$250 Million Fine in Ramus Document Shredding

It appears Rambus may have shredded $250 million.  A federal judge said it will cost the firm that much for its destruction of 700 boxes of documents, in bad faith, that might have been used in a patent dispute.

The documents were related to contract and licensing negotiations, patents, company finances and its participation in an industry standards setting body.  Some of those might have been pertinent to the SK Hynix, Inc. memory-chip patent dispute, according to the court.

The decision by U.S. District Judge Ronald Whyte in San Jose Wednesday is good news for Hynix, which has been embroiled for years in a patent dispute with Rambus over SDRAM memory chips.

In 2000, Hynix sued Rambus preemptively, asking the court to declare that it was not infringing the Rambus patents and that several of the patents might be invalid or unenforceable for SDRAM member.

Hynix also accused Rambus of monopolization and fraud.  Rambus responded with a patent infringement suit against Hynix.

By the end of a three-phase trial, Whyte awarded Rambus $349 million for its patent claims against Hynix.  He also rejected claims by Hynix that Rambus should be sanctioned for destroying documents.

But the Court of Appeals for the Federal Circuit, which hears patent appeals, in 2011 overturned his decision on document destruction, known as spoliation.

Whyte ruled that the $250 million sanction against Rambus will be deducted from the $349 million award against Hynix.

“Rambus willfully destroyed large volumes of documents when litigation was reasonably foreseeable,” Whyte wrote.  “It kept no records of what it destroyed.  Although the evidence does not establish that it deliberately singled out particular damaging documents for destruction, Rambus’s conduct makes it impossible too tell what evidence was lost, and Rambus must suffer the consequences of that uncertainty,” Whyte said.

Case:  SK Hynix Inc. v. Rambus Inc., No. C00-20905RMW