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Same Facts, Different Results: California Court Declines to Reconsider Ruling in Favor of Rambus, Despite Delaware Court’s Opposite Conclusion

Posted in NEWS & UPDATES

Hynix Semiconductor Inc. v. Rambus Inc., 2009 WL 292205 (N.D. Cal. Feb. 3, 2009)

Beginning in 2000, Rambus Inc. (“Rambus”) alleged that several companies had infringed its patents and instituted legal action.  Among the companies accused by Rambus were Micron Technology, Inc (“Micron”) and Hynix Semiconductors, Inc. (“Hynix”).  In response to the allegations of infringement, both Micron and Hynix filed actions for declaratory judgment in Delaware and California, respectively.  Both Micron and Hynix also asserted the unenforceability of the patents and alleged that Rambus had unclean hands as a result of extensive document destruction.  In both cases, a bench trial was held on the unclean hands defense.

In January 2006, the California court ruled in Rambus’s favor holding that Hynix’s defense of unclean hands had failed.  Hynix Semiconductor, Inc. v. Rambus Inc., 2006 WL 565893 (N.D. Cal. Jan. 5, 2006).  In January 2009, the Delaware court ruled in Micron’s favor holding that Rambus had destroyed documents in bad faith and, as a sanction, ordered the patents unenforceable against Micron.  Micron Tech., Inc. v. Rambus, Inc., 2009 WL 54887 (D. Del. Jan. 9, 2009).

Based on the ruling of the Delaware court, Hynix moved for summary judgment on the basis of defensive non-mutual issue preclusion or, in the alternative, for reconsideration of the California court’s prior decision regarding Rambus’s actions.  Those motions were denied, leaving in place the conflicting rulings of the two courts.

The court denied Hynix’s motion for summary judgment following its discussion of the inapplicability of the doctrine of defensive non-mutual issue preclusion.  The denial was supported, in part, by the court’s reasoning that inconsistent judgments weighed against the application of issue preclusion where issue preclusion “rests on an assumption that a prior decision was more or less correct.”  Rather, the court concluded, inconsistent decisions suggest that “‘the outcomes may have been based on equally reasonable resolutions of doubt as to the probative strength of the evidence.’” (Citation omitted).

The court’s discussion of inconsistent outcomes continued with its assertion that the unfairness of the application of non-mutual issue preclusion in the face of conflicting adjudications is heightened “when those issues are ‘slippery subjective appraisals or application of generalized standards of conduct.’”  The court then indicted its belief that the question of prejudice resulting from spoliation was just such an issue.  Ending its discussion of the conflicting outcomes, the court also rejected Hynix’s arguments regarding the applicability of the “last in time rule.”

The court next addressed Hynix’s failure to join Micron and its decision to file a separate declaratory judgment action, instead.  Specifically, the court indicated its disinclination to allow Hynix to take advantage of its “coordinated, dual-front litigation against Rambus to capitalize on Rambus’s loss in Delaware.”

The court ended its consideration of Hynix’s motion for summary judgment by addressing the lack of efficiency that would result from replacing the judgment of one court with another.

Turning to Hynix’s alternative motion for reconsideration, the court declined to replace its reasoning with that of another court and indicated that it remained “unpersuaded” that litigation was reasonably foreseeable at the time determined by the Delaware court.

The court also denied Hynix’s motion for a stay of the proceedings and for the spoliation issue to be certified for interlocutory appeal with the Micron spoliation order.  Instead, the court indicated its intent to resolve any outstanding issues to “permit appellate review of a final judgment.”