Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Timeliness of claims against SD card developers questioned again, (Dec 10, 2014)

By Jeffrey May, J.D.

The U.S. Supreme Court has been asked to consider the timeliness of antitrust claims brought by purchasers of SD digital memory cards against developers of the technology. Panasonic Corporation, Toshiba Corporation, SanDisk Corporation, and SD-3C, LLC filed a petition for certiorari with the Court on December 1. They seek review of a decision of the U.S. Court of Appeals in San Francisco reversing the dismissal of the purchasers' claims on statute of limitations and laches grounds. In November, the developers asked the High Court to consider the timeliness of related claims brought by Samsung Electronics Company, challenging standard-setting and patent licensing agreements for the technology (SD-3C, LLC v. Oliver, Dkt. 14-641).

The two underlying suits involve challenges to the structure and licensing practices of a standard setting organization and patent pool formed a decade earlier for SD card technology. SD cards are the dominant form of flash memory card on the market and are widely used in cellular phones, digital cameras, audio players, and other forms of mobile electronics.

The district court dismissed both cases as untimely. The petitioners now question the Ninth Circuit's decisions to revive the claims brought by Samsung, which was a licensee manufacturer of SD cards, as well as a “copycat” suit brought by SD card purchasers who are seeking injunctive relief under the federal antitrust laws.

In the earlier-filed companion case of Panasonic Corp. v. Samsung Electronics Co., Ltd., Dkt. 14-540, the developers asked the Court to consider the “continuing conspiracy” and “speculative damages” exceptions to the Clayton Act's four-year statute of limitations. Specifically, they asked whether public standard-setting and patent-pool licensing agreements that long predate the Clayton Act's four-year statute of limitations period may be indefinitely subjected to antitrust challenge based on the defendants’ ongoing collection of royalties, where a complaining licensee delayed filing suit challenging those pre-limitations agreements until the market had come to depend upon the licensed technology.

In the latest petition, the developers asked whether they should be subject to antitrust suits seeking injunctive relief against the foundational terms of a decade-old standard setting and technology licensing arrangement for as long as third parties continue to make sales of goods embodying the technology. In addition, they questioned the Ninth Circuit’s decision to treat statute of limitations analysis as dispositive on the issue of laches, without considering the broader equitable issues associated with permitting challenges to long-settled business arrangements.

According to the developers, their earlier petition explains “the Ninth Circuit's core error: treating every step that a decade-old joint venture took to create the innovative SD Card, license the requisite pooled IP, and oversee its technical evolution as an endless series of new 'overt acts' by the founders, forever restarting the statute of limitations.” They go on to state that the appellate court's decision in the purchaser action “extends and aggravates that unprecedented expansion of antitrust exposure” in three ways:

1. by holding that any purchase by the plaintiff constitutes an overt act by the defendant, even when the plaintiff purchased the goods from someone other than the defendant, like a third party licensee or intermediary;

2. by allowing injunctive claims long after damages actions are time-barred; and

3. by treating the technical limitations analysis as dispositive of laches in a case for injunctive relief, without accounting for prejudice to the defendants, the broader public interest, and other traditional equitable factors.

The petitioners have asked the Court to grant certiorari in both cases and consolidate them for argument.

Attorneys: Daniel M. Wall (Latham & Watkins LLP) for SD-3C, LLC.

Companies: SD-3C, LLC; Panasonic Corp.; SanDisk Corp.; Samsung Electronics Co., Ltd.; Toshiba Corp.

News: Antitrust