A poster at IV, Buspilot, attended the Hynix sanctions hearing in Whyte's court yesterday and posted his comments. Much thanks to him.
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RFP...Judge Whyte's hearing results.
I'll start out saying that I'm really tired and I'm not sure how this will all come out. There are a lot of voids in the matter I will be writing. We all know that HJW is extremely difficult to hear when he speaks. Couple that with the microphones were not working in his court too well. Please forgive me if my sentences make little sense. Court began at 2:05 PM Pacific. present in the gallery were about a dozen suits....all lawyers. One was "Bobrow" who was observing. No press, no Michael Cohen. At the Hynix table were Ted Brown, Nissly, a female attorney named "VanCuelen" sp?, and another female attorney, one who is always there. At Rambus' table was Stone, Perry, Jeff Woo, and Mike Farmwald. I'm not sure why he was there at their table. In the gallery seated on the RMBS side were all the RMBS in house attornies, including Lavelle. Nearly all would later be taking copious notes while others typed into their laptops.
HJW began by saying the following... "In discussion of sanction amount, there is legitimate concerns about amounts. We'll close the court when we get to that point. What the sanction should be will be the last of our discussion. I will address colateral estoppel, the recent exam, motion for a new trial, Rambus motion to amend findings of fact and conclusions of law.
The motion of summary judgement based on reviews of Farmwald Horowitz patents. The patents are not invalid. The Federal Circuit decision in Hynix II affirmed the court's judgement on the basis of obviousness and invalidity arguments and suggest the "Mendelson case" which suggests colateral estoppel. The Mendenhall case is dinguishable because it does not address the scope on remand. Mendelson is a different situation. If we do get into colateral estoppel, we have several problems considering civil actions and re-examinations. A decision should be found resulting from the Federal Circuit.
(HJW spoke about the "Flexatique" case? That Rambus cited where the patents have not been confirmed to be valid.
HJW again....."Then there are 6 claims that are in fact final, so even if the 4 claims are tossed out,......seems to me that we would have the same result. If Rambus prevailed on any claim, it would be entitled to damages. The position that Hynix claims...the 6 patent claims that are valid, have not been determined to be invalid. It troubles me to say that patents that have been held valid by jury verdict, and held valid on appeal, because the patent trademark office said that the other patents in the family were found invalid.....doesn't seem right to me that we should be rendering those findings. If I could be persueded that colateral estoppel might be applied toward the determinations by the patent and trademark office, that the Farmwald-Horowitz patents were different,.....I think we might have to set another date to see if the patents are found to be invalid." "In respect to Hynix' request for a new trial, it doesn't make sense to me that theres any new invalidating prior art that was presented that can be newly discovered evidence." "Also, I am troubled by the idea that you can base a new trial on agency determinations." "With respect to trial motions on damages that some other claims that other patents were invalid.......that there should be a new trial based on which parties of the damages were attributed to which patents......I don't see a basis now that we should do so." "In respect to Memory Device before the Federal Circuit, the construction of Memory Device was an agreed upon definition....it's not appropriate to go back and reconsider what was agreed upon and whether the same burden of proof applies. The Patent office may be looking at something different than that. A stay to the proceedings doesn't accomplish anything. In respect to Rambus' motion to findings of fact and conclusions of law, that Rambus did not spoliate documents in the 2000 office move, I didn't give it too much attention to that issue primarily because at the time, anything destroyed at that time would have benefited Hynix. After "Vincent" purged documents after Hynix I, he said that he "did it on his own". We have no evidence that Rambus told employees of what to keep and not to keep. When Johnson and Karp put on their presentation about retention if litigation is foreseeable......it's pretty clear that Rambus did not destroy anything that would have prejudiced anybody." "Rambus' analysis overlooks the relevance re: the 1995-1996 timeframe. These have to be looked at to see what would maintain fairness in the market place. Based upon what information was available at the time, but that deosn't apply here after the fact. We're trying to determine damages under the circumstances here now. I'm most interested in the sanctions issue."
(Note) I'M STOPPING HERE AND WILL CONTINUE IN A NEW POSTING WITH THE REMAINING OF TODAY'S HEARING. PRESSING MATTERS AT HOME. TO BE CONTINUED SHORTLY. SORRY.
Buspilot
RFP CONTINUING re: Judge Whyte
Sorry. I heard sirens outside my house. My next door neighbor was heating cooking oil on his stove in order to make home made french fries.....He burnt his whole kitchen down. Huge chainsawed hole in his roof by firefighters. What a mess. Water everywhere. Nissly - "Beginning in Jan. 2012, the Patent Board began issuing decisions regarding Farmwald-Horowitz. There are some 370 decisions on re-examinations of these patents and all combinations of these have been found obvious. Speaking about "Westwood Chemical", 4 claims that were invalidated directly by the board.....found invalid just a couple weeks ago. Four pages on the 184 patent, there's no issue on the finality. Rambus submitted no expert. We have the two claims also invalid from Westwood. Rambus' argument was about 5 features that made DRAM chips "go faster". Speaking on the 6 patents that were found valid versus the 4 found invalid, opens the door to giving credence and value to revisiting the validity of a new trial with expert witnesses. Rambus cannot say that validity was "tried" and Hynix was unable to prove.
"Regarding the Cedar Rapids judgement and Mendenhall case and colateral estoppel re: validity about patents being found invalid. This issue requires special attention from the court. Rambus is saying that even though the PTO has found patents invalid and Rambus seeks to have this court uphold these patents, we will always have a different burden of proof."
HJW - "Just out of curiosity......what's going on with the Micron case in Delaware"?
Nissly - "Nothing as far as I know....we haven't heard anything."
Nissly - "On a new trial, Rule 59A supports the finding for a new trial. What's relevant are the PTO's board decisions. Now we have new decisions that say there were mistakes."
HJW - "So.......the accused infringer has two bites of the apple?"
Nissly - "Yes. The experts say there is new evidence."
Stone - (There's a chart he is displaying that reads "Hynix' Invalidity Defenses were rejected by the jury.") citing...."Judge Baxter says we should not erroniously overide and come to a different conclusion from a trial court, to a PTO conclusion." "Hynix waited until 2009 to file for an ex parte re-exam "AFTER" they lost. Hynix should not be rewarded for the "scheming" of the system. Hynix takes the lower standard of proof from the PTO and tries to interject it into a new trial. 6 of the 10 claims have been confirmed by the PTO on re-examination. Under the 918 patent, claims 24 and 33, Hynix exparte re-exam request,....."claims confirmed,....not subject to appeal". "These were all basis for the just verdict. 916 patent, claims 9 and 40...."rejected...no substantial new question of patentability.' 120 patent, claim 32, "claim confirmed, not subject to appeal". The six confirmed claims cover SDRAM and DDR. "Hynix seeks to take advantage .....those 6 claims remain confirmed...those decisions are final. Now Hynix wants you to apply colateral estoppel. Hynix is trying to piggyback and obtain a new trial. Congress has said that you cannot do that. They are relying on a lower standard of proof (PTO) over a jury trial. (Another chart is shown in the court) REEXAMINATIONS HAVE NO IMPACT ON DAMAGES , * Jury awarded damages based on royalties for products. * All products at issue infringe ALL of the 6 confirmed claims.
Stone - "Hynix never argued at trial that damages depended on the number of infringed claims." "Patents that expire should not undo what a jury decides."
Nissly - "Mr. Stone's argument about separation of powers misses the mark...in Baxter, that doesn't apply here." "Mr. Stone's argument about confirmation of a patent in "Westwood" claims have been rejected in the Taylor definition.
Stone - "The parties have a right to final resolution."
(Ted Brown then enters into a lengthy discussion with HJW re: when they could have and should have filed for interparte and exparte re-exam. HJW was questioning why Hynix, Micron, and Samsung waited so long to file for re-exams.)
Nissly - "Congress has fundimentally established rules re: appeals of patents. What Rambus is attempting to do is just wrong...and we respectfully request a new trial."
Female attorney VanCuelen - "Obviously we're here to talk about sanctions re:Rambus and royalty rates on your findings of fact and determining the appropriate spoliation remedy and the degree of fault and appropriatness of sanctions. Rambus had a litigation plan and destroyed large volumes of evidence and records. Hynix made the requisite showing that Hynix was harmed by Rambus' destruction of documents. Paying a royalty awarded at trial, the degree of damage that Hynix would suffer.....spoliation of evidence should preclude Rambus to place Hynix at a competative disadvantage." "It should be inline with the Infinian order over the relavent market share, 2000 - 2010 at the relavent time." (VanCuelen then hands the clerk a document showing the Infinian rate, and the clerk hands it to HJW).
VanCuelen - "Infinian is the most like Hynix because they had a "most favored nation" provision and a finding of spoliation. Samsung had litigation and negotiation but a larger market share. They also had controllers like Hynix. You will see an average in front of you. Elpida, (Weinstein declaration) A broad product mix, a history of negotiation with Rambus, all Jedec standards amongst the landscape....it also shows the rates that were paid to Rambus.
HJW - "Is the effective royalty rate different than a negotiated royalty rate?
VanCuelen - "yes"
HJW - "Can you give me a hypothetical example?"
VanCuelen - "I don't know if I can....other than to name examples that you have before you." "The only thing that matters is what did Rambus competetors pay?"
(There is a lot of discussion of RAND that goes on for over 15 minutes, but I got lost in the minutia)
(Another large chart is displayed by Stone that reads) THE LEGAL STANDARD FOR SPOLIATION SANCTION Key factors. * The degree of fault, * The degree of prejudice suffered by the opposing party, * Whether there was a lesser sanction that will avoid substantial unfairness to the opposing party.
Stone - "The district court must select the least onerous sanction.....the sanction must be commensurate with the fault and the prejudice." "The classic case of bad faith is one where a litigant INTENTIONALLY destroys evidence." "I submit that 2.5% as the proper amount of royalty based on the original Jedec figures set forth RAND rates at the time. This makes sense based on the amount of prejudice."
HJW - "Don't you think that 2.5% is discriminatory based on the RAND rate others have paid or are paying now."
Stone - "NO....it's what would have been negotiated at the time. Hynix is saying that they should be paying less because they feel that they have been prejudiced. Hynix kept the money all these years....Rambus has not had it! Hynix has had a huge competetive edge all these 12 years while not having to pay! Hynix has had no competetive disadvantage. We don't even know if they were or weren't helped by the Korean government!" "When you look at the degree of fault and prejudice between zero and 100, you want to find a sanction between a jury verdict and a compelled license. Between 2.5% if these parties would have had a negotiated settlement between 1.4% for SDRAM and 10% for DDR."
VanCuelen - "What we hear Rambus arguing is for a "Bench Trial" on damages and royalty, and this would be wrong. The court has already determined the damage to Hynix is significant. What puts Hynix on a level playing field? It's not what Mr. Stone states. The court should look at what Mr. Weinstein stated."
HJW - "I want the parties to file a brief as to why the proceedings should be confidential and closed to the public. I feel that the transcripts should be available to the public with all the facts."
Stone - "The amount of the sanctions that we feel would be adequate would be in line with attorney fees expended during the spoliation phase, and further....even in (I couldn't hear the name of the case) the fine was only 2 million dollars."
HJW - "Okay,.....we're going to be going into some areas now where we will be closing the courtroom. All non litigating parties are to now exit the courtroom."
(AT THIS POINT, I LEFT THE COURTROOM AND HUNG AROUND FOR ABOUT 30 MINUTES. THE DOORS NEVER REOPENED AND IT WAS GETTING LATE (DARK) AND I LEFT FOR HOME. HOPE THIS HELPS GIVE SOME FLAVOR AS TO WHAT TRANSPIRED IN COURT TODAY. I DIDN'T GET IT ALL, BUT I THINK I GOT MOST OF WHAT WAS SAID THAT WAS IMPORTANT.)
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