Micron Tech., Inc. v. Rambus, Inc., Case No. 00-792-SLR (D. Del. Jan. 9, 2009)
Take Away: The duty to preserve evidence may arise at the point where a party has articulated a time frame and a motive for a general litigation strategy. Document retention/destruction policies should be drafted and implemented in a defensible manner.
Rambus, a microchip technology company, based their corporate philosophy on creating a patent “minefield”, including aggressive litigation of their intellectual property. Rambus developed a licensing and litigation strategy with respect to several specific target companies, which included Micron Technology. Opinion at ¶¶ 11-12. In preparation to implement this strategy, Rambus implemented a company-wide document retention/destruction policy, which emphasized the elimination of documents and ESI that might be discoverable in litigation. ¶¶ 13, 15-18. A few months later, employees participated in “’Shred Day,’ during which they destroyed documents pursuant to the company’s new policy. ¶ 19. In reviewing Micron’s inevitable motion for sanctions due to spoliation of evidence, the court noted generally accepted principals with regard to the duty to preserve potentially relevant information when there is knowledge of a potential claim. This includes suspending document retention/destruction policies and instituting a litigation hold once litigation is reasonably foreseeable. ¶¶ 41-43 (citing Zubulake v. UBS Warburg LLC)
For Rambus, litigation was reasonably foreseeable after the company articulated both a time frame and motive for its general litigation strategy. Because the document destruction was approached within the context of the litigation strategy, Rambus knew or should have known that the policy was inappropriate because of the relevancy to litigation. Any documents purged after the litigation strategy was in place were “deemed to have been intentionally destroyed, i.e., destroyed in bad faith.” ¶ 55.
Since the destroyed documents may have been relevant to Micron’s case, the court found they had been prejudiced. This prejudice was compounded by Rambus’ litigation conduct “which has been obstructive at best, misleading at worst.” ¶ 56.
The court reviewed the full panoply of sanctions, noting the remedial, punitive, and deterrent function that sanctions serve. ¶¶ 44-47. On the question of the burden of proof necessary for the essentially dispositive sanction of patent unenforceability, the court here concluded that a high burden of proof was appropriate, requiring the aggrieved party to come forward with clear and convincing evidence of intent and prejudice. Then a balancing test must be performed. ¶¶48-49.
“More specifically, once intent and prejudice have been established, the court must determine whether their total weight satisfies the clear and convincing standard of proof. In this regard, the showing of intent (i.e., bad faith) can be proportionally less when balanced against high prejudice. In contrast, the showing of intent must be proportionally greater when balanced against low prejudice.” ¶49.
The court found that harsh sanctions were appropriate in this case. “The spoliation conduct was extensive…the very integrity of the litigation process has been impugned.” Therefore the court concluded the appropriate sanction was to declare the patents in suit unenforceable against Micron. ¶ 57