Rambus destroyed material evidence relevant to the government's antitrust case against the company, the chief administrative law judge of the US Federal Trade Commission (FTC) ruled last week in a court action that has just been made public.
Judge James P. Timony also denied an FTC motion for default judgment, that sought to skip the trial phase of the case and go straight to the punishment phase.
Rambus had argued that it routinely destroyed internal documents under a policy that is common among companies and not as a means to get rid of evidence in the case. The document destruction was key to the FTC motion to skip to the punishment phase.
While denying the FTC motion, Timony ruled that "the undisputed facts of record require sanctions in the form of certain rebuttable adverse presumptions against Rambus at the trial of this matter based on the spoliation of evidence."
The judge found that the evidence did not establish that the document retention program was, as the FTC argued, "nothing more than a sham." Timony ruled, however, that Rambus "acted with gross negligence ... and with reckless disregard of its obligations to preserve documents relevant to possible litigation."
The California-based Rambus makes RDRAM (Rambus DRAM), a type of computer memory used mostly for high-performance, computing-intensive applications.
The FTC filed a complaint against the company in June 2002 alleging that Rambus did not tell the Joint Electron Device Engineering Council Solid State Technology Association (JEDEC) that it had patents on SDRAM (synchronous dynamic RAM) technology during discussion to set standards for that technology.
As a consequence of document destruction, it could be presumed that Rambus should have known that development of a JEDEC standard would require the use of patents held or applied for by the company, Timony ruled in the set of "rebuttable adverse presumptions" that will be in play for the remainder of the case.
Rambus did not disclose those patents to JEDEC or other standard-setting participants, and the company should have known that litigation over patent enforcement "was reasonably foreseeable," he ruled.
Furthermore, the company "provided inadequate guidance to its employees as to what documents should be retained and which documents should be purged" and Rambus' corporate document retention program did not direct employees to keep documents that could be relevant to foreseeable litigation, Timony ruled.
The program also failed to require that a log be kept of which documents were purged.
In a separate order, Timony turned the case over to Judge Stephen J. McGwire. Other action related to the case also includes a motion filed by Rambus seeking summary judgment in the case in matters it contends are not in dispute.
The FTC is an independent federal agency that deals with competition issues. The agency acts on behalf of consumers and has authority over a wide range of consumer protection laws. FTC administrative law judges are independent, but work for the commission. Decisions made by those judges can be appealed by either side in a case to the full Commission whose decision can then be appealed at the federal court level.
The rulings can be found at http://www.ftc.gov/os/adjpro/d9302/index.htm/
In a statement, Rambus' senior vice-president and general counsel said that the company had been disappointed by some rulings and pleased with others. Overall, it was pleased that the judge decided the case should go to trial. The company was confident that it would overcome adverse rebuttable presumptions that might still be in place when the trial began.