Bernstein Shur Business and Commercial Litigation Newsletter #24

By Paul McDonald and Dan Murphy

January 2013 | Issue 24

We are pleased to present the 24th edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we highlight recent decisions addressing the statute of repose for securities fraud claims, the consequences of destruction of evidence, and the termination of a federal anti-trust investigation of Google. We hope you enjoy this month’s newsletter.

In the News:

Federal court ruling extends time for individuals to file seemingly time-barred securities fraud claims. It has been settled for decades that a five-year “statute of repose” applies to federal securities fraud claims, meaning that any claim filed more than five years after the allegedly false or misleading statement is untimely and subject to dismissal. Notwithstanding this rule, the United States District Court for the District of New Jersey  ruled that the timely filing of a prior securities class action tolled the statute of repose for a securities fraud action that was later filed by individual investors. In  In re Merck & Co., Inc. Securities, Derivative and ERISA Litigation, MDL No. 1658 (SRC) (Dec. 20, 2012 D. N.J.), there was no dispute among the parties that the prior class action asserted claims that paralleled those asserted by the individual plaintiffs, that the putative class included the plaintiffs, and that no decision had been made on certification of the class. In these circumstances, the court ruled that the repose period was tolled by the class action filing and the motion to dismiss was denied. This decision may give new life to securities fraud suits by individual investors previously thought to have been time-barred. Click here to read the court’s opinion. 

Rambus, Inc. is barred from enforcing 12 semiconductor patents against a competitor based entirely upon discovery violations  it committed in a patent infringement enforcement action. In Micron Technology, Inc. v Rambus, Inc., CV No. 00-792 (Jan. 2, 2013 D. Del.), Rambus asserted claims against its competitor, Micron Technology, Inc., for infringement of Rambus’ patents for high-speed computer memory chips. Discovery in the case revealed that Rambus systematically destroyed documents that cast doubt on the enforceability of the patents in question, while preserving documents that supported its strategy. Addressing Micron’s claims of evidence spoliation — the destruction of evidence where litigation is foreseeable — U.S. District Judge Sue L. Robinson concluded that the Rambus document destruction program was pervasive, undertaken in bad faith and highly prejudicial to its competitor, determining that the “only appropriate sanction” was to rule that the 12 patents were unenforceable against Micron. The case underscores the need to adopt and implement sound document preservation policies and to painstakingly preserve evidence once litigation becomes reasonably foreseeable. Click here to learn more about the case and here to read Judge Robinson’s opinion.

Following a two-year investigation, the Federal Trade Commission concluded that Google did not violate federal antitrust laws regarding practices related to information harvesting for its search engine results. Since 2011, the FTC has been investigating charges that Google gathered content from rival firms and passed it off as its own, along with claims that one of Google’s patent subsidiaries failed to license its technology in a fair, reasonable and non-discriminatory manner. Following a review of such complaints, the FTC acknowledged that it was troubled by some of Google’s practices, but concluded that anti-trust and anti-competition laws were not violated. As part of the conclusion to the investigation, Google and the FTC entered into a settlement agreement aimed at correcting the practices that had been criticized. Among other things, Google has agreed to limit content gathering from competitors’ search results. The settlement has been characterized as a major victory for Google, while being sharply criticized by its competitors. Read more about the story here.