Rambus designed computer chips during the 1990s but never sold its own products. It turned to patent litigation around the year 2000, after its technology failed to gain wide acceptance in the semiconductor industry. According to Rambus, rivals like Hynix and Micron Technology ripped off its patented ideas, leaving it no choice but to go to court. Rambus’s detractors say the once-innovative company is now just another patent troll. It’s also been battered by evidence that it destroyed evidence during company-wide "shred days." (As Corporate Counsel explained in a lengthy feature, that phrase was used by a Rambus vice president in the late 1990s, and Rambus has been haunted by the word choice ever since.)
After six years of litigation, Rambus’s lawyers at Munger Tolles & Olson won a $347 million jury verdict against Hynix in 2006. O’Melveny & Myers, which represented Hynix, sought to vacate the verdict on the grounds that Rambus had "unclean hands" from its alleged destruction of evidence. Micron has successfully employed that same argument in its own battle with Rambus. But the U.S. district judge in San Francisco that oversaw the Hynix case, Ronald Whyte, rejected the defense. At the time of the "shred days," Whyte ruled 2006, Rambus could not have reasonably foreseen its impending storm of litigation.
Hynix appealed to the U.S. Court of Appeals for the Federal Circuit. Around the same time, Rambus appealed its 2009 loss in the Micron case. The Federal Circuit consolidated the two cases for appeal, setting the stage for a star-studded oral argument in 2010. Sri Srinivasan, a former O’Melveny partner recently appointed judge on the U.S. Court of Appeals for the D.C. Circuit, represented Hynix. Well-known patent litigator Matthew Powers, then at Weil Gotshal & Manges, argued for Micron. Carter Phillips of Sidley Austin argued for Rambus.
The Federal Circuit remanded the Hynix case in May 2011, ruling that Whyte used the wrong standard for determining whether Rambus improperly destroyed evidence. On remand, Whyte reconsidered his earlier ruling and accepted Hynix’s unclean hands defense. He refused to set aside the jury verdict, however, ruling that dismissal was too severe of a sanction. He also refused to order a new trial. After several months of debate, on May 9 Whyte imposed a $250 million sanction on Rambus to be applied as a credit against the 2006 jury verdict, which at that point had accumulated significant interest.
Hynix urged Whyte to reconsider his sanction, arguing that he was still going too easy on Rambus. But this week, rather than drag the case out any further, the companies laid down their arms and reached a licensing deal valued at $240 million over the next five years.
Rambus may have hoped for a better and quicker result, but Jae Kim, who was appointed general counsel in February, said the mood at Rambus’s headquarters was quite positive on Wednesday. Kim told us he "couldn’t speculate" on what the company wanted 13 years ago. "Everyone here is very happy with the result and looking forward to a brighter future," he said.