CA District Court Enters $397M Judgment in Rambus, Hynix Patent Case

Holding:

In this long-running patent suit involving memory chips, the U.S. District Court for the Northern District of California has entered final judgment against Korean company Hynix Semiconductor, Inc. and its affiliates Hynix Semiconductor America Inc., Hynix Semiconductor U.K. Ltd., and Hynix Semiconductor Deutschland GmbH (collectively "Hynix") In particular, the judgment ordered Hynix to pay Rambus Inc. (“Rambus”) the amount of approximately $134M for infringement through December 31, 2005 and approximately $215M for its infringement from January 1, 2006 through January 31, 2009. In addition, the district court awarded about $48M in pre-judgment interest to Rambus. The district court also ordered Hynix to pay Rambus royalties on net sales after January 31, 2009 and before April 18, 2010 of 1% for SDR SDRAM and 4.25% for DDR SDRAM memory devices. The latter rate applies to DDR, DDR2, DDR3, GDDR, GDDR2 and GDDR3 SDRAM devices, as well as DDR SGRAM devices. Damages and the compulsory license apply to U.S. infringements of the patent claims in suit. Finally, the district court stayed the execution of its judgment is stayed for 14 days in order for Hynix to file a motion under Rule 62 seeking relief from final judgment pending an appeal.

Detailed Summary:

By way of background, this case was originally filed by Hynix against Rambus in August 2000. The district court split the case into three separate phases with Rambus subsequently prevailing in all three phases.

During the first phase, Hynix alleged that Rambus’ patents were invalid based on the doctrine of unclean hands. The district court issued its Findings of Fact and Conclusions of Law in Rambus’ favor in January 2006. In ruling that “Hynix’s unclean hands defense fails,” the district court concluded that “Rambus did not engage in unlawful spoliation of evidence.” The district court also found that the “evidence also does not demonstrate that Rambus targeted any specific document or category of relevant documents with the intent to prevent production in a lawsuit such as the one initiated by Hynix,” and that the evidence “does not show that Rambus destroyed specific, material documents prejudicial to Hynix’s ability to defend against Rambus’s patent claims.” The district court reaffirmed its finding of no spoliation when it denied Hynix’s motion for reconsideration in February 2009.

The second phase dealt with Rambus’ allegations that Hynix memory products infringed its patents. In April 2006, a jury unanimously found that all ten Rambus patent claims at issue in that trial are valid and infringed by Hynix memory products. The jury award of approximately $307M in damages for U.S. sales of infringing Hynix products through December 31, 2005, was subsequently reduced by the Court to approximately $134M.

In the third and final phase of the case, Hynix tried its remaining claims and defenses against Rambus including antitrust and fraud claims based on Rambus’ participation in a standard-setting organization called JEDEC. In March 2008, a jury found Rambus had acted properly during its participation in JEDEC in the early 1990s. The district court also rejected Hynix’s equitable JEDEC-related claims and defenses, finding that the evidence supported the jury’s finding “that JEDEC members did not share a clearly defined expectation that members would disclose relevant knowledge they had about patent applications or the intent to file patent applications on technology being considered for adoption as a JEDEC standard.” The district court further found that “not only did Rambus not have an obligation to disclose pending or anticipated patent applications, it had sound reasons for not doing so.”

Rambus sought an injunction to bar Hynix from making chips after winning the third phase. While the district court denied Rambus’ request for injunctive relief, it ordered Rambus and Hynix to negotiate the terms of a compulsory license to allow Hynix to continue to make, use, and sell SDR SDRAM and DDR SDRAM products.

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