2883-1 rambus' response re mm price fixing

8/14/2019 2883-1 Rambus' Response Re MM Price Fixing

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6585711.4

RAMBUSS OPPOSITION TO MANUFACTURERSMOTIONIN LIMINENO. 17;

CASE NOS. 05-334 RMW; 05-2298 RMW; 06-244 RMW

Gregory P. Stone (SBN 078329)Andrea Weiss Jeffries (SBN 183408)Fred A. Rowley, Jr. (SBN 192298)MUNGER, TOLLES & OLSON LLP355 South Grand Avenue, 35th FloorLos Angeles, CA 90071-1560Telephone: (213) 683-9100Facsimile: (213) 687-3702Email: [email protected]: [email protected]: [email protected]

Peter A. Detre (SBN 182619)Rosemarie T. Ring (SBN 220769)Jennifer L. Polse (SBN 219202)MUNGER, TOLLES & OLSON LLP560 Mission Street, 27th FloorSan Francisco, CA 94105Telephone: (415) 512-4000

Facsimile: (415) 512-4077Email: [email protected]: [email protected]: [email protected]

Attorneys for RAMBUS INC.

Rollin A. Ransom (SBN 196126)SIDLEY AUSTIN LLP555 West Fifth Street, Suite 4000Los Angeles, CA 90013-1010Telephone: (213) 896-6000Facsimile: (213) 896-6600Email: [email protected]

Pierre J. Hubert (Pro Hac Vice)Craig N. Tolliver (Pro Hac Vice)McKOOL SMITH PC300 West 6th Street, Suite 1700Austin, TX 78701Telephone: (512) 692-8700Facsimile: (512) 692-8744Email: [email protected]: [email protected]

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION

RAMBUS INC.,

Plaintiff,

vs.

HYNIX SEMICONDUCTOR INC., et al.,

Defendants.

CASE NO.: C 05-00334 RMW

RAMBUSS OPPOSITION TOMANUFACTURERS MOTIONIN LIMINETO EXCLUDE EVIDENCE OF ORREFERENCE TO ALLEGED DRAMPRICE-FIXING OR ALLEGED BOYCOTTEVIDENCE FROM JANUARY 2009PATENT TRIAL (MIL NO. 17)

Date: December 19, 2009Time: 2:00 PM

Trial Date: January 19, 2009Courtroom: 6Judge: Hon. Ronald M. Whyte

RAMBUS INC.,

Plaintiff,

vs.



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6585711.4

RAMBUSS OPPOSITION TO MANUFACTURERSMOTIONIN LIMINENO. 17;


SAMSUNG ELECTRONICS CO., LTD.,et al.,

Defendants.

RAMBUS INC.,

Plaintiff,

vs.

MICRON TECHNOLOGY INC., et al.,

Defendants.



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6585711.4 - 1 -RAMBUSS OPPOSITION TO MANUFACTURERS

MOTIONIN LIMINENO. 17;


I. INTRODUCTIONRambus opposes the Manufacturers MotionIn Limine No. 17 to exclude

evidence of DRAM price-fixing and the boycott of RDRAM. As during the Joint

Conduct Trial, this motion marks yet another attempt by the Manufacturers to win carte

blanche to present any evidence or argument that they wish, without opening the door to

evidence of DRAM price-fixing or the RDRAM boycott.

The Manufacturers argue that the Court should rule, in advance of trial,

that regardless of the evidence or argument presented by them, Rambus should be

barred from introducing, discussing, or eliciting testimony or evidence at the January 19,

2009 trial relating to alleged DRAM price fixing or alleged boycott evidence.

([Proposed] Order Granting MotionIn Limine No. 17, Docket Entry 2716-2.) In familiar

refrain, the Manufacturers complain that anything short of unequivocal immunization

from rebuttal regarding price-fixing or boycott evidence will cause a Sword of

Damocles to hover over the trial. (Nanya Technology Corporations and Nanya

Technology Corporation USAs Joinder In Samsung MotionIn Limine No. 17 at 3,

Docket Entry 2782.) However, as this Court has previously noted, there is a sword of

Damocles hanging over the Manufacturers case, but it was placed there by the

Manufacturers own alleged conduct. (Order Denying The Manufacturers Motion For

A New Trial at 11, Docket Entry 1984.)

II. FACTUAL BACKGROUNDAn issue raised several times during the Joint Conduct Trial was whether

Rambus could introduce evidence that the Manufacturers engaged in price-fixing or a

boycott to destroy RDRAM and Rambus. Prior to the trial, the Manufacturers moved in

limine to exclude any evidence of plea agreements or alleged boycotts. On each motion,

the Court ruled presumptively in the Manufacturers favor, although it did not afford the

absolute immunity from price-fixing and boycott evidence that the Manufacturers


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sought.

Addressing the price-fixing motion in limine, the Court ruled that:

Rambus may not introduce into evidence the Samsung or Hynix guilty pleas forthe purpose of impeaching character for truthfulness. If Rambus wishes to raise

the issue of a price-fixing conspiracy to (1) inquire about specific instances ofconduct on cross-examination to impeach character for truthfulness, or (2) rebutevidence regarding various lines of argument about pro-competitive behavior inthe DRAM industry, Rambus must first obtain permission from the court outsidethe presence of the jury.

Hynix Semiconductor Inc. v. Rambus Inc., Nos. CV-00-20905 RMW, et al., 2008 WL

350647, at *1 (N.D. Cal. Feb. 3, 2008). Addressing the boycott motion in limine, the

Court ruled that:

Ruling is deferred so that court can consider how evidence develops.

Rambus must seek permission from the court outside the presence of thejury before mentioning anything about alleged boycott or pricemanipulation. If the Manufacturers present evidence that RDRAMfailed or experienced lack of market success because it was tooexpensive or had technical flaws or performance problems, Rambusshould be able to explain other reasons that caused or contributed to itsRDRAMS market performance. However, if the Manufacturers do notget into the reasons for RDRAMs lack of market success, evidenceconcerning an alleged boycott or price manipulation seems irrelevant.

Id. at *2 (emphasis added).

At various points in the Joint Conduct Trial, Rambus argued outside of

the presence of the jury that it should be able to introduce evidence related to price-fixing

or boycotts. (Order at 9, Docket Entry 1984.)

At the end of the trial, the Manufacturers moved for a new trial arguing

that the Court erred by not conclusively excluding all evidence related to price-fixing or

boycotts prior to trial. (Manufacturers Motion For A New Trial Pursuant to Federal

Rule Of Civil Procedure 59 at 16-22, Docket Entry 1678.) The court rejected the

Manufacturers motion, stating:

In short, the Manufacturers after-the-fact argue that they wouldhave tried their case differently had the court entered a blanket orderexcluding evidence of their misdeeds. The court declined to enter such anorder. Instead, the court presumptively excluded evidence regardingprice-fixing and boycotts, contingent on how the evidence developed attrial. This was not an erroneous ruling. The Manufacturers were free tointroduce whatever evidence they pleased, cognizant of the risk that ifevidence of price-fixing or an agreement to boycott was probative in


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rebutting their evidence, it mightcome into evidence. To be sure, theManufacturers had to be careful in their presentation of evidence toexclude the portion of the story in which the Manufacturers allegedlyviolated the antitrust laws. This was a sword of Damocles hanging overthe Manufacturers case, but it was placed there by the Manufacturersown alleged conduct not the courts rulings.

(Order at 11, Docket Entry 1984 (emphasis in original).) The court should similarly

reject the Manufacturers latest attempt to win a pre-trial blanket order excluding all

price-fixing and boycott evidence.

III. ARGUMENTA. Motions In Limine Should Not Be Directed At Large Categories Of Evidence

The Manufacturers seek the unfettered right to present evidence without

rebuttal. However, it is well settled that courts should avoid sweeping and broad

exclusions of evidence by in limine orders. Pegg v. General Motors Corp., No. 88-

4267-C, 1992 WL 266862 at *3 (D. Kan. Sept. 22, 1992). See also Sperberg v.

Goodyear Tire & Rubber Co., 519 F.2d 708, 712 (6th Cir. 1975) ([o]rders in limine

which exclude broad categories of evidence should rarely be employed.). Courts also

may deny a motion in limine if it lacks the necessary specificity with respect to the

evidence to be excluded,National Union Fire Ins. Co. of Pittsburgh, Pa. v. L.E. Myers

Co. Group, 937 F. Supp. 276, 287 (S.D.N.Y. 1996), or if the moving party fails to show

that the evidence in question is clearly inadmissible on all potential grounds.

Commerce Funding Corp. v. Comprehensive Habilitation Servs., Inc., No. 01 Civ. 3796

(PKL), 2004 WL 1970144 at *4 (S.D.N.Y. Sept. 3, 2004). In addition, motions in limine

should not be designed to create an uneven playing field, where one party is free to

introduce evidence on a relevant issue while the other party is prevented from doing so.

B. The Manufacturers Might Open The Door To Evidence Of Price-FixingContrary to the Manufacturers assertion that price-fixing evidence could

not possibly relate to any matters of proof in the upcoming trial, price-fixing would bear

a direct relationship to several potential lines of argument, and the Court should not


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categorically exclude it without allowing that evidence to develop.

1. Price-fixing may be relevant to the alleged lack of commercial success ofRDRAM

The Manufacturers argue that [e]vidence of alleged DRAM price fixing

of a completely different product in the 1999-2002 time period can have no conceivable

relevance to RDRAMs lack of success. (MotionIn Limine To Exclude Evidence Of Or

Reference To Alleged DRAM Price-Fixing Or Alleged Boycott Evidence From January

2009 Patent Trial (MIL No. 17) at 5, Docket Entry 2716.) This argument is without

merit. The Manufacturers apparently believe that they can limit their arguments about

commercial success to Rambuss pre-1996 efforts to commercialize Base and Concurrent

RDRAM, and then pull down a curtain over Intels selection in 1996 of Direct RDRAM

as the next generation main memory device. In other words, the Manufacturers wish

the jury to believe that dual-edge clocking and on-chip PLL/DLL were insignificant

inventions because they were not used in main memory prior to 1996. If the

Manufacturers intend to argue that Rambuss inventions are insignificant because

Rambus-designed DRAMs failed to achieve commercial success, then the jury should

hear the true reason why RDRAM failed to achieve the dominance that industry

observers and the Manufacturers expected in the late 1990s.1

1 The evidence also shows that the price-fixing of products other than RDRAM isrelevant to the issue of RDRAMs success, as certain manufacturers were engaging inprice-fixing to lower DDR prices in order to drive RDRAM out of the market. This jointstrategy was explained in a June 5, 2001 email written by Micron vice president LindaTurner in reaction to Hynix lowering its DDR price:

No problem! W[e] want DDR to explode into the marketplace so haveactually been requesting Infineon, Samsung, and Hynix to lower theirDDR pricing to help it become a standard (and drive Rambus awaycompletely).

(Declaration of Bill Ward In support Of Rambuss Opposition To ManufacturersMotionIn Limine To Exclude Evidence Of Or Reference To Alleged DRAM Price-Fixing Or Alleged Boycott Evidence From January 2009 Patent Trial (Ward Decl.),Ex. A (emphasis added).)


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The commercial and technological success of RDRAM is an important

issue of secondary considerations bearing on nonobviousness in this case. As the

Federal Circuit has stated, these secondary considerations may often be the most

probative and cogent evidence in the record. It may often establish that an invention

appearing to have been obvious was not. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d

1530, 1538 (Fed. Cir. 1983). See also Ashland Oil Co. v. Delta Resins & Refractories,

Inc., 776 F.2d 281, 306 (Fed. Cir. 1985) (Secondary considerations may be the most

pertinent, probative, and revealing evidence available to the decision maker in reaching a

conclusion on the obviousness/nonobviousness issue.). On such an important issue,

Rambus must have the right to respond to the Manufacturers arguments. See, e.g.,

United States v. Magallanez, 408 F.3d 672, 681 (10th Cir. 2005) (a party is entitled to

offer evidence to explain, repel, contradict or disprove an adversarys proof) (citation

omitted);Jones v. Southern Pac. R.R., 962 F.2d 447, 450 (5th Cir. 1992) (if the

opposing party places a matter at issue on direct examination, fairness mandates that the

other party can offer contradicting evidence. . . .).

2. Price-fixing is relevant to the profitability of DDR2 precursor productsThe Manufacturers motion also ignores other relationships between the

accused products in the January trial (DDR2 and later generations) and price-fixing

related to SDRAM and DDR. While the Manufacturers motion strives to emphasize the

differences between these products, elsewhere, according to the Manufacturers and their

experts, DDR2 and DDR3 are mere evolutions of DDR that build upon DDR with

DDR and DDR2 hav[ing] a common set of features because they are compliant with

or based on evolutionary JEDEC standards. (Declaration of Joseph McAlexander In

Support Of The Manufacturers Farmwald And Ware Motions For Summary Judgment

at 69, Docket Entry 514.) By their own account, the Manufacturers wished to

introduce detailed evidence in the Joint Conduct Trial regarding Microns negative profit

margins on SDRAM. (Manufacturers Motion For A New Trial at 19, Docket Entry


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1678.) The Manufacturers may very well seek to introduce such evidence again, arguing

that the low profitability of DDR2 precursors cuts in favor of a lower reasonable royalty

rate under the Georgia-Pacific factors. See Invacare Corp. v. Sunrise Med. Holdings,

Inc., No. 1:04CV1439, 2005 WL 1750271, at *2-3 (N.D. Ohio Jan. 21, 2005)

(information regarding non-accused precursor products may be relevant to the

calculation of a reasonable royalty). In particular, contrary to Nanyas assertion, Rambus

should not be precluded from rebutting counterfactual assertions by the Manufacturers

that DRAM prices are set by competition in the industry. (Nanyas Joinder In MotionIn

Limine No. 17 at 3, Docket Entry 2782.) As this courts previous orders contemplate,

Rambus should be permitted to rebut evidence regarding various lines of argument

about pro-competitive behavior in the DRAM industry. Hynix Semiconductor, 2008

WL 350647, at *1.

3. Price-fixing evidence is relevant for impeachment purposesThe Manufacturers argue, incorrectly, that this court has already held

[that] Rambus should not be allowed to introduce evidence of the Manufacturers guilty

pleas to impeach the Manufacturers witnesses or the Manufacturers themselves.

(MotionIn Limine No. 17 at 5, Docket Entry .) In fact, this Courts previous order

specifically contemplates that Rambus might albeit with the Courts leave raise the

issue of a price-fixing conspiracy to [] inquire about specific instances of conduct on

cross-examination to impeach character for truthfulness. Hynix Semiconductor, 2008

WL 350647, at *1. Such impeachment is wholly proper. The general rule in federal

courts is that felony convictions are admissible in civil cases to attack a witness

credibility. See Robert E. Jones, et al., The Rutter Group Practice Guide, Federal Civil

Trials and Evidence, 12:52 (2008). For example, evidence of a companys prior felony

conviction is admissible under Rule 609 to impeach the credibility of witnesses who

testify to the companys good corporate reputation or who otherwise place the

companys credibility at issue. See Hickson Corp. v. Norfolk Southern Ry. Co., 227 F.

Supp. 2d 903, 907 (E.D. Tenn. 2002). Rule 609 also allows the use of a felony


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conviction in examining the testimony of an employee or former employee who

participated in the underlying conduct. Walden v. Georgia-Pacific Corp., 126 F.3d 506,

523-4 (3d Cir. 1997).

C. The Manufacturers Might Open The Door To Boycott Evidence1. Boycott evidence is directly relevant to RDRAMs success

As discussed above, evidence of price-fixing which was used to drive

RDRAM out of the market is directly relevant to the commercial success of RDRAM.

Evidence that the Manufacturers2

attempted to drive RDRAM out of the marketplace

through other means, such as production limits, is similarly relevant to the success of

RDRAM, which in turn is a critical inquiry bearing on secondary considerations of

nonobviousness. The Manufacturers assertion that evidence regarding the technical

flaws and performance problems of RDRAM in no wayimplicates the alleged boycott

is thus baseless. (MotionIn Limine No. 17 at 6, Docket Entry 2716.) (emphasis added)

The Manufacturers cannot expect that only the evidence that they consider relevant will

be presented at trial, and Rambus should not be deprived of the ability to present an

alternative theory of causation to the jury in response to this technical deficiency story.

As this Court previously recognized in rejecting the Manufacturers motion for new trial

following the Joint Conduct Trial:

Such boycott evidence would be highly probative in rebutting theManufacturers arguments about technical superiority, and while theywould be prejudicial, they would not be unfairly prejudicial in thatcontext. Accordingly, the relief the Manufacturers retrospectively request the entry of a blanket order forbidding Rambus from introducingevidence of the Manufacturers conduct with respect to RDRAM nomatter how probative would have been unfair to Rambus.

2

As they have done in the past, Nanya and Nanya USA take great pains to distancethemselves from any involvement in DRAM price-fixing, citing, among other things,Judge Hamiltons entry of summary judgment in the direct purchaser class action. In reDRAM Antitrust Litig., No. M 02-1486 (N.D. Cal. Feb. 20, 1997). The Nanya parties failto mention, however, that Judge Hamilton denied Nanya USAs motion for summaryjudgment and held that numerous contacts and communications took placed during therelevant period between NTC USA executives namely Mr. Hurley and North AmericanSales Director Mike Walsh and other defendants, and that some of the evidenceconveys actions taken by NTC USA executives that may, in fact, be suggestive ofcollusive behavior. Id. at 34:3-14.


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(Order Denying The Manufacturers Motion for A New Trial at 10, Docket Entry 1984

(emphasis in original).) Given the importance of secondary considerations to the

question of obviousness, such a blanket order would be at least as unfair to Rambus in

the coming January trial.

2. The RDRAM boycott bears on certain Manufacturers desire to avoidpaying royalties on Rambuss patents

The Manufacturers also argue that the boycott is irrelevant to the validity

of the patents because [e]ven if RDRAM completely failed, Rambuss patents (valid or

invalid) would still exist. (MotionIn Limine No. 17 at 6, Docket Entry 2716.) This

characterization of the boycott effort is, however, contrary to the evidence in the case.

As an email from Farhad Tabrizi of Hynix shows, the aim of the boycott was not just to

put RDRAM out of the market but to destroy Rambus as a corporation. (Ward Decl.,

Ex. B (I believe DRAM companies will join forces and fight this to the end of Rambus

company.).) The Manufacturers have reminded this court repeatedly of the

considerable costs associated with this litigation. It is likely that if Rambus were out of

business or without funds to pay for litigation, its patents would pose little threat to the

Manufacturers.

3. The Manufacturers offer conflicting arguments pertaining to the trialpresentation of commercial success

According to Samsungs brief (which was joined by Hynix, Micron, and

Nanya), the Manufacturers should be allowed to provide evidence that RDRAM was

not commercially successful without opening the door to the boycott evidence. (Motion

In Limine No. 17 at 6, Docket Entry 2716.) As an example of this evidence, the brief

points to technical flaws and performance problems. Id.

However, in its joinder motion, Nanya argues the direct opposite.

According to Nanya, price-fixing and boycott evidence should be precluded because it

would lead to a trial within a trial on the commercial merit of RDRAM. (Nanyas

Joinder In MotionIn Limine No. 17 at 5, Docket Entry 2782.) According to Nanya,

[t]he presentation of this complex story, which would be necessary to respond to any


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boycott or other collusion allegations, would divert the attention of the jury from the

real issues of the case, wasting court and jury time, and proving nothing relevant in the

context of an infringement and validity case. Id. at 6.

Thus, Samsungs brief argues that the Manufacturers should be able to

present evidence that RDRAM was not a commercial success without opening the door

to boycott evidence. Nanyas brief argues that Rambus should not be able to present

price-fixing or boycott evidence because that would open the door to a trial within a

trial on the commercial merit of RDRAM. The Manufacturers seem to be able to agree

only that Rambus should be precluded from presenting price-fixing and boycott evidence

under any circumstances.

These contradictory positions serve to illustrate that it is simply too early

for the Court to rule out all possibility of permitting evidence of price-fixing and

boycotting. As the Manufacturers arguments show, without knowing what evidence the

Manufacturers will introduce to argue their case, Rambus should not be categorically

excluded in advance of trial from rebutting that unknown testimony and argument.

IV. CONCLUSIONFor the foregoing reasons, the Manufacturers MotionIn Limine No. 17

To Exclude Evidence of Or Reference To Alleged DRAM Price-Fixing Or Alleged

Boycott Evidence From January 2009 Patent Trial should be denied.


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DATED: December 16, 2008 MUNGER, TOLLES & OLSON LLP

SIDLEY AUSTIN LLP

McKOOL SMITH PC

By: /s/ Bill WardBill Ward

Attorneys for Plaintiff RAMBUS INC.

2883-1 rambus' response re mm price fixing

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