blonder-Tongue, 402 U.S. at 346; see also, Precision Instrument, 324 U.S. at 816 (patent by its very nature is affected with a public interest, so the public has a paramount interest in seeing that patent monopolies spring from backgrounds free from fraud or other inequitable conduct and that such monopolies are kept within their legitimate scope). These public concerns make it inappropriate for courts to permit or deny enforcement of invalid patents depending on the degree of perceived fault of the alleged infringer. Denial of collateral estoppel would also undermine the reexamination scheme designed by Congress. Reexamination proceedings are one way Congress has addressed concerns about bad patents. Microsoft Corp. v. i4i, 131 S. Ct. at 2252; see also, Patlex, 758 F.2d at 601 (Congress had an important public purpose in mind when it enacted the reexamination statute. The statute was part of a larger effort to revive United States industrys competitive vitality by restoring confidence in the validity of patents issued by the PTO.). For this Court to enter judgment on patent claims where the PTO has ruled that those claims and related claims are invalid would compound the PTOs initial error and interfere with Congresss error-correction system. Rambuss argument, which would permit courts to evaluate which litigants are worthy to receive the benefits of reexamination, would turn the system on its head. In sum, to the extent that the Court has any discretion to deny collateral estoppel effect for the Board rulings, it would be an abuse of discretion to do so because it would result in the enforcement of patents that the PTO has found to be invalid. III. HYNIX IS ENTITLED TO A NEW PATENT TRIAL As discussed above, the Board decisions collaterally estop Rambus from enforcing the claims-in-suit. If, however, the Court believes summary judgment of collateral estoppel is not - 28 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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appropriate, Hynix is entitled to a new trial on validity at which evidence of the Board decisions may be properly introduced. If any Rambus claims-in-suit survive a new trial on validity, Hynix is also entitled to a new trial on damages on those surviving claims. Any new trial should also give full force and effect to the Federal Circuits decision in In re Rambus, and should also properly reflect the Courts recent spoliation evidentiary rulings with respect to Rambuss damages claims. See, Sept. 21 Order20. A. The Reexaminations are Newly Discovered, Admissible Evidence Warranting a New Trial on Validity
If the Court is not persuaded that Hynix is entitled to summary judgment, then it should grant a new trial to give Hynix an opportunity to bring a motion for summary judgment on the merits of the issue. See, Ohio Willow Wood, 2012 WL 2196083, at *13. Should the Court ultimately determine that the invalidity of the claims-in-suit cannot be established on summary judgment, Hynix should be permitted to present evidence of the reexaminations to the jury. See generally, DataTreasury Corp. v. Wells Fargo & Co., 490 F. Supp. 2d 749, 754 (E.D. Tex. 2006) (The record of reexamination would likely be entered at trial . . . .). As discussed in Hynixs Motion for New Trial21, the reexaminations are newly discovered evidence warranting a new trial. See, Hynix Mot. New Trial 6:2-10:3. First and foremost, Rambuss argument on new trial completely misses the procedural boat. Hynix has moved for a new trial under Rule 59. See, e.g., Hynix Mot. New Trial 5:13-6:11. Rambuss brief argues against a motion under Rule 60(b)(2), a motion Hynix did not make because the Federal Circuit vacated the judgment in Hynix II, 645 F.3d at 1355. Rambus argues that Hynixs Rule 59 motion as unavailable because it must be filed no later than 28 days after entry of judgment. Fed. R. Civ. P. 59(b). Here there is no judgment and thus no Rule 59(b) deadline, and Ninth Circuit law is clear that a Rule 59 motion lies before entry of judgment. Hynix Mot. New Trial 5:23-6:1.
20
Findings of Fact and Conclusions of Law on Spoliation and Unclean Hands Defense (Sept. 21 Order), Sept. 21, 2012 (D.E. 4160). 21 Hynixs Motion for New Trial, or in the Alternative, Motion for Stay (Hynix Mot. New Trial), Oct. 17, 2012 (D.E. 4166). - 29 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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Compounding its error, Rambus builds elaborate strawmen arguments of lack of newly discovered evidence and a supposed lack of diligence as a basis for denying a Rule 60(b) motion. Rambus Consol. Oppn 33:15-36:13. Not only are these arguments irrelevant to Hynixs Rule 59(b) motion, Rambus does not address the decisive key factors: (1) the evidence justifying a new trial did not exist until after the prior patent trial; (2) no amount of diligence could led to the discovery of the evidence earlier, since it did not exist; and (3) the evidence, that the government agency that granted the Farmwald/Horowitz patents-in-suit in the first place has decided that it made a mistake and the patents are invalid, is of such magnitude that it would likely have changed the outcome of the trial. Hynix Mot. New Trial 6:2-11. Rambus cites Amado vs. Microsoft Corp. for the proposition that a party is required to file a reexamination request with reasonable diligence. Rambus Consol. Oppn 34:8-19. Rambus overreads Amado, which has nothing to do with the reexaminations at issue in these motions. In Amado, the defendant sought to set aside a judgment under Rule 60 to introduce evidence of statements made by the patent holder during a reexamination filed by the defendant after entry of judgment. Amado, 517 F.3d at 1363. The defendant argued that the patent holders statements entitled it to a new trial on infringement. 517 F.3d at 1362-63. The court denied the motion, holding that the defendant delayed in filing the reexamination request until after an adverse judgment, even though the prior art on which the reexamination was based was available prior to trial. Id. Here the new evidence is based on Board decisions in reexaminations filed by others, finding the patents invalid. Amado simply did not deal with new evidence of the kind presented by Hynixs new trial motion. Second, Rambus argues that the Board determinations of invalidity are not admissible evidence, but cites only cases dealing with initial office actions, grants of reexamination or similar preliminary actions. Rambus Consol. Oppn 36:14-37:4. These cases are not persuasive here, where we have, in the 184 case, a final Board ruling that Rambus chose not to appeal, and other final Board rulings. Indeed, it would be misleading to allow a jury to hear evidence that the patents-in-suit are presumptively valid without permitting the accused infringer to rebut such evidence with evidence of reexaminations that have found the same or similar claims to be - 30 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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invalid. See, Oracle Am., 2012 WL 1189898, at *3. During the patent trial, Rambus forcefully emphasized to the jury that the patents-in-suit issued by the PTO after [t]rained examiners, trained in the art and trained in patents, looked at these claims and decided whether or not to issue them. Patent Trial Tr. at 3260:21-25; see also, id. at 11:8-24 (jury shown video of PTO patent prosecution process). Indeed, Rambus tried hard to personalize the examiners and stress the detailed nature of the initial prosecution. See, e.g., Patent Trial Tr., vol. 1, 117:1-20; Patent Trial Tr., vol. 2, 152:5-11; 152:21-153:21; Patent Trial Tr., vol. 19, 3276:5-21. The evidence that the Board overruled those examiners and has now decided they were mistaken is powerful contrary evidence a jury must be allowed to hear. Similarly, admission of the Board determinations is appropriate here because, as discussed above, collateral estoppel extends not only to the relitigation of identical claims but also to the relitigation of identical issues in related patents. See, section II.C.3., supra. These related patent claims have common issues with claims-in-suit in this litigationthat is, they are substantially identical issues to the claims-in-suit. See, Carter-Wallace, Inc. v. United States, 496 F.2d 535, 538 (Ct. Cl. 1974); see also, Hynix Mot. Summ. J. 17:5-18:28. Faced with the obvious relevance of the Board decisions, Rambus argues they should be excluded under Fed. R. Evid. 403. Rambus Consol. Oppn 37:5-28. While clearly the Board decisions are harmful to Rambuss patent claims, Rule 403 is not a bar to prejudicial evidence but rather a balancing test between probative value and unfair prejudice. Fed. R. Evid. 403. Rule 403 reflects a finding that the proffered evidence is relevant, and it does not protect a party from all prejudice, but only unfair prejudice. Deters v. Equifax Credit Info. Servs., Inc., 202 F.3d 1262, 1274 (10th Cir. 2000). In performing the 403 balancing, the court should give the evidence its maximum reasonable probative force and its minimum reasonable prejudicial value. Id. (citation omitted); see also, In re Tableware Antitrust Litigation, No. C04-3514 VRW, 2007 WL 781960, at *2 (N.D. Cal. Mar. 13, 2007) (citing Deters). Indeed, Rule 403 is an extraordinary remedy to be used sparingly because it permits the trial court to exclude otherwise relevant evidence. United States v. Mende, 43 F.3d 1298, 1302 (9th Cir. 1995) (quoting United States v. Patterson, 819 F.2d 1495, 1505 (9th Cir. 1987)) (internal quotation marks omitted); see - 31 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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also, United States v. Roberts, 88 F.3d 872, 880 (10th Cir. 1996). Rambus again argues that because the Board has not yet issued certificates of cancellation, the Rule 403 balance tips in its favor. Rambus Consol. Oppn 37:16-19. However, as set forth above, just as the Board determinations are sufficiently firm for purposes of collateral estoppel, they do not rise to the level of unfair prejudice to invoke Rule 403. Notably, the Board determinations Hynix seeks to admit are, in fact, closer to a final decision than the reexaminations that were found admissible in Oracle. See, Hynix Mot. New Trial 3:1-4:10. B. The Federal Circuits Construction of the Term Memory Device Also Warrants a New Trial
The Federal Circuits recent decision in In re Rambus also entitles Hynix to a new trial. Whereas the patent jury in 2006 was instructed that a memory device must consist of a single chip (see, Hynix Mot. New Trial 11:13-19), the Federal Circuit has now held that a memory device is not limited to a single chip. In re Rambus, 694 F.3d at 50. The Courts erroneous jury instruction prejudiced Hynix because it affected the jurys consideration of a key piece of prior artthe iAPX Manualwhich contains several chips. See, id. Rambus resorts again to its blame Hynix strategy, arguing Hynix waived its right to relevance on In re Rambus. Hynix did not stipulate or agree to the construction of a memory device (or any other type of device) as a single chip. Hynixs proposal during claim construction was that the term that should be construed was device, which was common to other claim terms such as integrated circuit device, memory device, and synchronous memory device. See, App. A to Joint Claim Construction Statement22 1:17-18, middle column; Hynixs Responsive Claim Brief23 6:23-7:11. Rambuss argument is based on the agreement to the term memory device, in the Joint Claim Construction Statement, as an integrated circuit device in which information can be stored and retrieved automatically. Joint Claim Const. Statement 1. This agreed construction incorporates a disputed term, integrated circuit device, which Hynix
22
Joint Claim Construction and Prehearing Statement (Joint Claim Const. Statement), Sept. 12, 2003 (D.E. 326). 23 Hynixs Responsive Claim Brief (Hynix Resp. Claim Br.), Nov. 10, 2003 (D.E. 332). - 32 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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expressly proposed should be construed as a device that includes one or more integrated circuits. Id., App. A, at 5. As it does here, Rambus argued to the Federal Circuit that Hynixs stipulation regarding memory device precluded construction of that term as encompassing more than one chip, and the Federal Circuit correctly rejected that argument. Hynix preserved its ability to argue, as the Federal Circuit has now ruled, that memory device as an integrated circuit device includes more than a single chip. Hynix prominently used the very piece of prior artthe iAPX manualthat the Federal Circuit considered in In re Rambus, and that was held to invalidate claim 18 of the 918 patent. Two other claims (24 and 33) from the 918 patent were tried here with the now-erroneous instruction. See, Hynix Mot. New Trial 11:9-25. Where an erroneous instruction is used, prejudice is presumed and the burden shifts to the other party to demonstrate that it is more probable than not that the jury would have reached the same verdict if it had been properly instructed. Medtronic, Inc. v. White, 526 F.3d 487, 493-94 499 (9th Cir. 2008) (quoting Galdamez v. Potter, 415 F.3d 1015, 1025 (9th Cir. 2005)) (concluding that jury instructions were prejudicial and remanding for new trial); see also, 10:19-13 of Hynix Mot. New Trial. Rambus has made no effort to carry its burden. C. Hynix is Entitled to a New Trial on Damages
Because Hynix is entitled to a new trial on validity in light of the reexaminations and the Federal Circuit decision in In re Rambus, if summary judgment is denied, Hynix is also entitled to a new trial on damages. Of course, if all of the claims-in-suit are found to be invalid, Rambus would not be entitled to damages at all. But damages will be affected even if fewer than all of the claims-in-suit are invalidated. As just one possibility, if all the claims-in-suit that Rambus asserted against SDRAM were to be held invalid, it would preclude Rambus from recovering royalties on SDRAM. It would also undermine Rambuss need more speed, take more inventions argument as to why it was entitled to a higher royalty rate on DDR. See, e.g., Patent Trial Tr. 67:20-68:1, vol. 1, March 15, 2006. It cannot simply be assumed that Rambus would be entitled to the same amount of damages whether one or ten claims is found to have been infringed. Such an assumption would be inconsistent with the entire market value rule, which requires that a patentee demonstrate that the patent-related feature is the basis for customer - 33 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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demand if the patented invention is just one feature among many in the accused product. See, Lucent Techs. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009) (citation omitted). Given that the previous damages award was not allocated among the patents or claims-in-suit, there is no mechanism to adjust the prior award, and the normal rule requires a new damages trial.24 Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295, 1310 (Fed. Cir. 2007); see also, NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282, 1326 (Fed. Cir. 2005). IV. ALTERNATIVELY, THE COURT SHOULD STAY THIS ACTION As explained above, Hynix submits that the Court should enter summary judgment of invalidity or, alternatively, grant a new trial on invalidity and damages. But if the Court accepts that the reexaminations have not yet reached finality for purposes of giving the Board decisions collateral estoppel effect, or introduction into evidence, it should not simply proceed to enter judgment but should instead stay the case until the reexaminations are completed. See, MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556, 563 (E.D. Va. 2007) (citing Gould v. Control Laser Corp., 705 F.2d at 1342) (stay is appropriate especially if the evidence suggests that the patents-in-suit will not survive reexamination). A. Hynix has not delayed in seeking a stay
The Board rulings issued only this year. Hynix promptly brought the Board decisions to the Courts attention even while the remanded spoliation issues were still under submission. See, D.E. 4156, 4158. Hynixs letters alerted the Court and Rambus that further proceedings to determine the effect of the reexaminations on this litigation would be necessary if the Court did not impose terminating sanctions for spoliation. Id. Hynix filed the present motions regarding the effect of the reexamination decisions within one month of the Court issuing its spoliation decision. Accordingly, a motion for stay should not be denied on grounds of delay. These reexaminations are at a far more advanced stage than in the typical situation where a party seeks a stay of litigation pending reexamination. See, e.g., eBay, 500 F. Supp. 2d at 567 (granting motion to stay pending reexamination in which PTO had issued interim office actions).
24
As discussed in Hynixs [Proposed] Reply Brief Regarding Sanctions for Rambuss Spoliation (Ex. A to D.E. 4192), Hynix is also entitled to a new trial on damages to determine the proper royalty rate should the Court decide to set a RAND rate as a spoliation sanction. Id., 5:8-12. - 34 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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Rambus offers no reason to believe that the relevant Board decisions will be reheard or reversed on appeal. Accordingly, this is not the typical stay situation, in which there is greater uncertainty as to the ultimate outcome of the reexaminations. In no event should the Court punish Hynix for the fact that this litigation has taken so long. For example, Hynix twice requested permission to take an interlocutory appeal from the original unclean hands ruling but Rambus opposed those requests and the Court denied them. (D.E. 1589, 1732, 2413, 2471.) Then, before this Court entered the now-vacated judgment in 2009, Hynix proposed a way to package the appeal as a spoliation-only appeal as a way to complete the appeal within as few as seven months, but the Court (at Rambuss urging) rejected that approach, entered judgment on all issues, and the appeal ended up taking over two years. Hynixs Motion for Summary Judgment on Unclean Hands, 8:2-16.25 These patents are expired, and the public policy against enforcement of invalid patents outweighs against Rambuss interest in a money judgment. A stay, to the extent the Court is not willing to dispose of the case now, would simplify the issues remaining here in the most dramatic way: all claims-in-suit will be eliminated and the case will end. Tierravision, Inc. v. Google, Inc., No. 11cv2170 DMS(BGS), 2012 WL 559993, at *2 (S.D. Cal. Feb. 21, 2012) (Cancellation of the claims [on reexamination] will result in the ultimate simplification of this case: It will be dismissed.). B. Rambus will not be prejudiced by a stay
The only prejudice Rambus cites stems solely from the fact that Rambus will be precluded from enforcing patents that the PTO has determined in reexamination are invalid. But this is not legally cognizable prejudice; Rambus will suffer no harm from a stay because defectively examined and therefore erroneously granted patent[s] must yield to the reasonable Congressional purpose of facilitating the correction of governmental mistakes. Patlex Corp, 758 F.2d at 604. Even if Rambus succeeds in reversing the Boards decisions in the Federal Circuit, by some series of events that not even Rambus hypothesizes, the delay in Rambuss enforcement of its patent rights would not prejudice Rambus because the effect, if any, of reexamination is temporary
25
Motion of Hynix for Summary Judgment on Unclean Hands, for Relief from Order Under FRCP 60(b), for Entry of Judgment Under FRCP 54(b), and for Stay of Remaining Proceedings (Hynix Mot. Summ. J. Unclean Hands), Jan. 19, 2009 (D.E. 3879). - 35 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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with respect to correctly granted patents and the patentee may recover damages from those who have infringed in the interim (or where, as here, the patents have expired, may be awarded interest to compensate for the delay in collection of damages). See, id. at 603. V. THE COURT SHOULD GRANT HYNIX LEAVE TO ADD A COLLATERAL ESTOPPEL DEFENSE The Federal Circuit has held that an accused infringer may raise a defense that a patent is invalid by operation of collateral estoppel at any time, even for the first time on appeal. Mendenhall, 26 F.3d at 1578-79, 1580 n.8. This rule recognizes the critical public interests that are implicated whenever a patentee seeks to enforce patents that have been determined to be invalid. See generally, Precision Instrument, 324 U.S. at 816. Hynixs motion for leave to supplement its reply is timely, the collateral estoppel defense that Hynix seeks to add is meritorious, Rambus will not be prejudiced by the addition of the defense, and judicial efficiency concerns dictate in favor of having this Court decide the collateral estoppel issue in the first instance. Accordingly, Hynix should be granted for leave to supplement its counterclaim. A. There is Good Cause to Permit Hynix to Supplement its Reply
As explained in Hynixs Motion to Supplement26, it could not have moved to supplement its reply to add a new defense based on the collateral estoppel effect of the Board decisions until those decisions issued, which was not until 2012. See, Hynix Mot. to Suppl. Reply 5:3-18. Following issuance of the Boards decisions, and once the Court issued its September 21 Order on Hynixs request for terminating sanctions that had been pending since December 2011, Hynix filed its Motion to Supplement (along with the associated Motion for Summary Judgment and Motion for New Trial) within one month. Under these circumstances, the deadline for supplementation of the pleadings that the Court set forth in its April 24, 2007 scheduling order could not reasonably have been met, and there is good cause to permit Hynix to supplement its reply. See, Fed. R. Civ. P. 15 Advisory Committee Notes; and see generally, Blonder-Tongue,
26
Hynixs Motion for Leave to File Supplemental Reply to Defendant and Counterclaim Plaintiff Rambus Inc.s Amended Counterclaim (Hynix Mot. to Suppl. Reply), Oct. 17, 2012 (D.E. 4165). - 36 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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402 U.S. at 350 (remanding to permit amendment of pleadings in district court to add collateral estoppel defense). B. Timeliness Rambus argues that Hynix waited too long after issuance of the first Board decision in January 2012 to file its motion to supplement the reply. Rambus Consol. Oppn 46:2-4. Elsewhere, however, Rambus argues that Hynix brought its collateral estoppel-based summary judgment motion prematurely because the Board decisions are not final. See, e.g., id. at 19:621:5. Hynixs motion cannot have been brought both too late and too early; the timing of Hynixs motion was entirely proper. Two of the Board decisions upon which Hynixs collateral estoppel defense depends issued on January 19, 2012, and with the Board's decision of June 14, 2012, Hynix had reexamination decisions in hand that cover all of the claims-in-suit under the Ohio Willow Wood framework. Indeed, the Ohio Willow Wood decision itself did not issue until June 15, 2012, and In re Rambus, upon which Hynix also relies, issued on August 15, 2012. While all the reexamination-related Board rulings and court decisions were issuing, the remanded spoliation issues (which included Hynixs request for terminating sanctions) were under submission. It was not until September 21, 2012, when the Court issued its spoliation decision, that it was clear that the case would proceed. Hynix then filed these motions promptly. Meanwhile, Rambus was well aware of these developments because it was a party to all of the Board proceedings and In re Rambus and was copied on Hynixs letters on the issue. See, e.g., letters from Hynixs counsel to Court dated August 27, 2012 and September 4, 2012 (D.E. 4156, 4158). To the extent that Rambus argues that Hynixs motion to supplement its reply is untimely because of Hynixs alleged lack of diligence in pursuing the reexaminations in the first place (see, Rambus Consol. Oppn 46:4-5), that simply repeats meritless Rambuss reexamination laches argument. See, section II.A., supra. No Futility The futility of a proposed amendment to the pleadings must be judged by the standard - 37 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
Supplementation is Proper under Rule 15 Standards
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governing a motion under Rule 12(b)(6), under which the Court must accept as true all factual allegations and all reasonable inferences that can be drawn from those facts, and view them in the light most favorable to the pleading party. See, Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988); see also, 3 James W. Moore, et al., Moores Federal Practice - Civil 15.15[3] (2012). The allegations of Hynixs proposed supplemental reply establish that the collateral estoppel defense is not futile under these lenient standards; indeed, Hynixs collateral estoppel defense warrants a grant of summary judgment in Hynixs favor, as discussed in section II., supra. No Prejudice Rambus has failed to carry its burden of proving that it will be prejudiced by supplementation of Hynixs reply. See, Keith v. Volpe, 858 F.2d 467, 475 (9th Cir. 1988). Rambus complains that permitting Hynix to supplement its reply will substantially delay and prolong these proceedings. See, Rambus Consol. Oppn 47:16-19. But the need for Rambus to litigate a new colorable defense supported by evidence is not the type of prejudice that would justify denial of a motion to supplement the pleadings. See, SKF Condition Monitoring, Inc. v. Invensys Sys., Inc., No. 07cv1116 BTM(BGS), 2010 U.S. Dist. LEXIS 90305, at *18 (S.D. Cal. Aug. 31, 2010). Judicial Efficiency Rambus argues that allowing Hynix to supplement its reply will not achieve judicial efficiency because the Federal Circuit will ultimately be required to pass on the issue in any event. See, Rambus Consol. Oppn 50:24-26. But it could be said with respect to any motion to supplement the pleadings in the trial court that those same issues may later be appealed; that is no reason to deny a motion to supplement. It is the general rule, of course, that a federal appellate court does not consider an issue not passed upon below. Singleton v. Wulff, 428 U.S. 106, 120 (1976). Were this Court to deny Hynixs motion to supplement its reply and leave it to the Federal Circuit to sort out, in the first instance, the effect of the reexaminations on the litigation, the Federal Circuit could simply remand the issue to this Court, which would hardly achieve judicial efficiency. See, e.g., Green Edge Enters., LLC v. Rubber Mulch Etc., LLC, 620 F.3d - 38 HYNIXS CONSOLIDATED REPLY ON MOT. FOR SUMMARY JUDGMENT, ETC. CV 00-20905 RMW
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1287, 1298-99 (Fed. Cir. 2010) (remanding to district court to determine in the first instance obviousness question raised but not decided below). VI. CONCLUSION Recent Board decisions have established that Rambuss claims-in-suit are invalid. The Court should now grant summary judgment of invalidity on all claims-in-suit based on collateral estoppel. If the Court is unwilling to do so, it should order a new patent and damages trial and/or stay these proceedings. In any event, the Court should permit Hynix to supplement its reply to add a collateral estoppel defense. Dated: December 4, 2012 By: /s/ Susan van Keulen Susan van Keulen KENNETH L. NISSLY SUSAN van KEULEN SUSAN ROEDER MISHIMA ALAM OMELVENY & MYERS LLP KENNETH OROURKE OMELVENY & MYERS LLP THEODORE G. BROWN III KILPATRICK TOWNSEND & STOCKTON LLP Attorneys for Plaintiffs HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., and HYNIX SEMICONDUCTOR DEUTSCHLAND GmbH
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 916 patent claims 9 and 40 020 patent claims 31 and 33

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020 patent claim 32

105 patent claim 34

Related claims rejected by BPAI decision dated

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918 patent claim 33

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918 patent claim 24

916 patent claim 9

Denying Collateral Estoppel Would Be An Abuse of Discretion

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There are no inconsistent results that justify denial of collateral estoppel

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Supplementation is Proper under Rule 15 Standards

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