The Rambus Story: A Spring Cleaning Lesson

So you’ve got the itch to do some ‘major’ cleaning this Spring. But consider this cautionary tale: Micron Technology, Inc. v. Rambus Inc.

In this case, the federal court in Delaware ruled that Rambus Inc., a microchip technology company, could not use a large number of patents to demand royalties from rival company, Micron Technology Inc.

According to the facts of the case, Rambus became concerned about possible patent infringements by rival microchip manufacturers. During this time, it retained counsel and began developing a litigation strategy. Rambus also began to design and implement a record retention policy, and held a series of "Shred Days" where many expired records were destroyed.

The court looked at whether Rambus’ actions of destroying their documents – even though it was part of their written policy -- constituted a spoliation of evidence. They found that Rambus had a duty to preserve its documents once litigation became reasonably foreseeable.

According to the court, 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.  Therefore, a duty to preserve potentially relevant information arose in December 1998 and any documents purged from that time forward were deemed to have been intentionally destroyed, i.e. destroyed in bad faith.

And because Rambus' bad faith was so clear and convincing and because they destroyed innumerable vital documents relating to all aspects of their business, the court determined that these actions compromised the very integrity of the litigation process. The court found no other equitable relief in this case but to find Rambus’ patents invalid -- a damaging blow to any manufacturer.

The moral of the story?  Companies must exercise extreme caution in implementing document retention policies and must strongly consider whether a "litigation hold" needs to be placed on some documents, even in cases where litigation has not been officially commenced yet.

The case can be found on our site here.