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November 2014: Appellate Victory for Samsung Electronics

November 2014

The firm obtained a unanimous ruling from the U.S. Court of Appeals for the Ninth Circuit for Samsung Electronics, reinstating a major antitrust action against Panasonic and others that had been dismissed by the district court on statute of limitations grounds. In a published opinion, the Ninth Circuit ruled that Samsung’s case was timely and allowed Samsung’s federal, state, and equitable claims to proceed. The decision is a significant antitrust precedent, reaffirming the “continuing conspiracy” doctrine in antitrust cases.

The case involves secure digital (SD) memory cards, which are the dominant form of flash memory in the market today, used in nearly all cell phones and digital cameras. Samsung alleges that Panasonic formed a cartel with Toshiba and SanDisk to force a six percent royalty on all manufacturers and sellers of SD cards. As alleged in Samsung’s complaint, the cartel began in the 1990s, and in 2003—outside the statute of limitations period—it imposed a six percent royalty on Samsung’s sales of first-generation SD cards in a license agreement. The issue on appeal was whether allegations of the cartel’s later conduct—including a 2006 meeting and subsequent imposition of a six percent royalty on manufacturers and sellers of a new, second generation of SD cards—restarted the statute of limitations.

Samsung filed suit in 2010, but the U.S. District Court for the District of Northern California twice dismissed its complaint on timeliness grounds. The district court ruled that all of the cartel’s anticompetitive acts, as well as any anticompetitive injury, took place in 2003, and that the cartel’s efforts to impose the six percent royalty in 2006 on the second generation of SD cards were merely an extension of the 2003 conduct as to the first generation of SD cards, pointing to the same six percent royalty the cartel imposed on both generations.

Samsung retained Quinn Emanuel to represent it in the appeal to the Ninth Circuit. The firm successfully argued that, no matter how the cartel’s actions in 2006 are viewed, they are sufficient to restart the statute of limitations, making Samsung’s suit timely. Specifically, the Ninth Circuit held that the cartel’s 2006 conduct was independent enough from the 2003 license to trigger the “continuing conspiracy” exception to the antitrust statute of limitations, and that even if the 2006 conduct was merely enforcing the 2003 license agreement, the cartel’s actions were still sufficient to trigger the same exception. The Ninth Circuit also ruled that Samsung could not have suffered damages in 2003 when it did not know it would enter the SD card market until 2006. The decision enables Samsung now to pursue its claims for antitrust damages and injunctive relief against Panasonic and the cartel.