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From Antitrust Law Daily, May 14, 2014

Laches was no bar to SD memory card purchasers' antitrust suit

By Jeffrey May, J.D.

An action brought by purchasers of SD digital memory cards against Panasonic Corporation, Toshiba Corporation, SanDisk Corporation, and SD-3C, LLC for conspiring to fix prices and engaging in anticompetitive practices with respect to the licensing of their patents for SD cards was not time-barred, the U.S. Court of Appeals in San Francisco has decided. The plaintiffs' federal antitrust claim should not have been dismissed under the Clayton Act's four-year statute of limitations and was not barred by the equitable doctrine of laches. Therefore, dismissal was reversed, and the case was remanded for further proceedings (Oliver V. SD-3C, LLC, May 14, 2014, Paez, R.).

The district court improperly held that the Clayton Act's four-year statute of limitations applied to the plaintiffs’ claims for injunctive relief and that the challenged conduct began well before the start of the four-year limitations period. Unlike damages claims under Section 4 of the Clayton Act, which are subject to Section 4B’s four-year statute of limitations, there is no statute of limitations for injunctive relief claims under section 16 of the Act, the appellate court explained. Although claims for injunctive relief were subject to the equitable defense of laches, exceptions applied here to prevent application of the doctrine.

Under the doctrine of laches, a suit seeking equitable relief will be barred where a plaintiff has inexcusably delayed pursuing a claim and the defendant has been prejudiced as a result, the court explained. There are, however, two recognized exceptions to this general rule: (1) the continuing violation exception; and (2) the speculative damages exception. Both exceptions applied to the complaining SD card purchasers' claims.

Continuing violation exception. Under the continuing violation exception, each time a defendant sells its price-fixed product, the sale constitutes a new overt act causing injury to the purchaser and the statute of limitations runs from the date of the act. The plaintiffs alleged that they purchased SD cards within four years of the date on which the lawsuit was filed. Because the plaintiffs alleged that they were injured within the four-year limitations period, they alleged sufficient facts to show that laches did not bar their federal antitrust claim.

Speculative damages exception. The speculative damages exception saves a plaintiff from filing suit and presenting speculative evidence of damages to avoid having a claim time-barred. The SD card purchasers should not be required to bring suit where their harm was not clear, according to the court.

State antitrust law claims. In addition to dismissing the plaintiffs' federal antitrust claims, the lower court dismissed state antitrust law claims seeking damages on the same statute of limitations ground. Because the plaintiffs’ federal antitrust claim was timely, the district court’s dismissal of the state law claims was reversed.

Related action. In finding the SD card purchasers’ claims timely, the appellate court noted the Ninth Circuit’s recent decision in a related action, Samsung Electronics Co., Ltd. v. Panasonic Corp. (2014-1 Trade Cases ¶78,733), reversing a district court holding that the Clayton Act’s four-year statute of limitations barred Samsung Electronics Company’s antitrust claims for damages and injunctive relief against the same defendants. Both the SD card purchasers and Samsung allege that the defending developers of SD cards—the dominant form of flash memory card on the market—created SD-3C to license patents to manufacturers who were not members of the “SD Group” using standard terms and royalties to fix prices in violation of state and federal antitrust laws.

The case is No. 12-16421.

Attorneys: Amanda Bonn (Susman Godfrey LLP) for Dan Oliver. Christopher B. Hockett (Davis Polk & Wardwell LLP) for SD-3C, LLC. Jeffrey L. Kessler (Winston & Strawn LLP) for Panasonic Corp. Richard S. Taffet (Bingham McCutchen LLP) for SanDisk Corp. Daniel M. Wall (Latham & Watkins) for Toshiba Corp.

Companies: SD-3C, LLC; Panasonic Corp.; SanDisk Corp.; and Toshiba Corp.

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