Samsung Elecs. Co., Ltd. v. Rambus, Inc., 2006 WL 2038417 (E.D. Va. July 18, 2006)
Samsung filed this action seeking a declaratory judgment, inter alia, that four patents held by Rambus were unenforceable by virtue of the doctrines of unclean hands, equitable estoppel, patent misuse, waiver and laches. The patents-in-suit were the same as the four patents-in-suit in Rambus, Inc. v. Infineon Technologies AG, No. CIV. A. 3:00cv524 (E.D.Va.) ("Rambus v. Infineon"). Rambus asserted counterclaims against Samsung, alleging infringement of two of the patents.
In this opinion, the court ruled upon Samsung’s motion for an award of attorney’s fees against Rambus under 35 U.S.C. § 285 and the court’s inherent power. The court concluded that, although it was an “exceptional case” under § 285, an award of attorneys’ fees was not appropriate under either § 285 or the court’s inherent power.
The court observed that a case may be deemed exceptional and, thus, eligible for an award of attorney fees under § 285, “when there has been some material inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed.R.Civ.P. 11, or like infractions.” It agreed with Samsung and found that Rambus engaged in the spoliation of evidence as part of its plans for litigation against the DRAM industry, including Samsung specifically. However, because there was no causal nexus between the misconduct found (pre-filing spoliation of evidence) and the fees sought by Samsung, the court declined to award attorney fees under the statute. Further, the court concluded that Rambus’ counterclaims were not asserted in bad faith or for the purpose of vexation, and so an award of fees under the court’s inherent power was also unwarranted.
The court’s opinion discusses at length the facts and circumstances surrounding Rambus’ adoption and implementation of its document retention policy and its spoliation of evidence.
The court’s discussion of corporate retention policies is particularly interesting:
Rambus defends the spoliation charge by arguing that its document retention policy is like many others, was adopted largely in the form recommended by counsel, and that, if its program constitutes spoliation, most, if not all, of corporate America is in jeopardy. For several reasons, Rambus’ argument misses the mark.
First, the allegation of spoliation is not directed to the constituent elements of Rambus’ policy. Nor is it asserted that the adoption and implementation of document retention policies are per se acts of spoliation. Indeed, many corporations have such policies. There is no need to canvass and recite the case law finding such policies to be generally permissible. And, since there has been no per se attack on the Rambus policy, there is no need to survey the policy to assess how it measures to standard.
Second, there is no dispute that counsel were involved in advising as to the content of the policy and in helping to present the policy to employees. That, however, does not change the fact that Rambus implemented the policy when it anticipated, or reasonably should have anticipated, litigation. Thus, the involvement of Johnson and Steinberg, as shown by the record, does not militate against a finding of spoliation.
Contrary to Rambus’ third argument, neither corporations nor individuals are at risk of a finding of spoliation merely because they adopt or implement a proper document retention policy. However, any company that implements a document retention policy during or in anticipation of litigation, and destroys documents relevant to the actual or anticipated litigation, will face and lose a spoliation charge. But, that is as it should be.
In any event, the law recognizes that document retention policies and actual or anticipated litigation can coexist. For example, a company can modify its policy to preserve documents reasonably thought relevant to the actual or anticipated litigation. To accomplish that, however, the company must inform its officers and employees of the actual or anticipated litigation, and identify for them the kinds of documents that are thought to be relevant to it. Other mechanisms, such as collecting the relevant documents and segregating them, may accomplish the same result. These points are by way of illustration and are not exclusive.
It is not sufficient, however, for a company merely to tell employees to "save relevant documents," without defining what documents are relevant. If the testimony from Gray Cary is accepted, that is all that was done in late 1999 or in 2000. As explained above, this sort of token effort will hardly ever suffice, and it will always fall short when the document retention program had an articulated principal focus of ridding the company of documents that are discoverable in litigation.
Nor can a company make a document retention program an integral part of its litigation strategy and, pursuant thereto, target for destruction documents that are discoverable in litigation. Rambus has cited no decision that supports such an approach. The Court has found none. And, if the result of finding spoliation on this record is to deter others from such conduct under like circumstances, then that is desirable.
Generally, whether spoliation has occurred is measured, as Silvestri teaches, by looking at the totality of the circumstances. A legitimately adopted and implemented policy will pass muster. The conduct of Rambus does not for the reasons outlined above. Fortunately, that conduct appears to be sui generis. None like it is reported in the periodicals, the trade press, or the decisional law. That further underscores the point that corporate America has little to fear from a decision holding Rambus accountable for spoliation of evidence.
2006 WL 2038417, at **37-38 (footnote omitted).