From the Wall Street Journal online. Last paragraph refers to Rambus.
Judge Sanctions Gateway
For Destroying Evidence
By CHRISTOPHER LAWTON
March 31, 2006; Page A3
A federal judge in Utah harshly reprimanded Gateway Inc. for destroying or losing evidence "in bad faith" in a patent-infringement case brought by an inventor against the computer maker.
The plaintiff, Phillip M. Adams, a former International Business Machines Corp. engineer, filed the suit in 2002 after talks fell through with Gateway in 2001 over licensing his patented technologies that address a defect in circuitry used to control floppy-disk drives. Mr. Adams asserts in the lawsuit that Gateway violated a nondisclosure agreement signed between the parties, and that the company infringed on his patents. He later added allegations that Gateway lost or destroyed documents needed to help prove his case, which is scheduled to go to trial Monday.
U.S. District Judge Ted Stewart sided with Mr. Adams, in a ruling that was issued March 6 and unsealed March 22. He chastised Gateway for failing to disclose information that a magistrate judge had found central to the case. Although he found no "direct" evidence about Gateway's intentions, he cited "ample circumstantial evidence" that Gateway acted in bad faith.
The ruling cites a missing email from a supplier to a Gateway employee that contained Mr. Adams's software for detecting the defect.
"Based upon the entire record, this court concludes that the explanation is that it was destroyed in bad faith by Gateway," the judge wrote in a memorandum. He added that "the court finds that it is clear that for years Gateway did everything it could to avoid producing complete copies of all the relevant emails."
Judge Stewart stopped short of granting Mr. Adams's request to decide the entire case in his favor because of Gateway's actions. But he sanctioned the company, ordering it to pay Mr. Adams's attorney fees incurred in connection with the litigation over the alleged document destruction.
Gateway, which leveled its own allegations that Mr. Adams destroyed documents, admitted to errors in handling the evidence, but insisted that it didn't intentionally conceal information. The company said that upon learning of the problems, it acted promptly to comply with orders for document discovery in the case.
"Gateway continues to dispute the characterization of this discovery battle, and we will continue to defend ourselves vigorously in this case. Plaintiffs have chosen to focus all of their energy on creating discovery disputes, and we're pleased to finally have the court consider the merits of this case," John Spelich, a spokesman for Gateway, said in a prepared statement.
A partner with Howard Phillips & Andersen, the Salt Lake City firm that filed the lawsuit on Mr. Adams's behalf, declined to comment. Mr. Adams said the case has "been a long torturous trip," adding, "I am so looking forward to my day in court."
Patent battles have been dogging many high-technology companies lately. Research In Motion Ltd. of Waterloo, Ontario, recently agreed to pay $612.5 million in a settlement with Virginia-based patent holding company NTP Inc. Barring a settlement, RIM was threatened with an injunction that could have shut down its BlackBerry email devices.
The stakes aren't quite as high in this case. Mr. Adams is seeking $150 million in damages, plus attorneys' costs from Gateway. He has said that he received about $30 million from Hewlett-Packard Co. and other companies that have licensed the patents at issue in the case.
Allegations of document destruction in patent cases have also become relatively common. Rambus Inc., a Silicon Valley maker of technology used in memory chips, has faced charges that it improperly shredded a large volume of documents associated with patent cases it has filed against companies that include Hynix Semiconductor Inc. A federal judge in San Jose, Calif., recently ruled that Rambus had done nothing improper.
