Micron vs Rambus
On July 29, the Federal Circuit refused to reconsider its May 13 ruling in Micron v. Rambus (Micron) in which the Court determined that Rambus destroyed relevant evidence related to its SDRAM semiconductor patent lawsuit Micron. In refusing to reconsider its ruling, the Court passed on its second opportunity to set a “bright line” rule establishing when the duty to preserve documents is triggered.
The Federal Circuit’s opinions in Micron and its companion case, Hynix v. Rambus (Hynix), purport to reconcile conflicting underlying district court decisions. Rambus’ common act of conducting “shred days” as part of a newly implemented document retention policy underlies each of the decisions. In reconciling the perceived split between the two cases, the Federal Circuit provided clarification on the issue of when the duty to preserve data attaches, explaining
the proper standard for determining when the duty to preserve documents attaches is the flexible one of reasonably foreseeable litigation, without any additional gloss.
This statement directly refuted Rambus’ argument that litigation would need to be “imminent or probable without any contingencies” before the duty to preserve would arise. Absent this requirement of “additional gloss,” the Federal Circuit remanded both cases: Micron to determine whether the sanction of dismissal was warranted given Rambus’ actions (based on the Micron court original determination that Rambus’ activities contravened its duty to preserve relevant evidence and that spoliation had occurred) , and Hynix to reevaluate whether spoliation occurred under the standard articulated by the Court (based on its original determination that Rambus’ duty to preserve had not attached to the documents that were shredded, which ultimately resulted in a nearly $400 million judgment against Hynix).
While the Federal Circuit’s decision provides guidance on when the duty to preserve attaches, the decision misses the opportunity to bring some certainty to a flexible situation.
While there are perils in crafting a bright line rule that can be applied to every situation, the facts at issue gave the Federal Circuit an opening to identify actions that conclusively do or — more importantly — do not give rise to a reasonable expectation of litigation. Specifically, the Court had the opportunity to address the following timeline and opine on whether certain activities always or never give rise to a determine whether “reasonable expectation of litigation”
- August or September 1998: Rambus begin preparing for litigation against SDRAM manufacturers.
- Q2 1998: Rambus implemented a document retention policy, which (improperly) stated that the destruction of relevant and discoverable information did not need to stop until the commencement of litigation
- October 1998: Rambus executives were informed of plans to assert Rambus’ patents against manufacturers in Q1 2000 by in-house counsel .
- November 1998: Rambus executives reaffirmed plans to assert the SDRAM patents.
- April, 1999: Rambus met with its outside counsel to discuss potential litigation.
- June 1999: With the first patent in suit issued, Rambus confirmed its goal of “preparing litigation strategy against” other manufacturers.
- October 1999: Rambus approached manufacturers to seek licensing payments for the SDRAM technology.
- December 1999: Licensing discussions failed, and Rambus instituted a litigation hold.
- January 1999: Rambus filed its first lawsuit against an SDRAM manufacturer.
- August 2000: After Rambus approached Micron about taking a license for SDRAM, Micron filed a declaratory judgment action against Rambus.
Against this backdrop, the Federal Circuit had ample opportunity to identify specific actions that establish when litigation is, or is not, deemed reasonably foreseeable. Such a determination — at a minimum — would have provided a touch point for corporations engaged in intellectual property litigation to consider in creating or updating document retention policies. As it stands, the Federal Circuit essentially re-affirmed that the question of reasonable foreseeability will turn on the facts of a specific case.
While this may be good news for some, those of us in the e-discovery law space — and more importantly, people responsible for managing compliant document retention policies ⎯ are left to wonder about what might have been.Posted on