Davis Polk Defeats Price-Fixing Claims Against SD Card Flash Memory Joint Venture

Davis Polk won a dismissal of antitrust claims brought by an alleged class of indirect purchasers of SD Card Flash Memory devices in a case of first impression before the U.S. District Court for the Northern District of California. Davis Polk represents SD-3C, a joint venture of Panasonic, SanDisk and Toshiba that licenses IP rights necessary to manufacture SD flash memory cards. The purported indirect purchaser class action alleged that a “fair market price” royalty provision in the license agreement between SD-3C and manufacturers of SD cards constituted naked price-fixing.

On September 30, 2015, Judge Jeffrey White dismissed the indirect purchasers' complaint, holding that the price-fixing claim failed as a matter of law.  The Court found that the challenged royalty provision was simply “designed to ensure that the licensees do not circumvent the royalty requirement.” The Court also held that “the allegations of the [Complaint] and the language of the 2006 License itself make clear that the royalty provision regulates pricing for the joint venture’s own License, not for downstream sales of SD Cards.”  Finally, the Court further held that the indirect purchaser plaintiffs lacked standing to challenge the other standard-setting and licensing activity alleged in the Complaint.

Davis Polk continues to represent SD-3C in connection with a related suit brought by Samsung against SD-3C and Panasonic in the Northern District.

The Davis Polk litigation team included partners Christopher B. Hockett and Neal A. Potischman, associates Samantha H. Knox and William D. Pollak. Members of the Davis Polk team are based in the Northern California and New York offices.