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

• Decision Date: 29 April 2008
• Docket Number: No. 2006-1579.,2006-1579.
• Citation: 523 F.3d 1374
• Parties: SAMSUNG ELECTRONICS CO., LTD., Plaintiff-Appellee, v. RAMBUS, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

523 F.3d 1374

SAMSUNG ELECTRONICS CO., LTD., Plaintiff-Appellee, v. RAMBUS, INC., Defendant-Appellant.

No. 2006-1579.

United States Court of Appeals, Federal Circuit.

April 29, 2008.

David J. Healey, Weil, Gotshal & Manges LLP, of Houston, TX, argued for plaintiff-appellee. With him on the brief were Carmen E. Bremer, of Dallas, TX; Amber H. Rovner and Melanie P. Sarwal, of Austin, TX; and Edward R. Reines and Sonal N. Mehta, of Redwood Shores, CA. Of counsel on the brief was Richard L. Rainey, Covington & Burling LLP, of Washington, DC. Of counsel were Gregory S. Coleman, Weil, Gotshal & Manges LLP, of Austin, TX, and Brian C. Riopelle, McGuireWoods LLP, of Richmond, VA.

Richard G. Taranto, Farr & Taranto, of Washington, DC, argued for defendant-appellant. On the brief was Michael J. Schaengold, Patton Boggs LLP, of Washington, DC. Of counsel were Daniel L. Geyser, Gregory P. Stone, and Paul J. Watford, Munger Tolles & Olson LLP, of Los Angeles, CA, and Paul R.Q. Wolfson, Wilmer Cutler Pickering Hale & Dorr LLP, of Washington, DC.

Before RADER, SCHALL, Circuit Judges, and FARNAN,^* District Judge.

RADER, Circuit Judge.

The United States District Court for the Eastern District of Virginia denied Samsung Electronics Co., Ltd.'s (Samsung) motion for attorney fees and issued a lengthy opinion addressing issues relating to the alleged spoliation of evidence by Rambus, Inc. (Rambus), but not relevant to the basis for judgment in favor of Samsung. When Rambus offered to pay Samsung's requested attorney fees in full, the case before the district court became moot. Samsung Elecs. Co. Ltd. v. Rambus, Inc., 439 F.Supp.2d 524 (E.D.Va.2006). This court therefore vacates the order of the district court and remands the case to the district court with the instruction that it dismiss Samsung's complaint.

I

Rambus filed a complaint against Samsung alleging infringement of four of its patents in the United States District Court for the Northern District of California on June 6, 2005. The next day, Samsung filed a declaratory judgment action in the Eastern District of Virginia seeking a declaration that the patents at issue were invalid, unenforceable, and not infringed. The Eastern District of Virginia accepted jurisdiction to hear the case as related to a previously concluded litigation involving the same patents. Rambus Inc. v. Infineon Techs. AG, 164 F.Supp.2d 743 (E.D.Va.2001). (Infineon litigation). The patents at issue in that litigation were: U.S. Patent Nos. 5,953,263; 5,954,804; 6,032,214; and 6,034,918, all directed to various dynamic random access memory devices (DRAMs). In that previous litigation this court, on appeal, had disagreed with the trial court's claim construction and fraud determination. Rambus Inc. v. Infineon Techs. AG, 318 F.3d 1081 (Fed. Cir.2003). Accordingly, this court remanded. Id. On remand, the district court immediately entertained arguments regarding the spoliation of evidence. From the bench, the district court in Virginia ruled that Rambus had unclean hands due to spoliation of evidence. To avoid issuance of an adverse finding, Rambus quickly settled with Infineon. Accordingly, the trial court properly dismissed that original case against Infineon before entry of any findings or judgment against Rambus.

Five months after settlement of the Infineon litigation, and one day after Rambus filed suit in the Northern District of California, Samsung filed a declaratory judgment action against Rambus in the Eastern District of Virginia. On July 12, 2005, Rambus unsuccessfully moved to transfer the case to the Northern District of California-the venue of Rambus' pending infringement action against Samsung, and the location of other ongoing lawsuits regarding the same patents. Rambus Inc. v. Hynix Semiconductor Inc., No. C05-00334, 2005 WL 2453164 RMW (N.D.Cal. Oct. 3, 2005); Hynix Semiconductor Inc. v. Rambus Inc., No. C00-20905 RMW, 2006 WL 565893 (N.D.Cal. Jan. 5, 2006). Samsung, however, aware of the previous adverse findings against Rambus in the Infineon litigation, sought to keep this case in the Eastern District of Virginia due to the possibility of invoking collateral estoppel on the basis of the earlier unpublished spoliation findings.

In the ongoing related litigation against Hynix in the Northern District of California, the district court, after an extensive inquiry into the same spoliation allegations, refused Hynix's analogous effort to invoke collateral estoppel based on the pre-settlement oral findings in Infineon. Hynix v. Rambus, Order Denying Hynix's Motion to Dismiss Patent Claims for Unclean Hands on the Basis of Collateral Estoppel, C00-20905 RMW, (N.D.Cal. 2005). In September of 2005, Rambus filed covenants not to sue Samsung on the four patents at issue and voluntarily dismissed its infringement counterclaims. Accordingly, the district court in Virginia dismissed the case as moot on November 8, 2005. The Virginia district court, however, retained jurisdiction to adjudicate Samsung's claim for attorney fees under 35 U.S.C. § 285.

On October 3, 2005, Rambus made a written offer to compensate Samsung for the full amount of its requested attorney fees. On November 30, 2005, as suggested by the court, Rambus followed up with a formal offer of judgment under Fed. R.Civ.P. 68. Samsung did not accept the offer for full relief and persisted with its motion for attorney fees. On July 18, 2006 the district court issued an order denying attorney fees because Rambus terminated its claims at a sufficiently early stage in the litigation and because the record was insufficient to establish a causal nexus between the spoliation of evidence and the attorney fees sought by Samsung. Samsung Elecs. Co. Ltd. v. Rambus Inc., 439 F.Supp.2d at 571-72. This opinion also held that the case was exceptional under 35 U.S.C. § 285, and issued the unpublished spoliation findings from the previously concluded Infineon litigation. Although it denied Samsung the only relief sought, the Virginia district court nonetheless issued a separate opinion on the same day holding that Samsung was the prevailing party. Samsung Elecs. Co. Ltd. v. Rambus Inc., 440 F.Supp.2d 495 (E.D.Va. 2006).

II

Rambus timely appealed the district court's order denying Samsung's attorney fees application but entering findings adverse to Rambus with respect to the spoliation of evidence.

Having appealed the order of the district court, Rambus nevertheless asks this court to dismiss its appeal for lack of jurisdiction. According to Rambus, because it was the prevailing party on the issue of attorney fees, it lacks standing to challenge the findings that are adverse to it in the district court's order. Under these circumstances, Rambus argues, this court does not have before it an Article III case or controversy. Hence, it is without jurisdiction. Rambus argues in the alternative that, if this court does decide to exercise jurisdiction, it should hold that the district court lacked jurisdiction to rule on Samsung's application for attorney fees because the issue had become moot in view of Rambus' offer to pay the full amount of attorney fees claimed by Samsung. Rambus urges this court to vacate the order of the district court and to remand the case to the court with the instruction that it dismiss Samsung's complaint.

Article III, § 2 of the Constitution confines federal courts to the decision of "cases" or "controversies." Standing to sue or defend is an aspect of the case-or-controversy requirement. Ne. Fla. Chapter, Associated Gen. Contractors of Am. v. Jacksonville, 508 U.S. 656, 663-64, 113 S.Ct. 2297, 124 L.Ed.2d 586 (1993). In the absence of Article III standing, a court lacks jurisdiction. See Whitmore v. Arkansas, 495 U.S. 149, 154-55, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990) ("Article III, of course, gives the federal courts jurisdiction only over `cases and controversies,' and the doctrine of standing serves to identify those disputes which are appropriately resolved through the judicial process."). Finally, the Article III standing requirement "must be met by persons seeking appellate review, just as it must be met by persons appearing in courts of first instance." Arizonans for Official English v. Arizona, 520 U.S. 43, 64, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997) (citing Diamond v. Charles, 476 U.S. 54, 62, 106 S.Ct. 1697, 90 L.Ed.2d 48 (1986)).

Rambus's argument that this court should dismiss its appeal because it lacks standing to challenge the district court's order raises a legitimate question as to our jurisdiction. It is not necessary for us to decide the standing issue, however. The reason is that this court may adopt the approach of assuming, arguendo, that Rambus has standing to bring this appeal. See Arizonans for Official English, 520 U.S. at 66-67, 117 S.Ct. 1055. ("We may resolve the question whether there remains a live case or controversy with respect to Yniguez's claim without first determining whether AOE or Park has standing to appeal because the former question, like the latter, goes to the Article III jurisdiction of this Court and the courts below, not to the merits of the case.") (citations omitted). Accordingly, this court turns now to the issue of whether Rambus' offer to pay the full amount of Samsung's attorney fees rendered the case moot so that the district court was without jurisdiction to enter the order that Rambus challenges.

Under Article III of the United States Constitution, federal courts may adjudicate only actual, ongoing cases and controversies. Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990) (citing Preiser v. Newkirk, 422 U.S. 395, 401, 95 S.Ct. 2330, 45 L.Ed.2d 272 (1975)). This court examines cases for an actual Article III controversy as a question of law without deference. Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1058 (Fed. Cir.1995) (citing BP Chems. Ltd. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed.Cir. 1993...