Rambus'S Trial Brief Regarding Samsung'S Counts I-Iii (Public Redacted Version)

Case 5:05-cv-00334-RMW Document 2153 Filed 09/08/2008 Page 1 of 29
1 Gregory P. Stone (State Bar No. 78329)

Keith R. D. Hamilton (State Bar No. 252115)
2 MUNGER, TOLLES & OLSON LLP
355 South Grand Avenue, 35th Floor
3 Los Angeles, California 90071-1560
Telephone: (213) 683-9100
4 Facsimile: (213) 687-3702
Email: gregory.stone@mto.com;
5 keith.hamilton@mto.com
6 Burton A. Gross (State Bar No. 166285)
Carolyn Hoecker Luedtke (State Bar No. 207976)
7 Miriam Kim (State Bar No. 238230)
MUNGER, TOLLES & OLSON LLP
8 560 Mission Street, 27th Floor
San Francisco, California 94105
9 Telephone: (415) 512-4000
Facsimile: (415) 512-4077
10 Email: burton.gross@mto.com;
carolyn.luedtke@mto.com; miriam.kim@mto.com
11
Attorneys for RAMBUS INC.
12
UNITED STATES DISTRICT COURT
13
NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION
14
15
RAMBUS INC., CASE NO. C 05-00334 RMW
16
Plaintiff,
17
v. RAMBUS’S TRIAL BRIEF REGARDING
18 SAMSUNG’S COUNTS I-III
HYNIX SEMICONDUCTOR INC., et al.,
19 [PUBLIC REDACTED VERSION]
Defendants.
20
Judge: Hon. Ronald M. Whyte
21 Trial Date: September 22, 2008
22
RAMBUS INC., CASE NO. C 05-02298 RMW
23 Plaintiff,
24 v.
25 SAMSUNG ELECTRONICS CO., LTD.,

et al.,
26
Defendants.
27
28
Rambus Inc’s Trial Brief On Counts I-III
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1 I. INTRODUCTION
2 For more than a decade, through various stratagems, Samsung has sought to pay less and
3 less for its continued use of Rambus’s patented inventions. This litigation is the latest of these
4 efforts. Besides reasserting claims and defenses alleged by other DRAM manufacturers (and
5 rejected in earlier trials), Samsung has raised additional Samsung-specific claims and defenses.
6 This Court’s August 11, 2008 summary judgment order, dismissing on statute of limitations
7 grounds, Samsung’s claims related to its former employee, Neil Steinberg, eliminated several of
8 those claims. Therefore, it appears that the focus of this trial will be on Counts I-III, Samsung’s
9 counterclaims involving its interpretation of the parties’ license agreement, signed in October
10 2000, effective in June 2005, and covering the June 2000-June 2005 time period (the “SDR/DDR
11 License”). Rambus submits this trial brief to provide an overview of the applicable law and
12 evidence on these three claims.1
13 Samsung asserts that Rambus breached the SDR/DDR License and its accompanying duty
14 of good faith and fair dealing. Specifically, Samsung contends that two provisions of the
15 SDR/DDR License should be interpreted so as to limit Rambus’s damages recovery to a small
16 fraction of the reasonable royalty to which Rambus otherwise would be entitled.
17 The first of these provisions is Section 3.8, which provided that REDACTED
18 1
The other Samsung claims and defenses that remain at issue for the September 22 Trial and that
19 Samsung presumably will address involve issues already familiar to this Court. First, Samsung
alleges Rambus acted improperly while attending JEDEC and in RDRAM license negotiations
20 with Samsung. The majority of this aspect of the case was presented in the coordinated January
2008 Trial. However, Rambus intends to supplement that record with additional Samsung-
21 specific evidence, such as evidence of Samsung’s knowledge and concern about the potential
scope and application of Rambus’s intellectual property as early as 1991. This evidence is fatal to
22 Samsung’s ability to show reliance. Second, Samsung alleges that Rambus spoliated evidence
through its document retention program. The Court addressed these allegations in the Hynix I
23 matter, and Rambus addresses them in its Proposed Findings of Fact and Conclusions of Law
filed herwith. To the extent Samsung has new arguments or evidence, Rambus understands
24 Samsung plans to identify in its Trial Brief what distinguishes Samsung from Hynix, and Rambus
will respond to that evidence and argument at trial and in Post-Trial Findings of Fact and
25 Conclusions of Law. Third, Samsung asserts estoppel and equitable estoppel defenses based on
allegations that Neil Steinberg improperly used Samsung information in his work at Rambus.
26 There is no merit to these allegations. Moreover, for the reasons set forth in this Court’s August
11, 2008 summary judgment order on Counts IV through VII, Samsung cannot show it relied to
27 its detriment on any nondisclosure by Mr. Steinberg or Rambus, an element required to prevail on
its equitable defenses. Fourth, Rambus asserts that under Samsung’s incorrect theory of
28 spoliation, Samsung has unclean hands because of its destruction of documents.
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1 REDACTED REDACTED REDACTED

2 REDACTED REDACTED
3 REDACTED REDACTED Samsung contends that this provision obligated
4 Rambus to reduce Samsung’s royalty rates for the final quarter of the license term REDACTED
5 by more than 85 percent based upon Rambus’ agreement with Infineon to resolve a number
6 of pending disputes between the two companies, both in the United States and abroad, under a
7 global agreement that included a grant of license rights to Infineon for certain Rambus patents
8 (“Infineon Settlement Agreement”).
9 The second provision of the SDR/DDR License upon which Samsung relies is Section
10 8.5. Samsung contends that Section 8.5, which REDACTED REDACTED
11 REDACTED REDACTED instead required Rambus to
12 enter into a new license with Samsung, beginning in the third quarter of 2005, that incorporated
13 this same drastically reduced “effective royalty rate” derived from the Infineon Settlement
14 Agreement, and limited Samsung’s total royalty obligation to a fixed sum. Samsung further
15 contends that, in exchange for this fixed sum, Samsung should have received not merely another
16 five-year license term, but a license for the entire remaining life of Rambus’ patents, and a license
17 which would encompass products not even covered by the original SDR/DDR License.
18 Samsung’s contractual arguments are without merit. As discussed below, Section 3.8 of
19 the SDR/DDR License did not have the sweeping scope claimed for it by Samsung. By its
20 express terms, Section 3.8 REDACTED REDACTED
21 REDACTED REDACTED
22 REDACTED REDACTED The provision did not entitle Samsung to step into
23 the terms of any third-party agreement that Rambus entered into, including an agreement, like the
24 Infineon Settlement Agreement, that REDACTED REDACTED
28 Indeed, the evidence reflects that, during the negotiations of the SDR/DDR license, Samsung
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1 sought, but failed to obtain, a “most favored licensee” provision of the type into which it now
2 seeks to transform Section 3.8. Put simply, Samsung asked for such a provision, Rambus refused,
3 yet Samsung now asks the Court to believe that the SDR/DDR License contained such a
4 provision all along.
5 Samsung’s Section 8.5 argument is even more strained. Nothing in the text of Section 8.5
6 supports the notion that Rambus had to extend the terms of the SDR/DDR License to a new
7 license, let alone expand the scope of such a license to include new products and to last through
8 the expiration of Rambus’s patents. Instead, the contract language makes clear that the parties
9 committed merely to negotiate, not to bind themselves to a new agreement under particular terms.
10 Indeed, it is precisely because the terms of any agreement the parties might have agreed
11 upon after a “good faith negotiation” are inherently speculative and unknowable that California
12 law does not permit a party to seek the relief Samsung seeks here – an order treating it as though
13 the parties’ negotiations had resulted in a new license incorporating the terms of the Infineon
14 Settlement Agreement. Indeed, Samsung ignores this quite probable scenario – as in fact
15 happened here – where good faith negotiations are unsuccessful and no agreement results.
16 Samsung’s Section 8.5 claim is untenable and must be rejected.2
17 Accordingly, the Court should enter judgment for Rambus on Samsung’s contract and
18 implied covenant counterclaims.
19 II. BACKGROUND
20 The Court is already familiar with the procedural background of Samsung’s contract
21 claims, so Rambus will only briefly summarize that history here.
22 A. The 1994 RDRAM Agreement
23 Samsung and Rambus first entered into a license agreement in November 1994, when
24 Samsung agreed to pay Rambus for certain intellectual property used in the manufacture and sale
25
2
26 Samsung also asserts a cause of action for breach of duty of the implied covenant of good faith
and fair dealing. This claim is predicated on Samsung’s mischaracterization of Rambus’s
27 contractual obligations under Sections 3.8 and 8.5, and thus also fails. See Waller v. Truck Ins.
Exch., Inc., 11 Cal. 4th 1, 36 (1995)(citing with approval Love v. Fire Ins. Exchange, 221 Cal.
28 App. 3d 1136, 1153 (1990).
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1 of RDRAM devices (the “1994 RDRAM Agreement”). In that contract, the parties agreed to an
2 expansive most-favored-licensee clause, which provided:
3 REDACTED REDACTED
4 REDACTED REDACTED
5 REDACTED REDACTED
6 REDACTED REDACTED
7 REDACTED REDACTED
8 REDACTED REDACTED
9 Rambus Trial Exhibit (“Tr. Ex.”) No. 6110 at § 10.16 (emphasis added).3 This initial agreement
10 thus illustrates that, long before the SDR/DDR License, Samsung and Rambus showed
11 themselves to be fully capable of executing a broad most-favored-licensee clause that afforded
12 Samsung the option of adopting the terms of a subsequent license agreement with a differing
13 structure that was deemed more favorable overall.
14 B. The SDR/DDR License
15 In October 2000, Rambus and Samsung entered into the SDR/DDR License. Tr. Ex. No.
16 9084. The Agreement REDACTED REDACTED
17 REDACTED REDACTED Under Section 3.1(b) of that License, Samsung agreed to
18 pay a set of running royalty rates based on a percentage of Samsung’s sales of relevant products,
19 specifically, REDACTED REDACTED
21
Samsung’s counterclaims focus on two provisions of the SDR/DDR License. The first of
22
these, Section 3.8, states:
23
REDACTED REDACTED
24
REDACTED REDACTED
25
REDACTED REDACTED
26
REDACTED REDACTED
27 3
For the convenience of the Court, Rambus will be lodging with this brief an appendix containing
28 a copy of the evidence cited herein.
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1 REDACTED REDACTED
2 REDACTED REDACTED
3 REDACTED REDACTED
4 REDACTED REDACTED
5 REDACTED REDACTED
6 As the foregoing language reflects, Section 3.8 is worded much differently, and is
7 narrower in scope, than the most-favored-licensee clause executed by the parties in their earlier
8 1994 RDRAM Agreement. For example, Section 3.8 does not grant Samsung REDACTED
11 REDACTED REDACTED but instead only grants
12 Samsung the right REDACTED REDACTED
14 As discussed further below, and as the evidence to be presented at trial will conclusively
15 demonstrate, this provision comes into play only when Rambus grants a third-party a readily
16 ascertainable lower royalty rate than that specified in Section 3.1(b) of the SDR/DDR License for
17 one or more of the specific products covered by Section 3.8.
18 The second provision of the SDR/DDR License on which Samsung’s claims is founded is
19 Section 8.5 of the Agreement. It provided as follows:
REDACTED REDACTED
23
Contrary to Infineon’s theory, this provision expressly REDACTED
24
REDACTED REDACTED REDACTED
25
REDACTED REDACTED
26
REDACTED As discussed below and as the evidence will show, the negotiation history further
27
demonstrates that Samsung’s interpretation of Section 8.5 is incorrect.
28
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1 C. The 2001 Amendment

2 Following the adverse judgment against Rambus in the original Infineon trial, Samsung
3 requested, and obtained, an amendment of the SDR/DDR License (the “2001 Amendment”). Tr.
4 Ex. No. 9201. Among other things, the 2001 Amendment: REDACTED
5 REDACTED REDACTED and (ii)
7 REDACTED REDACTED
8 Samsung also requested that the 2001 Amendment include a modified version of the most-
9 favored-licensee provision from the SDR/DDR License. In particular, Samsung requested and
10 obtained provisions (i) REDACTED REDACTED
11 REDACTED and (ii) REDACTED REDACTED
13 REDACTED as follows:
16
Id. at ¶ 8. The 2001 Amendment further provided that REDACTED
17
REDACTED REDACTED REDACTED in which case
18
the terms of the original SDR/DDR License would resume in force. Id. at ¶ 7. That is precisely
19
what happened when, as described below, Rambus settled its litigation against Infineon.
20
21 D. The Infineon Settlement Agreement

In March 2005, Rambus entered into the Infineon Settlement Agreement, a global
22
settlement and license agreement. Tr. Ex. No. 10252. This settlement was unique among
23
agreements Rambus entered into with DRAM manufacturers, and, as summarized below, it
24
included a variety of significant consideration flowing between the parties. The various forms of
25
consideration captured by the agreement included:
26
1. Dismissal of Eastern District Litigation. The impetus for Rambus’s negotiation
27
of the Infineon Settlement Agreement was Judge Payne’s statement from the bench that he would
28
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1 find Rambus to have committed spoliation and subsequently issue written findings to that effect.
2 The parties promptly entered into a global settlement of all of their disputes, thus avoiding an
3 adverse judgment that potentially had far-reaching negative economic consequences for Rambus
4 beyond that immediate case. After the settlement, Judge Payne dismissed the case without entry
5 of any findings against Rambus or a judgment based on such findings. Tr. Ex. No. 10252 §
6 4.5(a). This Court has recognized the obvious value of that dismissal to Rambus, noting “that
7 Rambus settled the Infineon litigation, at least in part, to avoid the risk that Judge Payne’s unclean
8 hands findings and dismissal thereon would have collateral estoppel effect” in litigation with
9 other DRAM manufacturers. Hynix Semiconductor Inc. v. Rambus Inc, Case No. CV-00-20905,
10 Order Denying Hynix’s Motion to Dismiss Patent Claims for Unclean Hands on the Basis of
11 Collateral Estoppel at 6 (filed Apr. 22, 2005).
12 2. Dismissal of Infineon from Rambus’s price-fixing suit. Rambus agreed to
13 dismiss Infineon, which had already pled guilty to price-fixing in United States federal court,
14 from Rambus’s ongoing price-fixing and boycott lawsuit in San Francisco state court. Tr. Ex.
15 No. 10252 at § 4.5(a).
16 3. Patent licenses to Infineon. Rambus granted Infineon REDACTED
19 REDACTED REDACTED See id. at §§ 2.1-2.2. Both the term and the
20 scope of products covered by the Infineon license were broader than those of the SDR/DDR
21 License. REDACTED REDACTED
23 REDACTED REDACTED Rambus also released any claims for
24 past infringement, thus effectively granting Infineon a retroactive license back to at least 2000,
25 when Rambus sued Infineon. See id. at § 4.1. The license set forth in the Infineon Settlement
26 Agreement thus encompassed a broader portfolio of Rambus’s patents for a longer period of time
27 than did the license granted under the SDR/DDR License.
28 In addition to having a broader temporal scope, the license provisions in the Infineon
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1 Settlement Agreement applied to a generally broader scope of products. The settlement

2 agreement granted Infineon rights to incorporate Rambus technology into many products not
3 covered by the SDR/DDR License, REDACTED REDACTED
4 REDACTED Id. at § 1.8.4
5 4. Monetary payment to Rambus. Infineon agreed to pay Rambus a lump sum of
6 either $50 million, $100 million, or $150 million (depending on the number of other leading
7 DRAM manufacturers Rambus was able to license), payable in quarterly installments. Id. at §§
8 6.3-6.4.
9 In negotiating the multi-layered Infineon Settlement Agreement, the parties did not
10 allocate any monetary value to any of the non-pecuniary consideration flowing between them, nor
11 did they make any attempt to allocate a “royalty rate” to any of the many different memory
12 products licensed to Infineon under the agreement.
13 E. Negotiations Between Rambus and Samsung
14 On March 22, 2005, soon after executing the Infineon Settlement Agreement, Rambus
15 sent Samsung a press release disclosing the major terms of the Agreement.5 Tr. Ex. 10254. In
16 response to Samsung’s inquiry as to the possible effect of the Infineon Settlement Agreement on
17 the SDR/DDR License, Rambus notified Samsung that the Infineon Settlement Agreement did
18 not trigger Section 3.8 of the Samsung license.
19 The SDR/DDR License REDACTED REDACTED. As that date
20 approached, the parties engaged in negotiations concerning the terms of a new license agreement.
21 The parties were unsuccessful in these efforts. Samsung asked that it be given an even better deal
22 than Infineon received. Rambus was unwilling to agree to this, or to offer Samsung new license
23 terms based at all on the Infineon Settlement Agreement. On June 6, 2005, three weeks before
24 4
The Infineon Settlement Agreement did not, however, cover REDACTED
5
26 Rambus in the same letter gave notice that it was terminating the 2001 Amendment to the
SDR/DDR License that the parties entered into following the original Infineon trial. This
27 termination took effect on April 1, 2005, and the terms of the SDR/DDR License then resumed in
force. Samsung’s claims, which are based upon Sections 3.8 and 8.5 of the SDR/DDR License,
28 thus focus on the period from resumption of the SDR/DDR License until its termination.
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1 the SDR/DDR License was otherwise due to expire, Rambus exercised its right to terminate the
2 Agreement based on Samsung’s persistent and unremedied breach of its obligations to cooperate
3 with Rambus’s efforts to audit Samsung’s compliance with its royalty reporting obligations.
4 III. OVERVIEW OF CALIFORNIA CONTRACT LAW
5 The SDR/DDR License states, and Samsung agrees, that it is governed by California law.
6 Tr. Ex. No. 9084 at § 9.1; Samsung’s Second Amended Answer and Counterclaims at ¶ 193.
7 Under California law, a contract “must be so interpreted as to give effect to the mutual
8 intention of the parties as it existed at the time of contracting, so far as the same is ascertainable
9 and lawful.” Cal. Civ. Code § 1636. “When a contract is reduced to writing, the intention of the
10 parties is to be ascertained from the writing alone, if possible.” Cal. Civ. Code § 1639. When the
11 meaning of the contract is based on the words of the agreement alone, or when there is no conflict
12 in the extrinsic evidence, the Court may interpret the contract as a matter of law. City of Hope
13 Nat’l Med. Ctr. v. Genentech, Inc., 43 Cal. 4th 375, 395 (2008).
14 In discerning the meaning of an ambiguous or unclear contract, the court may consider
15 relevant conduct by the parties either prior or subsequent to its formation. City of Stockton v.
16 Stockton Plaza Corp., 261 Cal. App. 2d 639, 644 (1968) (“Both prior negotiations and prior
17 conversations may be construed as well as the subsequent acts of the parties in ascertaining the
18 true intention of the parties to the contract.”). Where alternative terms have been proposed and
19 rejected during negotiations, a contract should not be construed as encompassing those rejected
20 terms. See Sun Pacific Farming Coop., Inc. v. Sun World Int’l, 2006 WL 1716206, at *10 (E.D.
21 Cal. 2006) (“[W]here the parties’ negotiation history or extrinsic evidence shows that terms were
22 unacceptable, the court may not read rejected terms into the contract.”), aff’d in relevant part and
23 vacated and remanded on separate topic, 277 Fed. Appx. 727 (9th Cir. May 8, 2008); People v.
24 Goodloe, 37 Cal. App. 4th 485, 490-91 (1995) (applying same principle in interpreting statutes).
25 IV. ARGUMENT
26 Samsung’s breach-of-contract counterclaims rest on two arguments. First, Samsung
27 contends that, under Section 3.8, Rambus was required to give Samsung the benefit of an implied
28 “effective royalty rate” REDACTED that represents an 85 to
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1 95 percent reduction of its royalty obligations6 and that extends to all of the patents and products
2 covered by the Infineon Settlement Agreement. Second, Samsung contends that, under Section
3 8.5, Rambus was legally obligated to negotiate a successor agreement that would have given
4 Samsung this same purported “effective royalty rate” on a going-forward basis through the life of
5 Rambus’s patents.
6 At the outset, it is important to note that these claims relate to how much money Samsung
7 owes to Rambus under the terms of the SDR/DDR License. Samsung owes Rambus money,
8 under its own theory, because it has not paid Rambus any of the royalties that it now
9 acknowledges it was obligated to pay for the last three months of that contract. It also has not
10 paid royalties for any period thereafter, even though it continued to sell products that infringed
11 Rambus’s patents during that entire period. Samsung, under its construction of the SDR/DDR
12 License, has been in breach of that agreement for three years now because it has not paid even the
13 amount that it admits, under its own theory, it owes Rambus. Obviously, then, Samsung has not
14 suffered any damage. Rather, what it claims as “damages” for Rambus’s purported breaches of
15 contract is instead a request that the Court establish a cap to any patent damages award for
16 products covered by the SDR/DDR License that Rambus may recover against Samsung in the
17 January patent infringement trial.
18 For the reasons set forth below, the Court should reject Samsung’s attempt to discount its
19 patent infringement liability to a few pennies on the dollar. With respect to Section 3.8, Rambus
20 had no obligation to allow Samsung to step into the shoes of a third-party agreement containing a
21 lump sum monetary payment and multiple levels of other consideration exchanged between the
22 parties, with no royalty rate for particular products covered by Section 3.8. With respect to
23
6
24 Samsung’s damages expert, Dr. Keith Ugone, identifies various potential “effective royalty
rates” for the Infineon Settlement Agreement. Depending on the rate applied, Samsung would
25 have owed Rambus REDACTED REDACTED
26 The claimed “effective royalty rate” thus represents a discount of at least 85 percent, and as much
as 95 percent, from the $46.58 million in royalties that Samsung owed Rambus under the terms
27 set forth in Section 3.1 of the SDR/DDR License. See Ugone Expert Report at 32. Of course, the
fact that Samsung’s expert calculates five different possible royalty payments after applying the
28 Infineon Settlement Agreement is strong evidence that no “effective royalty rate” actually exists.
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1 Section 8.5, Rambus did not commit to automatic renewal of the SDR/DDR License, or to
2 renewal on any particular terms, and thus had no obligation to incorporate terms of the Infineon
3 Settlement Agreement into any renewal license with Samsung.
4 A. Section 3.8 Of The SDR/DDR License Did Not Entitle Samsung To An
Infineon-Based “Effective Royalty Rate” For The Final Quarter Of The
5 License Term
6 Samsung’s breach of contract claim under Section 3.8 is premised on its interpretation of
7 that provision as granting Samsung the right to renegotiate its royalty obligations whenever
8 Rambus entered into any third-party agreement that Samsung preferred to its own. Through this
9 theory, Samsung seeks to reduce its royalty obligations REDACTED
12 REDACTED See supra note 6.
13 Although the parties certainly could have created a licensing arrangement that would have
14 allowed Samsung such a windfall, they did not do so, and the language of Section 3.8
15 demonstrates that it is not the sweeping most-favored-licensee clause Samsung claims. Further,
16 the history of negotiations between the parties with respect to the SDR/DDR License, including
17 the earlier and later agreements entered into by Samsung and Rambus, demonstrate that they
18 knew how to create such a broad most-favored-licensee clause, but did not do so here. Instead,
19 they agreed to a narrower provision applicable only where Rambus agreed to or obtained through
20 litigation a clearly ascertainable royalty rate for one or more of the specific products covered by
21 Section 3.8. Because the Infineon Settlement Agreement did not constitute such an agreement, it
22 did not trigger application of Section 3.8.
23 1. The Language Of Section 3.8 Is Limited To Agreements Providing For
Clearly Ascertainable Royalty Rates
24
By its terms, Section 3.8 is limited in scope. The provision comes into play only if,
25
during the term of the Agreement, REDACTED
26
27
REDACTED REDACTED In that event,
28
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1 Rambus is REDACTED REDACTED

2 REDACTED ` REDACTED REDACTED
3 REDACTED REDACTED
4 Section 3.8 thus contemplates a third-party agreement in which the third party actually has
5 agreed REDACTED REDACTED
7 REDACTED The SDR/DDR License further contemplates that REDACTED
8 REDACTED , so that Rambus can simply notify Samsung of the lower rate soon after it
9 takes effect, and such rate will then be carried over to the same category of products for purposes
10 of the SDR/DDR License.
11 The provision is thus written so as to be routinely and automatically applied whenever
12 Rambus enters into a license containing clearly ascertainable product-specific royalty rates that
13 are lower than those set forth in the SDR/DDR License. It does not contemplate a more
14 complicated scenario where Rambus might enter into an agreement having multiple components,
15 some of which are license-related and some of which are not.
16 The Infineon Settlement Agreement constituted this more complicated type of agreement.
17 As noted, it included substantial non-pecuniary consideration flowing in both directions – for
18 example, the dismissal of Infineon’s Virginia litigation, and the dismissal of Rambus’s price-
19 fixing claims against Infineon – that prevent a determination of what “royalty rate” Infineon
20 could be said to have paid for the products that it licensed. See Tr. Ex. 10252 § 4.5. In light of
21 these other various forms of consideration exchanged under the Infineon Settlement Agreement, it
22 is not possible to determine a royalty rate that Infineon “agreed” to pay for the patent rights it
23 received in the Settlement Agreement.
24 Even leaving aside this other consideration, and hypothetically viewing REDACTED
25 REDACTED as a one-for-one exchange for patent license rights – which clearly is an
26 inaccurate view of the agreement – that payment granted Infineon license rights to many products
27 not covered by the SDR/DDR License, REDACTED REDACTED
28 REDACTED REDACTED was not allocated across
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1 the many broad product categories covered by the Infineon Settlement Agreement, let alone
2 REDACTED REDACTED 7 Indeed, the indeterminacy of any so-called
3 “effective royalty rate” in the Infineon Settlement Agreement is essentially conceded by
4 Samsung’s own expert, who in his analysis “pretends” that Infineon’s payments were entirely
5 royalties for products covered by Section 3.8 (and thus ignores both the non-patent-related
6 consideration and the broader scope of products covered by Infineon’s license), and who still
7 comes up with five separate royalty rates that he admits “reasonably” could be argued to be the
8 appropriate rates. See REDACTED REDACTED
9 REDACTED REDACTED
10 Thus, any attempt to fashion an “effective royalty rate” from the Infineon Settlement
11 Agreement is doomed to failure. As a mathematician might describe it, there are more variables
12 than there are equations, so multiple solutions are possible. From a lawyer’s perspective, as well
13 as from a businessman’s perspective, fashioning an “effective royalty rate” would require far
14 more than the automatic adjustment of royalty rates contemplated by Section 3.8. It would, at a
15 minimum, require negotiation and, if that was unsuccessful, some form of binding mediation or
16 arbitration, Indeed, as noted earlier, Samsung’s expert admitted that one cannot simply look at
17 the Infineon Settlement Agreement and determine what “royalty rate” was being paid for the
18 products covered by Section 3.8. REDACTED Instead, the parties would have needed to
19 undertake a negotiation of what, if any, “royalty rate” could be attributed to licensing of products
20 subject to Section 3.8 – a task that simply is not possible in the apples-to-oranges comparison
21 between the SDR/DDR License and Infineon Settlement Agreement.
22 This is not, moreover, what Section 3.8 contemplates. Section 3.8 contains no terms
23 7
Samsung contends that some of these products, specifically REDACTED
24 REDACTED REDACTED , and thus fall within the
scope of Section 3.8 of the SDR/DDR License. Rambus will demonstrate at trial that this is not
25 the case, and that the SDR/DDR license does not cover such next-generation products.
Samsung’s theory is belied by the plain language of the SDR/DDR License, including among
26 other provisions Sections 1.5 and 1.7, which define REDACTED
REDACTED in the Infineon Agreement do not fall within the protections of Section 3.8.
28 REDACTED
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1 setting forth procedures for the parties to determine an “effective” royalty rate from a complex,
2 multi-tiered agreement that specifies no such rates, or to resolve any disagreements over what
3 such an appropriate rate would be. It contemplates a straightforward third-party patent license
4 like the SDR/DDR License itself, which specifies a product-specific rate for particular products.
5 The absence of any provisions to deal with more complicated and densely-layered third-party
6 agreements is strong evidence that the parties intended Section 3.8 to be triggered only by a
7 license with readily ascertainable product-specific royalty rates for the relevant products.8
8 2. The Parties’ Negotiating History Reflects That Section 3.8 Did Not
Apply To Agreements Like The Infineon Settlement Agreement.
9
The negotiations between Samsung and Rambus, including those occurring before, during
10
and after the execution of the SDR/DDR License, all reflect that Samsung was familiar with the
11
type of most-favored-licensee provision that would be applicable to an agreement like the
12
Infineon Settlement Agreement, and demonstrate that the parties did not intend to place such a
13
provision into the SDR/DDR License.
14
a. The 1994 RDRAM Agreement Contained The Broader Type Of
15 Most-Favored-Licensee License Necessary To Include A Complex
Third-Party Agreement With Differing Terms.
16
The 1994 RDRAM Agreement between Rambus and Samsung shows that the parties
17
knew full well how to draft a broad most-favored-licensee provision that would apply to
18
agreements with different terms and different royalty payment structures. See Tr. Ex. No. 6110 §
19
10.16. In the 1994 RDRAM Agreement, the parties agreed REDACTED
20
REDACTED REDACTED , id. at § 4.2(a), but also
21
differed from Section 3.8 in several important ways.
22
First, the 1994 RDRAM Agreement gave Samsung REDACTED
23
REDACTED REDACTED Second, it explicitly required that
24
REDACTED REDACTED Third, it
25
provided that REDACTED REDACTED
26
8
27 Rambus entered into many such licenses, including for example, REDACTED
REDACTED that contain running royalty rates for some or all of the
28 same product categories identified in the SDR/DDR License.
5883160.1
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2 REDACTED REDACTED Id. at § 10.16. In this sense,
3 the 1994 RDRAM Agreement recognized that “royalty rate” was merely one aspect to be
4 considered in evaluating a comprehensive licensing arrangement that potentially could involve
5 different products or license periods. Finally, the 1994 RDRAM Agreement stated that,
8 These are the types of terms and conditions that need to be included in a most-favored-
9 licensee provision if the parties intend to grant the licensee protection against a situation where
10 the patent-holder grants another party a license whose royalty payments cannot readily be
11 compared to rates paid by the original licensee.9 If Rambus and Samsung had intended to adopt
12 such a broad and flexible most-favored-licensee provision in 2000, they had an obvious template
13 for doing so. Their decision not to employ a similar provision in the SDR/DDR License indicates
14 that Section 3.8 was more limited, and was intended to be so. Consequently, this important
15 distinction between the two provisions must be given effect.10
16 9
The four cases cited by the Court in its summary judgment order similarly illustrate the type of
most-favored-license clauses that are capable of transcending different types of royalty
17 arrangements. One pertained to a sweeping clause granting the licensee the benefit of “all other
terms and conditions . . . at least as favorable as the terms and conditions of any other license then
18 or thereafter granted to others.” Hazeltine Corp. v. Zenith Radio Corp., 100 F.2d 10, 12 (7th Cir.
1938). The other three cases involved options contracts under which the licensee had the right to
19 choose to subscribe to the terms and conditions of any agreement with any other licensee. See
Cardinal of Adrian, Inc. v. Amerock Corp., 208 U.S.P.Q. (BNA) 822, 823 (E.D. Mich. 1979);
20 Studiengesellschaft Kohle, m.b.H. v. Hercules, Inc., 105 F.3d 629, 631 (Fed. Cir. 1997); Epic Sys.
Corp. v. Allcare Health Mgmt. Sys., Inc., 2002 WL 31051023, at *3 (N.D. Tex. Sept. 11, 2002).
21 The SDR/DDR License at issue here does not contain similarly expansive language, nor does it
provide Samsung REDACTED REDACTED
REDACTED
23 10
Samsung’s 1996 license agreement with InterDigital Technology Corporation further shows
24 that Samsung’s knew how to draft a broad MFL provision that covers agreements with differing
payment structures, product coverage, or other economic terms. That agreement gave Samsung
REDACTED REDACTED TDMA Patent License Agreement between
27 InterDigital Technology Corporation and Samsung Electronics Co., Ltd. at § 8.4.4 (Tr. Ex. No.
10009). Samsung’s negotiators for the SDR/DDR License were, moreover, keenly aware of this
28 provision because REDACTED REDACTED
5883160.1
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1 b. Samsung Unsuccessfully Tried To Obtain A Broader Most-

Favored-Licensee Provision In The SDR/DDR License.
2
The parties’ negotiations over the language of Section 3.8 also show that they did not
3
intend Section 3.8 to cover a deal, like the Infineon Settlement Agreement, that cannot readily be
4
transformed into product-specific royalty rates. On October 16, 2000, Samsung negotiator Jay
5
Shim sent Rambus proposed language for Section 3.8 that REDACTED
6
REDACTED REDACTED Notably, he also proposed adding the
7
following two provisions:
8
REDACTED REDACTED
9
REDACTED REDACTED
10
REDACTED REDACTED
11
REDACTED REDACTED
12
REDACTED REDACTED
13
REDACTED REDACTED
14
Tr. Ex. No. 9102 (emphasis added). In Section 9.3 (the dispute resolution provision), Mr. Shim
15
further proposed that REDACTED REDACTED
16
17
REDACTED REDACTED
18
REDACTED Id.
19
Samsung’s proposed language again reflects the type of provision necessary if a licensee
20
wishes to have the right to claim the benefits of any third-party agreement it deems preferable to
21
its own. Samsung’s proposal not only REDACTED REDACTED
22
REDACTED but also would have REDACTED
23
24
REDACTED REDACTED
25
26
REDACTED See Samsung v. InterDigital; arbitration transcript, testimony of Charles Donohoe
28 at 297:16-312:21 (Tr. Ex. No. 10057).
5883160.1
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1 REDACTED
2 The fact that Samsung felt it necessary to propose the above-quoted language
3 demonstrates that it understood Section 3.8, without such language, would not cover lump-sum
4 payments in general, let alone payments made pursuant to a multi-layered agreement in which a
5 lump sum payment by Infineon and a patent license for covered products from Rambus were but
6 two components of a global exchange of much broader consideration in both directions.
7 Samsung’s proposal also confirms what common sense would otherwise suggest – that provisions
8 addressing REDACTED REDACTED would have had to be included
9 if the parties intended to include agreements, like the Infineon Settlement Agreement, that did not
10 constitute standard patent licenses having readily ascertainable royalty rates.
11 By contrast, it flies in the face of common sense to suggest, as Samsung does, that the
12 parties understood negotiation and dispute resolution provisions to be “implicit” within Section
13 3.8, even though such provisions were consciously considered and omitted. A provision that
14 confers only REDACTED REDACTED simply cannot, under the guise of contract
15 “interpretation,” be construed to encompass and resolve such complicated issues as REDACTED
17 REDACTED Vikco Ins. Servs., Inc. v. Ohio Indem. Co., 70 Cal.
18 App. 4th 55, 70 (1999) (“The courts will not imply a better agreement for parties than they
19 themselves have been satisfied to enter into, or rewrite contracts whenever they operate
20 harshly.”). The parties’ decision not to include the language proposed by Samsung in the final
21 agreement thus strongly supports the conclusion that Section 3.8 was not intended to cover
22 complicated and dissimilar third-party deals like the Infineon Settlement Agreement that would
23 require negotiation and potentially dispute resolution to address reformation of the agreement.
24 See Sun Pacific Farming Coop., 2006 WL 1716206, at *10 (holding that, under California law,
25 “where the parties’ negotiation history or extrinsic evidence shows that terms were unacceptable,
26 the court may not read rejected terms into the contract”), Goodloe, 37 Cal. App. 4th at 490
27 (noting that, in the interpretation of statutes, the “rejection of a specific provision which appeared
28 in the original version of an act supports the conclusion that the act should not be construed to
5883160.1
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1 include the omitted provision”).

2 c. The 2001 Amendment Included A Broader Most-Favored-Licensee
Provision That Recognized The Inapplicability of Section 3.8 To
3 Lump-Sum Licensing Agreements.
4 The 2001 Amendment further demonstrates that Section 3.8 does not apply to lump-sum
5 deals such as the Infineon Settlement Agreement. Paragraph 8 of the 2001 Amendment
6 introduced a new provision that REDACTED REDACTED
8 REDACTED in which case the 2001 Amendment provided that
9 REDACTED REDACTED Tr. Ex. No.
10 9201. For several reasons, the 2001 Amendment suggests that the parties did not understand
11 Section 3.8 to be triggered by a lump-sum third-party license. First, the very decision to adopt a
12 new provision in this area reflects the parties’ recognition that lump-sum deals like Infineon’s
13 were not already covered in the existing Agreement. If lump-sum deals had already been
14 included, this provision would have been unnecessary and the language of Section 3.8 simply
15 could have been retained in the 2001 Amendment.
16 Second, the language of this paragraph shows that Rambus and Samsung understood
17 lump-sum payments and a percentage-of-net-sales royalty to be separate and distinct concepts,
18 with the former typically differing sufficiently from the latter to require more than merely some
19 automatic application of REDACTED REDACTED The parties’ decision to include a
20 process for addressing necessary contract changes through a good faith negotiation process to
21 modify the license once again demonstrates that the parties recognized the need for such a
22 provision if Samsung’s rights were to be extended to agreements that do not contain comparable
23 product-specific royalty rates. By suspending section 3.8 and establishing this new and different
24 provision only in the 2001 Amendment, the parties made clear that their original provision was
25 more narrow and applied only to agreements for which a comparable set of product-specific
26 royalty rates could be readily ascertained.
27
28
5883160.1
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1 3. Rambus Did Not Agree To Give Samsung The Most Favorable

Economic Deal
2
Rambus anticipates that Samsung will continue to rely on parol evidence to argue that,
3
notwithstanding the actual limited language of Section 3.8, the parties intended that Samsung
4
would be entitled to the best overall economic deal under all circumstances. This argument must
5
be rejected because it seeks to ascribe a meaning to Section 3.8 that is contrary to its express
6
terms. As the foregoing discussion illustrates, the actual language of the SDR/DDR License does
7
not contemplate application of Section 3.8 to a complex agreement involving substantial non-
8
monetary consideration and containing no enumerated or ascertainable royalty rates for particular
9
SDR or DDR product categories.
10
Had the parties intended for Section 3.8 to be triggered by non-analogous agreements like
11
the Infineon Settlement Agreement, they could, and would, have included a provision to that
12
effect. For example, the parties could have granted Samsung REDACTED
13
REDACTED REDACTED as they did in their 1994
14
RDRAM Agreement. Or they could have included a provision expressly stating REDACTED
15
16
REDACTED REDACTED
17
REDACTED — the very provision that Samsung requested during negotiations.
18
Or they could have included a provision REDACTED REDACTED
19
20
REDACTED as they did in the 2001 Amendment.
21
Of course, adding such greater protections to Section 3.8 would have come at a
22
corresponding cost, namely, the possibility of time-consuming and adversarial negotiations over
23
whether a third-party agreement contained more favorable economic terms, and the possibility of
24
disputes between the parties on that issue requiring arbitration. The key point, however, is that
25
the parties did not agree to such a provision. Having failed to obtain such broader protections,
26
Samsung cannot now resuscitate such terms through the introduction of parol evidence, nor
27
should it be heard to claim the benefit of terms expressly considered but excluded from the
28
5883160.1
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1 SDR/DDR License.
2 In this regard, it is important to keep in mind that the SDR/DDR License is a fully
11
3 integrated agreement REDACTED REDACTED Parol
4 evidence “of intention which is contrary to a contract’s express terms” is inadmissible because it
5 “does not give meaning to the contract” but “rather . . .seeks to substitute a different meaning”
6 from the one the parties ultimately settled upon. Gerdlund v. Electronic Dispensers Int’l, 190
7 Cal. App. 3d 263, 273 (1987); see also Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079, 1091
8 (9th Cir. 2005) (“[P]arties may introduce evidence to explain the terms of the contract, but they
9 may not introduce evidence of terms not specifically included in the contract or evidence that
10 contradicts the terms of the contract.”).
11 This is exactly what Samsung seeks to accomplish, however, by pointing to statements
12 made by negotiators during the course of the negotiations. Samsung simply ignores the actual
13 language of the Agreement, and contends that Section 3.8 should be interpreted as a guarantee
14 that Rambus would give Samsung the best economic deal in all circumstances. This is not what
15 the contract says, and it is not how the contract reasonably can be interpreted.
16 Indeed, the notion that Rambus committed to give Samsung the best possible deal under
17 all circumstances is flatly belied by the undisputed fact that Section 3.8 does not even purport to
18 apply to all licensed products, but rather REDACTED
21 REDACTED See Ugone Dep. at 57; Jun Park 30(b)(6) Dep. at 97-98.
22 This underscores the peril of giving weight to parol evidence of statements made during
23 negotiations that do not end up in the final agreement. Were the Court to accept Samsung’s
24 assertions of the oral commitments it was purportedly given, and ignore the actual language of the
25 contract, it could easily find Rambus to have granted most-favored-licensee status even as to
26 products excluded from Section 3.8. As even Samsung concedes, such a result would be
27
11
28 Tr. Ex. 9084 § 10.14.
5883160.1
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1 inconsistent with the parties’ actual agreement. For the same reason, the Court should not expand
2 the scope of Section 3.8 for those products to which it does apply, based on Samsung’s parol
3 evidence that it believed that provision to be broader than its words reasonably suggest.
4 The dangers of applying most-favored-nations provisions beyond the scope of their actual
5 language was underscored in Studiengesellschaft Kohle m.b.H v. Novamont Corp., 704 F.2d 48
6 (2d Cir. 1983). There, the court refused to try to translate a lump-sum settlement into a
7 “standard” royalty rate for purposes of a most-favored-licensee provision, citing the
8 “imponderables” inherent in such an undertaking. Id. at 57. The Second Circuit remarked that
9 any attempt to “maintain competitive equality” among licensees under such vastly different
10 licensing arrangements “would place the court in the position of an arbitrator,” and the court
11 therefore concluded that “there is no basis in fact for the conversion of a lump sum rate of royalty
12 into a rate of per cent of selling price royalty.” Id. at 57-58. Distinguishing other cases in which
13 courts had applied lump-sum payments on the grounds that they involved “only a simple
14 mathematical computation,” the Second Circuit “decline[d] to construe the MFL clause as
15 entitling an MFL licensee to the type of customizing of the royalty provisions of the second
16 license sought by [the MFL licensee].” Id. at 58.
17 That same logic militates against allowing Samsung to use the straightforward language of
18 Section 3.8 to claim entitlement to a complex calculation and application of an “effective royalty
19 rate” derived the Infineon Settlement Agreement — a feat that its own expert witness has not
20 accomplished. More fundamentally, the very difficulty of applying Samsung’s theory to the
21 Infineon Settlement Agreement further illustrates that the parties did not have such agreements in
22 mind when they drafted Section 3.8. Accordingly, the Court should not rewrite and expand
23 Section 3.8 to apply to situations not intended to be covered by the parties and not encompassed
24 by the language of the SDR/DDR License.12
25 12
Samsung has also alleged that Rambus breached the covenant of good faith and fair dealing
that is implicit in Section 3.8 by failing to notify Rambus of the terms of the Infineon deal and
26 adjust the rates Samsung pays to what Samsung claims is the Infineon effective royalty rate. See
Samsung’s Second Amended Answer and Counterclaims at ¶¶ 194-98. This claim equally lacks
27 merit because the underlying contractual provision, as discussed above, does not entitle Samsung
to opt into the Infineon Settlement Agreement or otherwise to obtain the benefit of its terms.
28 California law is clear that covenant of good faith and fair dealing does not apply when it “has
5883160.1
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1 B. Section 8.5 Expressly Rejects Samsung’s “Going-Forward” Theory For the

Post-Contract Period
2
Samsung claims that Rambus was contractually obligated to negotiate a successor
3
agreement — beginning on July 1, 2005, continuing through the post-contract period until
4
present, and extending on through the life of Rambus’s patents — equivalent in terms to the
5
Infineon Settlement Agreement. Under this theory, any damages based on Samsung’s ongoing
6
infringement of Rambus’s patents must be limited to those payments made to Rambus by
7
Infineon, adjusted only to account for Samsung’s higher sales volume. This would limit
8
Samsung’s payments for infringement from July 1, 2005 going forward to the same effective
9
royalty rate that Samsung identifies for the second quarter of 2005, thus allowing Samsung to pay
10
only a tiny fraction of what it would otherwise be obligated to pay for infringing Rambus’s
11
patents.
12
Even if the Court were to conclude that the Infineon Settlement Agreement somehow
13
triggered Section 3.8 for the Second Quarter 2005, thus reducing Rambus’s potential recovery for
14
that one quarter, Samsung’s claim that Rambus was obligated to carry the “effective royalty rate”
15
from the Infineon Settlement Agreement forward into a renewal license under the Agreement’s
16
“good faith negotiation” provision is entirely baseless. This argument contradicts the plain text of
17
the Agreement, ignores negotiating history demonstrating that this very proposal was considered
18
and rejected, and is belied by the sworn testimony of Samsung’s negotiator in a earlier
19
proceeding.
20
The parties’ duty to negotiate a successor agreement is set forth in Section 8.5, which
21
provides as follows:
22
REDACTED REDACTED
23
REDACTED REDACTED
24
REDACTED REDACTED
25
26
27 nothing upon which to act as a supplement, and ‘should not be endowed with an existence
independent of its contractual underpinnings.’” Waller, 11 Cal. 4th 1, 36; Love, 221 Cal. App. 3d
28 at 1153. This is exactly what Samsung is attempting to do here.
5883160.1
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1 Tr. Ex. No. 9084 (emphasis added). This provision cannot reasonably be read to suggest that the
2 parties’ good faith negotiation obligation included an obligation to agree to any particular
3 substantive terms for the successor agreement, let alone an obligation by Rambus to give
4 Samsung economic terms equal to the most favorable terms it had given any other licensee. To
5 the contrary, the parties expressly provided that REDACTED
6 REDACTED REDACTED While it is obvious that
7 Samsung would have been satisfied with a new life-of-the-patents license that allowed it to pay
8 vastly less than it had previously paid for a license covering fewer products, it is absurd to
9 suggest that such an agreement REDACTED REDACTED
10 REDACTED, when the cloud on its patents presented by the Infineon litigation had been lifted.
11 Nor can the statement that REDACTED REDACTED
12 REDACTED REDACTED be squared with
13 Samsung’s contention that Rambus effectively was “locked in” to offering Samsung an extension
14 of the SDR/DDR License including the drastically reduced royalty rates it claims were embedded
15 in the Infineon Settlement Agreement. Even assuming arguendo that Samsung were entitled to
16 some “effective royalty rate” derived from the Infineon Settlement Agreement for the Second
17 Quarter 2005, Rambus would only be obligated to provide such terms on a going-forward basis if
18 Samsung had some right to automatic extension or renewal of the SDR/DDR License. Such
19 provisions, called evergreen clauses, are common in licensing agreements, as are clauses that give
20 one party an option to renew the agreement. As Samsung’s expert concedes, however,
23 Instead, it has merely a good faith negotiation provision, which by its very terms allows Rambus
24 to negotiate for a new agreement with new terms.
25 In short, it is difficult to conceive of a “good faith negotiation” provision that could more
26 clearly reserve for each party the right to determine the economic terms they are willing to offer
27 in negotiations for a successor agreement. Because the contract language is both explicit and
28 clear, it governs. Samsung’s attempt to redraft Section 8.5 to require a new contract on terms
5883160.1
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1 dictated by Samsung thus must be rejected. See Powerine Oil Co. v. Superior Court, 37 Cal. 4th
2 377, 390 (2005) (“If contractual language is clear and explicit, it governs.”)13
3 Samsung’s theory that Rambus effectively would have had a continuing obligation under
4 Section 3.8 to extend most-favored-licensee treatment to a new license agreement between the
5 parties is also directly contradicted by the language and negotiation history for Section 8.6 of the
6 SDR/DDR License. That provision identified REDACTED
8 REDACTED REDACTED
13 It is, moreover, clear from the negotiations that the parties specifically considered this
14 issue and that REDACTED . According to
15 Samsung witness Mr. Han Yong Uhm, a member of Samsung’s negotiation team and a
16 participant in the 2000 license negotiations, on September 19, 2000, Samsung proposed – and
17 Rambus rejected – a substantive good faith renegotiation provision that would have REDACTED
19 13
Samsung also cannot rely on Section 8.5 to establish any such obligation for another wholly
20 independent reason: the provision expressly states that REDACTED
21 REDACTED As set forth in Rambus’s Proposed Findings of Fact and Conclusions of
Law, Samsung was in breach of the Agreement by no later than July 2004 due to its failure to
22 permit access to information necessary for Rambus’s auditors to successfully perform a
contractually authorized royalty audit, and Rambus properly terminated the Agreement on that
23 basis on June 6, 2005. See Rambus’s Proposed Findings of Fact and Conclusions of Law, at
Section V. Samsung never contested or objected to Rambus’s termination of the agreement, thus
24 tacitly acknowledging Rambus’s right to terminate based on its breach.
Moreover, as discovered in the audit, Samsung also breached the Agreement by improperly
25 deducting various unauthorized expenses from gross sales in establishing the net sales amounts to
which its royalty payment obligations applied, thus enabling it to substantially understate and
26 underpay its royalties. See id.
27 Samsung does not contend that its Section 8.5 claim would have any applicability if the Court
concludes that Samsung was in breach of the SDR/DDR License during the last Quarter 2005.
28 Ugone Dep. at 207-09.
5883160.1
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2 REDACTED July 25, 2008 Deposition of Han Yong Uhm, Tr. 27:20-37:2.14
3 Subsequently, on October 16, 2000, Samsung’s negotiator (Mr. Shim) sent Rambus an
4 email requesting a variety of changes to the draft SDR/DDR License, including REDACTED
7 REDACTED Tr. Ex. No. 9102.15 Rambus responded to this request by email the
8 next day, agreeing REDACTED REDACTED REDACTED
9 Tr. Ex. No. 9087 (emphasis added). Rambus thus expressly rejected Samsung’s request
11 REDACTED and, as demonstrated by the final language REDACTED
12 REDACTED REDACTED . Requiring
13 Rambus to abide by Section 3.8 on a going-forward basis would directly contradict the express
14 intention of the parties, as demonstrated in both Sections 8.5 and 8.6.
15 The foregoing negotiation history thus demonstrates that, consistent with the express
16 language of Section 8.5, the Agreement created no obligation for Rambus agree to any specific
17
14
Mr. Uhm described Samsung’s proposal and Rambus’s response as follows:
18
REDACTED REDACTED
19
21
REDACTED REDACTED
22
24
REDACTED REDACTED
25
26
7/25/08 Uhm Depo. at 34:20-37:2; see also Tr. Ex. Nos. 9077, 9078.
27 15
In specific, Mr. Shim’s request was as follows: REDACTED
28 REDACTED .” Tr. Ex. No. 9102 at R2215881.
5883160.1
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1 royalty terms upon renegotiation of the Agreement, let alone agree to extend any status as a most-
2 favored-licensee beyond the date of the Agreement.
3 Indeed, Samsung’s own negotiator, Mr. Shim, admitted that the Agreement did not
4 encompass any such obligation upon renewal. In sworn testimony given shortly after Rambus
5 terminated the Agreement, Mr. Shim testified as follows:
7 REDACTED REDACTED
9 REDACTED REDACTED
18 8/23/05 Shim E.D. Va. Test. at 79:19-80:14. Samsung’s eleventh-hour attempts to circumvent its
19 patent infringement liability by positing some ongoing obligation by Rambus to provide
20 preferential treatment extending to some hypothetical future license is thus specious on its face.
21 In sum, the parties expressly left the terms of renewal open in the Agreement, and did not
22 agree that Samsung would be entitled to most-favored-licensee status on a going-forward basis
23 after the end of the Agreement’s term.
24 Precisely because agreements to negotiate of the type set forth in section 8.5 do not
25 require a party to enter into an agreement with pre-ordained terms, California law does not permit
26 a party to seek expectation damages based on a claim for breach of a duty to negotiate in good
27 faith. In fact, California law precludes the very remedy that Samsung seeks in this case – a
28 judicial determination that it should be treated as though it had entered into a new SDR/DDR
5883160.1
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1 License upon terms of its choosing. This is because, in any negotiation, “there is no way of
2 knowing what the ultimate terms of the agreement would have been or even if there would have
3 been an ultimate agreement.” Copeland v. Baskin Robbins U.S.A., 96 Cal.App.4th 1251, 1262-63
4 (2002). Whether based on an express contractual provision or the implied covenant of good faith
5 and fair dealing, “damages for the injured party’s lost expectations under the prospective
6 contract” are not available and “reliance damages are the only form of recovery available in an
7 action on a [failure] to negotiate an agreement.” Id. at 1260-61, 1263. Here, Samsung has not
8 offered and cannot offer any evidence of any reliance damages, and thus cannot demonstrate any
9 legally cognizable injury, even if it could establish that Rambus did not negotiate in good faith
10 (which it cannot). For that reason as well, Samsung’s Section 8.5 claim necessarily fails.
11 For all of these reasons, Samsung’s breach of contract claim for the period after June 2005
12 must be rejected regardless of whether the Infineon Settlement Agreement triggered Section 3.8
13 of the SDR/DDR License for the three months that remained after the Infineon Settlement
14 Agreement was executed.16
15 V. CONCLUSION
16 For the reasons set forth above, the Court should conclude that Samsung has failed to
17 show that Rambus breached the Agreement, and judgment should be entered for Rambus on
18 Counts I-III of Samsung’s counterclaims.
19
20
21
22
23
24
16
25 For similar reasons, Samsung’s claim of an alleged a breach of the implied covenant of good
faith and fair dealing based on Section 8.5 must fail. Samsung’s claim in this regard is based on
26 Rambus’s alleged failure to enter into a new license agreement having the terms of the Infineon
Settlement Agreement. But as discussed above, Section 8.5 includes no such obligation and is
27 nothing more than an agreement to negotiate in good faith. Because Samsung’s implied covenant
claim is based upon a fundamental misstatement of the underlying contractual obligation, it must
28 fail. See Waller, 11 Cal. 4th 1, 36; Love, 221 Cal. App. 3d at 1153.
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1 DATED: September 8, 2008 MUNGER, TOLLES & OLSON LLP

2
3 By: /s/ Burton A. Gross

BURTON A. GROSS
4
Attorneys for RAMBUS, INC.
5
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Rambus'S Trial Brief Regarding Samsung'S Counts I-Iii (Public Redacted Version)

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Rambus'S Trial Brief Regarding Samsung'S Counts I-Iii (Public Redacted Version)

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Case 5:05-cv-00334-RMW Document 2153 Filed 09/08/2008 Page 1 of 29

1 Gregory P. Stone (State Bar No. 78329)

25 SAMSUNG ELECTRONICS CO., LTD.,

1 REDACTED REDACTED REDACTED

1 C. The 2001 Amendment

5 REDACTED REDACTED and (ii)

6 REDACTED REDACTED REDACTED

10 obtained provisions (i) REDACTED REDACTED

11 REDACTED and (ii) REDACTED REDACTED

12 REDACTED REDACTED REDACTED

21 D. The Infineon Settlement Agreement

1 Settlement Agreement applied to a generally broader scope of products. The settlement

1 Rambus is REDACTED REDACTED

1 REDACTED REDACTED REDACTED

1 b. Samsung Unsuccessfully Tried To Obtain A Broader Most-

1 include the omitted provision”).

1 3. Rambus Did Not Agree To Give Samsung The Most Favorable

1 B. Section 8.5 Expressly Rejects Samsung’s “Going-Forward” Theory For the

1 REDACTED REDACTED REDACTED

20 REDACTED REDACTED REDACTED

23 REDACTED REDACTED REDACTED

1 DATED: September 8, 2008 MUNGER, TOLLES & OLSON LLP

3 By: /s/ Burton A. Gross

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