Hynix v Rambus - 10/18/05 - Part VII

The potential for litigation moved closer and closer to actual litigation.

A Nuclear Winter Scenario was prepared by Mr. Karp in late ’98 or early ‘99 and discussed how Rambus could respond in the event that Intel withdrew support for RDRAM. This document suggested as one option that RMBS sue Intel.

[Donkey comment: The existence of this document suggests what? That in early ‘99 Rambus was gearing up for a litigation barrage that included suing (Intel) if RDRAM fell off the roadmap? Or is it evidence that Rambus (Karp) was thoroughly analyzing all the scenarios, including suing Mom?]

Another document presented to Mr. Karp for testimony was the Lexington document or The Shoot Heard Around the World. This was presented as part of the IP update in late (Nov.?) ’99 at Chaminade. This document outlined the Rambus IP initiative, including commencing litigation.

On January 18, 2000, the board was informed that a complaint would be filed against Hitachi later that day or the next in Delaware.

Stone elicited the following from Mr. Karp:

The bulk of the destroyed records were a mountain of computer printouts of circuit design held by engineers. These included simulations that might be several hundred pages long on large paper. Once the circuits were put into production, there isn’t any use for the paper.

The litigation strategy was implemented in November ’99.

A claim chart is used for two purposes, litigation and negotiation. A claim chart is used in licensing.

Is litigation likely or unlikely? Mr. Karp indicated that he was hopeful and concentrated on licensing. Litigation is “not something a small company savored.”

When was the Hitachi complaint drafted? January ’00 or maybe December ’99. Much less than 30 days before the complaint was filed.

Why was Hitachi was selected as a target? Hitachi had worldwide status, respected IP and if RMBS could settle with them it would encourage others to settle. Hitachi, they are “smart guys” and I had a good relationship with them.

When at Samsung, I was worried that the RMBS RDRAM was a “show stopper” for IP other than RDRAM.

Judge Whyte asked Mr. Karp what the difference was between licensing technology and patents. Mr. Karp responded that technology included know-how and design services and a patent, only the use of the patent.

Rambus had security concerns a month or two after Mr. Karp arrived. A hacking attempt or denial of service. Rambus hired Alan Brill to conduct a general security audit. One of the topics he covered in a power point presentation was Vampire Data. This is data that rises from the dead. He recommended that RMBS adopt a document retention policy.

The ’98 and ’99 IP budgets were reviewed. The budgets included various scenarios with a range in the number of patent applications to be filed and whether the applications would be processed by outside or in house counsel. No allowance was made in either budget for IP litigation expenses.

Attorney Dan Johnson – the litigation attorney – was described as being part of a ready team. He was described as the “elephant in the corner.”