Memory Card Cartel Claims Revived

A federal appeals court revived separate antitrust lawsuits by Samsung electronics Co. and a class of consumers Friday over allegations that Panasonic Corp. Engaged in a patent-licensing cartel with other flash memory card makers.

The 9th U.S. Circuit Court of Appeals found an exception to the four-year statute of limitations applied in the case of licenses for SD cards, which are the dominant form of flash memory card used widely in cellular phones, digital cameras and other mobile electronics.

Samsung and the consumers accused Panasonic of anti-competitive agreements to restrain trade and monopolize the markets for the cards.

The three-judge panel fund that Samsung sufficiently alleged the defendants committed two overt acts of antitrust within the limitation period when they adopted a lew license and attempted to enforce either the original or new license by collecting royalty payments.

In 1999, Panasonic and other allied companies develop the SD cards and created an SD Group to promote their use.  By 2003, the defendants created a standard license imposing a 6 percent royalty on SD cards sold by manufacturers who were not members of the group.

Samsung signed a license agreement, but did not begin making the SD cards because it made its own competing version.

By 2006, the SD group made new high capacity cards, SDHC cards, which became dominant in the market.  Samsung’s license did not include the right to make the new format, but it began making the new format, according to the court.

In 2010 Samsung sued alleging Panasonic and other SD defendant’s licenses were anti-competitive and a restraint on trade.

U.S. District Judge Jeffrey White dismissed the suit holding that all the acts had occurred more than four years before the lawsuit was filed or were a mere continuation of the original actions.

The 9th Circuit reversed.  It held that once Panasonic adopted the 2006 license to cover the second-generation SD cards and attempted to enforce the license through royalties it had acted within the four-year limitation period.

The 2006 license was not a mere restatement of the 2006 license, according to Judge Ronald Gould.

Joining him were Judges Richard Paez and visiting Judge David Ezra, of the Western District of Texas.

Case:  Samsung Electronics v. Panasonic Corp., No. 12-15185

 

 

 

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