Hynix Semiconductor Inc. v. Rambus Inc. (897 F. Supp. 2d 939, 2012)

United States District Court for the Northern District of California 2012-09-21

Citations

Full opinion text

FINDINGS OF FACT AND CONCLUSIONS OF LAW ON SPOLIATION AND THE UNCLEAN HANDS DEFENSE

RONALD M. WHYTE, District Judge.

I. FEDERAL CIRCUIT’S MANDATE

On May 13, 2011, the Federal Circuit issued its opinion affirming in part and vacating in part this court’s judgment in the subject patent case between Hynix Semiconductor Inc., Hynix Semiconductor America Inc., Hynix Semiconductor U.K. Ltd, and Hynix Semiconductor Deutschland GmbH (collectively “Hynix”) and Rambus Inc. (“Rambus”). Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336 (Fed.Cir.2011) (“Hynix II”). Specifically relevant here is that the Federal Circuit vacated this court’s Findings of Fact and Conclusions of Law regarding spoliation and remanded the case for reconsideration of the spoliation issue. Hynix had unsuccessfully urged in the district court proceedings that Rambus had spoliated evidence and that its “unclean hands” warranted dismissal of its patent infringement claims.

The Federal Circuit remanded the case for reconsideration under the framework set forth in Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed.Cir.2011) (“Micron II”), a companion case presenting the identical spoliation issue, and “to determine when Rambus’s duty to preserve documents began ... and the appropriate sanction, if any.” Hynix II, 645 F.3d at 1341. The Federal Circuit expressly left for this court to decide “whether the Micron II decision should be given any preclusive effect, the correctness of [this court’s] determinations on prejudice and good faith, [and] the propriety of any particular sanction on this record.” Id. at 1341 n. 2. The court now issues its Findings of Fact and Conclusions of Law in response to the Federal Circuit’s mandate.

II. PROCEDURAL HISTORY

Hynix’s unclean hands defense to Ram-bus’s patent infringement claims was originally tried before this court on October 17-19 and October 24-November 1, 2005. The primary issues were: (1) whether Rambus adopted a document retention plan in order to destroy documents in advance of a planned litigation campaign against DRAM manufacturers; and (2) whether in light of any such conduct, the court should dismiss Rambus’s patent claims against Hynix as a sanction pursuant to the equitable defense of “unclean hands.” On January 5, 2006, the court issued its Findings of Fact and Conclusions of Law holding that Rambus did not spoliate documents.

After further proceedings in the case, the court entered final judgment on March 10, 2009 in favor of Rambus. Hynix appealed the judgment to the United States Court of Appeals for the Federal Circuit. On May 13, 2011, the Federal Circuit issued its decision in the appeal. On the same day, the Federal Circuit issued its decision in the companion case of Micron II.

In its Hynix II decision, the Federal Circuit held that this court “applied too narrow a standard of foreseeability” in determining when litigation became reasonably foreseeable and thus erred in its consideration of the spoliation issue. Hynix II, 645 F.3d at 1341. Therefore, the Federal Circuit vacated this court’s Final Judgment and its Findings of Fact and Conclusions of Law regarding spoliation and remanded the case.

After the issuance of the Federal Circuit’s mandate, this court held a Case Management Conference on September 2, 2011, at which it ordered the parties to submit briefs listing the issues to be resolved on remand, including any collateral estoppel argument, and discussing whether further evidence should be taken. Dkt. # 4051 at 28:1-16. After those briefs were submitted, the court held another Case Management Conference on October 21, 2011. At that conference, the court ordered the parties to submit briefs and proposed findings of fact and conclusions of law, using the court’s (vacated) January 5, 2006 findings and conclusions as a starting point. Dkt. # 4078 at 29:14-17. The court indicated that it would allow Hynix to propose additional findings based upon evidence from other proceedings for consideration in connection with Hynix’s request for supplementation of the record. Id. at 30:4-8. The court also stated its tentative view that collateral estoppel should not be applied but indicated that it would reexamine the issue. The court directed Hynix to include in its proposed findings any assertion that collateral estoppel does apply so that the issue would be, at a minimum, preserved. Id. at 33:3-13. As discussed below, the court has reconsidered its tentative view and now concludes that collateral estoppel does apply to the issue of Rambus’s spoliation.

III. FINDINGS OF FACT

A. The Current Litigation

1.On August 29, 2000, Hynix filed a complaint, later amended, against Rambus that in part sought a declaratory judgment of non-infringement, invalidity, and unenforceability of eleven Rambus patents. On February 5, 2001, Rambus filed counterclaims asserting that Hynix infringed those eleven patents. Hynix answered the counterclaims and asserted various defenses. Rambus subsequently amended its counterclaims to add four additional patents.

2.The patents that have been asserted by Rambus in this case and their issue dates are set out in the following table:

3. All of the patents-in-suit are continuation or divisional applications based on a single parent application, serial number 07/510,898 (“'898 application”).

4. In January 2005, Hynix moved for leave to add the defense of “unclean hands” to its pleadings. In an order dated March 7, 2005, this court granted that motion. In a separate order of the same date, the court stated that Hynix’s unclean hands allegations would be considered by the court in a separate, initial phase of the trial of the parties’ respective claims.

5.The court held a bench trial on Hynix’s defense of unclean hands from October 17, 2005 through November 1, 2005, and issued its Findings of Fact and Conclusions of Law on January 5, 2006. The court concluded that Rambus had not spoliated evidence, that Rambus had not acted in bad faith in destroying evidence, and that Hynix had not been prejudiced by the destruction of relevant evidence. See generally, Hynix Semiconductor Inc. v. Rambus Inc., 591 F.Supp.2d 1038 (N.D.Cal. 2006) (“Hynix I ”). After further proceedings, including trial of Rambus’s allegations that Hynix infringed certain claims of the patents-at-issue and Hynix’s claims and defenses based upon theories including monopolization and other misconduct, judgment was entered on March 10, 2009 in favor of Rambus. Hynix appealed.

6. On May 13, 2011 the Federal Circuit issued its opinion affirming in part, vacating in part (specifically, this court’s Findings of Fact and Conclusions of Law regarding spoliation), and remanding the spoliation issue for reconsideration under the framework set forth in Micron II. Hynix II, 645 F.3d at 1341.

B. The Farmwald/Horowitz Patent Applications

7. Rambus was founded in March 1990 by two professors, Michael Farmwald, PhD, and Mark Horowitz, PhD, who had been working together to address the increasing gap between microprocessor performance and dynamic random access memory (“DRAM”) performance. Trial Transcript (“Trial Tr.”) 600:13-601:5; 1341:15-1343:2; 1540:12-19; HTX 005.001.

8. From 1990 to the start of 2005, Geoffrey Tate was the Chief Executive Officer of Rambus. At the time of the trial of the spoliation phase, Tate was the Chairman of the Board at Rambus. Trial Tr. 1226:9-16.

9. On April 18, 1990, Farmwald and Horowitz filed the '898 application. Trial Tr. 364:11-365:19; 600:20-601:8; HTX 005.001.

10. The '898 application resulted in a number of continuation and divisional patent applications (“Farmwald/Horowitz family”). Rambus received its first issued United States patent resulting from the '898 application in September 1993. The patents that are at issue in this case resulted from this continuation and divisional process. HTX 005.001.

11. Rambus retained Blakely, Sokoloff, Taylor & Zafman (“BSTZ”) as outside patent counsel from approximately 1991 through sometime in 2001 or 2002 to prosecute Rambus patent applications, including many applications from the Farmwald/Horowitz family. Trial Tr. 784:14-785:2. Lester Vincent, Scott Griffin, and Roland Cortes were patent prosecutors at BSTZ who worked on the Farmwald/Horowitz family of applications. Trial Tr. 784:14-785:2; 1592:22-1593:9; 1603:14-1604:11.

12. The first of the patents that Ram-bus has asserted against Hynix in this action issued on June 22, 1999. Dkt. # 249, at 17-19.

C. Rambus’s RDRAM Technology

13. Rambus does not manufacture its own products; rather, it licenses its intellectual property to DRAM manufacturers and collects royalties. Trial Tr. 1250:25-1251:2. As a company that generates revenue from its intellectual property alone, intellectual property protection necessarily is important to Rambus.

14. In 1996, Intel licensed the Rambus Dynamic Random Access Memory (“RDRAM”) technology and adopted it as the memory interface technology for its next generation microprocessors. Micron II, 645 F.3d at 1316; Trial Tr. 1237:20-1239:1. Because Rambus does not manufacture products, it relied upon DRAM manufacturers to license Rambus’s intellectual property and produce RDRAM for use in Intel’s products. Trial Tr. 1251:3-6. Rambus negotiated licenses with a number of DRAM manufacturers to produce RDRAM-compliant chips for Intel’s use. Micron II, 645 F.3d at 1316; Trial Tr. 1237:20-1239:1. In April 1998, Tate met with Intel and learned that Intel’s intent was to compete with Rambus’s RDRAM for its next generation of product: “ ‘[I]ntel says they are basically going to compete with us on [the] next generation [of DRAM].’ ” Hynix II at 1343. By the fall of 1999, Rambus’s licensed RDRAM manufacturers had failed to deliver the promised manufacturing capacity, which contributed to Intel’s rethinking of its adoption of RDRAM. Micron II, 645 F.3d at 1316.

15. Rambus referred to the RDRAM production by licensed DRAM manufacturers as the “Direct RDRAM ramp.” Trial Tr. 1238:4-8; 1330:21-24. Direct RDRAM licensees were granted a narrow license to produce RDRAM. Trial Tr. 1289:1-16. Those licenses generally did not permit licensees to utilize Rambus intellectual property for purposes other than producing RDRAM pursuant to Rambus’s specifications. Other uses of Rambus’s technology were referred to as “noncompatible” uses, because they were non-compatible with the RDRAM specifications. Trial Tr. 1356:22-1359:24.

D. Rambus’s Participation in JE-DEC

16. Rambus was a member of the Joint Electron Device Engineering Council (“JEDEC”), a standard setting organization, from 1992 until it formally resigned in June 1996. A Rambus representative last attended a JEDEC meeting in December 1995. Trial Tr. 786:21-795:8; 1148:11-12; 1161:12-20; see also Hynix II, 645 F.3d at 1341-2.

17. Richard Crisp, a program manager for Rambus, was Rambus’s primary representative to JEDEC and attended JEDEC meetings on behalf of Rambus from 1992 to late 1995. Trial Tr. 1148:8-11. Billy Garrett was Rambus’s other JEDEC representative. RTX 311; RTX 312.

18. Crisp and Garrett submitted trip reports following each meeting of JEDEC that they attended. Crisp took a Macintosh laptop computer with him and took notes electronically. He later distributed his JEDEC trip reports to members of the Rambus executive team and others in the sales division. After Crisp heard presentations on features to be included in the standard at JEDEC, he discussed the inventions with the attorneys prosecuting Rambus’s patents, signaling them to direct Rambus’s prosecution efforts to cover those features. Hynix II, 645 F.3d at 1342. During Rambus’s membership, JE-DEC adopted Synchronous Dynamic Random Access Memory (“SDRAM”) as a standard and by December 1996 was working on DDR SDRAM. Id.

19. Between 1992 and late 1995 or early 1996, Crisp, Tate, Tony Diepenbrock (inside patent counsel) and other Rambus executives and employees were informed that Rambus’s participation in JEDEC might pose enforcement problems for some of its patents. Specifically, the concern was raised that Rambus might be equitably estopped from enforcing its patents as a result of its failure to disclose to JEDEC Rambus’s potential patent coverage with respect to products (non-compatible with RDRAM) conforming to JEDEC standards. Trial Tr. 1156:4-1163:22; HTX 066; HTX 078; HTX 225. Rambus was also informed of this possibility by Vincent, one of its outside patent attorneys. Trial Tr. 785:3-804:7; HTX 192. This concern was discussed within Rambus. Id.

20. Although Rambus’s executives and attorneys had concerns about equitable estoppel, no duty to disclose existed because the Rambus patent applications that were pending during Rambus’s participation in JEDEC did not read on the adopted standard. See Hynix II, 645 F.3d at 1349; Rambus Inc. v. Infineon Techs. AG, 318 F.3d 1081, 1101-04 (Fed.Cir.2003). The JEDEC disclosure duty applied only to issued patents and pending patent applications. See Hynix II, 645 F.3d at 1348-49; Infineon, 318 F.3d at 1102. Crisp nonetheless did disclose Rambus’s U.S. Patent No. 5,243,703 to JEDEC in September 1993; the specification of the '703 Patent is substantially the same as the specification of the patents-in-suit — only the claims are different. See id.

E. MoSys License

21. In 1996, Rambus initiated patent licensing negotiations with Mosys. Mosys had been founded by two former Rambus engineers and, according to Rambus, the Mosys product shared many characteristics with Rambus’s products. Trial Tr. 1382:13-1384:17. Rambus wanted to “avoid any legal battle with Mosys” because litigation would have been disruptive, expensive, and likely unnecessary; Rambus expected to “beat them in the marketplace regardless.” Trial Tr. 1384:5-15.

22. Patent negotiations, which Tate stated Rambus was poorly equipped to handle (Trial Tr. 1385:13-16) nevertheless resulted in MoSys taking a license from Rambus. However, Tate determined that since patent licensing negotiations were more complex than Rambus had originally thought, Rambus needed to hire someone familiar with the negotiation of patent licenses to handle future licensing negotiations. Trial Tr. 1385:17-24.

F. Rambus’s Relationship with Hynix

23. Rambus and Hynix (then Hyundai) had a licensing agreement commencing in 1995 for RDRAM. The agreement included an “Other DRAM” provision that allowed Hynix to make non-compatible DRAMs using Rambus Interface Technology in return for a 2.5% royalty. Trial Tr. 1295:19-1305:11; HTX 004.004; HTX 087; HTX098.002.

24. In July 1998, Rambus attempted to remove or amend the “Other DRAM” provision. Id. It appears that Rambus wanted Hynix (Hyundai) to increase its marketing effort and to productize the RDRAM device, and that Rambus wanted to be able to claim infringement if Hynix (Hyundai) continued to work on Synchronous Link DRAM (“SLDRAM”) or SDRAM. Id.; Trial Tr. 1038:2-1039:22.

25. Thereafter, Hyundai merged with LG Semiconductor (“LGS”). At the time of the merger, both Hyundai and LGS had RDRAM licenses with Rambus. Id. Following the merger, the resulting entity, Hynix, sought to affirm the 1995 HyundaiRambus license, asking Rambus to agree to use the 2.5% royalty rate specified in that license. Id.

26. Rambus apparently declined, instead treating its relationship with the merged company, Hynix, as being governed the LGS license, which apparently did not have an “other DRAM provision.” Trial Tr. 1038:2-1039:22.

G. Rambus Formulates its Licensing and Litigation Strategy

1. Rambus Hires Joel Karp

27. Rambus hired Joel Karp in October 1997 to assess its patent portfolio, determine if chips infringed the patent portfolio, develop licensing strategies for infringing chips, and negotiate with companies that built and sold such chips. Trial Tr. at 356:22-357:28; RTX 080; HTX 091. Before Karp started work, Tate sent an email to Rambus executives describing Karp’s role as “to prepare and then to negotiate to license our patents for infringing drams (and potentially other infringing ic^).” HTX 091; RTX 080. For some time prior to Karp’s employment, Rambus was concerned that companies in the DRAM field were infringing Rambus’s patents or using Rambus’s inventions in non-compatible chips. Rambus did not want to disclose its concern because it was not sure it could show infringement. It wanted to get more patents in place and it did not want to alienate companies it needed to work with to make a success of RDRAM. Trial Tr. 1256:18-1257:12; 1390:18-1391:4; 1391:8-12; 1392:2-11. At the time that Karp was hired, Tate had told him that he wanted any party negotiating for a license from Rambus to pay more for a license for noncompatible uses than one for use of the RDRAM technology. HTX 091.

28. Before his employment at Rambus, Karp was employed by Samsung from September 1990 through July 1997. When he left Samsung’s employment, he was a senior vice president. During his employment with Samsung, Karp attended JEDEC meetings on Samsung’s behalf, describing his role as “Samsung’s mouthpiece.” Karp met Crisp, Rambus’s JE-DEC representative, at JEDEC meetings. Trial Tr. 136:16-25.

29. Karp had learned through his experience that the DRAM industry was very litigious. Trial Tr. 138:23-134:3.

30. While at Samsung, Karp participated in licensing and litigation activities on behalf of Samsung. Trial Tr. 137:6-23; 138:2-5. He was involved with patent litigation against Mitsubishi, Fujitsu, Fortel, SEL, Hitachi, Harris and Texas Instruments. Trial Tr. 138:6-22. In one action against Texas Instruments (“TI”), Karp submitted a declaration asserting that TI was subject to equitable estoppel because it was contrary to industry practice for an intellectual property owner to remain silent during the standard setting practice if its intellectual property covered the standard being considered. Trial Tr. 150:12-151:7.

31. In a document entitled “TOP LEVEL KEY RESULTS FOR 1998 — FINAL 1/98” Tate listed twenty-seven line items. HTX 094. The focus was on making RDRAM successful. Id. Under the heading “SUCCESSFUL PRODUCT/PROJECT COMPLETION AND PLAN-NIN G/TRACKIN G PROCESS,” which was at the top of the page, Tate’s first three goals were “Concurrent RDRAM 600 MHZ MP:18M early 98; 64M ES Q2, MP as needed,” “Direct Rambus 1.0 memory system implemented on spec., on cost, on schedule for production ramp late 98,” and “Deliver RACs in spec when customer needs with a profit on implementation fees ....’’Id.

32. Under the heading “POSITION RAMBUS FOR THE FUTURE INCLUDING IP,” Tate included:

Develop and enforce IP

A. Get access time register patent issued that reads on existing SDRAM

B. Broad patents in place for Direct Rambus, next generation signaling; and chip-to-chip interconnect

C. Get all infringers to license our IP with royalties > RDRAM (if it is a broad license) OR sue.

Id.

33. On January 7, 1998, Tate met one-on-one with Karp. Tate directed Karp to prepare a plan for licensing infringing DRAMs for presentation to the Rambus Board of Directors in early March. That strategy was to include a litigation strategy. Trial Tr. 170:2-171:12; HTX 013.020; see also HTX 395.002.

2. Rambus Meets With Cooley Godward Attorneys

34. In late 1997, Karp called Diane Savage, an attorney at the law firm of Cooley Godward (“Cooley”) with whom he had worked before coming to Rambus, seeking a recommendation for someone to help set up a licensing program. Trial Tr. 393:22-394:10. Attorney Savage, who was a partner in Cooley’s technology transactions group, introduced Karp to her colleagues John Girvin, Dan Johnson, and Peter Leal. Trial Tr. at 394:17-22; 585:16-19. They were litigators but also did licensing. Trial Tr. 586:9-10. Leal, a licensing attorney, reported to Girvin, head of the Information Technology Patent group. Trial Tr. 586:9-16. Girvin, in turn, reported to Johnson, head of Cooley’s litigation group. Id. Karp dealt extensively with Johnson. Trial Tr. 395:6-10.8-10. When asked why he had in mind forming a licensing team with a litigator, he explained: “Again, from my experience at Samsung, many times when people came out for licensing discussions, there was kind of a litigator in the room, sort of an elephant in the corner.” Trial Tr. 395:11-19.

35. On January 13, 1998, Tate and Karp met with Cooley attorney Leal, who specialized in licensing matters. On January 15, 1998 Karp and Leal met again. HTX 376. Leal’s notes of the January 13, 1998 meeting reflect that the parties discussed the concept “[n]o negotiation w/out full strategy and prep.” HTX 395.001. Rambus wanted to “go in and quickly proceed to either a license or litigation.” Id. Further, Rambus was “looking for a royalty rate that tells [the DRAM industry] it costs to infringe.” Id. Rambus wanted to “[t]ry win-win first; do not prejudice g[ood] — f[aith] for litigation.” Id. Tate and Karp told Leal they “[w]ant litigation strategy by March board meeting. Six weeks from now.” HTX 395.002. At the January 15, 1998 meeting, Karp and Leal discussed a proposed sequence for negotiating meetings with potential infringers, including roles Rambus executives and Cooley attorneys might play in negotiations and what information would be presented at each meeting, labeled in Leal’s notes as the “Middle Ground, delaying meeting” and the “Pound Sand” meeting. HTX 376.001-376.004. Rambus at this time was “very, very sensitive” to costs. HTX 376.001. Leal noted that Cooley had a list of Rambus’s patents including two key patents: “'481 (clear infringement if licensee uses DLL)” and “'327 (strong suspicion of infringement but need hardware to be sure).” Id.

36. On February 12, 1998, Karp met with Johnson, Girvin, and Leal. HTX 403. The purpose of the February 12, 1998 meeting was to develop the licensing and litigation strategy Tate had requested at the one-on-one meeting between him and Karp. HTX 097; HTX 403. The licensing strategy envisioned optimizing Rambus’s notice to potential infringers, a negotiation strategy and a litigation strategy. HTX 403.

37. As of the February 12, 1998 meeting, the Cooley attorneys were aware of Karp’s draft licensing term sheet, which specified that Rambus would charge a 5% running royalty for a license to make non-compatible DRAMs. RTX 088. Johnson thought that insistence on such a rate would inevitably lead to litigation. Karp acknowledged that such royalty rates “will probably push us into litigation quickly.” HTX 097. Leal made a note that Rambus felt a need to litigate against someone to establish a royalty rate and have a court declare a patent valid. Johnson indicated that a breach of contract claim against a licensee would be much easier to prove than patent infringement. No evidence was offered showing that Rambus ever sought the 5% royalty rate referenced in Leal’s notes of the February 12 meeting.

38. At the February 12, 1998 meeting, Johnson expressed concern that Rambus did not have a document control system in place and advised that Rambus needed to “make [itself] battle ready.”

Q Do you recall somebody saying words to that effect at this meeting?

A That sounds like something I would do.

Q And what did you mean by that phrase?

A Very simply, Rambus was essentially an old start-up, as far as I was concerned. It had been around probably eight, nine years. They had, as best I could tell, no central document patrol (sic) system in place, and I had not too long before this litigated a spoliation of evidence case and I said you guys really need, if you want to have a licensing program, if you end up filing lawsuits against anybody, putting in place a system that gets your documents organized.

They had databases, the best I could tell, that went back eight, nine years, and that’s an enanthema (sic) if you ever get a subpoena from a third party and they want you to go back and search documents for five years prior.

Q Why did you say it’s an enanthema (sic)?

A Very simple, because it’s amazing as we sit here in 2005 talking about electronic discovery.

But the first time these electronic discovery issues came up was back in the mid to late 90’s because many clients ... had tapes that they stored and oftentimes these tapes had different operating systems, they used old or obsolete computer systems, and more importantly, they didn’t store them very well.

So you could find yourself with a bunch of data that you could not recreate because you did not have a system in place that allowed you to do it. You simply had a lot of tapes.

So I went on ... for awhile about your (sic) going to spend a ton of money just trying to respond to a subpoena if you don’t put in place a document retention system.

Q And ... if you look at the rest of that bullet point, it says, “start gathering critical documents in company so we can start putting together an electronic database.”

Is that something you think you said at this meeting or someone else would have said?

A I did----When I knew they were on tape, I said, you know it would be a lot smarter if you put together an electronic database where you had all your documents in a form that was searchable and readily accessible.

Q And then the last sentence in this bullet point says “need company policy on document retention policy.”

Do you see that?

A Correct

Q Is that something you said at this meeting?

A Absolutely.

Trial Tr. 1675:21-1678:7.

39. Johnson advised Rambus to adopt a company policy on document retention. HTX 097. Johnson’s advice regarding document retention was commonplace and similar to advice he gave to other start-up companies in the Silicon Valley. Trial Tr. 1678:21-1679:9.

40. At this February 12, 1998 meeting, Johnson also advised Rambus to instruct its patent prosecution attorneys to clean up their files for issued patents to ensure that the Rambus file was the same as the official file, a recommendation that Johnson characterized as “standard advice.” Trial Tr. 409:18-410:1; 1679:10-1680:3; HTX 097.

41. On February 23, 1998, Cooley presented its “Proposed Strategy for Ram-bus.” HTX 098. The document briefly outlines a licensing strategy, starting with criteria for selecting initial targets for negotiation. The proposed strategy progresses to a discussion of a tiered litigation strategy. One of the basic assumptions is that Rambus would not initiate action until a competing product entered the market, at which time Rambus would conduct reverse engineering and determine what action to take next. HTX 098.002.

42. Cooley’s proposed strategy offered several options: first, pursuing a breach of contract remedy against existing licensees; second, initiating a patent infringement suit against an unlicensed competitor; third, bringing an action against SLDRAM. With respect to possible litigation, the proposed strategy memo states:

To implement the above strategy, Ram-bus has authorized outside counsel to begin organizing documents and preparing a discovery data base, so that if and when Rambus elects to proceed with litigation, it will not unduly disrupt the company’s activities. More importantly, with proper planning, Rambus may be able to obtain an advantage over its competitors by choosing a court such as the eastern district of Virginia, “the rocket docket” or the ITC. Because these courts proceed at an accelerated schedule, early preparation will benefit Rambus.

HTX 098.002-003.

43. The Cooley document does not specifically mention establishing a document retention policy at Rambus. The Cooley proposed strategy for Rambus ends by stating that, “it bears emphasis that each of the above scenarios is dependent on the facts that exist at the time the decision to litigate is made. Factors unknown at this time may result in a change of strategy.” HTX 098.003. Karp added in handwriting “document retention policy” and “patent attorney files” after the text of the proposed strategy. These handwritten additions suggest that Karp was considering implementation of a document retention plan that included the disposal of materials from Rambus’s patent prosecution files that were not contained in the files of the Patent and Trademark Office (“PTO”). Karp, however, apparently did nothing to actually gather documents or begin a document retention program at that time.

44. On February 25, 1998, Karp had a regular one-on-one meeting with Tate at which they reviewed the developing licensing and litigation strategy. HTX 013.034.

3. Karp Presents a Licensing and Litigation Strategy to the Board

45. On March 4, 1998, Karp presented the licensing and litigation strategy at a regular Rambus Board of Directors meeting chaired by Tate. HTX 031. The strategy included demanding the 5% running royalty rate and other financial terms that Karp had reviewed with Cooley at the February 12,1998 meeting. HTX 006.001.

46. The minutes following the March 4, 1998 board meeting memorialize that the meeting included an update by Karp of “the Company’s strategic licensing and litigation strategy.” HTX 031.002. An option under consideration was to reward licensees whose output of RDRAM exceeded fifty percent of their total output for two consecutive quarters by reducing their running royalty rate and to penalize those whose production was less than fifty percent for two consecutive quarters by increasing their running royalty rate. HTX 006.002.

47. In the presentation, Karp recommended that “[i]f licensing discussions do not result in resolution, tiered litigation strategy kicks in.” HTX 006.003. He suggested that the first targets for licensing non-compatible uses should be “present licensees which currently have released noncompatible product,” and that the second group of targets should be “present licensees which are currently well along with alternate development.” HTX 006.006. This presentation was based upon the strategy that Cooley had presented on February 12, 1998. Trial Tr. 418:19-419:4. Several current licensees, including Hyundai, were given as examples of possible defendants in a breach of contract or patent infringement suit. HTX 006.004. However, the discussion of the possibility of litigation appears to have been only in general, somewhat speculative terms at this time notwithstanding the fact that a timetable was mentioned.

48. The timetable for executing the proposed licensing and litigation strategy called for Rambus “not [to] contact potential licensees until D-RDRAM achieves initial samples.” HTX 006.007. The first step thereafter was the delivery of initial samples of Direct RDRAM (“DRDRAM”). This was to ensure that DRAM manufacturers would be locked into the RDRAM ramp. Id. Thereafter, the strategy included procuring customer sample (“CS”) quality parts of potentially infringing devices, reverse engineering the products and creating claim charts, notifying the potential infringer, conducting two meetings, and if the meetings did not result in agreement on a license, commencing legal action. The timetable projected 4^6 months from procuring “CS quality parts” to the commencement of litigation. Id.

49. The Licensing and Litigation Strategy was apparently neither approved nor rejected by the Board at the March 4, 1998 meeting. Rambus was not planning on contacting potential licensees until its RDRAM “achieve[d] initial samples.” Id. Rambus’s anticipation was that the DRDRAM would not be ready for high volume production until late 1998. HTX 094 (Item 2: “Direct Rambus 1.0 memory system implemented on spec, on cost, on schedule for production ramp late 98”); Trial Tr. 1250:1-11.

50. The Licensing and Litigation Strategy included near term actions of creating a document retention policy, preparing a discovery database and conforming Ram-bus’s attorneys’ files on issued patents to that which was in the PTO files. This was part of getting “battle ready.” Trial Tr. 206:9-207:10; HTX 006.008.

51. In April 1998, Tate met with an Intel executive and was told that Intel was “basically going to compete with us on [the] next generation [of DRAM].” Hynix II, 645 F.3d at 1343.

52. In the summer of 1998, attorney Neil Steinberg worked on a small assignment for Rambus. He began working again for Rambus in mid-August 1998 and he continued until April 1999 at which time he became Rambus’s General Patent Counsel. Trial Tr. 1443:2-1444:20. Starting in October 1998, Steinberg’s work included prosecuting continuation applications for the Farmwald/Horowitz family of patents. Trial Tr. 1463:7-1464:13.

53. On July 10, 1998, Tate sent an internal e-mail to both Karp and Allen Roberts, a Rambus vice-president, regarding the license agreement between Hyundai and Rambus, suggesting that Hyundai would be “a great company to start Joel’s plan with in ql/99 potentially” if Rambus’s patent application covering use of an access time register issued. HTX 087. Rambus wanted to renegotiate or eliminate the “Other DRAM” provision in its existing contract with Hyundai. Id.

4. Rambus Revises its Strategy

54.In late 1998, Rambus revised its approach toward licensing its technology for non-compatible product to its existing licensees. Rambus initially planned to begin its licensing strategy only after DRAM manufacturers were locked in to RDRAM production. This assumed that Rambus would be able to procure customer samples, reverse engineer them and show potential infringement. However, as of October 1998, the projected time frame for the lock-in to RDRAM was early 2000 at the soonest. In an October 1998 Strategy Update, Karp projected that Rambus might be able to demonstrate that Mosel and Nanya had SDRAM products that directly infringed a pending access time register patent by the first quarter of 1999, thus enabling Rambus to potentially state contributory infringement and inducement claims against companies like Acer, SIS, and VIA for SDRAM and double data rate (“DDR”) SDRAM. However, his presentation recommended not even initiating licensing negotiations.

• DO NOT ROCK THE DIRECT BOAT.

• We should not assert patents against Direct partners until ramp reaches a point of no return (TBD)

• Probably not until Ql'00

• However, the Big Question Is— WHAT’S THE RUSH?

• What is the compelling business reason? I can’t think of any.

• Keeping the Maytag repairman busy is not a valid reason

• IMHO, risks of damaging establishment of dominant standard outweigh potential return

• Lets not snatch defeat from the jaws of victory

HTX 128.003; Trial Tr. 1319:17-1321:5; 282:20-284:2. This “point of no return” was projected to be in the first quarter of 2000. Id.

55. Karp explained that there were good business reasons for the delay in bringing suit, particularly Rambus’s interest in getting licensing revenues from RDRAM manufacturers, who would be the same parties it would seek to license for the production of SDRAM. Trial Tr. 428:12-22; see also Micron II, 645 F.3d at 1317.

56. Karp’s October 1998 Strategy Update stated that Rambus’s “Top Priority Should Be Strengthening of Portfolio” by obtaining patents covering SDRAM, DDR, SLDRAM, any and all forms of synchronous memory (static and dynamic) by aggressively prosecuting patent applications for such coverage. HTX 128.005. To that end, Rambus pulled five cases from its outside patent prosecution lawyers BSTZ and assigned them to its inside patent counsel attorney Steinberg.

57. Karp’s October 1998 Strategy Update reported that Rambus had engaged Semiconductor Insights to do reverse engineering on Samsung DDR part at an estimated cost of $45 to $55 thousand. HTX 128.002; HTX 129.004; Trial Tr. 289:20-25.

58. Although strengthening Rambus’s strategic portfolio was a top priority for Rambus as of the October 1998 time frame, Rambus’s ultimate goal was to make RDRAM successful and that was Rambus’s primary focus. Trial Tr. 1320:5-6; see Trial Tr. 1321:25-1322:1; Trial Tr. 1566:24-1567:10. Karp and Roberts, then a Rambus vice-president, were concerned that pursuing non-compatible licensing at that time could be harmful to Rambus and alienate Rambus’s RDRAM “partners” who were the ones producing non-compatible product. Trial Tr. 1565:11-1565:24; 1567:10; see Trial Tr. 1321:20-1321:1. However, meeting notes from a November 1998 offsite strategy meeting reflect that Rambus planned to assert its patents against SDRAM at some point even if its strategy to make RDRAM successful worked. See Micron II, 645 F.3d at 1317.

59. In December 1998 or January 1999, Karp drafted and distributed to Rambus executives a “Nuclear Winter Scenario” memorandum relating to Rambus’s Patent Enforcement strategy for 1999. That memo set forth an assumption in which Intel suddenly opted to move away from Rambus’s RDRAM technology and instead implemented something else, for example DDR or SLDRAM. Although Karp described the assumption as “a very unlikely scenario,” he believed that if it were to happen, it would “threatenf]” Rambus’s “very existence.” HTX 004.002. Karp, therefore, set forth a strategy for convincing Intel “that without access to Rambus’s IP, it will be difficult and costly to continue selling its current processor based products and its new, more advanced products because the memory needed for these Intel products require use of Rambus’s IP.” Id.

60. The Nuclear Winter Scenario memorandum set forth negotiating tactics by which Rambus hoped to establish its intellectual property position. Rambus needed to show by clear and convincing evidence that three of Rambus’s then-issued patents covered alternate competing devices: the '327 patent covered DDR (dual edged clocking); the '481 patent covered DDR (phase locked loop circuitry); and the '580 patent covered DDR and PC 100 (access time register). HTX 004.002. The '327 patent had issued to Rambus on April 30, 1996; the '481 patent had issued on August 12, 1997; and the '580 patent had issued on November 24, 1998. Micron Technology, Inc. v. Rambus Inc., 255 F.R.D. 135, 138, 143 (D.Del.2009) (“Micron I”).

61. The Nuclear Winter Scenario memorandum discussed “COMPLAINTS AGAINST DRAM COMPANIES.” HTX 004.004. This discussion suggested potential causes of action against DRAM companies, potential litigation targets, possible venues, other necessary litigation preparation, and a cost estimate of $1.5 to $3.0 million. In a section entitled “NEGOTIATION TACTICS,” the memorandum suggested holding meetings at which Rambus would show its claim charts to the target companies to show infringement. HTX 004.004-004.005. Much of the information concerning litigation was provided by Cooley attorney Johnson. Trial Tr. 516:23-518:18; 103:14-1704:5. Johnson also drafted the sample letter for notifying a DRAM manufacturer of infringement and offering to license, which was attached to the Nuclear Winter Scenario memorandum. Trial Tr. 516:23-518:18.

62. In the late 1998 to early 1999 time frame, Rambus had very limited information about DDR parts. HTX 004.005. Karp did not believe that Rambus had strong claims based upon the '327, '481 or the '580 patents. Trial Tr. 510:12-516:22. Roberts did not believe that the '481 and '580 patents read directly on the suspected products. Trial Tr. 1566:11-23.

63. The last section of the Nuclear Winter Scenario memorandum, entitled “PREPARATION FOR LITIGATION,” stated that costs of litigation would be high and that Rambus would need to begin patents and infringement analysis, complete a discovery data base, and retain appropriate experts. HTX 004.006.

64. As of the late 1998 to early 1999 time frame, Rambus recognized that it would have to instigate litigation to establish the value of its patents and convince industry players to license its technology. However, Rambus had not yet chosen a particular DRAM manufacturer to pursue and sue. Several contingencies had to occur before Rambus would actually file suit: (1) the direct RDRAM ramp had to be sufficiently developed so as not to jeopardize RDRAM production; (2) Rambus’s patents covering non-RDRAM technology had to issue; (3) product samples from potentially infringing DRAM manufacturers had to be available in the market; (4) the non-compatible products had to be reverse engineered and claim charts- had to be made showing coverage of the actual products; (5) Rambus’s Board had to approve commencement of negotiations with a DRAM manufacturer; and (6) the targeted DRAM manufacturer had to reject Rambus’s licensing terms. Hynix I, 591 F.Supp.2d at 1062. However, Rambus fully expected that the contingencies would occur. Hynix II, 645 F.3d at 1346. “Contingencies whose resolutions are reasonably foreseeable do not foreclose a conclusion that litigation is reasonably foreseeable.” Id.; see also Micron II, 645 F.3d at 1324-25.

65. On June 22, 1999, the '105 patent issued, the first patent-in-suit.

66. On June 24, 1999, Tate instructed Karp to hammer out strategy for the first target to be launched in October 1999.

67. Karp prepared a document entitled “IP Q3'99 — FINAL 7/1/99” which listed goals for: procuring patents, initiating reverse engineering of infringing devices as required for litigation preparation, developing a complete licensing strategy, preparing licensing positions against three manufacturers and a litigation position against one of those three licensing targets, being ready for litigation with thirty days notice, having a presentation to the Rambus Board ready by the end of the third quarter for presentation during the fourth quarter, and organizing a 1999 shredding party at Rambus. HTX 140.003-004.

68. In a strategy update presentation titled “IP Strategy 9/24/99,” Rambus acknowledged that it was losing Intel’s business (“Intel Has Already Started To Let Go”) and that, absent that relationship, the DRAM industry would not have respect for Rambus’s intellectual property. HTX 244. The update stated that Rambus must “INCREASE THE INDUSTRY’S PERCEPTION OF OUR VALUE THROUGH AGGRESSIVE ASSERTION OF OUR IP RIGHTS.” HTX 244.003. Specifically, Rambus needed to “earn that respect by substantiating our claims that cover pioneering technology.” The update stated that:

“Patent claims are substantiated either by

• signing a lucrative license deal with (an) industry powerhouse(s)

• winning in court”

HTX 244.004. The IP Strategy 9/24/99 concluded that the “Best route to IP credibility is through victory over a major DRAM manufacturer” and “WE MUST WIN!!” HTX 244.004-005.

69. Karp and Steinberg developed a formula for selecting the first targets for Rambus’s licensing/litigation strategy. The formula was set forth in a presentation dated October 14, 1999. HTX 151. The formula considered both business and legal/litigation factors. Among the factors weighed were “confirmation of Rambus IP,” “experience in battle,” “exposure to Rambus IP,” “venue flexibility,” and “litigation story.” HTX 151.002. Hynix was identified as the number three target after Hitachi and Samsung, HTX 151.006.

70. In October 1999, Rambus’s Board and management approved commencement of licensing negotiations for non-compatible products. Trial Tr. 350:8-20 (Board approval); 1469:14-18 (“executive core” approval).

H. Rambus’s Formulation of its Document Retention Policy

71. The idea of instituting a document retention/disposal policy at Rambus was generated by outside counsel Johnson at the meeting he had with Karp on February 12, 1998. Trial Tr. 675:21-1678:20. At that meeting, Johnson expressed concern that Rambus did not have a document control system in place. See ¶¶ 89-40 above.

72. Johnson advised Rambus to gather critical company documents to start putting together an electronic database and to adopt a company policy on document retention. HTX 097. Johnson testified that he recommended adopting a document retention policy for three principal reasons. First, a document retention policy would reduce the expense of retrieving electronic data stored on obsolete or corrupted backup media. Trial Tr. at 1676:24-1677:10. Second, a document retention policy would reduce search costs in the event that Ram-bus was someday required to respond to subpoenas or document requests that might be issued in connection with future lawsuits or investigations. Trial Tr. at 1677:11-14. Third, the absence of a company-wide policy for the retention and destruction of documents might be cited by a future litigant as evidence of spoliation. Trial Tr. at 1678:10-20. The evidence suggests that Rambus had never contemplated a document retention program until Johnson recommended it. It seems clear that Johnson was concerned about Ram-bus getting entangled in litigation with its records in the shape that they were in at the time, whether it was litigation brought by Rambus, initiated against Rambus, or in some way involving Rambus’s records. Karp, Tate and Johnson all recognized that unsuccessful licensing negotiations could result in litigation.

73. Johnson testified that the advice he gave Rambus regarding document retention was commonplace and that he probably gave similar advice to at least eight to ten start-up companies in the Silicon Valley. Trial Tr. 1678:21-1679:9.

74. At this February 12, 1998 meeting, Johnson also advised Rambus to instruct its patent prosecution attorneys to clean up their files for issued patents to ensure that the Rambus files were the same as the official files, a recommendation that Johnson characterized as “standard advice.” Trial Tr. 409:18-410:1; 1679:10-1680:3; HTX 097.

75. At a one-on-one meeting with Tate on February 25, 1998, Karp reported that he was already “[wjorking with J. Lau on a document retention policy, discovery database, email, etc.” HTX 013.034. Tate did not recall this meeting with Karp. Trial Tr. 1275:8-12. However, it was Tate’s practice to meet with his executive staff one-on-one every week to discuss goals and progress toward goals. Tate’s inability to recall discussing document retention suggests that he was not personally focused on document retention but on aggressively pursuing Rambus’s patents with the responsibility of how to do so left to Karp.

76. On March 16, 1998, Roberts advised Joseph Lau, Engineering Department Head, that Rambus should begin recycling its e-mail back-ups so that the back-ups had a “shorter shelf life.” HTX 100. Roberts suggested three months. Id. There was a growing concern that e-mail back-ups were discoverable. Trial Tr. 1575:17-1577:4

As I recall, the general concept was ... that we were generating gigabytes of information on surely a weekly basis, but maybe even on a daily basis that went onto tapes.

And that those tapes were being kept kind of continuously, and that if there was any case where somebody said we want to see all this information, it would be a huge expense to pull all that information back and pay people to review it all.

Trial Tr. 1577:7-18. Roberts said there was no litigation that Rambus was contemplating instituting at the time nor any that would involve Rambus. Trial Tr. 1576:14-20.

77. On March 19, 1998, after an inquiry about document retention by Karp, attorney Savage forwarded to Karp a standard, form document retention policy template that had been developed by Cooley. Trial Tr. 579:19-580:19; 582:19-24; RTX 091. Attorney Savage was unaware of any litigation strategy at the time she forwarded the template. Trial Tr. 583:15-17. In her forwarding memorandum to Karp, she recommended that he consult Cooley attorney David Lisi if he had any specific litigation oriented issues. Trial Tr. 579:19-584:2; RTX 091 at R124437.

78. The memorandum sent to Rambus by Cooley was a generic template for a document retention program drafted by the law firm for its clients. Trial Tr. 580:15-19. In the forwarding memorandum, Savage advised that “a comprehensive document retention policy must be customized to conform to the Company’s business practices and needs.” RTX 091 at R124437. Karp did not consult Savage or Lisi regarding tailoring the template for Rambus.

79. On March 27, 1998, after he had left Cooley to join Fenwick & West, attorney Johnson had a lunch meeting with Karp. Following that lunch, Johnson wrote Karp saying “I am excited about the possibility of working with you.” Attorney Johnson also enclosed “a standard set of document requests,” saying “[tjhis should give you some idea of the type of information requested in patent cases.” HTX 368; Trial Tr. 1713:15-1716:9.

80. The Cooley template retention policy stated that “ ‘[t]hat Policy should inform employees email is subject to review by the Company and is not ‘private.’ ” RTX 091 at R124443. The Cooley template also recommended that the company should “permanently remove emails from system server on a periodic basis” and if back-up tapes of e-mail are kept, they “should be destroyed on a periodic basis as well.” Id. It also stated that “the Company and individual employees should be discouraged from archiving email” and that “E-mail that needs to be saved should be either: (a) printed in hard copy and kept in the appropriate file; or (b) downloaded to a computer file and kept electronically or on disk as a separate file.” Id. The memorandum also recommended that Rambus “regularly discard outdated electronic files and discard all draft documents once a document is finalized.” Id.

81. At the same time that Rambus was consulting with outside counsel regarding the adoption of a document retention policy, Rambus retained Kroll Associates, a specialist in the field of information and computer security, to do a security audit of Rambus. Rambus contacted Kroll because it had security concerns after a hacking attempt on Rambus’s computers. Trial Tr. 369:18-370:20. In an April 24, 1998 presentation at the conclusion of the security audit, Kroll advised that Rambus adopt a variety of measures to better protect its confidential information and the confidential information of its business partners. Brill Depo at 49:15-50:1; 50:13-18. Among the specific recommendations from Kroll was confirmation that Rambus should work with outside counsel to develop a document retention policy. Trial Tr. 372:25-373:23; RTX 160 at 26. Brill also advised that Rambus should keep e-mail only as long as required and that back-up tapes should not be kept indefinitely. RTX 160 at 26, 47; Brill Depo at 55:19-57:14 (played at trial on October 28, 2005); Trial Tr. 1515:21-23, 15:178-9. Krojl was not involved in formulating a specific document retention program for Rambus.

82. On May 14, 1998, Karp met with a group of representatives of the four Ram-bus operating divisions to decide on a policy for saving back-up tapes. He then sent a memorandum to the Rambus Board, engineering managers, and others at Rambus stating: “Effective immediately, the policy is that full system back-up tapes will be saved for 3 months only. Therefore, you can no longer depend on the full back ups for archival purposes. Any valuable data, engineering or otherwise, must be archived separately.” RTX 104. Karp’s memorandum further advised: “I will now start the task of implementing a company-wide document retention policy. Every Rambus employee will be involved in this.... I expect to have a company meeting in early June to kick off this policy.” Id. Karp consulted with attorney Johnson about the length of time to retain back-up tapes. Trial Tr. 528:21-530:4; 1691:23-1692:6; RTX 104. Johnson recommended against adopting a proposal to create a full system back-up every two years, citing the problems and potential expense that could arise from stale data, operating system changes, and corrupt data. Trial Tr. 1692:7-17.

83. Karp drafted Rambus’s Document Retention Policy shortly before July 22, 1998, based upon the generic template forwarded by attorney Savage, and incorporating some of its language verbatim. Trial Tr. 525:7-17; HTX 023. The Rambus policy provided with respect to “Electronic Mail and Documents” that “Rambus maintains complete system tape back-ups for a period of 3 months. Employees should not utilize email as a' place to save documents beyond 3 months. Email that is required to be saved more than 3 months can be kept either in paper or a separate file on your hard drive.” HTX 023.

84. The Rambus policy stated that:

documents, notebooks, computer files, etc., relating to patent disclosures and proof of invention dates are of great value to Rambus and should be kept permanently. Engineering personnel should not depend on the electronic system back-up tapes to archive their work, since these tapes are only kept for 3 months. They should create their own archive copies of, for example, tape out and major project milestone databases, which can then be kept indefinitely in Rambus’ offsite, secure storage facility.

HTX 023.001-002.

85. The Rambus policy pronounced that “Final, execution copies of all contracts entered into by Rambus are kept at least 5 years after the expiration of the agreement.... All drafts ... and any materials used during negotiations that are not part of the final binding contract ... should be destroyed or systematically discarded.” HTX 023.002

86. The terms of Rambus’s two-page Document Retention Policy were based on the template provided by attorney Savage, referred only to categories of documents, and were content neutral within those categories. HTX 023; RTX 091. The policy contained no directive to discard documents relating to specific companies or specific subjects. However, it did instruct that “documents, notebooks, computer files, etc. relating to patent disclosures and proof of invention dates are of great value to Rambus and should be kept permanently.” HTX 023.001.

I. Presentation of Rambus’s Document Retention Policy

87. After Karp had drafted the Policy, he created slides for use in a presentation introducing the Document Retention Policy to Rambus’s managers. Karp sent his two-page Document Retention Policy to attorney Johnson for his review. Trial Tr. 521:20-522:10; 1692:18-1693:2; 1693:13-25.

88. On July 22, 1998, Rambus distributed its two-page Document Retention Policy to its employees. HTX 023.

89. On July 22, 1998, attorney Johnson and Karp gave a presentation to Rambus’s managers about the need for such a policy and the legal requirements relevant to the policy. RTX 130. The presentation distinguished between obligations before litigation and after litigation commences. Id.

90. Karp’s portion of the presentation consisted of a summary of the types of documents Rambus wanted to keep and for how long. Attorney Johnson reviewed and commented on drafts of Karp’s slides. Trial Tr. 535:4-11; 1699:11-1701:4; RTX 112; RTX 115; RTX 123. Rambus, however, is not relying on an advice of counsel defense as a defense to Hynix’s spoliation claim. Trial Tr. 1801:25. In presenting his slides to Rambus managers and employees, Karp gave explicit instructions to delete e-mails. Trial Tr. 261:4-265:1.

91. Attorney Johnson’s portion of the presentation was litigation-oriented. Slide 3 listed what kind of records are discoverable. Slide 4 cautioned specifically about e-mail and electronic documents. It noted that “special care must be taken with emails” because they are “generally less formal and thoughtful than written correspondence.” Slide 5 recounted what Johnson referred to as “horror stories” of cases where deleted e-mails had been used to prove age discrimination and sexual harassment. Slides 6 and 7 warned that the rules for document retention change once litigation begins. RTX130; HTX111.004-008. Attorney Johnson testified that “[a]nd the act of deleting, when you are actively involved in litigation, that can give rise to a claim, and I was trying to explain to the client that this was serious business.” Trial Tr. 1699:7-10. Johnson also advised that “[a] formal document retention policy will likely shield a company from any negative inferences ... due to destruction of documents, unless the policy was instituted in bad faith or exercised in order to limit damaging evidence available to potential plaintiffs.” RTX 130 at R124523. He also warned Rambus managers, however, that destroying relevant documents once litigation started would be improper. RTX 130 at 124527-28, 124545-49; Trial Tr. 1722:2-11. “Once litigation has commenced, a party cannot destroy either relevant evidence or discoverable information. If relevant evidence is destroyed, the party may be liable for sanctions, up to and including default judgment.” RTX 130 at 124544. One of the slides from the “After a lawsuit is filed” section of the slide presentation instructed: “Gather all ‘sensitive’ files as soon a possible to avoid inadvertent destruction.”

92.Johnson did talk to Rambus about potential patent claims in the abstract. Trial Tr. 1725:6-12. He did not view his contribution to the July 22, 1998 presentation as a legal opinion that Rambus was free to dispose of evidence relevant to such potential patent claims. Trial Tr. 1725:6-1726:2. Moreover, Johnson expressly told Rambus that, if Rambus was “anticipating filing a lawsuit, it could not commence a document retention policy.” Trial Tr. 1721:18-1722:6.

93. One of the slides that Karp prepared contained the messages “EMAIL— THROW IT AWAY” and “LOOK FOR THINGS TO KEEP.” HTX 112.001. Karp explained that he recalled some questions from employees about how to decide what to keep. Karp responded that he could not tell them what to do within in their areas. Trial Tr. 539:3-12. No standards were distributed by Rambus management as to what to keep other the general description in the policy. See HTX 023. Craig Hampel, who joined Rambus in 1993 and later became its technical director, did say that Karp, at a staff meeting explaining the reasons for the policy, stated that there was no reason to keep documents that were not needed except, for example, proof of invention and gave as an example of a document not to keep one that questioned the patentability of a concept.

Q. Was anything said about the reasons for instituting this new policy?

A. A couple of examples of why it’s a good idea not — not to keep stuff around were cited, yeah.

Q. What were those examples?

A. Things like apparently discussions on patentability of a — of a concept. If for some reason you had a third party in the company that said that this idea isn’t patented — maybe they were wrong even, but they said it’s not patentable for some reason, having that email around could be used in the prosecution of the patent, or at some later date. So it was examples like that given, where it’s not a good idea to have the discussion on the idea, the formulation of the idea, and its patentability prior to applying for a patent.

Micron I Trial Tr. 1302:7-20; 1303:21-1304:14. Hampel’s testimony was not offered by Hynix in the original proceedings before this court. Hynix now offers this somewhat unclear testimony to suggest that Rambus deliberately selected damaging documents to destroy. It appears, however, that Karp was not concerned about any actual damaging e-mails or records that he knew existed but rather about the possibility that there could be speculative adverse comments by a third party or other stray remarks that might be found by an adversary in the course of discovery. Johnson and Karp emphasized that e-mail was discoverable. HTX 112.001; Trial Tr. 1575:17-1577:18. Attorney Johnson expressed concern about Karp’s repeated direction to Rambus employees to “look for things to keep.” HTX 112. Johnson told Karp that such a directive would result in the retention of more documents than Rambus employees were otherwise required to keep. Johnson told Karp that “unless you’ve got some kind of standard as to what to keep and what not to keep, they’re going to keep everything, because engineers are pack rats.” Trial Tr. 1700:11-1701:1. Karp nevertheless chose to keep the language in his slides. Trial Tr. 1701:2-4.

94. After his July 22, 1998 presentation, Johnson no longer assisted Rambus in its licensing, litigation, or patent prosecution strategy. Karp merely asked Johnson “truly random” questions from time-to-time about general litigation related matters, such as arbitration and different venues for litigation. Trial Tr.