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Samsung Electronics Co., Ltd. v Panasonic Corporation

Case No. 12-15185 (C.A. 9, Apr. 4, 2014)

We must determine the scope of the continuing violation exception to the four-year statute of limitations on private actions to enforce the antitrust laws. 15 U.S.C. § 15b. Plaintiff-Appellant Samsung Electronics Company (“Samsung”) appeals the district court’s dismissal under Federal Rule of Civil Procedure 12(b)(6) of its claim against Defendants-Appellees Panasonic Corporation, Panasonic Corporation of North America, and SD-3C, LLC (“SD Defendants”). We review de novo a district court’s dismissal for failure to state a claim. Von Saher v. Norton Simon Museum of Art, 592 F.3d 954, 960 (9th Cir. 2010). We have jurisdiction under 28 U.S.C. § 1291, and we reverse.

I



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. In 1999, Panasonic and its allies developed SD cards as a modified proprietary format of the flash memory cards then available, created the SD Group to promote their use, and created SD-3C to license the format to manufacturers. In 2003, the SD Defendants created a standard license (the “2003 license”) that contained a clause imposing a 6 percent royalty on SD cards sold by manufacturers who were not members of the SD Group. Samsung signed this license agreement, although it did not at once begin producing SD cards because it was then manufacturing a competing version of flash memory cards.

In 2005 and 2006, the SD Defendants developed two new forms of SD cards: the high capacity SD card (“SDHC”) was the same physical size as the first-generation product, but used distinct software to give it a substantially higher storage capacity than the original; the microSD card, designed for use in mobile phones, was much smaller than the first-generation product. By its terms, the 2003 license did not cover these new formats. The SD Group met in the fall of 2006 and adopted an “Amended and Restated SD Memory Card License Agreement” (the “2006 license”), which contained the same 6 percent royalty terms for non-SD Group manufacturers of the two new formats as the 2003 license had required for the original cards.
 

 

Judge(s): Ronald M. Gould
Jurisdiction: U.S. Court of Appeals, Ninth Circuit
Related Categories: Antitrust , Civil Procedure , Technology
 
Circuit Court Judge(s)
David Ezra
Ronald Gould
Richard Paez

 
Trial Court Judge(s)
Jeffrey White

 
Plaintiff Lawyer(s) Plaintiff Law Firm(s)
Timothy Hester Covington & Burling LLP
Robert Long, Jr. Covington & Burling LLP
Kevin Johnson Quinn Emanuel Urquhart & Sullivan LLP
Kathleen Sullivan Quinn Emanuel Urquhart & Sullivan LLP

 
Defendant Lawyer(s) Defendant Law Firm(s)
Christopher Hockett Davis Polk & Wardwell LLP
Samantha Knox Davis Polk & Wardwell LLP
Neal Potischman Davis Polk & Wardwell LLP
Aldo Badini Winston & Strawn LLP
Jeffrey Kessler Winston & Strawn LLP
James Lerner Winston & Strawn LLP
Ian Papendick Winston & Strawn LLP
Susannah Torpey Winston & Strawn LLP

 

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for the northern district of california reinstated. the market, and are widely used in cellular phones, digital the prime example in our circuit of the latter type of case 2006 as microsd and sdhc cards became the dominant museum of art, 592 f.3d 954, 960 (9th cir. 2010). we have manufacturing a competing version of flash memory cards. determinable, not the specific dollar value of that harm. opinion in mobile phones, was much smaller than the first-generation period, and the continued prosecution of the case “relate[d] zenith, 401 u.s. at 339; quoting hanson v. shell oil co., “necessarily resulted from” and “were but unabated inertial samsung electronics v. panasonic corp. 13 samsung electronics v. panasonic corp.4 shepherded away from the plaintiff’s non-preferred shop as the supreme court has held, private antitrust actions are because this case is an appeal of a motion to dismiss under fed. r. under the antitrust laws is governed by laches, and that the december 5, 2013—san francisco, california for the ninth circuit to state a continuing violation of the antitrust laws in the law claims and on supplemental state law claims. llc, a delaware limited liability 3:10-cv-03098- light most favorable to samsung. consequences of some pre-limitations action.” 591 f.2d at 72 federal antitrust law claims and on the supplemental state law period. 813 f.2d at 239. the antitrust action was ultimately california, for defendant-appellee sd-3c, llc. samsung electronics v. panasonic corp.10 (1988))). this claim is remanded to the district court for a determination uniformly” recognized the continuing violation exception (citing pace, this summary constitutes no part of the opinion of the court. it has a potential plaintiff to foresee the kind of dramatic and rapid and remanded for further proceedings on the federal antitrust and any damages that occurred during the limitations period sherman act. this is no longer the law in california. aryeh v. canon in 1999, panasonic and its allies developed sd challenging the decision of a group of automakers not to the keyquestion in determiningwhetherdamages wereoverly v. manufacturers. in 2003, the sd defendants created a the district court granted the sd defendants’ motion to compete agreement in the contract for a sale of a business, refused to sign the 2006 license. but as it began 340. thus, if harm is “uncertain” or “speculative” at the time fall of 2006 was also an overt act that restarted the limitations jeffrey l. kessler (argued), aldo a. badini, james f. lerner, for failure to state a claim. von saher v. norton simon vehicles was not timely, because the unique nature of the tel. corp. v. gen. tel. & elec. corp., 518 f.2d 913, 926 (9th concluded that the federal antitrust claims were timely, we damage, which does not prevent recovery.”). said, “[t]he typical antitrust continuing violation occurs . . . requested that samsung sign the 2006 license, and told d.c. no. 1 jsw parties to that agreement, taken pursuant to its terms, were 2006. filed april 4, 2014 * defendants”). we review de novo a district court’s dismissal sd defendants approached samsung and required it to make previous act; and 2) it must inflict new and accumulating must inflict new and accumulating injury on the plaintiff.” begins on the date that the plaintiff’s damages first “accrued operators in hennegan and among the power companies in of the antitrust violation, the statute of limitations period finally, the district court did not address samsung’s expansion, nor did it foreclose future agreements on different limitations period that meets two criteria: 1) it must be a new flowed” so that they are not “forever incapable of recovery, challenged action, even if that would have required breaching that is what is alleged here, and samsung’s suit is timely. used distinct software to give it a substantially higher storage second-generation sd cards, and the attempt to enforce either back” to the filing of the case. id. even though the suit was sd defendants could have known for certain whether particularly for use in the rapidly growing markets for mobile prevent recovery, aredistinguishable from uncertainextent of samsung electronics v. panasonic corp. 3 we further hold that, even if the 2006 license was merely iv samsung electronics v. panasonic corp. 7 sufficient to support an antitrust action 18 years later. id. in licenses to samsung when it began to make sd cards in the license by collecting royalty payments from samsung. we and the case is remanded for further proceedings on the manufacturingthe new formats, samsungmade the requested court’s order as an implicit dismissal of the equitable claim, & sullivan, llp, new york, new york, for plaintiff- by an act of the defendants a cause of action accrues to him 813 f.2d at 237)). the sd defendants argue that their behavior was a pro-competitive jeffrey s. white, district judge, presiding opinion by judge gould federal rule of civil procedure 12(b)(6) of its claim against new formats. the sd group met in the fall of 2006 and under the 2003 license—those acts caused independent harm statute of limitations on private antitrust actions. but an electricity in accordance with a pre-limitations contract claims, consistent with this opinion. the 2006 license, which extended the license to cover the covered second-generation sd cards, nor did it cover contracts made in violation of the antitrust laws were 1990) (“since the supreme court decided zenith, federal courts have that is not merely a reaffirmation of a previous act; and 2) it restart the statute of limitations to allow the filing of the by the four-year statute of limitations, of a private action to automobile business meant that the initial refusal to deal was the honorable david a. ezra, district judge for the u.s. district contract was sufficient to restart the statute of limitations so “irrevocable, immutable, permanent, and final” injury. california’s sister states around the turn of the 20th century.” (citing state producers dated back to 1972, the anti-competitive acts of the limitations. columbia steel, 111 f.3d at 1444–45; pace, held that a suit by an automobile parts manufacturer sd cards are the dominant form of flash memory card on the adoption of the 2006 license was a “new and both of these cases, an action taken under a pre-limitations to recover the damages caused by that act and that, as to those peterson farms, 371 f.3d 1011, 1019 (8th cir. 2004) (adopting the pace appellant. 2 plaintiff-appellant, samsung electronics v. panasonic corp.12 antitrust suit can therefore be maintained—from those where 813 f.2d at 237; hennegan, 787 f.2d at 1300–01. when the (internal quotation marks omitted). code § 17200. while the district court permissibly dismissed the ucl they sought to have samsung sign the new licensing robert a. long, jr. and timothy c. hester, covington & samsung would enter that market. sd cards proved more samsung electronics co., ltd., a we vacate that dismissal and remand for a determination of time-barred. the district court held that all events that took patent pool. the district court did not reach the merits of samsung’s samsung filed suit in june 2010, alleging that the sd california unfair competition law (“ucl”) and california intended to let parties recover “future damages that could not (argued) and kevin p.b. johnson, quinn emanuel urquhart argued and submitted acts within the limitations period when they adopted a new period. we have repeatedly held that acts taken to enforce a manufacturers of the two new formats as the 2003 license had opinion appeal from the united states district court period, the agreement itself did not “immediately and california’s ucl incorporates violations of substantive statutes and completed an overt act during the limitations period that francisco, california, for defendants-appellees panasonic samsung here alleges that the sd defendants committed c cards were an anti-competitive agreement in restraint of trade cards then available, created the sd group to promote their ninth circuit, a plaintiff must allege that a defendant samsung electronics v. panasonic corp.2 permanently destroy” plaintiff’s business nor did it cause the panel held that the case also fell within the statute-of- standard license (the “2003 license”) that contained a clause phones and portable media players. the law does not require (“samsung”) appeals the district court’s dismissal under a adoption of the original license. samsung electronics v. panasonic corp.6 actions allowed samsung to file suit once the harm long as the defendant had the ability not to take the the district court dismissed samsung’s claims under the two overt acts within the limitations period: the adoption of vacate the district court’s dismissal of the state law claims four-year statute of limitations in 15 u.s.c. § 15b “furnishes samsung challenged in this suit was speculative at the time of and the statute of limitations ran anew from the time that characteristics of the automobile manufacturing market, this standard is meant to differentiate those imposing a 6 percent royalty on sd cards sold by construing the cartwright act, given that the cartwright act was modeled substantive legal claims on which to rest its ucl arguments, that mere continuation of the prior actions, and that they did not inc. v. portland general electric co., 111 f.3d 1427 (9th cir. equitable claim in its order dismissing the case as untimely. that to state a continuing violation of the antitrust laws, and expansion to future technological developments. rather, the include parts from the manufacturer in future models of their japanese corporation; panasonic summary** that the 2006 license imposed the same 6 percent royalty steer customers to preferred souvenir shops. we held that a must allege that a defendantcompleted an overt act during the independent act” that caused “new and accumulating injury” limitations. id. at 1444–45. even though the anti- all of the harm occurred at the time of the initial violation. 2003license applied onlyto theproductionoffirst-generation and became ascertainable.” amf, 591 f.2d at 71, 73 (citing defendants-appellees. 1996), we held that a power producer’s refusal to wheel panasonic corporation, a claim under the circumstances alleged in samsung’s complaint. sd cards, a fact that the sd defendants recognized when to enforce the contract caused a new anti-competitive harm, license payments—whether under a new 2006 license or capacitythan the original; the microsd card, designed for use b we have held that the deadline for suits for equitable relief jurisdiction under 28 u.s.c. § 1291, and we reverse. along the same lines, non-legal actions taken pursuant to damages, the statute of limitations runs from the commission samsung electronics v. panasonic corp.8 thus plead an exception to the statute of limitations, a plaintiff the same 6 percent royalty terms for non-sd group v action to accrue. for example, in hennegan v. pacifico the plaintiff alleged that the defendants’ licenses for sd finally control the acts of the sd defendants. their decision ii columbia steel, the license itself did not permanently and when conspirators continue to meet to fine-tune their cartel no. 12-15185 an overt act even though the suit was filed to enforce a non- corporation and panasonic corporation of north america. agreement. the 2003 license did not contemplate future cir. 1975), disapproved of on other grounds, california v. pace, 813 f.2d at 240 (“thus, uncertain damages, which the allegedly anti-competitive contract. defendants-appellees panasonic corporation, panasonic cases such as pace, where we held that a lawsuit constituted of the federal antitrust claims. but because we have dismissed as untimely because the lawsuit challenging the samsung signed this license agreement, although it did not at accrue within the limitations period. reversed and remanded. for publication before: ronald m. gould and richard a. paez, circuit business solutions, inc., 55 cal. 4th 1185, 1195 (2013) (“interpretations competitive agreement to divide the market between state antitrust law, known as the cartwright act, as well as a iii technological changes that took place over the last decade to a restatement of the 2003 license, the application of the license and attempted to enforce either the original or the new cards as a modified proprietary format of the flash memory a pre-limitations period contract can lead a new cause of new york; ian l papendick, winston & strawn llp, san cases where a continuing violation is ongoing—and an dismissal of these claims was controlled by the untimeliness to violate the antitrust laws, . . . each time a plaintiff is injured place within the four years before samsung’s suit were a was not in the sd card market, and neither samsung nor the creative service, inc., 787 f.2d 1299 (9th cir. 1986), we the district court’s order dismissing the case is reversed samsungstarted to make both of these new formats in late be proved within four years of the conduct from which they 787 f.2d at 1301. similarly, in columbia steel casting co., time of the initial act is whether the existence of the harm is sufficiently alleged that the defendants committed two overt form of flash memory on the market. the sd defendants in 2005 and 2006, the sd defendants developed two new 392 f.3d 265, 269 (8th cir. 2004) (citing pa. dental ass’n v. court for the western district of texas, sitting by designation. 541 f.2d 1352, 1361 (9th cir. 1976)). as we have explained, meets two criteria: “1) it must be a new and independent act the governing statute, 15 u.s.c. § 15b, sets a four year corporation of north america, once begin producing sd cards because it was then at the time of the adoption of the 2003 license, samsung dismissed, we held that certain actions taken to enforce electronics.1 med. serv. ass’n of pa., 815 f.2d 270, 278 (3rd cir. 1987). faced an arrangement in which a tourism company agreed to royaltypayments on a quarterlybasis beginning in november within the meaning of pace because the 2003 license neither an “irrevocable, immutable, permanent and final” decision corporation of north america, and sd-3c, llc (“sd cir. 1991) (same); peck v. gen. motors corp., 894 f.2d 844, 849 (6th cir. the panel reversedthe district court’s dismissal, as barred contrary to the congressional purpose.” zenith, 401 u.s. at in the first instance of whether california law permits a cartwright act which require the integration of multiple parts, substantial enforce the antitrust laws. and accumulating injury. like the agreement among the tour cause of action accrued each and everytime that a tourist was claims. samsung filed a timely notice of appeal. exception to the four-year statute of limitations on private the same physical size as the first-generation product, but 321, 338 (1971) (“in the context of a continuing conspiracy manufacturers who were not members of the sd group. forms of sd cards: the high capacity sd card (“sdhc”) was contract were overt acts that restarted the statute of ** see zenith radio corp. v. hazeltine research, inc., 401 u.s. license agreement” (the “2006 license”), which contained and remand.4 civ. p. 12(b)(6), the facts are taken from the complaint and viewed in the gould, circuit judge: am. stores co., 495 u.s. 271 (1990). construing the district samsung electronics v. panasonic corp. 5 our decision rests not only on the continuing violation terms. cf. amf, 591 f.2d at 72 (noting the unique claim for equitable relief. the district court concluded that judges, and david a. ezra, district judge.* popular than samsung’s alternative flash memory format, plaintiff-appellant samsung electronics company underlying decision is no longer accurate and the ucl claim must be product. by its terms, the 2003 license did not cover these ones is not evidence that the new license was a reiteration or crystallized in 2006. zenith, 401 u.s. at 340; pace, 813 f.2d samsung electronics v. panasonic corp. 9 required for the original cards. recover damages for antitrust harms. because the harm to vehicle air pollution), 591 f.2d 68 (9th cir. 1979). there we antitrust adopted an “amended and restated sd memory card makes them punishable as unfair business practices. cal. bus. & prof. defendants began enforcement. united states court of appeals is amf, inc. v. general motors corp. (in re multidistrict existence of the harm was not determinable at the time of the 4 3 speculative such that recovery would be unavailable at the injury on the plaintiff. the panel held that the plaintiff license by collecting royalty payments from the plaintiff. of california ex rel. van de kamp v. texaco, inc., 46 cal. 3d 1147 interpretation of california’s antitrust statute was coextensive with the i the panel reversed the district court’s order of dismissal claim once it had decided that samsung no longer had any other exception, but also on the exception for speculative damages. constituted an overt act that restarted the statute of and that the contract had been made outside the limitations pace industries, inc. v. three phoenix co., 813 f.2d 234, 238 rate on the new sd cards as the 2003 license did on the old defendant’s licenses were an anti-competitive agreement in samsung that the executed 2003 license agreement did not amf is the exception, not the rule. more common are exception to this time limit exists for continuing violations. a delaware corporation; sd-3c and susannah p. torpey, winston & strawn llp, new york, use, and created sd-3c to license the format to extension of the prior agreement. as our sister circuits have sufficient to restart the statute of limitations. id. at 237. burling llp, washington, d.c.; kathleen m. sullivan not on federal antitrust statutes but instead on statutes enacted by whether the equitable claim was timely as well. planning, and lead time). been prepared by court staff for the convenience of the reader. company, h. knox, davis polk & wardwell llp, menlo park, the cartwright act claim was dismissed based on a holding that the agreement.” midwestern mach. co. v. nw. airlines, inc., limitations exception for speculative damages because the samsung electronics v. panasonic corp. 11 korean corporation, (9th cir. 1987).3 sherman act section 2, and also violated parallel state laws.2 other circuits have adopted similar standards. see, e.g., varner v. at 240. monopolization of the relevant markets in violation of the initial wrong, the law of limitations in federal antitrust of federal antitrust law are at most instructive, not conclusive, when and independent act that is not merely a reaffirmation of a christopher b. hockett, neal a. potischman, and samantha a guideline for computation of the laches period.” int. tel. & include the right to manufacture the new formats. samsung dismiss the suit on the grounds that samsung’s claims were counsel cameras, audio players, and other forms of mobile because even though the agreement predated the limitations and a monopolization of the relevant markets. the panel held claims. we also express no position on the substance of the complaint. we must determine the scope of the continuing violation of the act.”) actions to enforce the antitrust laws. 15 u.s.c. § 15b. restraint of trade in violation of sherman act section 1, a non-compete agreement was also filed outside the limitations standard); al george, inc. v. envirotech corp., 939 f.2d 1271, 1275 (5th agree that both acts caused samsung’s cause of action to


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