Rambus, Inc. v. Infineon Technologies Ag
Decision Date | 09 August 2001 |
Docket Number | No. CIV.A.3:00CV524.,CIV.A.3:00CV524. |
Citation | 155 F.Supp.2d 668 |
Court | U.S. District Court — Eastern District of Virginia |
Parties | RAMBUS, INC., Plaintiff, v. INFINEON TECHNOLOGIES AG, Infineon Technologies North America Corp., and Infineon Technologies Holding North America, Inc., Defendants. |
Michael W. Smith, Craig T. Merritt, Christian & Barton, L.L.P., Richmond, VA, David E. Monahan, John Allcock, Gray Cary Ware & Freidenrich LLP, San Diego, CA, for Plaintiff.
Brian C. Riopelle, Robert M. Tyler, McGuire Woods, LLP, Richmond, VA, John M. Desmarais, Kirkland & Ellis, New York, NY, for Defendants.
The Defendants and Counterclaim Plaintiffs, Infineon Technologies AG, Infineon Technologies North America Corp. and Infineon Technologies Holding North America, Inc., (collectively "Infineon") prevailed on the claims of patent infringement asserted by the Plaintiff and Counterclaim Defendant, Rambus, Inc. ("Rambus"). At the conclusion of a two and one-half week trial, the jury found in favor of Infineon on its constructive fraud and actual fraud counterclaims. By separate opinion and order, the verdict on the constructive fraud count is to be set aside, the Court having granted Rambus' motion for judgment as a matter of law on that count; and the verdict on the actual fraud claim is to be set aside in part.
Infineon now petitions the Court for an award of attorneys' fees and costs under: (1) 35 U.S.C. § 285, which allows the prevailing party in a patent case to recover its attorneys' fees in "exceptional" circumstances; (2) Virginia law for its attorneys' fees incurred in pursuit of the fraud claim; and (3) the inherent equitable power of the court to sanction those parties that litigate in bad faith. For the reasons set forth below, the request for attorneys' fees and costs pursuant to § 285 and under Virginia law (as a prevailing party of a claim of fraud) is granted; and the request for fees and costs under the inherent equitable power of the court is denied.1
I. Procedural Background
Rambus filed a complaint on August 8, 2000, alleging that Infineon had infringed two of its patents. On October 20, 2000, Rambus filed a First Amended Complaint which added charges of infringement of two additional patents. In March 2001, the Court issued an opinion pursuant to Markman v. Westview Instrs. Inc., 52 F.3d 967 (Fed.Cir.1995), aff'd 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996) to construe the disputed claim terms of the patent. Thereafter, Rambus abandoned, before trial, the charge of infringement as to one of the patents-in-suit, U.S. Patent No. 5,954,804. After the presentation of Rambus' infringement case, the Court granted JMOL in Infineon's favor on the remaining three patents-in-suit, U.S. Patent Nos. 5,953,263; 6,032,214; and 6,034,918.
The trial proceeded, however, on the counterclaims filed by Infineon. After prevailing on the infringement suit, Infineon agreed that its claims of invalidity, non-infringement and unenforceability of the four patents-in-suit (Counts 1-4) were moot, as was its claim for monopolization of the relevant technology market in violation of the Sherman Act, 15 U.S.C. § 2 (Count 12). The Court granted JMOL in favor of Rambus on Counts 8 and 9, which alleged that Rambus breached its contract with JEDEC,2 a technology standards-setting body (Count 8) and that Infineon was a third-party beneficiary of that breached contract (Count 9). The Court also granted JMOL in favor of Rambus on Infineon's attempted monopolization claim (Count 13). See 15 U.S.C. § 2.
At the conclusion of the two and one-half week trial, the jury, in a special verdict form, found Rambus liable for committing actual and constructive fraud in its conduct at JEDEC respecting both the Synchronous Dynamic Random Access Memory ("SDRAM") and the Double Data Rate SDRAM ("DDR SDRAM") standards adopted by JEDEC. The jury awarded nominal damages in the amount of $1.00 on each of the fraud claims (Count 10—actual fraud; Count 11—constructive fraud) and punitive damages in the amount of $3,500,000.00 on the actual fraud claim. Pursuant to Va.Code § 8.01-38.1, the Court reduced the amount of punitive damages to $350,000.00. The jury found in favor of Rambus on Infineon's claim of a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. (Count 14).
By separate opinion and order entered this day, the finding of liability on the constructive fraud claim (Count 11) is set aside, and that part of the verdict finding Rambus liable for actual fraud (Count 10) respecting its conduct in connection with the DDR SDRAM standard is also set aside.
A. Factual Background
Rambus is a technology company that designs and licenses computer memory systems. Rambus does not manufacture memory devices, but instead licenses its technologies to semiconductor manufacturers. The existence and the profitability of Rambus depends entirely on securing patents and licensing them to manufacturers.
In April 1990, Rambus filed a patent application covering a new design for computer memory systems. The United States Patent and Trademark Office ("PTO") determined that this application, U.S. Patent App. No. 07/510,898 ("the '898 application"), contained 11 independent and distinct inventions. The PTO, therefore, required Rambus to select only one of those inventions to pursue in the '898 application and allowed it to file divisional applications on the remaining inventions. Rambus did precisely that.
As of the date of trial, Rambus had been granted 31 patents based on the 1990 '898 application and numerous applications are currently pending. Many of these early patents are directed to "Rambus DRAMs" or "RDRAMs," which is a predecessor to the SDRAM technology. Rambus licensed several semiconductor manufacturers, including Infineon, for the RDRAM technology.
The four patents-in-suit, however, are addressed to SDRAMs and DDR SDRAMs. In a SDRAM, the central processing unit, or CPU, sends and receives information from the memory device according to the "tick" of a "clock" contained within the memory system. In DDR SDRAMs, the rate of the transfer of information is doubled because information is sent on both the "tick" and the "tock" of the clock.
Infineon makes and sells a variety of semiconductor devices to be used in computers, including SDRAMs and DDR SDRAMs. Infineon's fraud claim focused on Rambus' conduct while Rambus and Infineon were members of JEDEC, an association of semiconductor manufacturers and designers who collaborate to develop industry-wide technical standards for semiconductor products in order to ensure that Dynamic Random Access Memory ("DRAM") products, made by different manufacturers, are compatible with one another. As part of its standard-setting process, JEDEC sought to avoid incorporating patented technology into its standards. To that end, JEDEC policy required members to disclose patents and patent applications that related to JEDEC's standard-setting work. If JEDEC decided to include a patented technology in a standard, its members who held patents on that technology were required (by agreement) to license that technology "under reasonable terms and conditions that are demonstrably free of any unfair discrimination."
Although a central issue in dispute at trial was whether, before 1993, JEDEC members had a duty to disclose pending patent applications (and not just patents that had been issued), the jury concluded that Rambus' disclosure duty extended to both issued patents and pending patent applications. The jury found that Rambus had committed actual fraud by failing disclose its patents or pending patent applications to JEDEC while it was a member of that organization.
The applications for the four patents-in-suit were filed after Rambus had withdrawn its membership from JEDEC. Specifically, the four applications were submitted between 1997 and 1999 and issued in 1999 and 2000. However, the evidence showed that the four patents-in-suit are divisional or continuation applications of other Rambus patents which were pending during the time that Rambus was a member of JEDEC, and at a time when Rambus had a duty to disclose its pending patents. Infineon offered extensive evidence which convinced the jury that Rambus committed actual fraud by: attending JEDEC meetings, listening to the proposed technology to be included in the JEDEC SDRAM standard, remaining silent (in the face of a duty to disclose) about its pending patent applications during those meetings, and, with the assistance of its patent lawyers, obtaining additional patents to cover the features of the JEDEC SDRAM standard, even as those features were being discussed at Committee JC-42.3 meetings.
Section 285 provides, quite simply, that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." The purpose of § 285 is two-fold.3 First, it permits an award of fees "where it would be grossly unjust that the winner be left to bear the burden of his own counsel which prevailing litigants normally bear." Badalamenti v. Dunham's Inc., 896 F.2d 1359, 1364 (Fed.Cir. 1990), cert. denied 498 U.S. 851, 111 S.Ct. 142, 112 L.Ed.2d 109 (1990) (quoting J.P. Stevens Co. v. Lex Tex Ltd., 822 F.2d 1047, 1052 (Fed.Cir.1987)) (emphasis in original). Thus, under § 285, an award of attorneys' fees compensates the prevailing party for losses incurred as the consequence of the conduct of the losing party. See Central Soya Co. v. Geo. A. Hormel & Co., 723 F.2d 1573, 1578 (Fed.Cir.1983). Additionally, § 285 deters parties from bringing bad faith litigation, see Mathis v. Spears, 857 F.2d 749, 753-54 (Fed.Cir.1988), which protects litigants, the courts and the judicial process from abuse. Attorneys' fees are available to the...
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