Case Cite

SK hynix Inc. v Rambus Inc., No. C-00-200905 RMW, 2013 WL 1915865 (N.D. Cal. May 8, 2013).

IPDQ Commentary

A patent owner saw more than 70% of a $350 million damages award evaporate when the court found it had spoliated documents. Even though the district court initially found no spoliation, the Federal Circuit vacated that decision and remanded the case. The lesson here is to make sure litigation holds are rigorously observed.

Case Summary

In a series of trials, the district court first ruled the patent owner, Rambus, had not spoliated documents. Id. at *2. After a jury trial, the court entered judgment for $349 million, plus prejudgment interest and ongoing royalties. Id. On appeal, the Federal Circuit vacated the judgment of no spoliation but otherwise affirmed the judgment. Id. On remand, the district court concluded Rambus had spoliated documents and decided the most appropriate sanction was to limit damages to a FRAND royalty. Id. at *1.

SK hynix moved for a new trial on damages, arguing there was no way to determine which portion of the damages was attributable to which patent claim. Id. at *15. Distinguishing Verizon Servs. Corp. v. Vonage Holdings Corp., the court said: (1) damages were awarded based on infringement by particular products and not particular patent claims; (2) SK hynix did not request an instruction or provide a method for determining damages claim-by-claim; and (3) because each of the products in issue infringed at least one of the claims in suit, the damages award was fully supported. Id. at *15.

The court also decided the sanction to be imposed on Rambus for spoliation. Id. at *18. The court considered (1) the degree of fault of Rambus; (2) the degree of prejudice suffered by SK hynix; and (3) whether a sanction less than dismissal would address the prejudice to SK hynix and deter similar conduct in the future. Id.

The court concluded Rambus willfully destroyed large volumes of documents when litigation was reasonably foreseeable, and it was impossible to tell what evidence was lost. Id. at *19. The court also concluded, had Rambus disclosed its intent to obtain patent coverage of the standard then being considered by JEDEC, it would have been required to license as a FRAND royalty rate. Id. The court then reviewed the law relating to FRAND licenses and the royalties paid by SK hynix’s competitors. Id. at *19 – *21. The court decided a sanction of $250 million to be applied as a credit against the judgment was appropriate. Id. at *22.