Document destruction renders patents unenforceable, says US court

Out-Law News | 13 Jan 2009 | 9:52 am | 2 min. read

A set of patents cannot be enforced because the patent owning company followed a policy of destroying documents, a US court has said. Rambus has been barred by a Delaware court from enforcing 12 of its patents because of the policy.

Rambus earns licensing revenue from patents it owns in the field of computer memory technology. It is involved in a dispute with memory manufacturer Micron over Micron's DRAM memory. It sought to sue Micron claiming that the company infringed its patents, but the SSSS Court has said that it cannot enforce its patents against Micron because it destroyed documents that the judge said it must have known would be vital in its case.

The judge said that Rambus had pursued a policy of destroying documents since 1998. It should have known, she said, that future litigation was likely, and that the documents would become material to its case.

"On September 3, 1998, Rambus employees participated in an even dubbed 'Shred Day', during which they destroyed documents pursuant to the company's new document retention policy" said the ruling of Judge Sue Robinson of the US District Court of Delaware.

Robinson said that Rambus' shredding of documents was "obstructive at best, misleading at worst".

"The spoilation conduct was extensive, including within its scope the destruction of innumerable documents relating to all aspects of Rambus' business," she said. "When considered in light of Rambus' litigation conduct, the very integrity of the litigation process has been impugned."

Rambus said that it disagreed with the opinion, and that a California court had not had the same problem in similar litigation.

"This opinion is highly inconsistent with the findings of the Court in the Northern District of California which looked at the same conduct and found there was nothing improper with our document retention practices," said Tom Lavelle, senior vice president and general counsel at Rambus. "We are confident in the strength of our position and will continue to vigorously pursue fair compensation for the use of our patented inventions."

Rambus is still involved in litigation regarding its memory patents in California against manufacturers Hynix, Nanya, Micron, and Samsung.

Rambus has been accused by the European Commission in the past of 'patent ambushing'. It participated in the setting of industry wide standards for dynamic random access memory (DRAM) and then asked for money because it had patents for some of the agreed technology, the European Commission said in 2007.

"Therefore, every manufacturer wishing to produce synchronous DRAM chips or chipsets consequently must either acquire a licence from Rambus or litigate its asserted patent rights," said a Commission statement in 2007 on a Statement of Objections to its behaviour.

"The Statement of Objections outlines the Commission’s preliminary view that Rambus engaged in intentional deceptive conduct in the context of the standard-setting process, for example by not disclosing the existence of the patents which it later claimed were relevant to the adopted standard," it said.

"This type of behaviour is known as a 'patent ambush'. Against this background, the Commission provisionally considers that Rambus breached the EC Treaty's rules on abuse of a dominant market position by subsequently claiming unreasonable royalties for the use of those relevant patents," said the statement.

Rambus said that it will appeal Robinson's ruling.