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Hynix Semiconductor Inc. v. Rambus Inc.

April 22, 2005

HYNIX SEMICONDUCTOR INC., HYNIX SEMICONDUCTOR AMERICA INC., HYNIX SEMICONDUCTOR U.K. LTD., AND HYNIX SEMICONDUCTOR DEUTSCHLAND GMBH, PLAINTIFFS,
v.
RAMBUS INC., DEFENDANT.



The opinion of the court was delivered by: Ronald M. Whyte United States District Judge

ORDER DENYING HYNIX'S MOTION TO DISMISS PATENT CLAIMS FOR UNCLEAN HANDS ON THE BASIS OF COLLATERAL ESTOPPEL

Plaintiffs Hynix Semiconductor Inc., Hynix Semiconductor America Inc., Hynix Semiconductor U.K. Ltd., and Hynix Semiconductor Deutschland Gmbh ("Hynix") seek to dismiss the patent claims of defendant Rambus Inc. under the doctrine of "unclean hands" on the basis of collateral estoppel. On March 1, 2005, Judge Robert Payne in the Eastern District of Virginia dismissed Rambus's patent claims in Rambus, Inc. v. Infineon Technologies AG,No. 3:00CV524, stating "I have concluded that [Infineon] has proved, by clear and convincing evidence, a spoliation that warrants dismissal of [the patent infringement case] as the only appropriate sanction after having considered the alternatives." Infineon Trial Transcript ("ITT") Vol. 6 (Mar. 1, 2005), Hynix's Collateral Estoppel Evidence Volume 1, tab Rambus v. Infineon Trial Volume 6 at 1139. Hynix asserts that Judge Payne's ruling collaterally estops Rambus from relitigating the issue of spoliation and requires this court to likewise dismiss Rambus's patent counterclaims in the instant action. Rambus opposes the motion, contending that the requirements for collateral estoppel are not met for either the issue of spoliation or the dismissal of its patent claims on the basis of unclean hands. For the reasons set forth below, the court denies Hynix's motion to dismiss Rambus's patent claims on the basis of collateral estoppel.

I. BACKGROUND

After a four-day evidentiary hearing, Judge Payne dismissed Rambus's patent claims, ruling from the bench. He stated, "An opinion will issue in due course with findings of facts and conclusions of law, but since you are preparing for a trial, it seems to me it's incumbent upon the court that you know its parameters. It will not include a patent infringement trial." Id. Judge Payne's written opinion never issued because Rambus and Infineon settled the case between them. On March 21, 2005, final judgment of dismissal of all claims between Rambus and Infineon with prejudice was entered pursuant to the parties' stipulation.

II. ANALYSIS

A. Collateral Estoppel

1. Collateral Estoppel Issues

Collateral estoppel bars the re-litigation of issues that were actually litigated and necessarily decided by a final judgment in another case. Offshore Sportswear, Inc. v. Vaurnet Int'l B.V., 114 F.3d 848, 850 (9th Cir. 1997). The elements that the party asserting collateral estoppel must show are: "(1) there was a full and fair opportunity to litigate the issue in the previous action; (2) the issue was actually litigated in that action; (3) the issue was lost as a result of a final judgment in that action; and (4) the person against whom collateral estoppel is asserted in the present action was a party or in privity with a party in the previous action." Pena v. Gardner, 976 F.2d 469, 472 (9th Cir. 1992).

Although the parties do not dispute that the first and fourth elements for collateral estoppel are met, Rambus asserts that the issues in the present litigation either are different from those in Infineon or were not "lost as a result of a final judgment" in the Infineon action.

Hynix argues that this court must give Judge Payne's finding of spoliation and his dismissal of Rambus's patent claims preclusive effect in this action. Because the question of whether Rambus engaged in spoliation has been litigated three times by the Infineon court and has now resulted in the final dismissal of Rambus's claims as a sanction for spoliation of evidence in that action, Hynix asserts that all elements necessary for collateral estoppel are present. It points to this court's November 24, 2004 Order on Motion to Dismiss as a Sanction for Litigation Misconduct ("November 24 Order") in support of its contention that Judge Payne's oral ruling that Infineon had proved that Rambus engaged in spoliation sufficient to warrant dismissal of its patent claims supplied the missing piece: a final judgment.

2. Issue Actually Litigated

This court's November 24 Order acknowledged that there was identity of issues between the question of spoliation in the Infineon case and the present litigation. As set forth above, Hynix cites that order for the proposition that there has already been a binding ruling that there is sufficient identity of issues to warrant the application of collateral estoppel. However, Hynix overstates the scope of the court's ruling in that order. The court commenced its discussion by setting aside the issue of dismissal on the basis of unclean hands for Rambus's spoliation and considered whether Judge Payne's previous spoliation findings could be the basis for finding that Rambus had engaged in spoliation sufficient to pierce Rambus's attorney-client privilege. November 24 Order at 2.

In the November 24 Order, the court applied the four factors in Kamilche Co. v. United States, 53 F.3d 1059, 1062, amended by 75 F.3d 1391 (9th Cir. 1996), to determine that Judge Payne's spoliation findings were actually litigated and (had there been a final judgment) would have been sufficient to apply collateral estoppel to the issue of whether there had been a sufficient prima facie showing of spoliation to pierce Rambus's attorney-client privilege.

As Rambus points out, however, this court did not determine that the issue of unclean hands had been previously litigated. Nor could it have: at that point, the question of the application of collateral estoppel was necessarily limited to the question of spoliation as Judge Payne had not issued a ruling on the basis of unclean hands. Thus, this court must now ...


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