Patentees: Destroy Evidence at Your Own Peril

Patentees: Destroy Evidence at Your Own Peril

In a recent U.S. patent dispute between two information technology players, a court has ruled that a patentee’s destruction of potentially relevant evidence may be sanctioned by a declaration of patent unenforceability.

The ruling in Micron Technology, Inc. v. Rambus, Inc. (Civ. No. 00-792-SLR, 2009 U.S. Dist. LEXIS 1260 (D.Del., Jan. 9, 2009)) penalizes Rambus, a corporation that develops and licenses technology to manufacturers of semiconductor memory devices, such as Direct Random Access Memory (“DRAM”).  As part of its internal business development plan, Rambus had planned to license and enforce its patented DRAM technology throughout the industry in an attempt to achieve recognition as the industry standard.  To implement that plan, Rambus had designed a litigation strategy to enforce its proprietary technology, which included a document retention policy.  That retention policy included pre-determined “Shred Days,” during which employees would destroy documents.  No records were kept of what was destroyed.

In order to avoid licensing from Rambus, Micron initiated an action seeking a declaration of patent invalidity.  One of the issues at trial was whether Rambus, through its document retention policy, had breached any duty to preserve potentially relevant evidence and, if so, what the appropriate sanction should be.

In finding in Micron’s favour, the court emphasized that even though litigation of the patents in issue was reasonably foreseeable, Rambus went ahead and destroyed documents relevant to the patents relating to contract and licensing negotiations, patent prosecution, Board meetings and finances.  According to Judge Robinson, “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.” Micron at para. 55).  Although the penalty of unenforceability was harsh, in the opinion of Judge Robinson, the showing of bad faith was “clear and convincing.”

Although two other courts had previously addressed the potential spoliation of evidence by Rambus (see Rambus, Inc. v. Infineon Techs. AG, 220 F.R.D. 264 (E.D. Va. 2004); and Hynix Semiconductor Inc. v. Rambus, Inc., No. C-00-20905 RMW, 2006 WL 565893 (N.D. Cal. Jan. 5, 2006)), only one of those courts held that spoliation had occurred.  Regardless of the split in outcome, the result serves as a reminder that potentially relevant evidence should be preserved in order to avoid dire results.