Samsung Electronics Co., Ltd. v. Rambus, Inc.

• Citation: 398 F.Supp.2d 470
• Decision Date: 08 November 2005
• Docket Number: No. Civ.A. 3:05CV406.,Civ.A. 3:05CV406.
• Parties: SAMSUNG ELECTRONICS CO., LTD., Plaintiff, v. RAMBUS, INC., Defendant.
• Court: United States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)

Page 470

398 F.Supp.2d 470

SAMSUNG ELECTRONICS CO., LTD., Plaintiff, v. RAMBUS, INC., Defendant.

No. Civ.A. 3:05CV406.

United States District Court, E.D. Virginia, Richmond Division.

November 8, 2005.

Harris Dewey Butler, III, Charles Lewis Williams, James Curie Skilling, Butler Williams & Skilling PC, Brian Charles Riopelle, McGuirewoods LLP, Richmond, VA, Ana Elena Kadala, David James Healey Weil Gotshal & Manges LLP, Houston, TX, Matthew D. Powers, Weil, Gotshal & Manges, Redwood Shores, CA, for Plaintiff.

Gregory Paul Stone, Munger Tolles & Olson LLP, Los Angeles, CA, Rowland Braxton Hill, IV, Craig Thomas Merritt, Michael W. Smith, Christian & Barton LLP, Harris Dewey Butler, III, Charles Lewis Williams, James Curie Skilling, Butler Williams & Skilling PC, Brian Charles Riopelle, McGuirewoods LLP, Richmond, VA, for Defendant.

MEMORANDUM OPINION

PAYNE, District Judge.

Rambus, Inc. ("Rambus") moves to dismiss the declaratory judgment action filed against it by Samsung Electronics Co., Ltd. ("Samsung") on June 7, 2005. Rambus contends that this action has been rendered moot by the covenants not to sue Samsung, which Rambus filed after the action was filed, and by the consequent dismissal of Rambus' counterclaims. According to Rambus, the Court no longer has subject matter jurisdiction, and thus Samsung's declaratory judgment action should be dismissed under Fed.R.Civ.P. 12(b)(1). Rambus further argues that the Court does not have subject matter jurisdiction over Samsung's request for attorney's fees. For the reasons that follow, the motion is granted in part and denied in part.

FACTUAL AND PROCEDURAL BACKGROUND

Samsung filed this action seeking a declaratory judgment, inter alia, that four patents held by Rambus are unenforceable by virtue of the doctrines of unclean hands, equitable estoppel, patent misuse, waiver, laches, and laches in the United States Patent and Trademark Office ("PTO"). The patents-in-suit are the four patents-in-suit in Rambus, Inc. v. Infineon Technologies AG, No. CIV. A. 3:00cv524 (E.D.Va.) ("Rambus v. Infineon"): (1) U.S. Pat. No. 5,953,263 ("the '263 Patent"); (2) U.S. Pat. No. 5,954,804 ("the '804 Patent"); (3) U.S. Pat. No. 6,032,214 ("the '214 Patent"); and (4) U.S. Pat. No. 6,034,918 ("the '918 Patent"). Rambus asserted counterclaims against Samsung in its Answer, alleging infringement of the same patents.

A. Rambus/Infineon Litigation

Rambus develops and licenses technology to companies that manufacture semi-conductor memory devices. Its patents are directed to various dynamic random access memory devices ("DRAMs"), Rambus DRAMs ("RDRAMs"), Synchronous Dynamic Random Access Memory ("SDRAM"), and Double Data Rate Synchronous Dynamic Random Access Memory ("DDR-SDRAM"). See Rambus, Inc. v. Infineon Tech. AG, 222 F.R.D. 280, 282 (E.D.Va.2004). Beginning in early 1998 and continuing through 1999 and 2000, Rambus developed, refined, and implemented a patent licensing and litigation strategy, which was aimed at several specifically identified DRAM manufacturers. Among the targeted DRAM manufacturers were Infineon, Samsung, and Hynix Semiconductor, Inc. ("Hynix").

Pursuant to that strategy, in June 2000, in this Court, Rambus asserted patent infringement claims against Infineon with respect to the same four patents-in-suit that are at issue in Samsung's action for declaratory judgment. After extensive discovery and issuance of a claim construction opinion, there was a two week trial on Rambus' infringement claims, as well as Infineon's counterclaims. Ultimately, the judgment was appealed to the United States Court of Appeals for the Federal Circuit, which affirmed in part, reversed in part, and remanded for further proceedings. Additional discovery was conducted at that time and, during those proceedings, it was determined that spoliation of documents by Rambus warranted the piercing of Rambus' attorney-client and work-product privileges. Rambus, Inc. v. Infineon Tech. AG, 222 F.R.D. at 296-99. Subsequent discovery was permitted on the issue of spoliation and other issues.

In February 2005, a bench trial was held on Infineon's defense of unclean hands. Simultaneously, a corollary evidentiary proceeding was held with respect to spoliation of evidence, for which a sanction of dismissal was requested. At the conclusion of the trial of those issues, the Court ruled from the bench that Infineon had proven, by clear and convincing evidence, that Rambus was liable for unclean hands, thus barring Rambus from enforcing the four patents-in-suit. Additionally, the Court ruled that Infineon had proven, by clear and convincing evidence, that Rambus had spoliated evidence, for which dismissal was the appropriate sanction. Following this ruling, and before the Court issued findings of fact and conclusions of law, Rambus and Infineon settled.

B. Background And Procedural History Of This Action

Also pursuant to its licensing and litigation strategy, and while Rambus was prosecuting its actions against Infineon, Rambus entered license negotiations with Samsung. In October 2000, the parties entered into a license agreement that covered, inter alia, the patents-in-suit. Samsung Electronics Co., Ltd. v. Rambus Inc., 386 F.Supp.2d 708, 712 (E.D.Va.2005). Samsung and Rambus amended that license agreement in 2001 because of developments in the litigation between Rambus and Infineon. Id.

Samsung and Rambus began to renegotiate the terms of the license agreement in July 2004. A part of those negotiations was a so-called "Standstill Agreement" by which any litigation over the license agreement would be delayed for a year while negotiation continued. However, the negotiations did not go to the liking of Rambus. When Samsung refused to accede to Rambus' demand for a contract provision that would allow Rambus to litigate any patent dispute in California, Rambus terminated the discussions respecting an extension of the license agreement and the license agreement itself. Simultaneously, Rambus filed a patent infringement action against Samsung in the United States District Court for the Northern District of California. Samsung, 386 F.Supp.2d at 713-15. In that action, Rambus claimed that Samsung was infringing, inter alia, all four of the patents-in-suit that were at issue in the Rambus/Infineon action.

On June 7, 2005, one day after Rambus brought patent infringement claims against Samsung in the Northern District of California, Samsung filed this action for declaratory judgment, and, shortly thereafter, filed its First Amended Complaint. See Samsung, 386 F.Supp.2d at 712. Samsung's complaint and the amended complaint proceeded on the clearly articulated theory that the decision on the spoliation and unclean hands issues in the Rambus/Infineon litigation barred any claim for infringement of the patents-in-suit. Nonetheless, on July 12, 2005, Rambus counterclaimed for infringement of all four patents-in-suit, and then moved to transfer the action to the Northern District of California so that Rambus could press its infringement claims there. Contemporaneous with its response to Rambus' motion to transfer, Samsung moved for partial summary judgment on the issues of spoliation and unclean hands. Samsung argued that the Court's bench ruling in Rambus v. Infineon with respect to Rambus' spoliation and unclean hands should be given collateral estoppel effect and consequently that the four patents-in-suit were unenforceable. A briefing schedule was set for Samsung's motion for partial summary judgment.

C. Covenants Not to Sue

Thereafter, on September 6, 2005, Rambus filed an "unconditional" and "irrevocable" covenant not to assert patent infringement claims against Samsung with respect to the '804 and '214 patents ("First Covenant"). The First Covenant expressly extends to actions in the International Trade Commission as well. The scope of the covenant not to sue extends to "any and all methods, processes, and products made, used, offered for sale, sold, or imported by Samsung currently or at any time prior to the date of this covenant." However, the First Covenant does not extend to any other patents held by Rambus, related or unrelated, and Rambus expressly declined to concede the merits of Samsung's allegation that the '804 and '214 patents were unenforceable and invalid.

Subsequently, on September 13, 2005, Rambus and Samsung stipulated that the First Covenant "eliminates any need for declaratory relief that Samsung may have had with respect to the '804 Patent and the '214 Patent." Stipulation (Docket No. 42). Samsung, however, reserved its right to request that the Court declare the case exceptional and order Rambus to pay Samsung's attorney's fees under 35 U.S.C. § 285. Rambus expressly reserved the right to oppose such relief, and to argue that the First Covenant moots such relief. The stipulation also provided that Samsung's declaratory judgment action with respect to the '804 and '214 patents was to be dismissed without prejudice.

On September 12, 2005, Rambus filed its opposition to Samsung's motion for partial summary judgment on the defense of unclean hands based on spoliation. On September 14, 2005, Rambus' motion to transfer this action to the Northern District of California was denied. On the same date, counsel were ordered to confer about procedures to expedite the trial of this action and to report the results thereof to the Court on September 21, 2005. On September 21, 2005, the Court gave notice of its intent to take judicial notice of the record of the spoliation and unclean hands bench trial in the Rambus/Infineon litigation.

On September 21, 2005, Mr. John Danforth, Rambus' General Counsel, signed a second covenant not to sue Samsung ("Second Covenant"), this time with respect to the '263 and '918 patents. The Second Covenant was filed with the Court on September 22, 2005. The language in the Second Covenant with respect to the covenant not to sue is identical to the...