duhpepsi post on TMF Rambus, Inc. (RMBS)
Many thanks to duhpepsi for his reporting today in Richmond, Va
Payne courtroom update
Disclaimer: I am not a lawyer. I don't understand much of what I wrote here below, so it is incomplete and highly subject to mistakes.
I was in Payne's courtroom today.
It is currently lunch break. I'll try to jot a few notes for the board before heading back in.
I met a fellow investor (not a poster) who said that he asked about mediation w/ Samsung and was told that mediation had in fact taken place (presumably unsuccessfully, since we are here today). [Later in session, an indication is made that mediation took place unsuccessfully].
Rambus table--on the right this time (as facing the judge) as opposed to my visit during the Ifx case when Rambus was on the left.
Rambus had three lawyers at their table--Stone, ?, and Hill
Samsung had four at their table--Healy (sp?), Riopel, ?, ?--These last two might be paralegals??
For what it's worth, the Healy is a huge guy with a beard. (This is just so you can picture the scene).
The first part of the hearings dealt with procedural matters:
On application of 43e [I don't know what this is, maybe a lawyer does] having something to do with whether the federal rules of evidenciary hearings applies
Stone: To make exceptional case decision, must have evidence in open court. But as for assessing lawyers' fees, can simply use affadavits.
Healy: But there does exist evidenciary record from the Infineon case.
As for two declarations, Parry's declaration (for Rambus re: some matters in Whyte's court) should not be let in (hearsay) but Nixon's (for Samsung) should be allowed in.
Stone: I don't think the court has ruled yet on judicial notice.
Stone then argued that Parry's can be admitted but Nixon's should not be.
[Sorry, I know the above was sketchy ... I'm reporting what I can w/ my limited capacity]
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There was then a discussion of procedural matters/documents. Did Samsung include all they were supposed to? Did Rambus file certain things by Dec 5, etc. I think all was cleared up.
Payne did give Rambus a request to have all changes to a certain document highlighted by the end of the day. When Rambus said it was not possible to get to him by the end of the day, Payne pretty much said tough (not his word) saying that it didn't seem to hard to do.
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Payne then declared that the Infineon record IS ACCEPTED as if it all happened in this case.
Samsung has agreed it will rest its prima facia cas on this record.
Healy: And Nixon's declaration
Payne to Rambus: What evidence would you like to rest your case on?
Stone: 1) Inf case, 2) Parry's declaration including associated exhibits
Healy: objected to Parry's declaration, "they could have admitted witnesses or witness declarations. This is hearsay upon hearsay.
I think Stone added inclusion of Whyte's April 25, 2005 decision. The idea behind this seems to be that Whyte says no estoppel, therefore Rambus is in good faith in filing here.
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The next big section involves arguments on 1) previaling party status, 2) exceptional case status, and 3) reasonableness of attorney fees.
Samsung put on their argument for 1) and 2) so far. Then we had this lunch break. I do not have time to go into this now. I have to get back.
Sorry this is written so hastily. Sorry even more for errors due to that haste.
--Craig
Court I - Prevailing Party Args
Back from court ...
Same disclosure applies here as my update at lunch. I am not a lawyer. I don't understand a lot of what is being said, so this is very subject to many errors. Even my quotes are not real quotes--just a guess from me as to what was said. Further, gaps exist in what I've written, so don't assume one line is a direct response to the one before.
OK ...
We have three sections remaining:
1) Prevailing party arguments
2) Exceptional case arguments
3) Reasonableness of fees arguments
I will not report on (3) - there was nothing especially insightful (IMO) in the arguments.
I will break these into three posts. This one is on Prevailing party arguments. The next on exceptional case arguments - Samsung, and the third on exceptional case arguments - Rambus
Here we go in order:
1) Prevailing party arguments
Riopel for Samsung: Rely on precedents by Buckannan (sp? - could be Buchanan, but he pronounced Buckannan, so I'll write it as I heard it). [Maybe lawyers understand this]. These show, in conjunction with sep 28 filing that parties agreed to "dismiss with prejudice" that the status of the parties DOES materially change. Samsung can sue for breach of contract but also for Res Judica and Collateral Estoppel--therefore, the standing of the parties HAS materially changed. Samsung should be declared the prevailing party.
Payne: Under rule 41? [don't ask me what this means]
Riopel: I think so, not sure
Riopel: Rambus will focus on CNS - critical fact is not to look at that, but action of court's dismissal with prejudice. Rambus tries to rely on Rice case precedent--but this was not a patent case. Further, in Rice plaintiff was not found prevailing party, but only because of certain case specific details. [This whole "Rice" case did not click with me--so errors especially likely when I talk about it]
It was only after trying to move venue, denial, and Infineon record being brought in did Rambus CAPITULATE and file CNS. Therefore it was not voluntary! Therefore Samsung should be regarded as "prevailing party."
If Rambus is allowed to "escape" then it means companies could sue and sue--try to bankrupt other companies in litigation and then file CNS at the last minute if it is not going their way.
Payne: You're not suggesting Rambus is going to bankrupt Samsung are you?
Riopel had a few more comments citing Buckannan again as he closed up.
Payne wanted to know how the two patents in the CA case were removed after CNS was filed. [Under prevailing party status?] Stone answered this later, that they were offered by stipulation to be removed in San Jose. That case is on hold at the moment.
Stone: Cites Fed cir 2005 Rice decision. Riopel did not mention that the court said "remedial action described shall be undertaken." In other words, the court had to enforce a decision, lest the same thing recur. In Rice, there was a chance of recurring, but in this CNS there is no chance. [Again--sounds like I got something wrong w/ this Rice business]
While the CNS applies to all courts, the jurisdiction of this court being removed, it can only memorialize for this court. Thus no prevailing party status.
Court II - Exceptional Case - Samsung
Same disclosure applies here as my update at lunch. I am not a lawyer. I don't understand a lot of what is being said, so this is very subject to many errors. Even my quotes are not real quotes--just a guess from me as to what was said. Further, gaps exist in what I've written, so don't assume one line is a direct response to the one before.
2) Exceptional Case arguments - Samsung
Healy: will look at
a) Legal framework
b) Highlight evidence from briefing
c) Address Rambus arguments
There has been bad faith (unclean hands) actions by what we have from Infineon record. Molens(sp?) case has an analogous fact pattern. Destruction of evidence precluded defendant from full, fair findings.
Payne: For exceptional case, doesn't the general rule require misconduct DURING litigation?
Healy: Not according to Molens [Did he cite Brooks here too? don't remember]
Rambus tries to argue that since Whyte would not grant CE, then they litigated in good faith. But Whyte's opinion and basis was that you did not issue your ruling and thus he couldn't read your mind as to what exactly you based your decision on. But you DO know what it's based on.
Payne: Why don't you and Rambus deprive me the opportunity to decide this!
Healy: We think it's best that you decide this--we tried settlement talks.
Payne: This court's decision is not better than a settlement.
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Healy went on to say Rambus counterclaims not needed. Where is a statement from an officer giving a declaration that these were made in good faith? Payne asked for case law on that [I think none was given]
Healy: They are engaging in venue manipulation?
Payne: What manipulation? YOU filed.
Healy: But they filed counterclaims that they had no intention of pursuing. They only did this to make it easier to transfer to CA.
Healy: Why do they have unclean hands?
[Healy then went into a lengthy rehash of the old Infineon record ... thousands of boxes of documents ... hire of Karp ... "battle ready" ... 20,000 lbs ... 500,000 pages ... . He did add some Samsung specific things including the hiring of Steinburg from Samsung]
Healy: Was Samsung a target? Yes ... (shows a matrix indicating a study of who was easiest for Rambus to sue ... Samsung in that line) They also reverse engineered our chips (showing their intent to sue).
Healy: (Summary:) In the end, what was destroyed? We don't know. We only know it was a lot. Rambus says "you can't prove what was destroyed" - Not a good defense when indicators point to deliberate actions. Samsung was targeted since 1998 - Rambus had a plan - reverse engineering - laying low until the right time - come out and approach Samsung about a license (2000). Court must tell that this is inappropriate.
Healy: Rambus defense will look at MOSY case - red herring - pointing to Samsung's conduct does not work. Also, they gave up that right with their procedural surrender.
Did Rambus spoliate? Yes. Did that lead to unclean hands? Yes. Can the court allow this? No. Is this an exceptional case? Yes. The court cannot allow Rambus to "get away with this"
--Lunch-- I reported a little of what transpired
Court III - Exceptional Case - Rambus
After lunch - Before continuing, Riopel said that Samsung now sees that they had indeed received Rambus' objections to Dec 5(?) filing. They had earlier said they had not received it. Later in the day a timetable was worked out that Samsung would respond by dec 21 and rambus would reply by jan 3.
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Stone: Healy gave an effective "opening statement" with one deficiency. An "opening statement" rather than a closing statement because he states what he hoped to prove, not what has been proved.
The deficiency? It is the fact that Samsung must prove that no reasonable litigant would expect success on the counterclaims. The supreme court has ruled that this is the standard. If it could reasonably be considered that Rambus might have prevailed, then this is not an exceptional case.
Further, Healy argued what is not in the record. Examples (not exhaustive) are:
1) [missed it-sorry]
2) Healy argued Karp destroyed docs on his computer. Actually, he printed them, retained them, then deleted the electronic copies.
3) Healy said audio tapes destroyed. No, the record says "if there had been audio tapes, they would have been destroyed"
4) Prior art not cited to have been destroyed - no evidence in record. No prior art destroyed
5) Healy argued that information in required documents was not obtained from rambus. There is no evidence of this [If I understood this right, I think it is that Stone is saying "no nexus"?]
Further, (Stone continues) there is a glaring lack of support for Samsung specific items in the record
What can sanctions be?
a) dismissal--the most severe (but this resulted last time from many Infineon-specific matters of misconduct)
b) - Payne interrupts
Payne: What does remedy have to do with this
Stone: Citing Brooks and Forest v. Abbot labs that Samsung must show by clear and convincing evidence that
1) Counterclaims were objectively baseless, and
2) Rambus pursued them in bad faith
Payne: I'm not quite sure that's the law
Stone: It is not litigation misconduct if litigation has not commenced
Payne: What about anticipation of litigation?
Stone: That can be unclean hands, etc. but not specifically litigation misconduct
Payne: Are you saying you can destroy all docs the eve of litigation and there would be no exceptional case?
Stone: Not under American rules
Payne: 285 is exception - I don't think that is a good argument
Stone: Scope of 285 doesn't apply in the [hypothetical] case you described [of destruction on eve of litigation]. In the case you described, if the court could show that with such spoliation no reasonable litigant could have prevailed, then that WOULD lead to an exceptional case.
Stone: Can Samsung argue that no reasonable litigant could imagine any outcome other than full dismissal? They can't!
Why? FTC ID for one - In that case spoliation did not dismiss
Whyte's decision of no collateral estoppel is another reason. If no reasonable litigant could imagine any other outcome, Whyte would have opted for the CE.
Stone continues: Healy states Whyte couldn't know what was in Payne's head when oral decision was given--EXACTLY! And nobody could know. Thus it is NOT bad faith in filing counterclaims. That is, we could not know exactly what the oral decision was based on [perhaps ifx specific things], so losing on counterclaims with full dismissal is not a foregone conclusion.
Payne: But what about keystone exception that Healy cited? [Stone said still does not hold-I missed the reasoning]
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Stone then gives several hard punches for why it is not a foregone conclusion to lose with full dismissal on these counterclaims (i.e., that this is not an exceptional case)
1) We don't know the extent of the Infineon-specific aspects of the oral ruling
2) To what extent did that cause the dismissal
3) Unclean hands did not lead to summary judgment (i.e. not a foregone conclusion)
4) Whyte did not make SJ
5) FTC ID win
Cannot show any reasonable litigant would expect loss with full dismissal
Stone: Why not wait for Whyte to rule on two proceedings (Hynix and Samsung)?
Hynix case has been tried - expect ruling soon - any day - at one time he [Whyte] indicated last week, so we expect it anytime.
Also, Samsung will be given a hearing on unclean hands. There is no reason not too wait! It is just a matter of the money of the fees.
Payne: What if Whyte rules there was spoliation?
Stone: Then look at remedy. If full dismissal that's one thing. Anything less is different altogether.
Payne: But Infineon dismissal was based on spoliation
[don't know if I missed some dialog here]
Stone: You should have permitted us discovery
Payne: This has been discovered to death - not a good argument
Stone: There is another argument, but let's be clear here - [missed some here]
Payne: You missed your opportunity - that's your fault [don't know exactly what they missed-sorry]
Stone: We made a proffer of what evidence - pg 2 of their brief
[Payne antagonistic - sorry for lack of detail]
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Stone: Law needs to balance conduct of all sides. We can show (MOSY, etc) that Samsung spoliated; > 3 years of emails destroyed that dealt with technical matters. During that time there were the JRA docs.
Payne: Doesn't CNS do away with all that?
Stone: Schedule Healy was proposing would not have allowed discovery prior to SJ hearing (rule 56D hearing)
[missed something here]
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Payne: But what about not intending to carry out the counterclaims suit here in VA?
Stone: Counterclaims had no impact on transfer motion. [Healy] has no basis for asserting counterclaims were put in for that reason. Two patents were already in CA case.
Stone: Evidence would have been presented to this court that could have led to a different outcome.
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Stone: Rambus followed advice of lawyer. "Battle ready" was a term used by Johnson (lawyer). Cannot defend "bad faith."
Payne: What about "work product privilege"? Isn't that inconsistent with not anticipating litigation?
Stone: Under CA law, "work product priv" can be claimed by any work done by attorneys even without anticipating litigation. We think that since the advice was given in CA, then CA law should be used rather than VA law.
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Stone makes difference between possible and probable litigation. Tate's announcement to staff of hiring of Karp indicated that litigation was last resort.
A bit of comic relief: At this point the bailiff fell asleep and started to snore. Stone said, "I know my argument is not very exciting." Bailiff was replaced with another.
Stone Sum up:
not exceptional - could reasonably expect win or at least a remedy better than full dismissal. Payne should wait for the two CA judgments.
Payne: But then can you just litigate everywhere again and again?
Stone: a) If in FOF for CA, there exists destruction of evidence, CE can apply.
b) If Rambus is a vexatious litigant, courts have other remedies.
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Reply by Healy -
Payne starts: "He left you with some pretty big problems"
Healy: I can answer them.
Healy answers that some of the Samsung-specific things were actually in the record.
[some things missed]
Healy: Late '99 time for anticipation of litigation is not credible.
Healy: Legal standards dispute - Brooks case did NOT say litigation misconduct--rather it explicitly says "if this related to litigation"
Payne asked Healy what he earlier asked Stone (I didn't report it above): Do you know of any case where litigation misconduct can be found for something done before litigation started? Do you know of any case that shows it cannot? Aside from Molens I think the answer was no to both questions by both Stone and Healy.
Payne: How can you demonstrate that the counterclaims are not sustainable and must have resulted in a dismissal?
Healy: That only goes to ONE basis of exceptional case. We believe that exceptional case can be arrived at other ways. We believe that standard does not affect our claim that spoliation led to litigation misconduct. Also the abuse of venue should lead to litigation misconduct.
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Payne asked if they could reach an amicable agreement without a ruling.
Did they get anywhere in the two day mediation?
Stone: We got somewhere - we got to Chicago"
But more mediation is scheduled.
All parties wanted to continue
Payne: You should resolve this as a business matter between yourselves.
Later Payne repeated to settle - even over holidays
Healy mentioned at one point that he thought it was difficult to fathom how the gap between parties could close without further litigation clarity.
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That's all -
I wish I could keep up like some others that report. I don't know how they keep it all straight. Anyway, this is mine fwiw.
