Court Strikes Flash Memory Card Claims As Too Tardy

Patent holders of technologies supporting digital camera and cell phone flash memory cards known as Secure Digital Memory Cards (“SD Cards”) have succeeded in defeating antitrust claims against them as too tardy.

Judge Jeffrey S. White has dismissed the plaintiffs’ claims in Oliver v. 3D-3C, LLC, in the U.S. District Court for the Northern District Court of California, after finding the claims are untimely under the four-year statute of limitations for asserting private antitrust claims under the Clayton Act.

Panasonic, Toshiba and SanDisk, through an entity known as SD-3C, LLC, provide intellectual property licenses for other companies that wish to manufacture and sell SD Card technology.  Under the terms of the licenses, the manufacturers are required to pay a royalty on each card sold.

A group of consumers filed the antitrust claim against SD-3C and the three-company team, arguing that they used the licenses to inflate and control prices.

The court based its decision largely on the decision in Samsung Electronics Co, LTD v. Panasonic Corp., which dismissed claims on similar grounds in 2010.  Unlike the Samsung case, in which a competitor filed the claim, the consumers here argued they were in a different position, since the price did not actually injure them until they purchased the products more recently.  This argument relied on cases such as Kaiser Foundation v. Abbott Laboratories, which held the limitations period did not bar claims based on continuing violations.

Panasonic, Toshiba and SanDisk, created the royalty agreement in 2003 and amended it once in 2006.  The Court here held that the statute of limitations period began when the companies made an agreement on royalty prices, and that the plaintiffs’ claims arose when the defendants made their last alleged overt acts – more than four years ago – not when the plaintiffs made their purchases.