Document Destruction Leads to Unenforceability Ruling in Patent Dispute

A dozen Rambus patents have been declared unenforceable against Micron in a long (going on nine-year) patent dispute in the District of Delaware. The reason: the destruction by Rambus of documents as part of its record retention/destruction policy that the district court (Judge Robinson, D. Del.) held were relevant to Micron's patent misuse, antitrust, and unfair competition defenses.

The 33-page opinion went into some detail about Rambus's long-simmering plan to exploit its patent resources, and determined that "litigation was reasonably foreseeable" by "no later than December 1998." Further, "because the document retention policy was discussed and adopted within the context of Rambus' litigation strategy, the court finds that Rambus knew, or should have known, that a general implementation of the policy was inappropriate because the documents destroyed would become material at some point in the future." Accordingly, the court ruled that "any documents purged" from December 1998 forward "are deemed to have been intentionally destroyed, i.e., destroyed in bad faith."

Had Micron only attacked the Rambus patents on their merits, however, the outcome might have been different. In a footnote, the court noted that "defenses that do not seem likely to depend from evidence internal to Rambus include those of anticipation and obviousness, since prior art references (by definition) must be publicly available. Likewise the written description requirement involves an objective review of the patent. . ." The defenses of unenforceability due to patent misuse, violation of the antitrust and unfair competition laws, and inequitable conduct, however, "are defenses that are illuminated by evidence of a non-public nature, e.g., by internal Rambus documents" -- the documents that were no longer available.

The court concluded that given the "clear and convincing" "showing of bad faith," Micron's "showing of prejudice can be proportionally less." Because the documents that were destroyed included "innumerable documents relating to all aspects of Rambus' business," and in view of "Rambus' litigation conduct" (which the court termed "obstructive at best, misleading at worst"), the "very integrity of the litigation process has been impugned."

There are several points (at least) to take away from this remarkable decision:

- Be careful how you implement or change record retention policies. The court found that Rambus's policy was litigation-driven; while in the opinion it appears that the original policy followed on the heels of a recommendation made in a Kroll Ontrack security audit, Rambus's litigation counsel was involved in the decision to implement it. Had the policy come from the corporate side of Rambus, or as a result of a business-oriented decision to clean out a growing accumulation of old files, the outcome might have been different.

- Make sure those responsible for prosecuting patents are aware of what those responsible for enforcing patents have planned. Another factor that hurt Rambus was the order to clean out patent prosecution files, which happened after the December 1998 "litigation was foreseeable" date.

- Be very careful about the extent and enforcement of a litigation hold. Rambus introduced a litigation hold as a result of the Micron dispute in December of 1999, but a year later disposed of "as many of 480 boxes of Rambus materials in connection with an office move."

- Tell your lawyers about your plans to shred. "Rambus employees, in several instances, did not inform outside counsel of the Rambus shred days."

- If the ruling stands, companies embarking on aggressive patent licensing programs may need to keep a much broader range of documents than companies that are trying to keep competitors out of a given market. If courts are going to assume that among the "reasonably foreseeable" litigation issues arising out of licensing negotiations include business issues such as patent misuse, antitrust, and unfair competition, then companies will need to keep documents that bear on such issues. Given the wide-ranging nature of civil discovery in the U.S., this could be a significant burden.