"Spoliation refers to the destruction or material alteration of evidence or to the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." Hynix Semiconductor Inc. v. Rambus Inc., 2011 U.S. App. LEXIS 9728 at *50 (Fed. Cir. May 13, 2011) (Judge Gajarsa's dissent) (emphasis original) (citing Silvestri v. Gen. Motors Corp., 271 F.3d 583 (4th Cir. 2001)). The issue before the Federal Circuit in Rambus is when is litigation reasonably foreseeable. As it turns out, reasonable minds can (and did) differ on this point.

On appeal, the Federal Circuit reviewed seemingly inconsistent decisions by two district courts that faced the question of whether Rambus has spoliated evidence. On one hand, in Hynix v. Rambus, the Northern District of California held that Rambus did not commit spoliation. On the other hand, in Micron v. Rambus, the District of Delaware held that Rambus did commit spoliation. Both district court decisions were based on the same facts.

The relevant facts were:

• October 1997 - Rambus hires Joel Karp as VP of Intellectual Property "to prepare and then to negotiate to license [Rambus'] patents for infringing [DRAMs]."

• February 1998 - Karp meets with outside counsel to discuss the litigation strategy. At that time, they also discussed that they needed a documents retention policy so that they would be "battle ready," including the need "to clean out all attorney notes so that [the PTO prosecution] file is the same as the official file."

• March 1998 - Karp proposes a litigation strategy to the Board.

• May 1998 - Karp announces document retention policy.

• July 1998 - Karp made presentations to the engineers about the new document retention policy and also to "look for things to keep" (e.g., things that help prove a conception date).

• September 1998 - Rambus holds its first "Shred Day", destroying 400 boxes of documents pursuant to the document retention policy.

• October 1998 - Karp advises executives to delay litigation (to wait until the RDRAM manufacturers have ramped up production to the point of no return).

• November 1998 - Karp sends Rambus executives the Nuclear Winter Memo detailing litigation activities should the "very unlikely" possibility that Intel cancels RDRAM in its next chipset.

• April 1999 - Rambus instructs outside patent counsel to destroy notes in patent files.

• June 1999 - First patent in suit issues; CEO Tate instructs Karp to identify his choice for the first licensing or litigation target for launch in October 1999.

• August 26, 1999 - Rambus holds its second "Shred Day," destroying 300 additional boxes.

• September 24, 1999- Karp makes presentation to Rambus board, emphasizing the desirability of litigation.

• October 22, 1999 - Karp sends Hitachi a letter referencing its patents.

• January 18, 2000 - Rambus sues Hitachi.

• August 28/29, 2000 - Micron and Hynix sue Rambus, respectively, for declaratory judgment on Rambus' patents.

The Delaware court held that Karp's November 1998 "Nuclear Winter" memo triggered Rambus' duty to preserve documents. Accordingly, the second "shred day" constituted spoliation.

The Northern District of California held that Rambus' duty to preserve documents was not triggered until Karp's September 1999 presentation to Rambus' board emphasizing the desirability of litigation. Only after this point was litigation imminent. Because this was after the second "shred day" there was no spoliation. In holding that litigation was not imminent, the California court relied on several contingencies that allegedly needed to be resolved before litigation could be commenced such as, reverse engineering product samples, creating claim charts and obtaining approval for litigation from Rambus' Board.

On appeal, both parties agreed that the reasonable foreseeability standard described in Silvestri was the proper standard. "The parties disagree[d], however, about what that standard means. Hynix argued that reasonable foreseeability incorporates no requirement of imminence of litigation, while Rambus argues that to be reasonably foreseeable, litigation must be 'imminent,' at least in the sense that it is probable and free of significant contingencies." Id. at *16.

The Federal Circuit affirmed the Delaware's court's spoliation findings and reversed the California court's decision, remanding for reconsideration of the spoliation issue. In so doing, the Federal Circuit rejected the standard that litigation be "imminent, or probable without significant contingencies." Id. at *18. The Federal Circuit stated that "Contingencies whose resolutions are reasonably foreseeable do not foreclose a conclusion that litigation is reasonably foreseeable. It would be inequitable to allow a party to destroy documents it expects will be relevant in an expected future litigation, solely because contingencies exist, where the party destroying documents fully expects those contingencies to be resolved." Id. at 20.

"The newly established standard is coined as a 'flexible one'--lacking an additional 'gloss' that requires litigation to be 'imminent, or probable without significant contingencies' to find spoliation." Id. at 47 (Judge Gajarsa's concurrence). Interestingly, the dissent points out that applying the appropriate deferential standard of review and applying the appropriate circuit law of each district court, both district court opinions should have been affirmed.