Supreme Court of the United States

No. 14-___ In the Supreme Court of the United States

SD-3C, LLC; PANASONIC CORPORATION; PANASONIC CORPORATION OF NORTH AMERICA; TOSHIBA CORPORATION; TOSHIBA AMERICA ELECTRONICS COMPONENTS, INCORPORATED; SANDISK CORPORATION,

Petitioners, V. DAN OLIVER, ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

CHRISTOPHER B. HOCKETT DANIEL M. WALL NEAL A. POTISCHMAN Counsel of Record DAVIS POLK & WARDWELL BELINDA S. LEE LLP AARON T. CHIU 1600 El Camino Real LATHAM & WATKINS LLP Menlo Park, CA 94025 505 Montgomery Street (650) 752-2000 Suite 2000 San Francisco, CA 94111 Counsel for SD-3C, LLC (415) 391-0600

[email protected] JEFFREY L. KESSLER ALDO A. BADINI J. SCOTT BALLENGER JAMES F. LERNER LATHAM & WATKINS LLP SUSANNAH P. TORPEY 555 11th Street, NW WINSTON & STRAWN LLP Suite 1000 200 Park Avenue Washington, DC 20004 New York, NY 10166 (202) 637-2200 (212) 294-6700 Counsel for Toshiba Corp. & Toshiba America Electronics Components, Inc. Additional Counsel Listed on Inside Cover

STEFFEN N. JOHNSON RICHARD S. TAFFET ELIZABETH P. PAPEZ MORGAN, LEWIS & BOCKIUS WINSTON & STRAWN LLP LLP 1700 K Street, NW 399 Park Avenue Washington, DC 20006 New York, NY 10022 (202) 282-5000 (212) 705-7000 Counsel for Panasonic KRISTEN A. PALUMBO Corp. & Panasonic Corp. MORGAN, LEWIS & BOCKIUS of North America LLP Three Embarcadero Center San Francisco, CA 94111 (415) 393-2000 Counsel for SanDisk Corporation

Counsel for Petitioners

QUESTIONS PRESENTED This is a companion case to Panasonic Corporation, et al. v. Samsung Electronics Co., Ltd, No. 14-540 (petition for a writ of certiorari filed Nov. 12, 2014).

In 1999, Petitioners, a group of technology companies, came together to create the “SD Card” used in many consumer electronics products and to license their pooled intellectual property. They announced in 2000 that they would charge third parties, but not themselves, for the right to use the SD Card intellectual property, and they began licensing to third parties in 2003. In 2010, Samsung sued over the “permanent cost advantage” caused by this “discriminatory” licensing program. In 2011, this consumer class action was filed. The district court held both actions untimely, but the Ninth Circuit reversed.

The questions presented are:

(i) Whether the Ninth Circuit erred when it held that Petitioners are subject to antitrust suits seeking injunctive relief against the foundational terms of a decade-old standard setting and technology licensing arrangement for as long as third parties continue to make sales of goods embodying that technology?

(ii) Whether the Ninth Circuit erred when it treated its statute of limitations analysis as dispositive on the issue of laches, without considering the broader equitable issues associated with permitting challenges to long-settled business arrangements?

LIST OF PARTIES AND RULE 29.6 STATEMENT Petitioners are SD-3C, LLC, Panasonic Corporation, Panasonic Corporation of North America, Toshiba Corporation, Toshiba America Electronics Components, Incorporated, and SanDisk Corporation. SD-3C, LLC is a limited liability Delaware company owned by members Panasonic Intellectual Property Corporation of America, SanDisk Corporation, and Toshiba America Electronic Components, Inc. Panasonic Corporation is a nongovernmental corporate party with no parent corporation, and no publicly-held corporation owns 10% or more of its stock. Panasonic Corporation is the corporate parent of Panasonic Corporation of North America and owns 10% of more of its stock. Toshiba Corporation is a nongovernmental corporate party with no parent corporation, and no publicly-held corporation owns 10% or more of its stock. Toshiba America Electronic Components, Inc. is wholly owned by Toshiba America, Inc., which is wholly owned by Toshiba Corporation. SanDisk Corporation is a nongovernmental corporate party with no parent corporation, and no publicly-held corporation owns 10% or more of its stock. Respondents are Dan Oliver, Jeannie Oliver, Joe Solo, Bernard Gross, Susan Keelin, Walter Kvasnik, Kou Srimounghanch, Humberto Gonzalez, Samuel D. Leggett, Brian Albee, Mary Louise Fowler, Joe Show, Rhonda Schultz, all of whom began purchasing SD Cards for end use from retail outlets or from third- party licensees of SD Card intellectual property in various states since March 15, 2007. Respondents purport to represent a class of similarly situated indirect purchasers of SD Cards.

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TABLE OF CONTENTS Page

QUESTIONS PRESENTED ...... i LIST OF PARTIES AND RULE 29.6 STATEMENT ...... ii TABLE OF AUTHORITIES ...... v OPINION BELOW ...... 1 JURISDICTION ...... 1 STATUTORY PROVISIONS INVOLVED ...... 1 INTRODUCTION ...... 2 STATEMENT OF THE CASE ...... 6 A. The Formation and Development of SD-3C ...... 6 B. District Court Proceedings ...... 8 C. The Ninth Circuit’s Decision ...... 10 REASONS FOR GRANTING THE WRIT ...... 12 I. THE NINTH CIRCUIT’S DECISION CONFLICTS WITH DECISIONS OF THIS COURT AND OTHER CIRCUITS BY TREATING ANY SALE TO THE PLAINTIFF AS A NEW “OVERT ACT” BY DEFENDANTS ...... 16 II. THE NINTH CIRCUIT’S DECISION IMPROPERLY APPLIES DAMAGES ACCRUAL PRINCIPLES IN A SUIT FOR INJUNCTIVE RELIEF ...... 22

TABLE OF CONTENTS Page

III. THE NINTH CIRCUIT’S DECISION CONFLICTS WITH DECISIONS OF THIS COURT AND OTHER CIRCUITS BY DISREGARDING THE EQUITABLE DIMENSIONS OF LACHES ...... 27 IV. THESE DECISIONS PRESENT ISSUES OF NATIONAL IMPORTANCE THAT MERIT REVIEW BY THIS COURT ...... 31 CONCLUSION ...... 35

APPENDIX Opinion of the United States Court of Appeals for the Ninth Circuit, Oliver v. SD-3C LLC, 751 F.3d 1081 (9th Cir. 2014) ...... 1a

Order of the United States District Court for the Northern District of California Granting Motion to Dismiss Without Leave to Amend, Oliver v. SD-3C, LLC, No. 3:11-cv- 01260-JSW (N.D. Cal. May 21, 2012) ...... 11a

Order of the United States Court of Appeals for the Ninth Circuit Denying the Petition for Rehearing and Petition for Rehearing En Banc, Oliver v. SD-3C, LLC, No. 12-16421 (9th Cir. Sept. 2, 2014) ...... 20a

Indirect Purchaser Plaintiffs’ First Amended Complaint, Oliver v. SD-3C, LLC, No. 3:11- cv-01260-JSW (N.D. Cal. Nov. 23, 2011) ...... 22a

TABLE OF AUTHORITIES Page(s)

CASES

Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1998) ...... 32

Apple Inc. v. Samsung Electronics Co., 735 F.3d 1352 (Fed. Cir. 2013) ...... 29

Armstrong v. Maple Leaf Apartments, Ltd., 622 F.2d 466 (10th Cir. 1979), cert. denied, 449 U.S. 901 (1980) ...... 28

Bridgestone/Firestone Research, Inc. v. Automobile Club, 245 F.3d 1359 (Fed. Cir. 2001) ...... 29

Cargill, Inc. v. Montfort of Colorado, Inc., 479 U.S. 104 (1986) ...... 23

CE Design, Ltd. v. Prism Business Media, Inc., 606 F.3d 443 (7th Cir. 2010), cert. denied, 131 S. Ct. 933 (2011) ...... 26

Champagne Metals v. Ken-Mac Metals, Inc., 458 F.3d 1073 (10th Cir. 2006) ...... 19

Chirco v. Crosswinds Communities, Inc., 474 F.3d 227 (6th Cir.), cert. denied, 551 U.S. 1131 (2007) ...... 28

Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187 (2d Cir. 1996) ...... 29

TABLE OF AUTHORITIES—Continued Page(s)

DXS, Inc. v. Siemens Medical Systems, Inc., 100 F.3d 462 (6th Cir. 1996) ...... 19

Galliher v. Cadwell, 145 U.S. 368 (1892) ...... 28

Ginsburg v. InBev NV/SA, 623 F.3d 1229 (8th Cir. 2010) ...... 29

Grand Rapids Plastics, Inc. v. Lakian, 188 F.3d 401 (6th Cir. 1999), cert. denied, 529 U.S. 1037 (2000) ...... 17

Hawaii v. Standard Oil Co. of California, 405 U.S. 251 (1972) ...... 23

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) ...... 3, 24

Kabealo v. Huntington National Bank, 17 F.3d 822 (6th Cir.), cert. denied, 513 U.S. 812 (1994) ...... 18

Kaiser Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045 (5th Cir. 1982), cert. denied, 459 U.S. 1105 (1983) ...... 17, 19

Kansas v. UtilCorp United, Inc., 497 U.S. 199 (1990) ...... 27

Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997) ...... passim

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TABLE OF AUTHORITIES—Continued Page(s)

Kloth v. Microsoft Corp., 444 F.3d 312 (4th Cir. 2006) ...... 30

Midwestern Machinery Co. v. Northwest Airlines, Inc., 392 F.3d 265 (8th Cir. 2004) ...... 20, 25, 29

Nack v. Walburg, 715 F.3d 680 (8th Cir. 2013), cert. denied, 134 S. Ct. 1539 (2014) ...... 26

National Souvenir Center v. Historic Figures, Inc., 728 F.2d 503 (D.C. Cir.), cert. denied, 469 U.S. 825 (1984) ...... 17

Pace Industries, Inc. v. Three Phoenix Co., 813 F.2d 234 (9th Cir. 1987) ...... 19

Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014) ...... 5, 13, 22, 28

Poster Exchange, Inc. v. National Screen Service Corp., 517 F.2d 117 (5th Cir. 1975), cert. denied, 423 U.S. 1054 (1976) ...... 16

Pro Football, Inc. v. Harjo, 565 F.3d 880 (D.C. Cir. 2009) ...... 29

Rotella v. Wood, 528 U.S. 549 (2000) ...... 21

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TABLE OF AUTHORITIES—Continued Page(s)

Russell v. Todd, 309 U.S. 280 (1940) ...... 27

Samsung Electronics Co. v. Panasonic Corp., 747 F.3d 1199 (9th Cir. 2014) ...... 2, 10, 17, 18

Southside Fair Housing Committee v. City of New York, 928 F.2d 1336 (2d Cir. 1991) ...... 28

Standard Oil Co. v. United States, 283 U.S. 163 (1931) ...... 33

Texaco, Inc. v. Dagher, 547 U.S. 1 (2006) ...... 21

U.S. Philips Corp. v. International Trade Commission, 424 F.3d 1179 (Fed. Cir. 2005), cert. denied, 547 U.S. 1207 (2006) ...... 33

Varner v. Peterson Farms, 371 F.3d 1011 (8th Cir. 2004) ...... 17, 18

West Penn Allegheny Health System, Inc. v. UPMC, 627 F.3d 85 (3d Cir. 2010), cert. denied, 132 S. Ct. 98 (2011) ...... 17

Z Technologies Corp. v. Lubrizol Corp., 753 F.3d 594 (6th Cir. 2014) ...... 17, 20

TABLE OF AUTHORITIES—Continued Page(s)

Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 (1969) ...... 23

Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971) ...... 4, 16, 22

STATUTES

15 U.S.C. § 15 ...... 22

15 U.S.C. § 15b ...... 1, 2

15 U.S.C. § 26 ...... passim

28 U.S.C. § 1254(1) ...... 1

OTHER AUTHORITIES

Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application (4th ed. 2013) ...... passim

Herbert Hovenkamp et al., IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law (2d ed. 2009) ...... 32

Josh Lerner & Jean Tirole, Efficient Patent Pools, 94 Am. Econ. Rev. 691 (2004) ...... 32

Daniel Quint, Pooling with Essential and Nonessential Patents, 6 Am. Econ. J. Microeconomics 23 (2014) ...... 33

TABLE OF AUTHORITIES—Continued Page(s)

Secure Digital, Wikipedia, http://en.wikipedia.org/wiki/Secure_Digital (last visited Nov. 18, 2014) ...... 7

U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition (2007) ...... 32, 34

U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidelines for Collaborations Among Competitors (2000) ...... 24

OPINION BELOW The decision below is reported at 751 F.3d 1081 (9th Cir. 2014). Pet. App. 1a-10a. The order denying rehearing en banc is unpublished. Pet. App. 20a-21a. The district court’s decision dismissing the first amended complaint is unpublished. Pet. App. 11a-19a.

JURISDICTION The court below entered judgment on May 14, 2014, and denied a timely rehearing petition on September 2, 2014. This Court has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED Section 4B of the Clayton Act, 15 U.S.C. § 15b, provides in relevant part: “Any action to enforce any cause of action under section 15, 15a, or 15c of this title shall be forever barred unless commenced within four years after the cause of action accrued.”

Section 16 of the Clayton Act, 15 U.S.C. § 26, provides in relevant part: “Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws … when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity ….”

INTRODUCTION In this case and in Samsung Electronics Co. v. Panasonic Corp., 747 F.3d 1199 (9th Cir. 2014) (“Samsung”), the Ninth Circuit allowed private antitrust plaintiffs to challenge the original structure and basic licensing practices of a standard setting organization and patent pool formed a decade before the suits. The court did so on an understanding of Sections 4B and 16 of the Clayton Act, 15 U.S.C. §§ 15b and 26, that is contrary to this Court’s precedents and that of several other circuits. The court’s decisions make it all but impossible for continuing collaborations such as joint ventures and standard setting organizations to obtain antitrust repose. Both cases concern a collaboration among Petitioners Panasonic, SanDisk, and Toshiba to develop and standardize the “SD Card,” which has become the most popular format for removable flash memory in consumer devices like cameras and smartphones. Petitioners formed a joint venture in 1999 (incorporated as Petitioner SD-3C, LLC), which developed a formal SD Card specification (i.e., a standard) adopted and issued in January 2000 by the “SD Association,” an open membership body. Pet. App. 118a-19a, 126a. From the beginning of their collaboration, Petitioners publicly announced that, “‘[w]hile other flash card manufacturers will be required to pay the SD Association license fees and royalties which will be shared between [Panasonic], Toshiba and SanDisk,’” those three companies would cross-license their patents to each other on a royalty-free basis. Pet. App. 161a (citation omitted). In 2003 the SD Association offered all comers a license to the necessary SD Card

IP for a fixed 6% royalty. Pet. App. 13a. The district court correctly recognized that the four-year Clayton Act limitations period to challenge those actions ended no later than 2007. Pet. App. 5a. In Samsung, the Ninth Circuit nonetheless held that a 2010 suit by Samsung, one of the earliest and most important licensee manufacturers of SD Cards, was timely because SD-3C’s ongoing collection of royalties under a 2003 license with Samsung and its 2006 proposal of a license amendment (which Samsung rejected) made the SD Card licensing program a “continuing violation” of the antitrust laws that kept the limitations period open. The court also held that the statute was tolled because before 2006, Samsung’s damages were apparently “speculative.” As thoroughly explained in the petition filed in Samsung, both holdings conflict with precedents of this Court and of other circuits, which toll the limitations period for a “continuing conspiracy” only when the action challenges a “new and independent act” occurring within four years of suit, and not merely the continued receipt of benefits from, or “unabated inertial consequences” of, an earlier act. This suit differs from Samsung because the plaintiffs are not SD-3C licensees, or any kind of “direct purchaser” with standing to seek damages in a federal antitrust action. See Illinois Brick Co. v. Illinois, 431 U.S. 720, 746 (1977). They are purchasers of finished SD Cards—i.e., “indirect purchasers” in the parlance of Illinois Brick. Their sole federal claim is for injunctive relief under Section 16 of the Clayton Act, 15 U.S.C. § 26, which allows one to sue for injunctive relief “against threatened loss or damage by a violation of the antitrust laws … when and under the

4 same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity.”1 Under Section 16, the timeliness of an injunctive relief action is governed by traditional “principles [of] injunctive relief,” and particularly the equitable doctrine of laches—not Section 4B’s statute of limitations. Nonetheless, the Ninth Circuit rotely extended its flawed limitations analysis from Samsung to hold that consumer purchasers of SD Cards can challenge the foundational terms of the SD-3C patent pool forever, or so long as SD Card products are being sold by anyone, including third parties. That additional leap vividly illustrates the implications of the panel’s errors in Samsung, and independently merits review for several reasons: First, the Ninth Circuit’s limitations tests in both cases squarely conflict with this Court’s decision in Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971), and decisions of several other circuits, by restarting the clock upon the accrual of new “damages” by the plaintiffs without any new, independent “overt acts” by the defendants. Samsung is bad enough: there the Ninth Circuit restarted the limitations period based on conduct that the defendants could not avoid short of abandoning the SD Card licensing structure, which Petitioners maintain is lawful and procompetitive. Here, the Ninth Circuit did not require any conduct by the defendants at all. It

1 Plaintiffs seek damages under the laws of various states that have legislatively “repealed” Illinois Brick. Pet. App. 34a-35a. Their Section 16 claim is a hook to create federal jurisdiction over damages claims that would otherwise be confined to state courts.

5 held that Respondents’ purchases of SD Cards from third party licensees and others down the distribution chain, at prices allegedly elevated by the royalties direct licensees paid to SD-3C, restarted the limitations period and defeated laches. But a sale by a third party obviously is not an “overt act” by defendants. Under Zenith, it therefore should have no part in either a statute of limitations or laches analysis. Second, the decision below treats the accrual of new “damages” as restarting the clock for injunctive relief claims that unquestionably could have been brought earlier, and even when plaintiffs are indirect purchasers who lack standing to sue for damages under federal law. This turns the structure of the Clayton Act and federal antitrust policy upside down. Injunctive relief claims under Section 16 accrue before actions for damages accrue under Section 4, when loss or damage is merely “threatened.” Their timeliness is measured not, as the Ninth Circuit effectively ruled, from the latest time at which a different plaintiff might be able to bring a damages claim. This ruling gives indirect purchasers who have no damages claims a right to piggyback on damages accrual principles that ought to be irrelevant to them. Third, in direct conflict with this Court’s intervening decision in Petrella v. Metro-Goldwyn- Mayer, Inc., 134 S. Ct. 1962 (2014), issued after the panel’s decision, the Ninth Circuit treated its limitations analysis as dispositive and completely ignored the equitable dimension of laches, which requires considering the defendants’ interests in repose and the reliance interests of third parties and the public. Although petitioners urged rehearing in

6 light of Petrella, the panel and en banc court denied review. These errors threaten to eliminate any repose or stability for licensing arrangements that are crucial to the national economy and to technological progress. They also highlight the often-noted conflicts, confusion, and disarray among circuits concerning the “continuing violation” and “speculative damages” exceptions established in Zenith four decades ago, but that remain unresolved. See No. 14-540, Samsung Pet. 12-29. Certiorari should be granted in this case and in Samsung, and the cases should be consolidated for argument. At a minimum, this Court should summarily reverse this decision or grant, vacate, and remand it in light of Petrella. STATEMENT OF THE CASE A. The Formation and Development of SD-3C In the late 1990s, Petitioners Panasonic, SanDisk, and Toshiba “enter[ed] into a joint venture … to develop the SD Card format.” Pet. App. 44a. SD Cards are postage stamp-sized flash memory cards used in portable consumer electronic devices. In January 2000, Petitioners publicly announced the establishment of the SD Association, an open membership standard-setting organization. Pet. App. 126a. In March 2000, the Association published the first SD Card specification. Pet. App. 123a. Petitioners formed SD-3C to license patents and other intellectual property necessary to manufacture SD Cards. Id. In March 2003, petitioners promulgated the SD Card License, which includes a 6% royalty payable to SD-3C by SD Card manufacturers on all SD Cards sold. Pet. App. 24a-25a, 48a. Petitioners do not

7 pay this royalty, but rather exchange their patents with one another on a royalty-free basis. Id. Respondents alleged that when, in 1999, they “enter[ed] into royalty-free cross-licenses with one another,” they obtained a “permanent cost advantage” over their competitors. Pet. App. 48a, 161a-62a, 169a- 70a. The SD Card format represented a significant technological advance over earlier products, and over the past decade “has become the de facto standard for ‘point and shoot’ cameras … and other small consumer devices.” Pet. App. 43a. Naturally, SD Cards have improved and evolved continuously; they now include four card families available in three different form factors.2 In August 2006, SD-3C promulgated an amendment to the SD Card License (the “2006 Amendment”), which extended the license to smaller, second generation SD Cards and the same 6% royalty established in 2003. Pet. App. 109a.3 Samsung refused to sign that new license, but continues to pay royalties under the 2003 license, including for second generation SD Cards. Pet. App. 141a-42a. Numerous other

2 See generally Secure Digital, Wikipedia, http://en.wikipedia.org/wiki/Secure_Digital (last visited Nov. 18, 2014) (describing history and application of the SD Card). 3 Respondents allege that the 2006 Amendment included a “fair market price” provision that served as a “minimum reference price for the calculation of licensees’ royalty obligations” under the SD Card License. Pet. App. 26a, 154a. But they do not allege that Petitioners ever set or communicated any “fair market price” to any licensees, and SD-3C “has not enforced [this Royalty Provision] since 2006.” Pet. App. 156a.

8 technology companies entered into SD Card Licenses and paid royalties to SD-3C. B. District Court Proceedings Samsung sued Panasonic and SD-3C (but not Toshiba or SanDisk) in 2010, in the aftermath of failed licensing negotiations with Panasonic. Samsung alleged that SD-3C’s standard setting and patent licensing activities were an anticompetitive price-fixing conspiracy, the “price” being the 6% royalty. Pet. App. 105a. Respondents filed a copycat complaint in 2011, purporting to represent a class of consumer “indirect purchasers” who first began purchasing SD Cards from SD-3C licensees (like Samsung) or downstream resellers on March 15, 2007. Pet. App. 23a-27a. Respondents filed their original complaint on March 15, 2011 (see Pet. App. 4a), and a First Amended Complaint (“FAC”) in November 2011 (Pet. App. 96a). Respondents’ FAC incorporated by reference Samsung’s complaint and alleged the same claims— that Petitioners’ standard setting and licensing activities violated Sections 1 and 2 of the Sherman Act and analogous state laws. Pet. App. 38a, 74a-94a. Both suits are, at their core, attacks on the formation and structure of the SD Association and SD- 3C, which enjoyed greater market success than another standard setting organization devoted to memory card technology (MMCA) backed by Petitioners’ competitors, including Samsung. Pet. App. 44a-48a, 117a, 123a-24a. Samsung and Respondents laud MMCA as “a natural forum” to develop new card formats, but disparage SD-3C as an “anticompetitive SD Card patent pool, a tool by which [Petitioners] impose an entry fee on their rivals in the SD Card

9 market.” Pet. App. 44a, 25a. The “entry fee” is the 6% royalty adopted in 2003, which allegedly gave Petitioners an unfair “permanent cost advantage over competitors” because Petitioners do not need an SD-3C license to use the technology covered by their own pooled patents. Pet. App. 161a-62a, 170a. Illinois Brick bars Respondents from seeking damages under federal law, because they have not purchased anything directly from Petitioners. They are, at most, “indirect purchasers” from SD-3C given the licensing fees paid by their sellers or an upstream licensee. Respondents seek an injunction under Section 16 of the Clayton Act, 15 U.S.C. § 26, to rescind the Petitioners’ cross-licenses and dissolve the SD-3C patent pool. Pet. App. 96a. The district court dismissed both cases as untimely, noting that both complaints were premised on “the same basic underlying facts” concerning the late 1990s standard-setting process, the formation of SD-3C, and the 2003 license agreement (Pet. App. 16a-18a), and that even damages claims should have been brought by 2007 (Pet. App. 15a, 18a). The court rejected Respondents’ argument that their purchases of SD Cards from 2007 forward reopened the limitations period, emphasizing that “on a continuing violation theory” the clock “runs from the time of the last overt act made by the defendant, not from the last purchase made by a potential plaintiff.” Pet. App. 17a. The court noted that if each purchase from a third-party licensee reopened the period for suit, “there would essentially be no statute of limitations bar to indirect purchaser claims.” Id.

C. The Ninth Circuit’s Decision The Ninth Circuit reversed in both cases. In Samsung, the court held that SD-3C’s unsuccessful attempts to get Samsung to sign the 2006 SD Card license amendment constituted a new “overt act” sufficient to restart the statute of limitations on Samsung’s claims, even though it is undisputed that (a) Samsung never signed that amendment, (b) the amended license has the same, allegedly discriminatory 6% license fee as the 2003 license that Samsung did sign, and (c) Samsung’s theory of the case is rooted in the formation of SD-3C in 1999 and 2000. 747 F.3d at 1203-04. The court also held that Zenith’s speculative damages exception tolled Samsung’s claims because Samsung did not begin manufacturing SD Cards until 2006, even though Samsung itself alleged that the “permanent” “cost disadvantage” was created in 1999 and became tangible in the 2003 licenses it signed. Id. at 1204-05. In this case, the Ninth Circuit recognized that the timeliness of Respondents’ claims for injunctive relief is governed by the equitable doctrine of laches. But the court did not evaluate any equitable considerations. It simply applied a limitations analysis that built upon, and extended, the reasoning in its Samsung decision. Pet. App. 5a-9a. The Ninth Circuit relied on this Court’s decision in Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997), and various circuit decisions interpreting Klehr, for the proposition that in a price-fixing case each sale of a price-fixed product by a defendant is a new overt act that restarts the Clayton Act’s limitations period for a direct purchaser to recover the damages associated with that sale. Pet. App. 7a-8a. The Ninth Circuit

11 applied that rule here, even though Respondents’ only federal claim is one for injunctive relief against a longstanding patent joint venture, and the only price “fixed” is SD-3C’s royalty rate for SD Card IP, which has been the same since 2003. Furthermore, the Ninth Circuit did not apply Klehr to any direct sale by Petitioners, but to sales by third parties—SD Card licensees or resellers—from which Respondents allegedly “purchased SD cards on or after March 15, 2007.” Pet. App. 8a. Unlike the district court, the Ninth Circuit saw no significance in the fact that the sales in question were by third-party licensees (and their distribution partners) rather than by Petitioners themselves. As in Samsung, the court then held that Respondents’ injunctive relief claim was timely because their “damages” were “speculative” under Zenith. Pet. App. 9a. According to the court, “[b]efore Plaintiffs purchased SD cards, it would have been pure speculation whether Plaintiffs would have been harmed by Defendants’ alleged unlawful acts,” and “Plaintiffs should not be penalized for failing to foresee earlier that they would enter the market for SD Cards and would therefore be harmed by Defendants’ conduct.” Id. The court reached this conclusion without mentioning: (1) this Court’s holding in Illinois Brick that indirect purchasers lack standing to seek damages under federal law; or (2) Section 16’s express statement that traditional “principles [of] injunctive relief” govern the timeliness of the claims it authorizes. Petitioners sought rehearing en banc in both cases, explaining that the panel’s decisions departed from precedents of the Ninth Circuit, other circuits, and this Court. Petitioners here also pointed out that the

12 panel’s focus on a statute of limitations analysis, to the exclusion of broader equitable considerations, was inconsistent with this Court’s decision in Petrella— which was issued after the panel opinions. The court of appeals denied both petitions without opinions. Pet. App. 20a-21a; No. 14-540, Samsung Pet. App. 15a. REASONS FOR GRANTING THE WRIT The Ninth Circuit’s decisions in these two companion cases break dramatically from the settled precedents of this Court and other circuits, and merit review. The Samsung petition explains the Ninth Circuit’s core error: treating every step that a decade- old joint venture took to create the innovative SD Card, license the requisite pooled IP, and oversee its technical evolution as an endless series of new “overt acts” by the founders, forever restarting the statute of limitations. The decision here extends and aggravates that unprecedented expansion of antitrust exposure in at least three important respects. First, the Ninth Circuit’s holding fundamentally distorts and transforms the core principle in antitrust limitations jurisprudence since Zenith: that a new and independent “overt act” by the defendant triggers a new limitations period to recover damages resulting from that act, but does not reopen the limitations window for damages caused by the defendant’s past acts. The whole point of Zenith and Klehr is that a limitations analysis focuses on the timing of the defendant’s conduct rather than the date of plaintiff’s injury. In keeping with that principle, several circuits clearly hold that the “unabated, inertial consequences” of a permanent business arrangement, such as the continued collection of licensing royalties, do not hold the limitations period open.

The Ninth Circuit got that wrong in Samsung by treating the normal, ongoing business of a lawful joint venture as new and independent “overt acts” by alleged conspirators. It went much further here, holding that any purchase by the plaintiff constitutes an overt act by the defendant, even when the plaintiff purchased the goods from someone other than the defendant, like a third party licensee or intermediary. That holding practically reverses Zenith’s rule and makes the defendant’s overt acts irrelevant. So long as the SD Card licensing structure persists, licensees make SD Card products, and consumers buy them, Petitioners remain subject to suit. Second, the court’s holding inverts federal antitrust policy, misunderstands the structure of the Clayton Act, and precludes the repose the Clayton Act contemplates by allowing injunctive claims long after damages actions are time-barred. In Petrella, this Court held that courts must heed how Congress structured the right to sue when evaluating the timeliness of an injunctive relief claim. 134 S. Ct. at 1974-75. Section 16 of the Clayton Act exists to permit a federal suit for injunctive relief before damages are incurred, i.e., as soon as loss or damage is “threatened.” 15 U.S.C. § 26. Section 16 further provides that the timeliness of the claims it authorizes is governed by equitable principles. The Ninth Circuit’s use of damages accrual principles to extend indefinitely the time for filing a Section 16 claim cannot be reconciled with the statute, Petrella, or Klehr itself, which rejected a continuing violation analysis that would allow suits “indefinitely” and thus “conflict[] with a basic objective—repose—that underlies limitations periods.” 521 U.S. at 187.

Under the Ninth Circuit’s holding, any joint business arrangement—even one that is decades old and deeply woven into the fabric of the economy—is vulnerable to being unwound simply because it enjoys continued success in producing goods consumers wish to buy. Nothing new, different and unlawful is required to justify the challenge. And the court’s holding that Respondents can sue now because their “damages” were previously “speculative” makes matters worse, because this independent tolling ground is now satisfied by a mere allegation that plaintiffs had not purchased SD Cards earlier. Inasmuch as there are new purchasers of SD Cards every day, the decision below suggests an endless limitations period. It is particularly illogical that this perpetual right of action, grounded in damages accrual principles, is for the benefit of “indirect purchasers”—i.e., consumers who under Illinois Brick have no federal cause of action for damages. It is a non sequitur to say, as the Ninth Circuit did, that because a damages action Respondents do not have would have been timely, their action for injunctive relief must also be timely. Whatever logic there may be in allowing plaintiffs with timely damages claims to seek injunctions too surely does not apply to plaintiffs who, as a matter of federal antitrust policy, are not allowed to sue for damages. Third, the Ninth Circuit’s analysis conflicts with decisions of other circuits and this Court’s recent decision in Petrella by treating the technical limitations analysis as dispositive of laches in a case for injunctive relief. The analogous limitations period is a guide. But as Petrella makes clear, a laches analysis must also account for prejudice to the defendant, the broader public interest, and any other traditional equitable

15 factors. The Ninth Circuit ignored those considerations, even though Petitioners urged rehearing given this Court’s intervening decision in Petrella. These are issues of great public importance, and the Ninth Circuit decisions addressing them merit review and reversal by this Court. “Repose is especially valuable in antitrust, where tests of legality are often vague,” “business practices can be simultaneously efficient … but also challengeable as antitrust violations,” and innocent third parties often develop substantial reliance interests. Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 320a (4th ed. 2013). The Ninth Circuit’s holdings effectively mean that for continuing collaborations there can never be repose. The context of these two cases provides a vivid illustration of the dangers of such a regime. Technology standards contribute enormously to consumer welfare and competition in the modern economy, and patent pools can be effective means for the broad dissemination of essential complementary patented technology and for efficient production of products that implement the standard. If the foundational terms of a pool license may be attacked forever and enjoined by any downstream consumer that purchases a product incorporating the technology, then incentives to invest in complementary technologies and collaborative, procompetitive standardization will be greatly reduced. Certiorari should be granted in both cases, and they should be consolidated for argument. Petitioners also respectfully submit that the Ninth Circuit’s

16 misapplication of Zenith and Klehr is clear enough to warrant summary reversal or, at least, to “GVR” in light of Petrella so the Ninth Circuit can revisit its decision under the equitable analysis Petrella and Section 16 require. I. THE NINTH CIRCUIT’S DECISION CONFLICTS WITH DECISIONS OF THIS COURT AND OTHER CIRCUITS BY TREATING ANY SALE TO THE PLAINTIFF AS A NEW “OVERT ACT” BY DEFENDANTS More than forty years ago this Court held in Zenith that an antitrust damages “cause of action accrues,” and the Clayton Act statute of limitations begins to run, “when a defendant commits an act that injures a plaintiff’s business.” 401 U.S. at 338. “In the context of a continuing conspiracy[,] … [this] mean[s] that each time a plaintiff is injured by an act of the defendants a cause of action accrues to him to recover the damages caused by that act.” Id. In Klehr, this Court restated those principles, emphasizing that a new overt act by the defendant creates a new limitations period to sue for the damages resulting from that act, “[b]ut … the commission of a separate new overt act generally does not permit the plaintiff to recover for the injury caused by old overt acts outside the limitations period.” 521 U.S. at 189. As the petition in Samsung explains (at 14-21), most circuits applying those principles have held that the mere “unabated inertial consequences of some pre- limitations action” by defendants do not restart the clock, even if the plaintiff continues to suffer harm. Poster Exchange, Inc. v. Nat’l Screen Serv. Corp., 517 F.2d 117, 128 (5th Cir. 1975), cert. denied, 423 U.S. 1054 (1976). A new limitations period requires “a new and

17 independent act that is not merely a reaffirmation of a previous act” and that “inflict[s] a new and accumulating injury on the plaintiff.” Z Techs. Corp. v. Lubrizol Corp., 753 F.3d 594, 600 (6th Cir. 2014) (internal quotation marks omitted). Thus, merely continuing to collect money under an existing contract does not restart the clock. See, e.g., Varner v. Peterson Farms, 371 F.3d 1011, 1020 (8th Cir. 2004); Grand Rapids Plastics, Inc. v. Lakian, 188 F.3d 401, 406 (6th Cir. 1999), cert. denied, 529 U.S. 1037 (2000); Kaiser Alum. & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1053 (5th Cir. 1982), cert. denied, 459 U.S. 1105 (1983). In Samsung the Ninth Circuit broke with that body of law and joined the minority position, espoused most clearly by the Third Circuit, that the limitations period reopens even when “the acts that occurred within the limitations period were reaffirmations of decisions originally made outside the limitations period.” W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 107 (3d Cir. 2010), cert. denied, 132 S. Ct. 98 (2011). The Ninth Circuit’s view is now that “collecting royalty payments” restarts the limitations period so long as the contract does not “permanently and finally control the acts of the [defendants].” Samsung, 747 F.3d at 1203-04. Under this rule, so long as the allegedly anticompetitive conduct is abatable by the defendants—i.e., so long as defendants have the power to abandon their licensing structure—the “decision to enforce the contract” does not qualify as a mere continuation or reaffirmation of an earlier act. Id. at 1204. Accord W. Penn, 627 F.3d at 106-07; Nat’l Souvenir Ctr. v. Historic Figures, Inc., 728 F.2d 503,

510, 514 (D.C. Cir.), cert. denied, 469 U.S. 825 (1984). Hence, SD-3C’s continued collection of royalties under a licensing structure established between 1999 and 2003 and the application of the same licensing structure to new SD Cards continuously restarted the limitations period.4 Samsung, 747 F.3d at 1203-04. The petition in Samsung explains why that conflict, and the broader confusion in the law surrounding Zenith’s exceptions, merits review. The Ninth Circuit’s decision in this case, however, went even further. It held that the limitations period was reopened by the alleged injury inherent in any purchase of an SD Card by a consumer—even though the SD Cards in question were purchased from third party licensees (like Samsung) or their distribution partners, and therefore involved no “overt act” by the defendants at all. This is a radical break from settled law. Prior to the Ninth Circuit’s opinion in this case, “[a]ll courts that have written on the subject agree that it is the last overt act of the defendant, not any act of the plaintiff, that triggers the statute of limitations.” Kabealo v. Huntington Nat’l Bank, 17 F.3d 822, 828 (6th Cir.) (emphasis added), cert. denied, 513 U.S. 812 (1994). Under this Court’s foundational decision in Zenith, “the focus is on the timing of the causes of injury, i.e., the defendant’s overt acts”—not on the timing of the injury itself. Varner, 371 F.3d at 1019 (internal

4 The Ninth Circuit also noted that SD-3C had proposed an amendment to the license, to extend its royalty terms to the new Micro-SD format. But since Samsung rejected that proposal, and continued paying royalties only under its original 2003 license, only the former agreement is relevant.

19 quotation marks omitted).5 Judicial refinements of the Zenith rule build on the understanding that the proper focus is on the acts of the defendant. For example, the court below purported to apply the rule that an overt act that is “‘new and independent’” and “‘not merely a reaffirmation of a previous act’” is necessary to restart the limitations period. Pet. App. 7a (quoting Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 238 (9th Cir. 1987)). It is the act of the defendant that must be “new and independent,” not its effects. The court below attempted to shoe-horn this case into a rule derived from naked price-fixing cases and cited by this Court in Klehr (a RICO case) that “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.” Id. But that rule is expressly about an act of the defendant—its sale of the price-fixed product—and therefore cannot justify the Ninth Circuit’s reliance on downstream purchases by the plaintiffs. Klehr’s reasoning cannot be extended to cases, like this one, involving the continued administration of decade-old formal industry collaborations. Naked price-fixing conspiracies often trigger

5 See also Kaiser Aluminum & Chem. Sales, Inc., 677 F.2d at 1051 (“[T]he continuing conspiracy or continuing violation exception … permits a cause of action to accrue whenever the defendant commits an overt act in furtherance of an antitrust conspiracy.”); DXS, Inc. v. Siemens Med. Sys., Inc., 100 F.3d 462, 467 (6th Cir. 1996) (“An antitrust cause of action accrues and the limitation period commences each time a defendant commits an act that injures the plaintiff’s business.”); Champagne Metals v. Ken- Mac Metals, Inc., 458 F.3d 1073, 1090 (10th Cir. 2006) (same).

Zenith’s “continuing violations” exception because they usually (though not necessarily) require ongoing anticompetitive conduct to keep prices fixed. See Lubrizol, 753 F.3d at 599 (explaining that “continuing violations” are frequently found in price-fixing cases because “each price increase requires further collusion between multiple parties to maintain the monopoly”); Midwestern Mach. Co. v. Nw. Airlines, Inc., 392 F.3d 265, 269 (8th Cir. 2004) (“The typical antitrust continuing violation occurs in a price-fixing conspiracy, … when conspirators continue to meet to fine-tune their cartel agreement.”). Upon this understanding, “[t]he statute is … tolled as long as such qualifying acts continue to be committed.” Areeda, supra ¶ 320c. The dictum from Klehr the panel cited, Pet. App. 7a, is clearly written from this perspective, as it emphasizes “the commission of a separate new overt act,” and presumes the plaintiff is not trying “to recover for the injury caused by old overt acts outside the limitations period.” 521 U.S. at 189. Most circuits, however, do not read Klehr to establish a rule that every sale of a product by a conspirator restarts the limitations period—much less a sale by a third party. Simply charging supracompetitive prices is, after all, the quintessential “unabated inertial consequence” of almost every antitrust violation. “[P]rofits, sales, and other benefits accrued as the result of an initial wrongful act are not treated as ‘independent acts,’” but instead “are uniformly viewed as ‘ripples’ caused by the initial injury.” E.g., Lubrizol, 753 F.3d at 600. That is the sensible rule here, where the supposed “price-fixing” is not the ongoing efforts of a cartel to

21 inflate a market price, but merely Petitioners’ exchange of royalty free cross-licenses to their own pooled IP in 1999, and SD-3C’s offer of a license to the public to that same IP in 2003 for a 6% royalty. Cf. Texaco, Inc. v. Dagher, 547 U.S. 1, 6 (2006) (noting that while joint venture pricing “may be price fixing in a literal sense, it is not price fixing in the antitrust sense”). Respondents themselves referred to that disparity as a “permanent cost advantage” in their complaint. Pet. App. 161a-62a, 170a. They cannot in the same breath cast it as “the commission of a separate new overt act” every day that Petitioners operate under the same business model and every time an SD Card is sold. Klehr, 521 U.S. at 189. Petitioners are aware of no other decision that suggests that downstream sales, not by the defendants but instead by their licensees, customers or further downstream distribution partners can restart the clock, even if the defendant itself has not committed “a separate new overt act” for a decade. That notion is irreconcilable with Zenith, and the district court correctly recognized that under such a rule “there would essentially be no statute of limitations bar to indirect purchaser claims.” Pet. App. 17a. The Ninth Circuit’s reasoning means that a party that contributes its intellectual property to a patent pool with licensing terms like those of SD-3C is potentially exposed to antitrust liability forever, so long as third parties continue to license pooled patents and sell products to consumers. That result extends the “limitations period to many decades, and so beyond any limit that Congress could have contemplated.” Rotella v. Wood, 528 U.S. 549, 554 (2000) (citing Klehr, 521 U.S. 179).

This error is plain enough to merit summary reversal if the Court does not otherwise grant review. II. THE NINTH CIRCUIT’S DECISION IMPROPERLY APPLIES DAMAGES ACCRUAL PRINCIPLES IN A SUIT FOR INJUNCTIVE RELIEF Review is also warranted to address the conflict between the decision below and the structure and purpose of Section 16 of the Clayton Act, 15 U.S.C. § 26, as this Court and others have previously understood it. To our knowledge, until the Ninth Circuit’s decision in this case, no court has ever applied Zenith’s “continuing violation” and “speculative damages” exceptions to revive a tardy claim for injunctive relief under Section 16. And for good reason. As this Court recently explained in Petrella, when assessing the timeliness of a suit for injunctive relief a court must be sensitive to how Congress structured the right to sue. 134 S. Ct. at 1967. Zenith’s exceptions are grounded in accrual principles under Section 4 of the Clayton Act, which gives “[a]ny person who shall be injured in his business or property” a right to sue for damages. 15 U.S.C. § 15. Under that provision, “a cause of action accrues and the statute begins to run when a defendant commits an act that injures a plaintiff’s business.” Zenith, 401 U.S. at 338. “This much is plain from the treble-damage statute [i.e., Section 4] itself.” Id. But Respondents are not suing for injury to their business or property under Section 4. They lack standing to do so under Illinois Brick. Respondents’ only federal cause of action derives from Section 16. A claim under Section 16 accrues at an entirely different

23 time and in an entirely different way than an action for treble damages under Section 4. Section 16 is prospective in nature and requires only “threatened loss or damage by a violation of the antitrust laws,” 15 U.S.C. § 26, not any specific injury to “business or property.” See Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251 (1972); Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 131 (1969). “[I]t is the threat of harm, not actual injury, that justifies equitable relief.” Cargill, Inc. v. Montfort of Colorado, Inc., 479 U.S. 104, 126 (1986). Section 16 thus permits earlier challenges to anticompetitive conduct that may not be possible under Section 4, which requires the plaintiff to wait until it actually suffers injury. Against this backdrop, the Ninth Circuit’s focus on Respondents’ accrual of new “damages” makes no sense. It is inconsistent with the Clayton Act’s structure and produces results that Congress obviously did not intend. Because a Section 16 action exists to stave off injury before it occurs and “is not dependent on the existence of actual or measurable injury,” Areeda, supra ¶ 326a, why should damages accrual rules justify an injunctive relief claim that could have been brought a decade ago? And why should it matter that the amount of damages might have been “speculative” earlier, when Section 16 does not authorize recovery of damages at all? The Ninth Circuit’s reasoning inverts the intended temporal relationship between the damages and injunction provisions, effectively holding that a claim for injunctive relief re-accrues until the last possible date to file for damages rather than, as the statute actually provides, when loss or damage is “threatened.”

The indirect purchaser context of this case makes the Ninth Circuit’s error even more apparent. The new “damages” that Respondents allegedly suffered (and that allegedly became non-“speculative”) when Respondents purchased SD Cards from third parties are not just irrelevant to their cause of action—they cannot be recovered under federal law at all, because Respondents lack standing to sue for them. This Court made clear in Illinois Brick that federal antitrust policy vests the damages remedy in direct purchasers in all but a handful of exceptional circumstances, none present here. 431 U.S. at 746. Yet the decision below allows end consumers to sue any supplier of components or intellectual property that found their way into the product, and attempt to unwind decades- old business arrangements—long after the claims of the directly injured customers or competitors are time- barred. That holding stands federal antitrust policy on its head. The Ninth Circuit worried that individual consumers may not have experienced or even anticipated a direct and personal injury until they decided to purchase an SD Card. That is undoubtedly true for some consumers—and it provides another reason not to accept the Ninth Circuit’s reasoning. The legality of public, formal collaborations like SD-3C is typically assessed at their formation using a merger- like analysis focused on market structure, terms of the venture, and anticompetitive potential. See generally U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidelines for Collaborations Among Competitors (2000); Areeda, supra ¶ 320c5. Every argument advanced by Samsung and Respondents was available to someone in 2003, 2004,

2005 or 2006, and could have been asserted under Section 16. The fact that others had no reason to sue in 2006 (the unborn, those too young to buy cameras and cellphones, those who simply never did) should not justify perpetual suits for injunctive relief. The timeliness of a Section 16 action challenging a public collaboration or joint venture should be assessed relative to when that action could have served its prospective, preventative function—to avoid a “threatened loss or damage by a violation of the antitrust laws”—not relative to the latest injury the collaboration causes. An influential Eighth Circuit decision holds that Zenith’s “continuing violation” and “speculative damages” exceptions cannot be applied in cases (including those seeking injunctive relief under Section 16) that challenge the legality of a merger. See Midwestern Mach., 392 F.3d at 271. Similarly, leading commentators have recognized that “[m]aking post- merger purchases or sales the basis for a ‘continuing violation’ exception would effectively abolish the statute of limitation for merger. Virtually every firm contemplates that its merger will result in ongoing sales.” Areeda, supra ¶ 320c5. This case law provides an important analogy, because Respondents’ substantive theory is highly akin to a merger challenge. It is grounded in SD-3C’s formation in 1999, the combined market power of its founders at that time, and the 6% royalty of the SD-3C license publicly announced by 2003. Those decade-old acts—not any new or independent acts by Petitioners—are the cause of the Petitioners’ alleged “permanent cost advantage” over rivals, i.e., the “entry fee” their competitors must pay for SD Card IP. Pet.

App. 25a-26a, 161a-62a. Like a merger, the formation of the SD Group, the SD Association and SD-3C were permanent changes in the structure of the relevant market. Any legitimate antitrust challenge to those market changes could have and should have been asserted as they unfolded. The rule that mergers and other public joint ventures must be challenged at their inception necessarily means that some persons who are later affected will never be able to litigate—or, put differently, that a cause of action for some potential plaintiffs is time-barred before it accrues. But that is no different from how litigants who suffer a late injury are often prevented from challenging federal regulations when the window for review closed long ago. See, e.g., Nack v. Walburg, 715 F.3d 680, 685-86 (8th Cir. 2013), cert. denied, 134 S. Ct. 1539 (2014); CE Design, Ltd. v. Prism Business Media, Inc., 606 F.3d 443, 450 (7th Cir. 2010), cert. denied, 131 S. Ct. 933 (2011). And it is the necessary consequence of placing some limit (any limit) on the timeliness of antitrust suits, when the economic consequences of an alleged antitrust violation often continue to ripple outward and affect new potential plaintiffs indefinitely. The alternative, as this case illustrates, is a regime in which there can never be repose concerning the legality of important business collaborations. This Court stressed in Klehr that Congress would not have intended any understanding of a limitations provision that would “conflict[] with a basic objective— repose—that underlies limitations periods.” 521 U.S. at 187. As the district court recognized, the theory embraced by the Ninth Circuit here means that there is absolutely no repose in actions brought by indirect

27 purchasers—the least favored plaintiffs under federal law. See, e.g., Kansas v. UtilCorp United, Inc., 497 U.S. 199, 211-12 (1990) (“Our decisions in Hanover Shoe and Illinois Brick often deny relief to consumers who have paid inflated prices because of their status as indirect purchasers.”). That cannot be what Congress intended. Review is warranted to clarify that Zenith’s exceptions for “continuing violations” and “speculative damages” are inapplicable when assessing the timeliness of an indirect purchaser’s injunctive relief claim under Section 16, and to ensure that claims for such extraordinary relief adhere to the Clayton Act’s text and purpose. III. THE NINTH CIRCUIT’S DECISION CONFLICTS WITH DECISIONS OF THIS COURT AND OTHER CIRCUITS BY DISREGARDING THE EQUITABLE DIMENSIONS OF LACHES Finally, the Ninth Circuit broke from settled law in treating its analysis of federal statute of limitations principles as dispositive of the issue of laches, in a suit that seeks only equitable relief under Section 16 and is thus not governed by Section 4’s limitations period for damages claims. See Russell v. Todd, 309 U.S. 280, 287 (1940); Areeda, supra ¶ 320g (“The §4B limitation period applies only to damages actions.”). That approach squarely conflicts with decisions of other circuits and with this Court’s intervening decision in Petrella, as emphasized by Petitioners in seeking rehearing. The analogous statute of limitations is a helpful guide for whether a delay in bringing suit is prejudicial, but a proper laches analysis requires broader equitable considerations—such as whether a

28 challenge to long-established business arrangements would unfairly prejudice reliance interests of the defendants, third parties, or the general public. Laches is “principally a question of the inequity of permitting the claim to be enforced—an inequity founded upon some change in the condition or relations of the property or the parties.” Galliher v. Cadwell, 145 U.S. 368, 373 (1892). This Court recently explained in Petrella that “the consequences of a delay in commencing suit may be of sufficient magnitude to warrant, at the very outset of the litigation, curtailment of the relief equitably awardable,” even if (unlike here) the statute of limitations for parallel damages actions at law has yet to expire. 134 S. Ct. at 1977. As an example, Petrella cited Chirco v. Crosswinds Communities, Inc., 474 F.3d 227, 235–36 (6th Cir.), cert. denied, 551 U.S. 1131 (2007), in which the Sixth Circuit held that laches barred an injunctive relief claim that would have required the destruction of a housing project when the defendant had already constructed 168 units and sold 141 of them, and 109 families had moved in. As this Court emphasized, the “unjust hardship” upon the defendants and “innocent third parties” justified denying injunctive relief, and “threshold dismissal.” Id. at 20-21.6 The holding in Chirco reflects longstanding traditions of equity across many areas of law. Laches

6 See also Southside Fair Hous. Comm. v. City of New York, 928 F.2d 1336, 1353-56 (2d Cir. 1991) (barring claim to set aside a sale of land associated with a development project that had been public for a decade); Armstrong v. Maple Leaf Apartments, Ltd., 622 F.2d 466, 474 (10th Cir. 1979) (laches barred an action to cancel deeds after the grantees had constructed buildings), cert. denied, 449 U.S. 901 (1980).

29 will often bar false advertising or trademark challenges, when the defendant has already invested substantially in its marketing campaign.7 Injunctions are also often denied in patent cases if they would interfere with the availability of products that consumers have come to rely upon. See, e.g., Apple Inc. v. Samsung Elecs. Co., 735 F.3d 1352, 1373 (Fed. Cir. 2013). As noted earlier, the Eighth Circuit applied laches to bar equitable relief sought by plaintiffs challenging the acquisition of an airline as violative of Section 7 of the Clayton Act. Midwestern Mach., 392 F.3d at 277. Plaintiffs brought their challenge eleven years after the acquisition, and during that time the merged airline became privately-held and then publicly traded again. Id. Even though the merged airline allegedly continued to overcharge consumers because of the merger, the Eighth Circuit held that allowing the suit would prejudice the airline’s shareholders, who had no reason to believe when they made their investments that the acquisition could be challenged so long after its consummation. Id.; see also Ginsburg v. InBev NV/SA, 623 F.3d 1229, 1235 (8th Cir. 2010) (laches barred

7 See, e.g., Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 192 (2d Cir. 1996) (laches barred claim for injunction against comparative ads, even though claim was filed within the limitations period for damages, because defendant had “committed massive resources to best exploit a marketing strategy which it chose a half dozen years ago.”); Pro Football, Inc. v. Harjo, 565 F.3d 880, 883-85 (D.C. Cir. 2009) (trademark challenge barred by laches given the defendant’s economic investments); Bridgestone/Firestone Research, Inc. v. Auto. Club, 245 F.3d 1359, 1363 (Fed. Cir. 2001) (“[C]ontinued commercial use and economic promotion of a mark over a prolonged period adds weight to the evidence of prejudice.”).

30 indirect purchasers’ Section 16 claim to divest a merger between two beverage companies brought two months after the announcement of the merger and less than two weeks before closing, as even that brief delay was “inexcusable” “[w]hen dealing with transactions of this nature”). Similarly, in Kloth v. Microsoft Corp., 444 F.3d 312 (4th Cir. 2006), the Fourth Circuit held that Section 16 claims for injunctive relief by indirect purchasers were barred by laches even though originally filed within four years of the consumers’ purchases. Laches applied because plaintiffs delayed pursuing their equitable claims and in the meantime the “competitive landscape” had been comprehensively evaluated and addressed in a similar government antitrust case. Id. at 326. The Ninth Circuit did not address these equitable considerations at all. It reversed solely on mistaken notions of damages accrual. That is not only wrong as a technical matter—it confuses the standards of Section 16 with those of Section 4. And it is especially pernicious in a case like this one, which involves the legality of public collaborations such as mergers or joint ventures. Collaborations such as SD-3C “normally lead to progressive integration of [] assets and operations … and to investment and other business decisions that are contingent on the new situation.” Areeda, supra ¶ 320g. Petitioners publicly formed SD- 3C, published the SD Card specification, openly established a standard setting organization, and began licensing the essential SD Card patents all before 2003—more than 8 years before this suit was filed. Since then, Petitioners and numerous third parties have invested substantially in product design, manufacturing capacity, and the development of

31 improved or complementary technologies—all in reliance on the SD Card standard and the promise, through SD-3C, that the requisite intellectual property will remain available on disclosed, common terms. One licensee (Samsung) and a putative class do not like those terms, and they have certain rights to challenge them, but only on a timely basis. Because “assessing antitrust consequences is often difficult, and reasonable minds might differ” about whether a particular combination or joint venture is lawful, “[i]t is especially important that antitrust challenges be timely made, thus minimizing the social costs of any antitrust violation but giving the parties repose for conduct that is lawful.” Id. ¶ 320a. The Ninth Circuit’s myopic focus on damages accrual—in a case where damages are not even recoverable—leaves no room for consideration of these traditional equities, and no room at all for the repose that Congress obviously intended. It is flatly inconsistent with this Court’s recent decision in Petrella, and merits review or at least an order granting, vacating, and remanding the Ninth Circuit’s decision. IV. THESE DECISIONS PRESENT ISSUES OF NATIONAL IMPORTANCE THAT MERIT REVIEW BY THIS COURT This case and Samsung raise issues of great national importance that merit review. The petition in Samsung details the widespread conflicts and confusion among the circuits in applying Zenith’s “continuing violation” and “speculative damages” exceptions, announced over forty years ago. This Court’s attention to this area of the law is sorely needed, and long overdue.

The particular context of these two cases heightens their importance. Respondents challenge the existence and original terms of a formal and public industry collaboration, particularly a standard-setting body and patent pool. This was never a secret cartel that only time and chance uncovered. It is an open standards- setting effort that is common in many markets and which this Court has recognized “can have significant procompetitive advantages.” Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 501 (1998) As “one of the engines driving the modern economy,” standards “make products less costly for firms to produce and more valuable to consumers” and “increase innovation, efficiency, and consumer choice … by allowing products to interoperate.” U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition 33 (2007) (“2007 FTC Report”). And yet “the point of a standard-setting organization is in fact for competitors to engage in an agreement.” Herbert Hovenkamp et al., IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law § 35.2 (2d ed. 2009). As such, the risk of conspiracy claims is ever-present. Often, as here, an industry-wide technology standard requires a joint venture to pool and license the necessary intellectual property. See generally, Josh Lerner & Jean Tirole, Efficient Patent Pools, 94 Am. Econ. Rev. 691, 691 (2004) (“[i]nnovations in computer hardware, software, and biotechnology often build on a number of other innovations owned by a diverse set of owners,” leading to “severe” patent thicket problems that can be alleviated by pooling).

Patent pools clear patent thickets by allowing a manufacturer to license all underlying inventions at once. See U.S. Philips Corp. v. Int’l Trade Comm’n, 424 F.3d 1179, 1193 (Fed. Cir. 2005), cert. denied, 547 U.S. 1207 (2006); see also Standard Oil Co. v. United States, 283 U.S. 163, 171 (1931) (“An interchange of patent rights and a division of royalties according to the value attributed by the parties to their respective patent claims is frequently necessary if technical advancement is not to be blocked …. If the available advantages are upon on reasonable terms to all manufacturers desiring to participate, such interchange may promote … competition.”). Patent pools like SD-3C containing only essential patents are not just potentially procompetitive, they “are always welfare increasing.” Daniel Quint, Pooling with Essential and Nonessential Patents, 6 Am. Econ. J. Microeconomics 23, 25 (2014) (emphasis added). Yet, as this case shows, patent pools can also easily be characterized as cartels, though such claims will unlikely succeed. Firms that undertake such public collaborations with obvious procompetitive potential but also some measure of antitrust risk should not be forever subject to antitrust suits that attacks the very existence of the firms’ longstanding collaboration. Pool participants and the licensees that invest and build their businesses upon the pool are entitled to proceed with confidence once a reasonable time for antitrust challenges has passed. The same is true of consumers who rely on the stability of a standard, and the legality of their seller’s license to the essential IP, when they purchase products that use the technology. The Ninth Circuit’s holding that there can never be

34 repose concerning the original legality of a standard- setting process and patent pool so long as the relevant products continue to be sold threatens to undermine the stability and confidence necessary for marketplace acceptance of these ventures. 2007 FTC Report at 35. Permitting an antitrust suit brought many years after the successful development of a standard and the broad licensing of patented standards-essential technology through a pool arrangement would be a perverse result. Licensees and consumers would be exposed to enormous “sunk costs.” Id. Without the pool license, the manufacture, sale, or use of products implementing the standard may suddenly become patent infringement. The sunk investments of licensees and consumers would yield patent owners “the power to extract higher royalties or other licensing terms that reflect the absence of competitive alternatives.” Id. at 36. The prospect of this happening forever would surely discourage investment in common standards and interoperable technology. The SD Card standard was developed in 1999. Petitioners began licensing the essential patents in 2003. The stability provided by SD-3C paved the way for countless technological innovations and increased interoperability between consumer electronics. The Ninth Circuit’s decision considers only the interests of a group of indirect purchasers, and entirely ignores the interests of defendants, SD-3C licensees, and the general public in repose. These cases provide an attractive vehicle for this Court to clarify the principles that govern the timeliness of structural attacks on joint ventures that yield widespread procompetitive benefits to the national and international economy.

CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted, CHRISTOPHER B. HOCKETT DANIEL M. WALL NEAL A. POTISCHMAN Counsel of Record DAVIS POLK & WARDWELL BELINDA S. LEE LLP AARON T. CHIU 1600 El Camino Real LATHAM & WATKINS LLP Menlo Park, CA 94025 505 Montgomery Street (650) 752-2000 Suite 2000 Counsel for SD-3C, LLC San Francisco, CA 94111 (415) 391-0600 JEFFREY L. KESSLER [email protected] ALDO A. BADINI JAMES F. LERNER J. SCOTT BALLENGER SUSANNAH P. TORPEY LATHAM & WATKINS LLP WINSTON & STRAWN LLP 555 11th Street, NW 200 Park Avenue Suite 1000 New York, NY 10166 Washington, DC 20004 (212) 294-6700 (202) 637-2200 STEFFEN N. JOHNSON Counsel for Toshiba Corp. & ELIZABETH P. PAPEZ Toshiba America Electronics Components, Inc. WINSTON & STRAWN LLP 1700 K Street, NW RICHARD S. TAFFET Washington, DC 20006 MORGAN, LEWIS & BOCKIUS (202) 282-5000 LLP Counsel for Panasonic 399 Park Avenue Corp. & Panasonic Corp. New York, NY 10022 of North America (212) 705-7000 KRISTEN A. PALUMBO MORGAN, LEWIS & BOCKIUS LLP Three Embarcadero Center San Francisco, CA 94111 (415) 393-2000 Counsel for SanDisk Corporation Counsel for Petitioners December 1, 2014

APPENDIX

APPENDIX TABLE OF CONTENTS Page Opinion of the United States Court of Appeals for the Ninth Circuit, Oliver v. SD-3C LLC, 751 F.3d 1081 (9th Cir. 2014) ...... 1a

Indirect Purchaser Plaintiffs’ First Amended Complaint, Oliver v. SD-3C, LLC, No. 3:11- cv-01260-JSW (N.D. Cal. Nov. 23, 2011) ...... 22a

UNITED STATES COURT OF APPEALS, NINTH CIRCUIT

Dan OLIVER; Jeannie Oliver; Joe Solo; Bernard Gross; Susan Keelin; Walter Kvasnik; Kou Srimounghanch; Humberto Gonzalez; Samuel D. Leggett; Brian Albee; Mary Louise Fowler; Joe Shaw, On their own behalves and on behalf of all others similarly situated; Rhonda Shultz, Plaintiffs– Appellants, v. SD–3C LLC; Panasonic Corporation; Panasonic Corporation of North America; Toshiba Corporation; SanDisk Corporation, Defendants–Appellees. No. 12–16421. Argued and Submitted Dec. 5, 2013. Filed May 14, 2014. 751 F.3d 1081 Before: RONALD M. GOULD and RICHARD A. PAEZ, Circuit Judges, and DAVID A. EZRA, District Judge.* OPINION PAEZ, Circuit Judge: In this antitrust suit, Plaintiffs, purchasers of SD digital memory cards, allege that Defendants Panasonic Corporation, Toshiba Corporation, SanDisk Corporation, and SD –3 C, LLC (collectively “Defendants”) violated federal and state antitrust laws

* The Honorable David A. Ezra, District Judge for the U.S. District Court for the Western District of Texas, sitting by designation.

2a by conspiring to fix the price for SD cards and engaging in improper practices with respect to the licensing of Defendants’ patents to other manufacturers of SD cards. The district court dismissed Plaintiffs’ claims as time-barred. Reviewing de novo, we reverse. Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 960 (9th Cir.2010).1 Recently, in a related action, Samsung Electronics Co., Ltd. v. Panasonic Corp., 12–15185, 747 F.3d 1199, 2014 WL 1328318 (9th Cir. Apr. 4, 2014), we held that the district court erred in concluding that the Clayton Act’s four-year statute of limitations barred Samsung Electronics Company’s antitrust claims for damages and injunctive relief against Panasonic Corporation, Panasonic Corporation of North America, and SD–3C. In this case, unlike the plaintiff in Samsung, Plaintiffs only seek injunctive relief under section 16 of the Clayton Act, 15 U.S.C. § 26. Because Plaintiffs seek only injunctive relief under federal law, their federal antitrust claim is subject to the equitable doctrine of laches and not the four-year statute of limitations in section 4B of the Clayton Act, 15 U.S.C. § 15b. Taking Plaintiffs’ allegations in the First Amended Complaint (“FAC”) as true, as we must at this stage of the litigation, we conclude that they are sufficient to establish that laches is not a bar to Plaintiffs’ federal antitrust claim. Accordingly, we reverse and remand for further proceedings.

1 We have jurisdiction under 28 U.S.C. § 1291.

I. In giving factual context for the federal and state antitrust claims, Plaintiffs allege essentially the same facts regarding the development of SD cards as those alleged in Samsung. We therefore draw liberally from our Samsung opinion in setting the stage for Plaintiffs’ lawsuit and their challenge to the district court’s dismissal order. SD cards are the dominant form of flash memory card on the market, and are widely used in consumer electronics devices such as cellular phones and digital cameras. In 1999, Panasonic, Toshiba, and SanDisk 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, 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. In 2005 and 2006, Defendants developed two new forms of SD cards: the high capacity SD card (“SDHC”) which 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; and the much smaller microSD card, designed for use in mobile phones. 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.

The 2006 license also included a “fair market price” provision pursuant to which Defendants were authorized to determine the “fair market price” of SD cards and to use that price as a baseline in calculating royalties. Plaintiffs allege that this provision shows that Defendants, who control 70 percent of the SD market, intended to “agree upon and charge a ‘fair market price’ for their SD [c]ards,” i.e. to fix the price for SD cards in violation of federal and state antitrust laws.2 Plaintiffs further allege that, in addition to fixing the price of SD cards, Defendants’ licensing practices violate antitrust laws because Defendants do not separately license certain patents that are part of the SD–3C patent pool and, furthermore, refuse to negotiate the terms of the SD Card License. Plaintiffs filed their lawsuit on March 15, 2011 and, of note here, they allege that they purchased SD cards on or after March 15, 2007. Plaintiffs’ first claim for relief seeks an injunction under section 16 of the Clayton Act, 15 U.S.C. § 26, to enjoin Defendants’ alleged violations of section 1 of the Sherman Act, 15 U.S.C. § 1. Unlike the corporate plaintiff in Samsung, Plaintiffs do not seek treble damages under section 4 of the Clayton Act, 15 U.S.C. § 15, as a remedy for Defendants’ unlawful acts. Plaintiffs’ second claim for relief alleges violations of California’s antitrust law, the Cartwright Act, Cal. Bus. & Prof.Code § 16720. Plaintiffs seek treble damages in connection with this

2 Defendants argue that the allegations regarding the fair market price provision are not sufficient to establish the existence of a price-fixing conspiracy. We express no opinion on this issue. As set forth infra in section IV, we leave this issue for the district court to address on remand.

5a claim. Plaintiffs’ third, fourth, and fifth claims for relief are for: (1) unlawful conduct in violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code § 17200; (2) violations of the antitrust laws of various states, e.g. Arizona, the District of Columbia, and Kansas;3 and (3) unjust enrichment and disgorgement of profits. As in Samsung, the district court dismissed Plaintiffs’ claims on the ground that they were time- barred. The district court held that the four-year statute of limitations set forth in section 4B of the Clayton Act, 15 U.S.C. § 15b, applied to Plaintiffs’ claims for injunctive relief and reasoned that Defendants’ allegedly unlawful conduct began well before the start of the four-year limitations period. Oliver v. SD–3C, LLC, No. C 11–01260 JSW, 2012 WL 1835740, at *3 (N.D.Cal. May 21, 2012). The district court dismissed Plaintiffs’ state law claims on the same ground. Id. Given the narrow ground on which the district court dismissed Plaintiffs’ lawsuit, we need only determine whether the court properly dismissed Plaintiffs’ federal antitrust claim as time barred. II. Although a claim for injunctive relief under section 16 is “analogous” to a claim for damages under section 4, section 16 provides a distinct cause of action. Int’l Tel. & Tel. Corp. v. Gen. Tel. & Electronics Corp., 518 F.2d 913, 926 (9th Cir.1975) disapproved of on other

3 Plaintiffs seek to maintain their action on behalf of themselves and a series of sub-classes consisting of consumers from various states who purchased SD cards within the class period, which includes the period from March 15, 2007 to the present.

6a grounds by California v. Am. Stores Co., 495 U.S. 271, 110 S.Ct. 1853, 109 L.Ed.2d 240 (1990) (“Clayton Act [§ ] 16 provides a private equitable remedy, analogous to the private legal remedy of Clayton Act [§ ] 4, as a method of enforcement of the prohibitions of Clayton Act [§ ] 7.”). Unlike damages claims under section 4, 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. Claims for injunctive relief, however, are subject to the equitable defense of laches.4 Id. at 928. And, “in computing the laches period,” section 4B’s four-year statute of limitation is used as a “guideline.” Id.; see also Samsung, 747 F.3d at 1205, 2014 WL 1328318 at *4. Therefore, in applying laches, we look to the same legal rules that animate the four-year statute of limitations under section 4 B. Ordinarily, “[a] cause of action in antitrust accrues each time a plaintiff is injured by an act of the defendant and the statute of limitations runs from the commission of the act.” Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 237 (9th Cir.1987) (citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971)). As we discussed in our Samsung opinion, however, there are recognized exceptions to this general rule. First, “[i]n the context of a continuing conspiracy to violate the antitrust laws, . . . each time a plaintiff is injured by an act of the defendant[ ] a cause of action accrues to him to recover the damages caused by that

4 Under the doctrine of laches, a suit seeking equitable relief will be barred if a party has inexcusably delayed pursuing his claim and his adversary has been prejudiced as a result. Int’l Tel. & Tel. Corp., 518 F.2d at 926.

7a act.” Zenith, 401 U.S. at 338, 91 S.Ct. 795. “[A]s to those damages, the statute of limitations runs from the commission of the act.” Id. In order to restart the statute of limitations, there must be a new overt act that: (1) is “new and independent . . . [and] not merely a reaffirmation of a previous act,” and (2) “inflict[s] new and accumulating injury on the plaintiff.” Pace, 813 F.2d at 238. Second, the limitations period may start to run after the defendant’s initial violation of the antitrust law, if it is “uncertain” or “speculative” whether the defendants’ antitrust violation has injured the plaintiff at the time of the violation. AMF, Inc. v. General Motors Corp. (In re Multidistrict Vehicle Air Pollution), 591 F.2d 68, 72 (9th Cir.1979) (citing Zenith, 401 U.S. at 339, 91 S.Ct. 795); see also Samsung, 747 F.3d at 1204–05, 2014 WL 1328318 at *4. In such cases, the statute of limitations period begins on the date that the plaintiff’s damages first “accrued and became ascertainable.” AMF, 591 F.2d at 73. We hold that both exceptions apply here. Turning first to the continuing violation exception, the Supreme Court and federal appellate courts have recognized that 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. Klehr v. A.O. Smith Corp., 521 U.S. 179, 189, 117 S.Ct. 1984, 138 L.Ed.2d 373 (1997); see also Hennegan v. Pacifico Creative Serv., Inc., 787 F.2d 1299, 1301 (9th Cir.1986) (holding that a new overt act occurred each time tour operators’ shepherded tourists away from plaintiffs’ shop in exchange for payment); In re Cotton Yarn Antitrust Litig., 505 F.3d 274, 290–91 (4th Cir.2007)

(“[I]n cases like this one involving allegations of ‘a price-fixing conspiracy that brings about a series of unlawfully high priced sales over a period of years, each overt act that is part of the violation and that injures the plaintiff, e.g., each sale to the plaintiff, starts the statutory period running again.’” (quoting Klehr, 521 U.S. at 189, 117 S.Ct. 1984)); Morton’s Mkt., Inc. v. Gustafson’s Dairy, Inc., 198 F.3d 823, 828 (11th Cir.1999) amended in part, 211 F.3d 1224 (11th Cir.2000) (holding that each sale of milk a price-fixed price constitutes a new overt act (citing Klehr, 521 U.S. at 189, 117 S.Ct. 1984)). Here, Plaintiffs allege in the FAC that they purchased SD cards on or after March 15, 2007, which is within four years of March 15, 2011, the date on which this lawsuit was filed. Because Plaintiffs allege that they were injured within the four- year limitations period, Plaintiffs have alleged sufficient facts to show that laches does not bar their federal antitrust claim.5

5 Defendants argue, relying on AMF, that the alleged anticompetitive impact caused by their combination was “permanent at initiation,” i.e. in the early 2000s when they first allegedly combined to develop the SD standard, and that the continued sales of SD cards at supracompetitive prices were “but unabated inertial consequences of [their] pre-limitations action.” 591 F.2d at 72. Therefore, Defendants argue that Plaintiffs’ lawsuit should have been filed within four years of Defendants’ initial violation of the antitrust laws. As we explained in Samsung, “AMF is the exception, not the rule.” Samsung, 747 F.3d at 1203, 2014 WL 1328318 at *2. In AMF, “the unique nature of the automobile business meant that the initial refusal to deal was an ‘irrevocable, immutable, permanent and final’ decision and any damages that occurred during the limitations period ‘necessarily resulted from’ “ the initial refusal. Id. (quoting AMF, 591 F.2d at 72). Here, in contrast, “the license itself did not permanently and finally control

Plaintiffs’ claims are also timely under the speculative damages exception. In Zenith, Zenith’s antitrust claim was not time-barred because, as the Supreme Court recognized, to require Zenith to establish damages at an earlier date would have required Zenith to present speculative evidence regarding Zenith’s future performance. 401 U.S. at 341–42, 91 S.Ct. 795. This evidence likely would have been rejected by the trial court had Zenith filed suit earlier. Id. Similarly, in this case, Plaintiffs allege that they purchased SD cards in March 2007. Before Plaintiffs purchased SD cards, it would have been pure speculation whether Plaintiffs would have been harmed by Defendants’ alleged unlawful acts. Plaintiffs should not be penalized for failing to foresee earlier that they would enter the market for SD cards and would therefore be harmed by Defendants’ conduct. See Samsung, 747 F.3d at 1205, 2014 WL 1328318 at *4 (holding that the law did not require Samsung to bring suit where it was not clear whether Samsung would enter the market for SD cards and “the harm to Samsung . . . was [therefore] speculative at the time of the initial wrong”). Thus, for the foregoing reasons, we conclude that Plaintiffs have alleged sufficient facts in the FAC to demonstrate that laches is not a bar to their federal antitrust claim. III. The district court also erred in dismissing Plaintiffs’ state law claims. The district court held that

the acts of” Defendants. Id. Defendants could have ceased charging the price-fixed price at any time.

10a

“Plaintiffs’ state antitrust claims fall outside the statute of limitations period for all the same reasons applicable to its federal antitrust claims.” Oliver, 2012 WL 1835740 at *3 (citing Cal. Bus. & Prof.Code § 16750.1; Corwin v. Los Angeles Newspaper Serv. Bureau, Inc., 4 Cal.3d 842, 852–53, 94 Cal.Rptr. 785, 484 P.2d 953 (1971) (stating that the Cartwright Act is interpreted consistently with the Sherman Act)). Because we have concluded that Plaintiffs’ federal antitrust claim is timely, we vacate the district court’s dismissal of the state law claims and remand. On remand, the district court should apply the California Supreme Court’s recent decision in Aryeh v. Canon Business Solutions, Inc. 55 Cal.4th 1185, 1195, 151 Cal.Rptr.3d 827, 292 P.3d 871 (2013) in determining whether Plaintiffs’ Cartwright Act claim was timely filed. See Samsung, 747 F.3d at 1205, 2014 WL 1328318 at *4 n. 4. IV. In addition to asserting the statute of limitations as a defense, Defendants raise a host of additional challenges to Plaintiffs’ claims. Because the district court has not yet considered these issues, we leave them to the district court to address in the first instance on remand. V. The district court’s dismissal order is reversed and the case is remanded for further proceedings consistent with this opinion. REVERSED and REMANDED.

11a

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

DR. DAN OLIVER, No. C 11-01260 JSW JEANNIE OLIVER, JOE SOLO, BERNARD GROSS, SUSAN KEELIN, ORDER GRANTING WALTER KVASNIK, KOU MOTION TO SRIMOUNGHANCH, DISMISS WITHOUT HUMBERTO GONZALEZ, LEAVE TO AMEND SAMUEL D. LEGGETT, BRIAN ALBEE, MARY LOUISE FOWLER, JOE SHAW, and RHONDA SCHULTZ, on their own behalves and on behalf of all others similarly situated, Plaintiffs, v. SD-3C LLC; PANASONIC CORPORATION; PANASONIC CORPORATION OF NORTH AMERICA; TOSHIBA CORPORATION; TOSHIBA AMERICAN ELECTRONIC COMPONENTS, INC.; and SANDISK CORP.,

Defendants. /

12a

Now before the Court is the motion filed by Defendants SD-3C, LLC (“SD-3C”), Panasonic Corporation (“Panasonic”), Panasonic Corporation of North America (“PNA”), Toshiba Corporation (“Toshiba”), Toshiba America Electronic Components, Inc. (“TAEC”), and Sandisk Corp. (“SanDisk”) (collectively, “Defendants”) to dismiss the First Amended Complaint (“FAC”) filed by Plaintiffs. The Court finds that this matter is appropriate for disposition without oral argument and is deemed submitted. See Civ. L.R. 7-1(b). Accordingly, the hearing set for May 25, 2012 is HEREBY VACATED. Having carefully reviewed the parties’ papers and considering their arguments and the relevant authority, and good cause appearing, the Court hereby GRANTS Defendants’ motion to dismiss. BACKGROUND This antitrust action challenges an alleged patent licensing arrangement to control the availability and pricing of Secure Digital Memory Card (“SD Card”) technologies and thereby restrain trade. Plaintiffs are indirect purchasers of, SD Cards from March 15, 2007 to the present. SD Cards are flash memory cards used in various devices such as digital cameras and cell phones. (FAC ¶¶ 43-46.) Plaintiffs challenge the standard-setting process created in the late 1990s that resulted in the SD Memory Card Specification (“Specification”) and licensing arrangements. (Id. ¶¶ 3, 73, 74, 80.) Defendant SD-3C licenses patents and other intellectual property necessary to practice the Specification developed by the Defendants in 1999 and released in 2000. (Id. ¶¶ 1,3, 53, 55-59.) According to the allegations in the amended complaint, the violations

13a

Plaintiffs challenge occurred “[a]t least as early as August 29, 1999,” when Panasonic, SanDisk, and Toshiba agreed to develop the Specification jointly or “at least as early as January 1, 2000,” when Defendants publicly announced the establishment of the SD Association, a standard-setting organization responsible for developing subsequent versions of the Specification. (See id. ¶¶ 128, 142.) Plaintiffs contend that, by virtue of a 2003 licensing agreement, companies that wish to make SD Cards and licensed the SD-3C technology would be required to pay a 6% royalty on all SD Cards sold. (Id. ¶¶ 3, 62.) In 2006, SD-3D offered an amendment to the 2003 SD Card License, which included a provision that allegedly serves as a “minimum reference price of the calculations of licensees’ royalty obligations” under the SD Card License. (Id. ¶ 5.) In addition, Plaintiffs incorporate the allegations in a related and previously dismissed complaint filed in Samsung Electronics Co., Ltd. v. Panasonic Corp. et al., C 10-03098 JSW (“Samsung Action”). (See FAC ¶¶ 42.) The second amended complaint in that matter, based on the same facts and specifically incorporated here, was dismissed without leave to amend on January 3, 2012 for failure to state a cognizable claim within the statute of limitations. Plaintiffs, indirect purchasers of the allegedly price- inflated SD Cards, filed this action on March 15, 2011. On February 21, 2012, Defendants jointly moved to dismiss the complaint. The Court shall address specific additional facts in the remainder of this Order.

14a

LEGAL STANDARD A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. The complaint is construed in the light most favorable to the non-moving party and all material allegations in the complaint are taken to be true. Sanders v. Kennedy, 794 F.2d 478;481 (9th Cir. 1986). However, even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), “a plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 ( 1986)). Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but must instead allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the. misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. . . . When a complaint pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. (quoting Twombly, 550 U.S. at 556-57) (internal quotation marks omitted). If the allegations are insufficient to state a claim, a court should grant leave to amend, unless amendment would

15a be futile. See, e.g., Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990); Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246- 47 (9th Cir. 1990). ANALYSIS A. Antitrust Causes of Action Are Barred by the Statue of Limitations. Under the Clayton Act, 15 U.S.C. section 15b, private antitrust claims are subject to a four-year statute of limitations. See Hennegan v. Pacifico Creative Serv., Inc., 787 F.2d 1299, 1300 (9th Cir. 1986). “A civil cause of action under the [antitrust laws] arises at each time the plaintiffs interest is invaded to his damage, and the statute of limitations begins to run at that time.” AMF, Inc. v. General Motors Corp., 591 F.2d 68, 70 (9th Cir. 1979) (quoting Twin City Sportservice, Inc. v. Charles O. Finley & Co., 512 F.2d 1264, 1270 (9th Cir. 1975). Although generally a cause of action accrues and the statute of limitations begins to run at the time a defendant commits an action that injures plaintiff’s business, in the context of a continuing conspiracy, this has been construed to mean that “each time a plaintiff is injured by an act of the defendants a cause of action accrues to him to recover damages caused by that act and that, as to those damages, the statute of limitations runs from the commission of the act.” AMF, Inc. v. General Motors Corp., 591 F.2d 68, 71 (9th Cir. 1979). In this way, the continuing violations doctrine can save an otherwise barred claim. In antitrust law, “[a] continuing violation is one in which the plaintiff’s interests are repeatedly invaded and a cause of action arises each time the plaintiff is injured.” Pace Industries, Inc. v. Three Phoenix Co., 813 F.2d

16a

234, 237 (9th Cir. 1987) (citation omitted). It is clear, however, that “a continuation of harm to plaintiffs alone will not keep the cause of action alive without some overt act or continuing conduct of defendants during the limitations period.” Electroglas, Inc. v. Dynatex Corp., 497 F. Supp. 97, 105 (N.D. Cal. 1980).1 “When a continuing violation exists, the limitations period runs from the ‘last overt act’ by the defendant, which must be (1) a ‘new and independent act that is not merely a reaffirmation of a previous decision that (2) inflicts a new and accumulating’ injury on the plaintiff.” Red Lion Medical Safety Inc. v. Ohmeda, Inc., 63 F. Supp. 2d 1218, 1223 (E.D. Cal. 1999) (citing Pace Industries, 813 F.2d at 238). In their First Amended Complaint, Plaintiffs in this action allege the same basic underlying facts as those that were dismissed in the related Samsung Action. Similarly, as this Court found there, Defendants’ allegedly unlawful conduct occurred well beyond the statute of limitations period lapsed. According to both complaints, this conduct caused permanent cost differentials at that time. This Court, in the Samsung Action, found that the underlying facts did not create a

1 Any harm that accrues after the tolling of the statute of limitations periods but that is associated with an overt act that occurred prior to the limitations period is not remediable. However, “each separate cause of action that so accrues [during the statute of limitations period] entitles a plaintiff to recover not only those damages which he has suffered at the date of accrual, but also those which he will suffer in the future from the particular invasion, including what he has suffered during and will predictably suffer after trial.” Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321,338-39 (1971) .

17a continuing violation that restarted the statute of limitations period. In the Ninth Circuit, “[a] cause of action in antitrust accrues each time a plaintiff is injured by an act of the defendant and the statute of limitations runs from the commission of the act.” Pace, 813 F.2d at 237. Further damages accrued by plaintiffs do not restart the statute of limitations period, even if the injuries are continuing. See id. The “statute of limitations is not extended by continued sales at an allegedly monopolistic price because the ‘monopolist’s simple charging of its profit-maximizing price is a naturally expected consequence of a monopoly and can hardly be said to be [an] independent [act].’” Kaiser Foundation v. Abbott Laboratories, 2009 WL 3877513, at *7 (C.D. Cal. Oct. 8, 2009) (quoting II Areeda & Hovenkamp, Antitrust Law, ¶ 320c4, at 298-99 (3d ed. 2007)). The “statute of limitation runs from the time of commission of the act, notwithstanding that high prices may last indefinitely into the future.” See id. Plaintiffs contend that, as consumers of SD Cards who did not suffer any injury until they more recently purchased the cards at supra-competitive prices, they cannot have made a claim until defendants actually extracted an excessive price. However, the Court is not persuaded by the distinction between consumers in this action and competitors in the Samsung Action. The statute of limitations, on a continuing violation theory, runs from the time of the last overt act made by the defendant, not from the last purchase made by a potential plaintiff. Should the Court find otherwise, there would essentially be no statute of limitations bar to indirect purchaser claims. As the Areeda treatise explains, if “mere[ly] charging . . . a monopoly price

18a constitutes a ‘continuing violation’ tolling the statute, then we have indefinitely lengthened the statute of limitation.” Id. (citing Areeda at¶ 320c, at 286). Accordingly, the Court finds, based on the same or similar facts underpinning Plaintiffs’ claims in this matter and the related and incorporated claims in the Samsung Action, that Plaintiffs’ antitrust claims fall outside the statute of limitations period and are therefore dismissed. B. Remaining Claims Are Barred. In addition, Plaintiffs’ state antitrust claims fall outside the statute of limitations period for all of the same reasons applicable to its federal antitrust claims. See Cal. Bus. & Prof. Code § 16750.1; Corwin v. Los Angeles Newspaper Service Bureau, Inc., 4 Cal.3d 842, 852-53 ( 1971) (Cartwright Act interpreted consistently with Sherman Act). Plaintiffs allege a claim for unfair competition under California Business and Professions Code § 17200 (“Section 17200”) which prohibits unfair competition, including “any unlawful, unfair or fraudulent business act or practice.” Plaintiff claims to have suffered injury from a competitor’s unlawful business act or practice. (FAC ¶¶ 140-152.) An action based on Section 17200 “borrows” violations of other laws and treats them as unlawful practices. Chabner v. United Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000). The “unlawful” prong of Section 17200 prohibits “any practices forbidden by law, be it civil criminal, federal, state, or municipal, statutory, regulatory, or court-made.” Saunders v. Superior Court, 27 Cal. App. 4th 832, 838-39 (1994) (internal quotation omitted). Because the Court has concluded that Plaintiffs have failed to state a claim under any independent law, the

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Court similarly finds that Plaintiffs have failed to state a claim under Section 17200 for unlawful business practices and dismisses the claim. Lastly, because the Court finds that Plaintiffs fail to state a claim under either federal or State law, their last claim for unjust enrichment and disgorgement of profits fails to state a claim for damages. CONCLUSION For the foregoing reasons, the Court GRANTS Defendants’ motion to dismiss the entirety of the First Amended Complaint. Having been given previous three chances to amend the complaint in the related matter based on the same set of facts and having dismissed this once-amended complaint based entirely on an issue of law, the Court finds that it is appropriate to dismiss the complaint without leave to amend. A separate judgment shall issue and the clerk may close the file. IT IS SO ORDERED. Dated: May 21, 2012 /s/ Jefferey S. White UNITED STATES DISTRICT JUDGE

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UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT FILED SEP 02 2014 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

DAN OLIVER; et al., No. 12-16421

Plaintiffs - Appellants, D.C. No. 3:11-cv- 01260-JSW v. Northern District of California, SD-3C LLC; et al., San Francisco

Defendants - Appellees. ORDER

Before: GOULD and PAEZ, Circuit Judges, and EZRA, District Judge.* Defendants Panasonic Corporation, Toshiba Corporation, SanDisk Corporation, and SD-3C, LLC’s (collectively “Defendants”) petition for rehearing is DENIED. The full court has been advised of Defendants’ petition for rehearing en banc and no judge has

* The Honorable David A. Ezra, District Judge for the U.S. District Court for the Western District of Texas, sitting by designation.

21a requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35. The petition for rehearing en banc is DENIED. IT IS SO ORDERED.

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Max L. Tribble Jr. pro hac vice [email protected] Joseph S. Grinstein pro hac vice [email protected] Eric J. Mayer pro hac vice [email protected] SUSMAN GODFREY L.L.P. 1000 Louisiana, Suite 5100 Houston, TX 77002-5096 Telephone: 713-651-9366 Facsimile: 713-654-6666 Amanda Bonn (SBN 270891) [email protected] SUSMAN GODFREY L.L.P. 1901 Avenue of the Stars, Suite 950 Los Angeles, CA 90067-6029 Telephone: 310-789-3100 Facsimile: 310-789-3150 Attorneys for Plaintiffs on their own behalves and on behalf of all others similarly situated

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

DR. DAN OLIVER, ) Case No. 3:11-cv- JEANNIE OLIVER, JOE ) 01260-JSW SOLO, BERNARD GROSS, ) SUSAN KEELIN, ) CLASS ACTION WALTER KVASNIK, KOU ) SRIMOUNGHANCH, ) INDIRECT HUMBERTO GONZALEZ, ) PURCHASER SAMUEL D. LEGGETT, ) PLAINTIFFS’

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BRIAN ALBEE, MARY ) FIRST AMENDED LOUISE FOWLER, JOE ) COMPLAINT SHAW, and RHONDA ) SCHULTZ, on their own ) DEMAND FOR behalves and on behalf of all ) JURY TRIAL others similarly situated, ) Plaintiffs, ) v. ) SD-3C LLC; PANASONIC ) CORP.; PANASONIC ) CORP. OF NORTH ) AMERICA; TOSHIBA ) CORP.; TOSHIBA ) AMERICA ELECTRONIC ) COMPONENTS, INC.; and ) SANDISK CORP., ) Defendants. )

Plaintiffs, indirect purchasers of Secure Digital Memory Cards (“SD Cards”), which include all SD Cards, whether SDHC, mini, micro and other forms of SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property, as defined below, on behalf of themselves and all other similarly-situated indirect purchasers, claim against all Defendants for the following complaints for price-fixing, unreasonably restraining trade, deceptive conduct and other wrongdoing in this product market and these technology markets in the United States, the State of California and other States between March 15, 2007 and the present (the “Class Period”):

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INTRODUCTION 1. This case involves a price-fixing cartel (the “Cartel”), made up of Panasonic Corp. (alone and through its wholly-owned subsidiary and distributor Panasonic Corp. of North America (“PNA”)), Toshiba Corp. (alone and through its wholly-owned subsidiary and distributor Toshiba America Electronics Components, Inc.), and SanDisk Corp., a conspiracy and combination among the members of the Cartel with each other, and with their “LLC,” the SD-3C LLC (“SD-3C”), as well as other co-conspirators as yet unknown. Each of the Cartel members competes with each other in the market for SD Card products and also the markets for SD Card Intellectual Property and NAND Flash Memory Card Intellectual Property. The SD-3C acts on its own behalf, on behalf of individual Cartel members, and jointly for Cartel members in holding title to copyrights and product certification trademarks on behalf of its owners, as well as licensing portions of this same SD Card Intellectual Property and NAND Flash Memory Card Intellectual Property delegated to it for handling by its owners. 2. Since late 2006, SD Cards have become the de facto flash memory card standard format in the United States and are widely used in a variety of consumer electronic devices including digital cameras, “netbooks,” and mobile phones. Notwithstanding the highly commoditized and low-margin nature of the flash memory card business, the SD Card market is dominated by Panasonic, Toshiba, and SanDisk, whose collective market share exceeds 70 percent. 3. The Cartel members have been able to achieve this dominant market share and to insulate themselves from price competition from the remaining

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30 percent of the SD Card market through their anticompetitive SD Card patent pool, a tool by which they impose an entry fee on their rivals in the SD Card market. After abandoning open standard setting efforts in order to manipulate the SD Card specification to favor their own intellectual property rights, the Cartel members developed a joint licensing scheme administered by their jointly-owned SD-3C to coerce their downstream rivals in the SD Card market into paying an entry fee from which they are exempt. Pursuant to the Cartel’s anticompetitive agreements, other manufacturers of SD Cards must pay SD-3C a 6 percent royalty on all SD Cards they sell (in addition to separate royalties paid to each Cartel member for other essential utility patents withheld from the pool), whereas the Cartel members cross-license the pooled patents to each other for free. 4. This purported “pool” is the antithesis of a legitimate pool because it does not collect in one entity all of the intellectual property needed (or even most of the intellectual property needed) to make the end product. Although the Cartel members each own patents that are essential in order to manufacture the NAND flash memory component of an SD Card, they withhold such patents from the pool and instead license them individually. Thus, rather than provide the efficiencies, cost savings, and other benefits of “one stop shopping” for manufacturers of SD Cards, which allow for cheaper transaction costs, lower royalties, less costly devices and greater availability of devices, this pool is the opposite. It makes for higher transaction costs, more difficult and protracted licensing transactions, more costly devices and limits the number of manufacturers of devices. Furthermore,

26a because the Cartel members refuse to disclose which of their purportedly essential patents are included in the patent pool (aside from nine utility patents and a handful of design patents that they disclose for illustrative purposes), the Cartel members have made no showing that their agreement to jointly develop and license flash memory card technology has cleared blocking patent positions. 5. Having succeeded in “tipping” the flash memory card market in favor of SD Cards as the dominant format by late 2006—by, among other things, exploiting Toshiba and Panasonic’s market power in consumer devices that use flash memory cards and by offering royalty-free licenses to other host device manufacturers—the Cartel then revised their SD Card License Agreement to reflect that their jointly-owned SD-3C would have the power to determine a “fair market price” for SD Cards that would serve as a minimum reference price for the calculation of licensees’ royalty obligations. In other words, the Cartel members—who collectively account for 70 percent of the SD Card market—acknowledged in writing their intent to collectively agree upon the “fair market price” for SD Cards. Whether or not the Cartel members enforced the royalty calculation provision against their licensees, their market power in the SD Card market combined with the entry fee imposed on licensees (who accounted for the remaining 30 percent of the SD Card market) enabled them to fix the “fair market price” of SD Cards without fearing price competition from their rivals. 6. The cost of flash memory devices is largely driven by the flash memory component of the device. But the price that Cartel members charge for SD

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Cards is higher than what they charge for other flash memory formats where they do not own the essential utility patents for the form factor and interface. By way of example only, just prior to March 15, 2011, at the site “pricegrabber.com,” a SanDisk SD Card with 8 GB of flash memory cost $14.85. In contrast, a USB stick by SanDisk cost $13.85 for the same 8 GB of flash memory. In other words, an SD Card (for which SanDisk is an owner of the intellectual property for the non-memory components of the card) actually costs more than the same memory density USB stick (for which SanDisk does not own intellectual property relating to the form factor or interface). 7. The Cartel’s unreasonable restraint of trade, and the effects thereof, continue. As a result of Defendants’ conspiracy and acts in furtherance of their thereof, Plaintiffs and all those similarly situated have suffered by purchasing SD Cards at artificially increased prices from March 15, 2007 to the present. THE PARTIES A. The Plaintiffs 8. Dr. Dan Oliver, Ms. Jeannie Oliver, and Joe Solo, are residents of California who, since March 15, 2007, have purchased SD Cards for end use and not for resale at retail outlets in California, among other states. In doing so they indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 9. Bernard Gross is a resident of Arizona who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in Arizona. In

28a doing so he indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 10. Susan Keelin is a resident of New Mexico who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in New Mexico. In doing so she indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 11. Walter Kvasnik is a resident of Minnesota who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in Minnesota. In doing so he indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 12. Kou Srimounghanch is a resident of Kansas who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in Kansas. In doing so he indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein.

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13. Humberto Gonzalez is a resident of the Washington, D.C., who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in Washington, D.C. In doing so he indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 14. Samuel D. Leggett is a resident of Tennessee who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets. In doing so he indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 15. Brian Albee is a resident of Vermont who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in Vermont. In doing so he indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 16. Mary Louise Fowler is a resident of Massachusetts who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in Massachusetts. In doing so she indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND

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Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 17. Joe Shaw has been a resident of New Jersey and New York who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in New York. In doing so he indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 18. Rhonda Schultz is a resident of Florida who, since March 15, 2007, has purchased SD Cards for end use and not for resale at retail outlets in Florida. In doing so she indirectly purchased during the Class Period SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from one or more of Panasonic, PNA, Toshiba, Toshiba America Electronics Components, SanDisk and/or the SD-3C LLC Defendants named herein. 19. Plaintiffs also purchased SD Cards, SD Card Intellectual Property, and NAND Flash Card Intellectual Property from other manufacturers and resellers who were licensed separately by one or more Defendants on that Defendant’s individual portfolio of SD Card Intellectual Property, NAND Flash Card Intellectual Property, and by the intellectual property for SD Cards owned or licensed by the SD-3C LLC. 20. Defendants (identified below) conspired and combined to charge multiple royalties on the same royalty base and fixed the cost bases of the royalties

31a charged. As a result, these Defendants fixed or inflated prices for SD Cards, SD Card Intellectual Property, and NAND Flash Memory Card Intellectual Property in the United States and in the State of California among other places. Furthermore, having insulated themselves from price competition from their rivals in the SD Card market, Defendants conspired and combined among themselves to fix the “fair market price” of SD Cards. Plaintiffs and other members of the indirect purchaser class were injured as a result of the harm caused to these relevant markets by Defendants’ unlawful acts in paying inflated prices for the SD Card products and the SD Card Intellectual Property and NAND Flash Memory Card Intellectual Property. 21. Defendants’ wrongful and deceptive acts caused unlawful harm to competition in at least the following markets: the markets in the United States and the State of California for SD Cards; the markets in the United States and the State of California for SD Card Intellectual Property; and the markets in the United States and the State of California for NAND Flash Memory Card Intellectual Property. This injury to competition and harm to these markets were caused by conspiracy, combinations and other wrongdoing to at least artificially inflate to unreasonable levels the royalty cost by the mechanism of “double charging” (or multiple charging) of royalties for SD Card Intellectual Property and NAND Flash Memory Card Intellectual Property on the same base NAND Flash Memory Component twice or more for the same purpose, by charging for product certification marks beyond the reasonable cost of such certification, by artificially setting the value of the base on which percentage

32a royalties were charged by fiat and contract rather than by market price, by dividing intellectual property rights between themselves and others to maximize the number of licenses and royalties they could garner for their own benefit, and by fixing the “fair market price” of finished SD Cards. These acts harmed competition in the relevant markets, and Plaintiffs were harmed by costs that were in whole or in part passed on to the Plaintiffs and other consumers in the form of illegally inflated prices. 22. Plaintiffs and the members of the Indirect- Purchaser Class(es) were injured in their businesses or property as a result of Defendants’ conspiracy and combination to unreasonably harm competition (without justifying counter-benefits) in the relevant markets, including by among other things their illegal price-fixing and other unlawful agreements. As a result of this unlawful harm to competition in one or more of these markets, the Plaintiffs and others similarly situated paid more for SD Cards than they would have absent such illegal conduct. B. The Defendants 23. Defendant Toshiba Corporation is a Japanese corporation with its principal place of business at 1-1, Shibaura 1-chome, Minato-ku, Tokyo, 105-8001, Japan. 24. Defendant Toshiba America Electronics Components, Inc. is a wholly owned and controlled subsidiary of defendant Toshiba Corporation with its corporate headquarters at 19900 MacArthur Blvd., Ste. 400, Irvine, CA92612. Toshiba America Electronics Components, Inc. manufactured, marketed, sold, and/or distributed SD Cards on behalf of Toshiba in the United States during the Class Period.

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25. Defendant Panasonic Corporation is a Japanese corporation, with its headquarters at 1006, Oaza Kadoma, Kadoma-shi, Osaka 571-8501, Japan. Prior to October 2008, Panasonic Corporation was known as Matsushita Electric Industrial Co., Ltd. 26. Defendant Panasonic Corporation of North America (“PNA”), a Delaware corporation, is, upon information and belief, a wholly owned subsidiary of Panasonic Corporation, with its principal place of business at One Panasonic Way, Seacacus, New Jersey 07094. PNA manufactured, marketed, sold and/or distributed SD Cards on behalf of Panasonic in the United States during the Class Period. 27. Defendant SanDisk Corporation is a Delaware corporation with its principal place of business at 601 McCarthy Boulevard, Milpitas, California, 95035. 28. Defendant SD-3C LLC is a Delaware limited liability company with its principal place of business at 180 Montgomery Street, Suite 1840, San Francisco, California 94104. On information and belief, SD-3C has conducted licensing activities through its agent, Miller, Kaplan, Arase & Co. LLP. 29. All defendants are doing business in this district, and throughout the State of California. 30. Any actions or agreements these Defendants made outside of the United States were done with the express purpose and intent of injuring trade and commerce in one or more of the relevant markets in the United States. 31. Wherever in this complaint a family of defendant-corporate entities is referred to by a common name, it shall be understood that plaintiffs are alleging that one or more officers or employees of one

34a or more of the named related defendant companies participated in the illegal acts alleged herein on behalf of all of the related corporate family entities. C. Co-Conspirators 32. Various persons and entities whose identities are unknown to Plaintiff at this time, participated as co-conspirators in the violations alleged herein and performed acts and made statements in furtherance of the conspiracy and wrong-doing of the Defendants. Once the identities of these presently- unknown co-conspirators are ascertained, Plaintiff will seek leave of court to add them as named defendants. 33. The acts charged in this Complaint have been done by Defendants and their co-conspirators, or were authorized, ordered, or done by their respective officers, agents, employees, or representatives while actively engaged in the management of each Defendant’s business or affairs. 34. Each of the Defendants named herein acted as the agent or joint venture partner of or for the other Defendants with respect to the acts, violations and common course of conduct alleged herein. Each Defendant that is a wholly-owned or indirect wholly- owned or controlled subsidiary of a foreign parent is the United States agent for its parent company. JURISDICTION AND VENUE 35. This action is brought under Section 16 of the Clayton Act (15 U.S.C. 26) to secure equitable relief against the Defendants due to their violations of Section 1 of the Sherman Act (15 U.S.C. 1), and provisions of the Clayton Act. The claims for actual and exemplary damages are brought under the Cartwright Act and other antitrust and unfair competition laws of the State of California (or,

35a alternatively, of the various Illinois Brick repealer states in which Plaintiffs and Class Members purchased SD Cards), to obtain restitution, recover damages, and to secure other relief against the Defendants for violations of those state laws. Attorneys’ fees, costs, expenses, of enforcement of these laws are also sought under both federal and state law. 36. This Court has subject matter jurisdiction of the federal antitrust claims asserted in this action under Section 16 of the Clayton Antitrust Act (15 U.S.C. 26), Section 1 of the Sherman Act (15 U.S.C.1), and Title 28, United States Code, Sections 1331 and 1337. This Court has subject matter jurisdiction of the state-law claims asserted in this action under Title 28, United States Code, Sections 1332(d) and 1367, in that the matter in controversy exceeds the sum of $5 million exclusive of interest and costs, members of the indirect-purchaser plaintiff class are citizens of states different from Defendants, and certain Defendants are citizens or subjects of foreign states.1 37. Venue is proper in this Judicial District pursuant to Section 12 of the Clayton Act (15 U.S.C 22) and Title 28, United States Code, Section 1391(b), (c), and (d), because a substantial part of the events giving rise to Plaintiffs’ claims occurred in this District, a substantial portion of the affected interstate trade and commerce was carried out in this District, and one or more of the Defendants has an agent, maintains an office, or does business in this District.

1 This case is not brought under the patent jurisdiction of the Federal Courts.

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38. Defendants conduct business throughout the United States, including in this jurisdiction, and they have purposefully availed themselves of the laws of the United States, including specifically the laws of the state of California. Defendants’ products and intellectual property are sold in the flow of interstate commerce, and Defendants’ activities had a direct, substantial and reasonably foreseeable effect on such commerce. 39. Defendants substantially affected commerce throughout the United States and specifically in California, causing injury to relevant markets, which in turn harmed Plaintiffs and class members, because Defendants, directly or through their agents, engaged in activities affecting all states, including California, to fix or inflate prices of SD Cards, SD Card Intellectual Property, and NAND Flash Memory Card Intellectual Property, which conspiracy unreasonably restrained trade and adversely affected each market without justifying circumstances to offset the harmful effect of such conduct. Defendants have purposefully availed themselves of the laws of California in connection with their activities relating to the production, marketing, and sale of SD Cards and the licensing of SD Card Intellectual Property as well as the licensing of NAND Flash Memory Intellectual Property from the Northern District of California. As a result of the activities described herein, defendants: a. Caused damage to the residents of California and all other states; b. Caused damage in California and all other states by acts or omissions committed outside each such state and

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by regularly doing or soliciting business in each such state; c. Engaged in persistent courses of conduct within California and all other states and/or derived substantial revenue from the marketing of SD Cards (and services relating to such marketing); d. Committed acts or omissions that they knew or should have known would cause damage (and did, in fact, cause such damage) in California and all other states while regularly doing or soliciting business in each such state, engaging in other persistent courses of conduct in each such state, and/or deriving substantial revenue from the marketing of SD Cards in each such state; and e. Committed acts in foreign countries specifically targeted at harming these United States and California markets and consumers knowing that to do so would violate of U.S. and state law. 40. The conspiracy and wrongdoing described herein affected adversely every person nationwide who indirectly purchased SD Cards and second generation SD Cards, as Plaintiffs did, throughout the United States. In doing so, Plaintiffs also purchased indirectly SD Card Intellectual Property and NAND Flash Memory Intellectual Property from these Defendants in the United States and in California. Defendants’ conspiracy has resulted in an adverse monetary effect on indirect-purchasers resulting from their adverse

38a impact on the relevant markets in the United States and California, among other states. INTRA-DISTRICT ASSIGNMENT 41. The SD-3C has its principal place of business in San Francisco County, where a substantial part of the events or omissions giving rise to this action occurred, including but not limited to licensing of SD Card Intellectual Property and NAND Flash Memory Intellectual Property, among other things. The SD-3C is a combination of Panasonic, Toshiba, and SanDisk, and acts on their behalf in licensing essential utility patents individually owned by each of them, essential design patents jointly owned by the three of them, design patents owned by SanDisk, and copyrights and trademarks owned by the SD-3C, for making SD Cards, and by extension NAND Flash Memory Cards, from its offices in San Francisco. Pursuant to Local Rule 3-2(d), “all civil actions which arise in the count[y] of . . San Francisco . . . shall be assigned to the San Francisco Division or the Oakland Division.” Therefore, assignment to the San Francisco Division of this Court is appropriate. 42. In that it involves a common set of operative facts, this case is related to Samsung Electronics Co., Ltd. v. Panasonic Corporation, et al., No 3:10-cv-03098-JSW. A copy of Samsung’s Second Amended Complaint is attached as EXHIBIT 1 and is incorporated herein by reference. ALLEGATIONS 43. An SD Card is small (roughly postage stamp-sized) container that houses controller circuitry and NAND flash memory circuits (these circuits are arranged on a “chip” or “die”). There are now several varieties of SD Cards of different sizes, mini and micro,

39a and densities, but all SD Cards are backward compatible (and where the form factor can be accommodated, forward compatible) by use of adapters to compensate for differences in form factors and placement of leads. 44. In an SD Card, the controller circuitry and NAND flash chips are mounted on a substrate (e.g., a PCB board), and then enclosed in plastic, with metal leads protruding from the card that allow the circuits and components in the card to connect electrically to a host device, such as a consumer “point and shoot” camera. SD Cards are encased in plastic shells of specific form factors that are designed to fit into a slot in a host device (with or without an adapter), and also to allow the leads to connect to leads within the host device (much as the prongs of an electrical cord fit into a wall socket). 45. SD Cards provide “permanent memory” (“non-volatile memory”) for consumer devices and other purposes. For example, other types of non- volatile memory include vinyl records, cassette tapes, CDs, DVDs, hard disk drives, photographic film, EEPROMs, CompactFlash Cards, XD Cards, Memory Sticks, and MMC Cards, and NOR flash memory. 46. The SD Card performs its function by using a semiconductor device called “NAND flash memory,” which is a type of circuit built by the tens of thousands in a semiconductor wafer, and cut into chips or die, that each contain thousands of such circuits. These chips or die are smaller than a “dime,” and “shrink” as manufacturing techniques improve. The NAND flash circuits will hold electrical charge even after a power source is removed. The amount of charge trapped in each circuit represents a “0” or a “1” or

40a some other bit of information, from which a processor can read, write and store computer-readable data. NAND Flash Memory Circuits can be made where each circuit contains one bit of information (single level cell, “SLC”) or more than one bit (multi-level cell). The circuits are arranged in groups called sections, blocks or pages that can store multiple bytes of data (a byte is eight bits of data forming a “word”), which can be read or written to by a host device through a controller on the card. (The terminology has changed over the decades NAND Flash Memory has been available and these terms have referred to different groupings of circuits at different times). The host device puts the digital code into a format that is perceptible by humans, editable, and otherwise can be used in different ways. The host device also does the reverse: It takes an analogue image or sound, digitizes it, and ultimately the bits of information are “written” through the controller into the NAND Flash Memory Circuits. In addition, the controller will maintain the integrity of the groups of NAND Flash Circuits on the die by rotating the use of different parts of the memory device so that all parts of the device wear evenly. The distinguishing feature of all types of non-volatile memory is the ability to retain the information recorded on them even if there is no power to the memory.2

2 In contrast, a “DRAM”, a “dynamic random access memory” loses all information stored in the device once the device loses power. A DRAM is like a “leaky bucket”, in that it must constantly be refreshed by electrical current to maintain the level of charge in the individual circuits that designate the data contained in each bit of information. This is known as a “volatile”

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47. An SD Card is not fungible with other types of non-volatile memory and no other type of non- volatile memory can serve as a substitute for an SD Card where it is used in the relevant markets for two reasons. First, host devices already designed for SD Cards and sold to consumers (in the tens of millions) cannot be reconfigured (reverse engineered) in a commercially or technically feasible manner to accept a different card with a different form factor, controller or electrical properties, and yet permit the card to be inserted in whole into the device (as in a point and shoot camera). Second, the SD Card has advantages not shared by other types of non-volatile memory that make it uniquely suited to its function in consumer devices in its small size, lack of moving parts (that can be damaged and consume larger amounts of power), and the speed with which relatively large blocks of data can be “read” or “written”: For example, a cassette tape has moving parts, higher power and space demands, delicate tape that can twist or break, and no efficient way to locate specific information on the tape; even mini-cassette tapes are many times larger than an SD Card, making them unsuitable for consumer devices. Likewise, vinyl records, optical discs, CD and DVD discs, as well as miniature versions of those disks, are many times larger than an SD Card, require analogue or optical reader components with moving parts, use more power, are easily subject to damage, and are also too large for many consumer devices that can use the SD Card (e.g., a handheld camera). Hard drives and mini-hard drives likewise have moving parts memory device because it loses its data when power is removed from the memory.

42a subject to damage and failure, use more power, and are not available in the size of the SD Card. An EEPROM is a type of non-volatile memory that has no moving parts and can be very small, but typically requires large amounts of power (or even ultra-violet light) to “write” data to the device, erase data from the device, and has much more limited capacity to hold data; they are not practical or even possible to use as a means to record new information in most battery powered consumer devices (very early flash memory literature and patents often referred to primitive flash memory as an advanced type of EEPROM). Video or photographic film have many disadvantages compared to SD Cards: they require moving parts, more power, images go through a development process in addition to processing of data by the host device, degrade more quickly, are more difficult to edit (and cannot be edited to the extent of a digital image), and cannot achieve the form factor of a small SD Card. 48. Other types of NAND flash memory devices likewise do not compete with SD Cards because their form factor or electrical properties are different: For example, a CompactFlash Card is formatted to the standard of a computer hard disk, and has a much larger form factor than an SD Card. An MMC card does not have a controller on the card that allows the card to “read and write” information to the NAND flash memory (the controller must be built into the host device), and does not have the same internal electrical circuits needed to be compatible with an SD Card’s host device. A USB “stick” (also known as a jump drive or thumb drive) generally has a much larger form factor than an SD Card and protrudes from the device with which it is used; further, it is designed

43a to use the interfaces of the USB ports on laptops and other devices, that have different interfaces and electrical connections and properties from SD compliant devices. Memory Stick and XD cards are proprietary forms of NAND Flash Memory Cards designed and used only for specific manufacturer’s products (e.g., the Memory Stick is proprietary to Sony, and the XD Card is proprietary to Fuji and Olympus). 49. NOR flash memory is not a substitute for NAND flash memory because it is far more expensive: It is designed to store, read and write information much more precisely organized than in the much larger sections, blocks or pages of a NAND flash memory. NOR is more like a non-volatile DRAM that works with data in “words” or “bytes” and is typically too expensive for use in consumer devices, for bulk storage of data (although it may be used for a different purpose in the same device). 50. Since late 2006, the SD Card has become the de facto standard for “point and shoot” cameras, “Netbooks,” cell phones, and other small consumer devices where it is necessary to have an inexpensive non-volatile memory to record images, sounds, other data, and/or to provide additional non-volatile memory to any memory embedded in the host device for bulk storage of data. SD Cards have the great majority of the market for non-volatile memory for consumer devices that use non-volatile memory, (approximately 75-80%). In 2009, the sale of SD Cards generated $1.5 billion in revenue in the United States. The market for SD Cards in the United States has been dominated by the Cartel members: Panasonic, Toshiba, and SanDisk.

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51. The development of the SD Card format— and its acceptance as an industry standard—was not the result of the type of open standard setting process that has been approved by U.S. Antitrust authorities and that has been common in the electronic memory industry. Rather, it resulted from a deliberate choice by three horizontal competitors—SanDisk, Panasonic, and Toshiba—to enter into a closed joint venture, design a specification that favored their own patents, and use Panasonic and Toshiba’s combined weight in downstream consumer electronics markets to tip the flash memory card market toward acceptance of the SD Card format. 52. Prior to the creation of the SD Card format, SanDisk and thirteen other companies created the MultiMediaCard Association (“MMCA”) in 1998 to “make the MultiMediaCard a broadly supported new industry standard.” All MMCA members were permitted to use the MMC specification to develop and manufacture MMC products on a royalty-free basis. The MMCA—of which SanDisk was a founding member—would have been a natural forum in which to develop an enhanced MultiMediaCard. 53. However, Panasonic encouraged SanDisk to enter into a joint venture with Panasonic and Toshiba in order to develop the SD Card format, a modified version of the MMC Card, in a closed process outside of the MMCA. SanDisk, Panasonic, and Toshiba were all horizontal competitors as manufacturers of flash memory. In addition, all three companies hold nearly all of the essential patents necessary to manufacture NAND flash memory. Toshiba introduced the NAND flash architecture in 1989 and still holds patents essential to the

45a manufacture of NAND Flash Circuits. Toshiba and SanDisk later developed multi-level cell (“MLC”) technology that allows for increased NAND flash capacity. SanDisk holds such MLC patents. In addition, Panasonic holds certain patents essential for the manufacture of NAND flash memory chips. As a result, any company wishing to manufacture NAND Flash Memory chips must license patents from each of the Cartel members. Finally, Panasonic was a major manufacturer and seller of host devices, as was Toshiba. Indeed, Panasonic and is the largest manufacturer of consumer electronics in the world. The Cartel was therefore well positioned to push the adoption of any standard they jointly developed. 54. Had the Cartel members attempted to develop the SD Card through the MMCA, any changes in the MMCA standard would have had to be considered and approved by a technical committee of the MMCA and by the MMCA Board of Directors. The Cartel members would have had to abide by the MMCA’s disclosure and licensing policies, which required (1) disclosure to the group of any patents covered by the proposed amendments to the specification and (2) an agreement to license any patents incorporated into the amendment on reasonable and nondiscriminatory (“RAND”) terms. Rather than comply with the MMCA requirements, SanDisk—along with Panasonic and Toshiba—agreed to combine outside of the open standard-setting process to establish a standard that artificially favored their own patents. The Cartel members implemented arbitrary amendments to the existing MMC specification that mandated particular technological solutions for features that could have been left to the

46a manufacturer’s discretion without affecting the SD Cards’ functionality, thus foreclosing alternative technologies. The Cartel members then filed patent applications to cover the mandated solutions they had elected to include in the specification. (See Samsung SAC ¶¶ 62-64.) 55. The Specifications for SD Cards are copyrighted and those copyrights are owned by the SD-3C. It appears the SD-3C permits an association of its licensees, the SD Association, to license these specifications at a de minimis cost. 56. The design patents for the form factor for the SD Cards (except for certain mini-cards) are jointly owned by Panasonic, Toshiba and SanDisk, and licensed through the SD-3C. 57. The trademarks that certify a product is compliant with SD standards are owned by the SD-3C. 58. No manufacturer can make an SD Card without a license to the design patents on the form factor that must be obtained from SD-3C. Otherwise, the card will not physically fit into the slot in the host device nor will the leads match their counterpart connections in the host device. Furthermore, copyrights on the specifications must be obtained from the SD Association or its re-sellers, as they are essential to designing SD Cards into host devices to match electrical performance and timing and are needed for network compatibility, among other things. Finally, it is not commercially feasible to sell SD Cards, without the commonly recognized product certification trademarks owned by the SD-3C prominently displayed on a card, the package for a card or host device or package for a host device. Those trademarks

47a permit consumers to be confident that their cards and devices will be compatible. 59. Each Cartel member has also given authority to the SD-3C to license what have been characterized as nine essential utility patents and other unidentified essential utility patents for SD Cards. SD- 3C discloses the nine utility patents “for information purposes only” and “by way of example,” but SD-3C and the other Cartel members have made clear that there are other undisclosed patents that are purportedly essential to implementation of the SD Card format that are included in the SD Card License. 60. The SD-3C, however, does not own or have exclusive licenses to all of the utility patents that each of the Cartel members claim are essential to make SD Cards functional. Most technology for NAND flash memory, controllers, card systems using NAND flash memory, and other inventions for NAND flash memory are instead owned separately and licensed individually by each of the three individual members of the SD-3C. 61. Panasonic, Toshiba, and SanDisk each license individually these utility patents (issued by jurisdictions with developed patent systems, such as the United States, Japan, Korea, Germany, the United Kingdom, and others) to make the components of the SD Cards and the card systems. Each of these three Defendants agreed with each other and with the SD-3C to “carve out” a small portion of each of their rights relevant to SD Cards and to give the SD-3C the authority to license those limited utility patent rights that they have each carved out of their separate relevant patent portfolios. Other than nine utility patents listed on the SD-3C website, neither the Cartel members or the SD-3C disclose all of their utility

48a patents given to the SD-3C to license, but claim many other “essential patents” are delegated to the SD-3C that they assert are needed to make the SD Card (and are to be licensed from the SD-3C). In this way, a maker of an SD Card could be called upon to take four licenses from the Cartel and the SD-3C: One each from Panasonic, Toshiba and SanDisk, and then an additional license from the SD-3C. 62. The Cartel members require that any manufacturer of SD Cards execute an SD Card License with SD-3C. The SD Card License grants a license to “manufacture, use, offer for sale, sell, import, export or otherwise dispose of SD Memory Cards . . . under the Essential Patent Claims Licensable by” SD-3C in exchange for a 6 percent royalty on net sales of SD Cards. The Cartel members, on the other hand, enter into royalty-free cross-licenses with one another. The net effect of the Cartel members’ agreement is to raise their downstream rivals’ costs by imposing a 6 percent entry fee for manufacturing SD Cards—an entry fee from which they are exempt. 63. The terms of the SD Card License are non- negotiable. For example, SD-3C’s representative, Mr. Quackenbush, refused to negotiate the license terms with Samsung. In fact, he refused even to send a Word version of the SD Card License to Samsung because the Cartel members were concerned “about anyone making changes to the agreement.” (Samsung SAC ¶ 113.) 64. In addition, the Cartel members have agreed not to license their pooled utility patents individually or separately from the SD-3C for the field of use of SD Cards. Samsung’s Second Amended Complaint details its unsuccessful efforts to license

49a these utility patents from their individual owners, SD- 3C member Panasonic, SanDisk, and Toshiba, without going through the SD-3C. (Samsung SAC ¶¶ 126-31.) 65. But even if a member of the Cartel were to agree to license its purportedly essential utility patents separately, the SD-3C nonetheless requires any manufacturer of SD Cards to execute an SD Card License—which covers, in addition to the purportedly essential utility patents, the jointly-owned design patents and the SD-3C-owned trademarks—at the same 6 percent royalty rate. This requirement coerces licensees into accepting the blanket SD Card License (and its non-negotiable 6 percent royalty rate) rather than entering into bilateral negotiations with individual Cartel members over licensing rights to their purportedly essential utility patents. (Samsung SAC ¶¶ 122-23.) 66. The SD-3C is an intellectual property pool that includes a pool of utility patents, design patents, product certification trademarks and copyrights, among other things. But this “pool” violates the tenants that the United States antitrust authorities and laws have said are needed to make such a collaboration of competitors and price-fixing by competitors sufficiently pro-competitive to outweigh the restriction on competition naturally resulting from such arrangements. 67. In truth, this purported “pool” is the antithesis of a legitimate pool because it does not collect in one entity all of the intellectual property needed (or even most of the intellectual property needed) to make the end product. Rather than provide the efficiencies, cost savings, and other benefits of “one stop shopping” for manufacturers of these products,

50a which allow for cheaper transaction costs, lower royalties, less costly devices and greater availability of devices, this pool is the opposite. It makes for higher transaction costs, more difficult and protracted licensing transactions, more costly devices and limits the number of manufacturers of devices. 68. The SD-3C does not have the intellectual property from its owners or the authority to license its owners’ intellectual property to make an SD Card, without each licensee also going to each of its three individual owners separately and obtaining needed rights to make SD Cards. Instead of being “one-stop” shopping, the Cartel members have required “multiple stop” shopping, and charged multiple royalties on each aspect of the intellectual property needed for the SD Card. The intellectual property needed from the SD- 3C is duplicative or de minimis of the separately licensed intellectual property, yet the SD-3C charges out-sized royalties on the same components already licensed by its members. The SD-3C also charges out- sized royalties on product certification trademarks which should be readily available at cost (or close to cost) of testing and policing products. The Cartel and the SD-3C further allow purchase of specifications protected by copyright from its association of licensees, the SD Association, at de minimis prices, but again increasing transaction costs. Further, the license the Cartel and the SD-3C require the SD Association to provide requires admissions that more expensive licenses for other intellectual property must be obtained from the SD-3C and/or the individual Cartel members, and also grants them favorable and unequal grantback rights.

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69. Moreover, the Cartel members refuse to disclose all of the patents that they claim are essential to practice the SD Card specification. Patent pools have often been justified on the grounds that they clear blocking patents or make available all necessary complementary patents on a “one stop shopping” basis. However, patent pools have frequently been condemned were they include substitute or competing patents. Because the Cartel members refuse to disclose all of their claimed essential patents, they can no more justify the patent pool on the pro-competitive basis of clearing blocking patents than they can on the basis of achieving one-stop shopping for complementary patents. 70. The net effect of this scheme is to approximately double the cost of royalties for SD Cards (or more). Each component maker pays royalties to each SD-3C member, commonly on the NAND flash component, controller, host interface controller, and/or card system. The SD-3C then charges an additional 6 percent royalty for the intellectual property it licenses and/or owns to the manufacturer that assembles these components into a finished card, or that simply applies a label to a finished card purchased from one of the Defendants or a licensee to certify the product is compliant with the de facto SD standards and will function in an SD Device. 71. Absent the SD-3C patent pool—and its mandatory 6 percent license—the Cartel members acting individually would not be able to extract from their downstream rivals such high royalty rates from their purportedly essential patents. In other contexts where the U.S. Department of Justice (“DOJ”) has approved patent pooling arrangements, the pool made

52a available all purportedly essential patents at lower royalty rates. For example, in its business review letter approving the DVD patent pool, DOJ noted that, among other things, a royalty rate below 4 percent for a license that included all essential patents necessary to implement the specification was “sufficiently small relative to the total costs of manufacture that it is unlikely to enable collusion among sellers of DVD players or discs.” Here, on the other hand, licensees must pay a 6 percent royalty for a small subset of the patents they will need to produce finished SD Cards, and will need to pay substantial additional royalties to the same Defendants under different licenses for patents withheld from the pool. 72. The SD-3C charges a 6 percent royalty based on the selling price of the card, which in turn is dictated by the card’s memory capacity: That is the number of bits of information that the NAND flash circuits in the card will store for the user. For each type and generation of SD Card the form factor, position of the leads, controller circuitry, specifications and trademarks are the same or similar or typically adaptable to each other using licensed kits: with the exception only of form factors for cell phones and GPS and other small devices. The only substantial difference between the cards of the same generation and type is the “memory density” (the amount of memory capacity, the memory circuits on the card). Accordingly, a manufacturer of NAND flash die would pay royalties to one, two or all three of the SD-3C members separately, and then the SD-3C collects an additional 6% royalty from the seller of the SD Card driven by the number of NAND flash memory circuits in the card. For example, one financial analyst noted

53a that prior to 2007 “Samsung ha[d] paid an 8 percent royalty fee to SanDisk on NAND MLC. As Samsung began making finished SD Cards using NAND MLC it was obligated to pay an additional 6 percent royalty fee to the SD Card Association for the cards, of which 2 percent of that went to SanDisk as a founding member of the association . . . . The result is that SanDisk has collected a staggering royalty fee from Samsung on its finished SD Cards.” On information and belief the royalties that Samsung paid to SanDisk for its NAND MLC patents and to SD-3C were in addition to separate royalties paid to Toshiba for Toshiba’s NAND patents. 73. This perversion of a legitimate patent pool has permitted the Cartel to unreasonably restrain trade in the United States, California, and other markets for SD Cards by charging double or multiple royalties, and further unreasonably restrained the markets for SD Card Intellectual Property, and NAND Flash Memory Card Intellectual Property in the United States and California. 74. Furthermore, by imposing this entry fee and by collecting sales information from their rivals via the royalty reporting form, the Cartel members—who control 70 percent of the SD Card market—positioned themselves to fix the price of SD Cards. (Samsung SAC ¶ 160.) Indeed, around the same time that the market for flash memory cards tipped in favor of SD Cards as the de facto industry standard, the Cartel amended the SD-3C’s license so as to permit the Cartel to collectively determine the “fair market price” of SD Cards and to use that agreed-upon price (rather than actual sales) as the basis for the royalty calculation. But whether or not they ever enforced this provision

54a against their licensees, this provision reflects the intent and ability of the Cartel members to collectively agree upon and charge a “fair market price” for their SD Cards—without fear of price competition from the remaining 30 percent of the market who are constrained in their ability to compete on price by the onerous licensing provisions imposed by the Cartel. 75. These acts are intentionally done and their consequences were planned by Defendants to inflate their profits and royalties beyond what they otherwise could hope to collect in a competitive market. In all modern memory markets the final price of a completed memory product charged to the purchaser naturally increases with memory density (regardless of the price per bit). A roll of film for 100 photos costs more than a roll for 25 photos. A DRAM with 8 meg capacity costs more than a DRAM with 1 meg capacity. These industry giants with long histories in the memory and electronics markets know how memory prices are manipulated, and in fact have been investigated for manipulating memory prices for other types of memory devices. Basing the SD-3C royalty on a percentage of the price of the card constitutes an obvious effort to double-recover royalties on the amount of NAND flash in the card. This is especially apparent where they retain the option to fix the “value” of the base for the purpose of applying the percentage rate for computing the royalty due to them regardless of actual selling price of the card. 76. Toshiba is a vertically integrated firm, which manufactures consumer electronics products, laptop computers, flash memory chips, develops technology for controllers for flash memory chips, incorporates those chips into SD Cards, and

55a incorporates the SD Card as a memory source in its consumer products, including for example laptops sold for the U.S. market. Toshiba develops technology in the SD Card intellectual property market and the NAND Flash Memory Card market. Toshiba licenses its SD Card intellectual property (mainly utility patents), NAND flash intellectual property (e.g., utility patents) and those utility patents for related components and systems separately from other Cartel members or the SD-3C. 77. SanDisk is a vertically integrated firm that manufacturers flash memory chips, develops and manufacturers flash memory controllers, manufactures memory storage products using flash memory chips (such as SD Cards, USB drives, and other products), and also manufactures consumer products that use flash memory such as music players (MP3 players). SanDisk develops technology in the SD Card intellectual property market and the NAND Flash Memory Card market. SanDisk licenses its SD Card intellectual property (mainly utility patents), NAND flash intellectual property (e.g., utility patents) and those utility patents for related components and systems separately from other Cartel members or the SD-3C. 78. Panasonic is a vertically integrated firm. It makes SD Cards, controllers for its products, and it makes consumer products that use SD Cards to provide removable or expandable available memory. Panasonic is the largest manufacturer of electronic consumer products in the world. Moreover, as shown by Samsung’s SAC, Samsung has alleged that Panasonic has refused to license separately the intellectual property it has given to the SD-3C to

56a license. Panasonic develops technology in the SD Card intellectual property market and the NAND Flash Memory Card market. Panasonic licenses its SD Card intellectual property (mainly utility patents), NAND flash intellectual property (e.g., utility patents) and those utility patents for related components and systems separately from other Cartel members or the SD-3C. 79. Many other SD Card manufacturers, however, are non-integrated aggregators: They are assemblers that purchase flash memory chips from other firms and then combine those chips with plastic substrates, control circuitry and leads, and then incorporate those chips into SD Cards, according to the specifications published by the SD-3C and the design patents for the form factors and electrical connections. Each licensed SD Card is encased in plastic and has an affixed mark or label indicating that the card is compatible for use in devices that can employ SD Cards for memory. 80. Although purporting to operate like a legitimate patent pool, the licensing arrangements among the SD-3C generate none of the pro-competitive benefits that might otherwise justify an agreement among horizontal competitors to combine their intellectual property rights for manufacture or sale of a product, license them as a package, calculate royalties based on a percentage of total sales, and collectively agree upon the “fair market price” for their SD Cards. Because they have withheld critical patent rights from the pool, the SD Card License, LAMS License, or other SD-3C licenses do not offer licensees the efficiency of being able to obtain all of the rights owned by the Cartel and the SD-3C needed to manufacture SD Cards

57a in one transaction at a lower price and without the higher transaction costs of multiple transactions. Because they refuse to disclose all of their purportedly essential patents, the Cartel cannot justify the pool on the basis of clearing blocking patents, nor assure licensees that the pool does not include substitute patents. 81. Moreover, notwithstanding illusory disclaimers to the contrary in recent versions of the SD Card License, the SD-3C members have refused to offer industry participants any alternative to executing the SD Card License—with its built-in “entry fee”—in order to manufacture SD Cards. RELEVANT MARKETS 82. There is are relevant markets in the United States in the sale of finished SD Cards to third parties for use with devices that contain slots made for SD Cards (the “Full-Size SD Card Market”). Such finished SD Cards are broadly used in interstate commerce for a range of applications, including particularly for data storage in digital cameras, PDAs, digital audio players, and other electronic devices equipped with an SD Card slot. Millions of such devices have been sold, and continue to be sold, in the United States. 83. Consumers with devices equipped with a SD card slot generally would regard an SD Card as the only option for use in the devices. Most consumers who operate a device that has an SD Card slot would not regard any memory card other than an SD Card as a reasonably interchangeable for the memory card permitted for operation by that device. Most consumers would not purchase a memory card for an

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SD host device (e.g., a point and shoot camera) without the SD product certification trademark. 84. There is a separate relevant market in the United States in the sale of finished SD Cards to third parties for use with devices that contain slots made for reduced-size SD Cards, such as miniSD and microSD Cards (the “Reduced-Size SD Card Market”; collectively with the Full-Size SD Card Market the “SD Card Market”). Such cards are the only available option for operating the device in conjunction with a flash memory card. Millions of Reduced-Size SD Cards have been sold, and continue to be sold, in the United States, and are used in interstate commerce for data storage in smaller electronic devices, such as mobile telephones. Consumers with devices equipped only with a slot for Reduced-Size SD Cards would not regard any other kind of flash memory card as a reasonably interchangeable alternative. 85. There is a separate relevant market in the United States, the State of California and other states, in the intellectual property used in the production of SD Cards, consisting of intellectual property developed for this end-use or that might be applied toward this end-use (the “SD Card Intellectual Property Market”). The SD Card Specification requires that certain SD Card functions be implemented either by a specific technology or by a particular solution for which the technological options are limited. The technologies required by the Specification or capable of providing a solution required by the Specification are not reasonably interchangeable with other technologies. Design patents jointly owned by the Cartel members are needed for SD Cards to fit into the “slots” for host devices for SD and mini-SD cards. Product

59a certification marks owned by the SD-3C are needed to make the products marketable to consumers. Utility patents are alleged to be need to implement the SD Card standards. 86. There is a separate relevant market in United States, the State of California, and other states for the intellectual property used in the production of removable NAND flash memory cards (the “NAND Flash Memory Card Intellectual Property Market”). This includes not only technology used in the production of SD Cards but also technology used in the production of other flash memory card formats. The intellectual property included in the Flash Memory Card Intellectual Property market are not reasonably interchangeable with other technologies that are not suitable for use in flash memory cards. High royalty burdens for use of the SD Card format by card makers and host device makers deter others from investing in alternative technologies due to the extra cost of doing so above the cost of the SD Card rights. 87. There are no other significant barriers to the interstate or international sale or exchange of SD Cards, SD Card Intellectual Property or NAND Flash Memory Card Intellectual Property. Accordingly, in each case above, the relevant geographic market is the United States, each state, and its territories, or, alternatively, the world. Competition, however, is driven by demand for SD Cards and SD host consumer electronic devices in the United States and its several states, including California. SIZE AND STRUCTURE OF RELEVANT MARKETS 88. The SD Card, including second generation form factors such as miniSD and microSD, is now the

60a dominant format in the flash memory card market for consumer devices. The SD Association states that it is “the de-facto industry standard” and that “SD technology is used by more than 400 brands across dozens of product categories and in more than 8,000 models.” SD Cards (including miniSD and microSD Cards) accounted for more than 80 percent of all flash memory cards sold worldwide in 2009. 89. The individual members of the SD-3C have benefited, and continue to benefit, handsomely from their anticompetitive agreements. This conduct has allowed the members of the SD-3C to extract hundreds of millions of dollars in royalty flows each year from flash memory manufacturers, controller manufacturers, and numerous competing flash card manufacturers, inflated profits from maintaining floors on prices for these products, they could not and would not have otherwise collected but for their Cartel agreements and actions through the SD-3C. These contracts, conspiracy, combinations are unreasonable restraints on trade in each relevant market as they inflate prices without countervailing benefits to consumers and prevent others from having the resources to invest in alterative NAND Flash Memory Technologies. This “double royalty” or multiple royalty is passed on to consumers. Consumers also deprived of other technical and commercial improvements that otherwise would likely have developed with additional investment in NAND Flash Memory Technology. 90. The market for the manufacture and sale of SD Cards is conducive to the type of collusive activity alleged herein. Throughout the Class period, Defendants collectively controlled a significant share of

61a the market for SD Cards, both globally and in the United States. Panasonic, SanDisk, and Toshiba together account for approximately 65-70 percent of the U.S. retail market for SD Cards (including cards manufactured by an SD-3C member and sold by a third party under its own brand name). (Samsung SAC ¶ 160.) The SD-3C members collectively account for a dominant share of both standard format SD Cards (even allowing for the negligible sales volume of MMC cards that can be operated in some cases in SD Card slots, but are not typically compatibly due to different circuitry) and second generation SD Cards, such as miniSD and microSD Cards. The SD-3C members’ collective share of the total U.S. market for SD Cards, including both retail and sales to original equipment manufacturers such as Motorola, is greater than 70 percent. (Id.) Moreover, through the anticompetitive conduct alleged herein, the Defendants have exercised control over prices with respect to the remaining approximately 30 percent of the SD Card market into which other SD Card manufacturers sell. As such, the Defendants’ conspiracy to fix the price of SD Cards substantially affected interstate trade and commerce in the SD Card market. Finally, the additional market power that Panasonic and Toshiba have in consumer electric devices, helped to “tilt” the market over time to use of the SD Card in such things as point and shoot cameras, computers, televisions, and other products. CHOICE OF LAW ALLEGATIONS 91. Toshiba America Electronics Components, Inc. is headquartered in Irvine, California. 92. Toshiba America Electronics Components, Inc., markets SD Cards on behalf of Toshiba

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Corporation in the United States from its California headquarters. For example, on January 6, 2011, Toshiba America Electronics Components, Inc., issued a press release from its Irvine headquarters announcing that it would be “on hand at International CES 2011 to demonstrate the company’s latest SD memory cards . . . .” 93. SanDisk Corporation is headquartered in Milpitas, California. 94. SanDisk describes itself as “the leading manufacturer or flash memory cards.” SanDisk is the largest manufacturer of SD Cards sold in the United States. 95. Toshiba, SanDisk, and Panasonic conduct their joint licensing activity through SD-3C LLC, and its agent in San Francisco, California. 96. Companies who wish to manufacture SD Cards are required to join the SD Association. The SD Association’s bylaws provide that the principal office of the SD Association shall be in California. The SD Association’s “Contact Us” web page states that the SD Association may be contacted “c/o Global Inventures, Inc.” at 2400 Camino Ramon; Suite 375 in San Ramon, California. The web page also lists California telephone number 1.925.275.6615 and California facsimile number 1.925.886.4870. The SD-3C has delegated rights to sell or license copyrighted materials (specifications) it owns to the SD Association, but those licenses, while at de minimis costs, contain provisions and admissions highly favorable to the Cartel and the SD-3C. 97. The SD Card License Agreement contains a California choice-of-law clause and a California forum-selection clause.

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98. Defendants’ licensing activities, and thus the conduct that forms the basis for each and every class member’s claims, emanated from California. Therefore, application of California law to a nationwide class is appropriate. CLASS ACTION ALLEGATIONS 99. Plaintiffs bring this action on their own behalf and as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all members of the following Class (the “Nationwide Class”): All natural persons and entities residing in the United States that purchased in the United States for their own use and not for resale SD Cards between March 15, 2007 and the present. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. 100. Alternatively, Plaintiffs bring this action on their own behalf and as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all members of the following Class (the “Nationwide Repealer State Class”):

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All natural persons and entities residing in the United States that purchased in Arizona, California, the District of Columbia, Florida, Kansas, Massachusetts, Minnesota, New Mexico, New York, Tennessee, or Vermont for their own use and not for resale SD Cards between March 15, 2007 and the present. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. 101. Alternatively, Plaintiffs also bring this, action on their own behalf and as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure and/or respective state statute(s), on behalf of all members of the following classes (collectively, the “Indirect Purchaser State Classes”): (a) Arizona (the “Arizona Indirect Purchaser Class”: 102. All natural persons and entities residing in the United States that purchased in Arizona for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a

65a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. (a) California (the “California Indirect Purchaser Class”): 103. All natural persons and entities residing in the United States that purchased in California for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. (a) District of Columbia (the “District of Columbia Indirect Purchaser Class”: 104. All natural persons and entities residing in the United States that purchased in the District of Columbia for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate

66a family and judicial staff, and any juror assigned to this action. (a) Florida (the “Florida Indirect Purchaser Class”): 105. All natural persons and entities residing in the United States that purchased in Florida for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. (a) Kansas (the “Kansas Indirect Purchaser Class”): 106. All natural persons and entities residing in the United States that purchased in Kansas for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. (a) Massachusetts (the “Massachusetts Indirect Purchaser Class”): 107. All natural persons and entities residing in the United States that purchased in Massachusetts for

67a their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. (a) Minnesota (the “Minnesota Indirect Purchaser Class”): 108. All natural persons and entities residing in the United States that purchased in Minnesota for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to, this action. (a) New Mexico (the “New Mexico Indirect Purchaser Class”): 109. All natural persons and entities residing in the United States that purchased in New Mexico for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also

68a excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. (a) New York (the “New York Indirect Purchaser Class”): 110. All natural persons and entities residing in the United States that purchased in New York for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. (a) Tennessee (the “Tennessee Indirect Purchaser Class”): 111. All natural persons and entities residing in the United States that purchased in Tennessee for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action.

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(a) Vermont (the “Vermont Indirect Purchaser Class”): 112. All natural persons and entities residing in the United States that purchased in Vermont for their own use and not for resale SD Cards during the Class Period. Specifically excluded from this Class are the defendants; the officers, directors or employees of any defendant; any entity in which any defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any defendant. Also excluded are any federal, state or local governmental entities, any judicial officer presiding over this action and the members of his/her immediate family and judicial staff, and any juror assigned to this action. 113. Plaintiffs do not know the exact size of the Classes at the present time. However, Plaintiffs believe that due to the nature of the trade and commerce involved, there are at least thousands in each separate state class, and hundreds of thousands of class members geographically dispersed throughout the United States, such that joinder of all class members would be impracticable. 114. Plaintiffs’ claims are typical of the claims of the Classes, and Plaintiffs will fairly and adequately protect the interests of the Classes. Plaintiffs’ interests are coincident with, and not antagonistic to, those of the members of their respective Classes. Plaintiffs have retained competent counsel experienced in class action and complex antitrust litigation. 115. Common questions of law and fact exist, including: a. Whether Defendants and their co-conspirators engaged in a contract, combination or conspiracy among

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themselves to fix, raise, maintain or stabilize the process of, or allocate the markets for SD Cards, SD Card Intellectual Property, and NAND Flash Memory Intellectual Property sold in the United States; b. The duration and extent of the contract, combination or conspiracy; c. Whether Defendants and their co-conspirators engaged in conduct that violated Section 1 of the Sherman Act; d. Whether Defendants and their co-conspirators engaged in unlawful, unfair or deceptive contracts, combinations or conspiracies among themselves, express or implied, to fix, raise, maintain, or stabilize prices of SD Cards, second generation SD Cards, SD Card Intellectual Property, and NAND Flash Memory Intellectual Property sold in and/or distributed in the United States; e. Whether Defendants and their co-conspirators engaged in conduct in violation of the antitrust, consumer protection, unfair trade, and/or deceptive trade practices laws of California or, alternatively, the various Indirect Purchaser States as alleged below; f. Whether the anticompetitive conduct of Defendants and their co-conspirators caused prices of SD Cards to be

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artificially inflated to non-competitive levels; g. Whether Defendants and their co-conspirators unjustly enriched themselves as a result of their inequitable conduct at the expense of the members of the Class(es); h. Whether Defendants and their co-conspirators fraudulently concealed the existence of their unlawful conduct; i. Whether Plaintiffs and the Class(es) are entitled to injunctive relief; and j. Whether Plaintiffs and other members of the Class(es) were injured by the conduct of Defendants and, if so, the appropriate measure of damages for each of the Classes. 116. These and other questions of law and fact are common to the Class(es) and predominate over any questions affecting only individual class members, including legal and factual issues relating to liability, damages, and restitution. 117. Class action treatment is a superior method for the fair and efficient adjudication of this controversy because: a. It will avoid a multiplicity of suits and consequent burden on the courts and Defendants; b. It would be virtually impossible for all members of the Classes to intervene as parties-plaintiff in this action; c. It will allow numerous individuals with claims too small to adjudicate on an

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individual basis because of the prohibitive cost of this litigation, to obtain redress for their economic injuries; d. It is appropriate for treatment on a fluid recovery basis, which obviate any manageability problems; and e. It will provide court oversight of the claims process, once Defendants’ liability is adjudicated. 118. The named Plaintiffs will fairly and adequately protect the interests of the Class(es) in that the named Plaintiffs have no interests antagonistic to the interests of the other members of the Classes and have retained counsel competent and experienced in the prosecution of class actions and antitrust cases to represent themselves and the Class. 119. This case is also appropriate for certification as a class action because Defendants have acted and refused to act on grounds generally applicable to the Classes, so that final injunctive relief will be appropriate with respect to the Class(es) as a whole. 120. The claims asserted herein are also appropriate for class certification under the laws of the state of California. STATUTE OF LIMITATIONS 121. Each Plaintiff and member of the classes alleged herein has suffered a separate and independent injury flowing from Defendants’ anticompetitive conduct each time he or she purchased an SD Card at artificially inflated prices. No Plaintiff or class member could have been injured by Defendants’ anticompetitive conduct prior to actually purchasing an

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SD Card and each purchase of an SD Card at artificially inflated prices constitutes a new and accumulating injury that triggers a separate limitations period. 122. Furthermore, Defendants have committed overt acts within the limitations period in order to continue to charge their 6 percent entry fee on rival SD Card manufacturers and to maintain SD-3C’s monopoly on SD Card Intellectual Property. For example, on April 14, 2007, SD-3C’s representative Mr. Quackenbush refused to provide Samsung with the logo guidelines for second generation SD Cards, explaining that such intellectual property is “only used by licensees who have signed the [2006 License].” In addition, SD-3C continued to invoice licensees pursuant to the SD Card License throughout the limitations period. 123. Plaintiffs and members of the classes alleged herein did not discover and could not have discovered, through the exercise of reasonable diligence, the existence of the conspiracy alleged herein until 2010, because Defendants and their co- conspirators actively and fraudulently concealed the exact nature of their contract, combination or conspiracy. 124. As an example, the aforementioned facts regarding Defendants’ refusal to deal and conduct in licensing negotiations were not disclosed publicly until the filing of Samsung’s amended complaint in Samsung Electronics Co., Ltd. v. Panasonic Corporation, et al., No 3:10-cv-03098-JSW, on October 14, 2010. (Exhibit 1). 125. Because the nature of Defendants’ agreement, understanding and conspiracy were kept

74a secret, Plaintiffs and members of the indirect- purchaser class(es) were unaware of Defendants’ unlawful conduct alleged herein and did not know that they were paying artificially high prices for SD Cards. 126. Defendants’ affirmative acts alleged herein, including acts in furtherance of the conspiracy, were actively concealed and carried out in a manner that precluded detection. For example, SD-3C required licensees to sign a Non-Disclosure Agreement, pursuant to which the royalty terms of the SD Card License Agreement were confidential. As a result of Defendants’ active concealment of their conspiracy, the running of any statute of limitations has been tolled with respect to any claims that Plaintiffs and the Class Members have as a result of the anticompetitive conduct alleged in this Complaint. VIOLATIONS ALLEGED First Claim for Relief (Agreement in Restraint of Trade in Violation of Section 1 of the Sherman Act) 127. Plaintiffs incorporate and re-allege, as though fully set forth herein, each and every allegation set forth in the preceding paragraphs of this Complaint. 128. At least as early as August 29, 1999, and continuing through the filing of this Complaint, the exact dates being unknown to plaintiffs, defendants and their co-conspirators entered into a continuing agreement, understanding, and conspiracy in restraint of trade artificially to fix, raise, stabilize, and control prices for SD Cards in the United States, thereby creating anticompetitive effects that are not outweighed by countervailing precompetitive benefits. Such conduct violates Section 1 of the Sherman Act (15

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U.S.C. 1) and is actionable under the private attorney general provisions for civil litigants under the Clayton Act. 129. These conspiratorial acts and combinations have caused unreasonable restraints in the markets for SD Cards, SD Card Intellectual Property and NAND Flash Memory Intellectual Property, without countervailing and offsetting benefits. 130. Plaintiffs and other similarly-situated indirect purchasers have been harmed by injury to competition to these markets by Defendants by being forced to pay inflated prices for SD Cards, SD Card Intellectual Property and deprived of advancements in NAND Flash Memory Intellectual Property that would provide for alternatives to SD Cards. 131. In formulating and carrying out the alleged agreement, understanding, and conspiracy, the Defendants and their co-conspirators did those things that they combined and conspired to do, including but not limited to the acts, practices, and course of conduct set forth above. 132. The combination and conspiracy alleged herein has had the following effects, among others: a. Price competition in the sale of SD Cards has been restrained, suppressed, and/or eliminated in the United States; b. Prices for SD Cards sold by defendants and their co-conspirators have been fixed, raised, maintained and stabilized at artificially high, non-competitive levels throughout the United States; and c. Those who purchased SD Cards indirectly from defendants and their co-

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conspirators have been deprived of the benefits of free and open competition. 133. Since March 15, 2007, Plaintiffs and other Class Members have been injured and will continue to be injured in their businesses and property by paying more for SD Cards and purchased indirectly from the Defendants and their co-conspirators than they would have paid and will pay in the absence of the combination and conspiracy. 134. Plaintiffs and the Class Members are entitled to an injunction against Defendants, preventing and restraining the violations alleged herein. Second Claim for Relief (Violation of California Antitrust Laws) 135. Plaintiffs incorporate and re-allege, as though fully set forth herein, each and every allegation set forth in the preceding paragraphs of this Complaint. 136. Beginning at a time currently unknown to Plaintiffs, but at least as early as January 1, 2000, and continuing thereafter at least up to the filing of this Complaint, Defendants and their co-conspirators entered into and engaged in a continuing unlawful trust in restraint of the trade and commerce described above in violation of Section 16720, California Business and Professions Code. Defendants, and each of them, have acted in violation of Section 16720 to fix, raise, stabilize, and maintain prices of SD Cards at supra-competitive levels. 137. The SD-3C and the Cartel members by colluding with each other have also fixed the standards for removable NAND flash memory products for consumer devices, and captured the markets for such

77a removable NAND Flash Memory Intellectual Property as well as SD Cards and SD Card Intellectual Property. Defendants, through their officers, directors and employees, effectuated a contract, combination, trust, or conspiracy between themselves and their co-conspirators by, among other things: a. Participating in meetings and conversations to discuss the prices and supply of SD Cards in the United States; b. Agreeing to fix the prices and limit the supply of SD Cards sold in the United States in a manner that deprived direct and indirect purchasers of free and open competition pursuant to the provisions governing royalty base in the 2006 license; c. Issuing price announcements and quotations in accordance with the agreements reached; d. Selling SD Cards to various customers in the United States at fixed, non- competitive prices; e. Invoicing customers in the United States at the agreed-upon fixed prices for SD Cards and transmitting such invoices via U.S. mail and other interstate means of delivery; f. Licensing separately the underlying technology for building the flash memory circuits (chips), controllers, and consumer devices;

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g. Refusing to disclose to licensees the specific identity of the patents in the SD-3C pool; and h. Effectively distorting competition in the NAND Flash Memory Intellectual Property Card market by making it impractical for memory device, card, and host consumer device makers to invest in and support alternative standards due to the cost of the SD Card implementation. 138. Defendants’ contract, combination, trust or conspiracy was entered in, carried out, effectuated and perfected within the State of California and nationwide from California, and Defendants’ conduct within California injured all members of the Class throughout the United States. 139. Since March 15, 2007, as a direct and proximate result of Defendants’ unlawful conduct, Plaintiffs and the members of the class have been injured in their business and property in that they paid more for SD Cards than they otherwise would have paid in the absence of Defendants’ unlawful conduct. As a result of Defendants’ violation of Section 16720 of the California Business and Professions Code, Plaintiffs and the Class(es) seek treble damages and their cost of suit, including a reasonable attorney’s fee, pursuant to Section 16750(a) of the California Business and Professions Code. Third Claim for Relief (Violation of California Consumer Protection And Unfair Competition Laws) 140. Plaintiffs incorporate and re-allege, as though fully set forth herein, each and every allegation

79a set forth in the preceding paragraphs of this Complaint. 141. Defendants’ business acts and practices were centered in, carried out, effectuated, and perfected mainly within the State of California, and Defendants’ conduct injured all members of the class. 142. Beginning on a date unknown to California plaintiffs, but at least as early as January 1, 2000, and continuing thereafter at least up through the filing of this Original Complaint, Defendants committed and continue to commit acts of unfair competition, as defined by Sections 17200, et seq. of the California Business and Professions Code, by engaging in the acts and practices specified above. 143. This claim is instituted pursuant to Sections 17203 and 17204 of the California Business and Professions Code, to obtain restitution from these Defendants for acts, as alleged herein, that violated Section 17200 of the California Business and Professions Code, commonly known as the Unfair Competition Law. 144. Defendants’ conduct as alleged herein violated Section 17200. The acts, omissions, misrepresentations, practices and non-disclosures of defendants, as alleged herein, constituted a common, continuous, and continuing course of conduct of unfair competition by means of unfair, unlawful, and/or fraudulent business acts or practices within the meaning of the California Business and Professions Code, Section 17200, et seq., including, but not limited to, the following: (1) the violations of Section 1 of the Sherman Act, as set forth above; (2) the violations of Section 16720, et seq. of the California Business and Professions Code, as set forth above.

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145. Defendants’ acts, omissions, misrepresentations, practices, and non-disclosures, as described above, whether or not in violation of Section 16720, et seq., of the California Business and Professions Code, and whether or not concerted or independent acts, are otherwise unfair, unconscionable, unlawful or fraudulent. 146. Defendants’ acts or practices are unfair to consumers of SD Cards within the meaning of Section 17200, California Business and Professions Code. 147. Defendants’ acts and practices are fraudulent or deceptive within the meaning of Section 17200 of the California Business and Professions Code. 148. Plaintiffs and the Class members are entitled to full restitution and/or disgorgement of all revenues, earnings, profits, compensation, and benefits that may have been obtained by defendants as a result of such business acts or practices. 149. The illegal conduct alleged herein is continuing and there is no indication that defendants will not continue such activity into the future. 150. The unlawful and unfair business practices of defendants, and each of them, as described above, have caused and continue to cause Plaintiffs and the members of the Class to pay supra-competitive and artificially-inflated prices for SD Cards. Plaintiffs and members of the Class suffered injury in fact and lost money or property as a result of such unfair competition. 151. The conduct of Defendants as alleged in this Complaint violates Section 17200 of the California Business and Professions Code.

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152. As alleged in this Complaint, Defendants and their co-conspirators have been unjustly enriched as a result of their wrongful conduct and by Defendants’ unfair competition, including overcharging and excluding other competitors from the relevant markets. Plaintiffs and the members of the Class are accordingly entitled to equitable relief including restitution and/or disgorgement of all revenues, earnings, profits, compensation, and benefits that may have been obtained by defendants as a result of such business practices, pursuant to the California Business and Professions Code, Sections 17203 and 17204. Fourth Claim for Relief (Violation of State Antitrust Laws) 153. Plaintiff Bernard Gross, on behalf of himself and the Arizona Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint. a. Defendants’ combinations or conspiracies had the following effects” (1) SD Card price competition was restrained, suppressed, and eliminated throughout Arizona; (2) SD Card prices were raised, fixed, maintained and stabilized at artificially high levels throughout Arizona; (3) Plaintiff Bernard Gross and members of the Arizona Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Bernard Gross and members of the Arizona Indirect Purchaser Class paid supra-

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competitive, artificially inflated prices for SD Cards. b. During the Class Period, defendants’ illegal conduct substantially affected Arizona commerce. c. As a direct and proximate result of defendants’ unlawful conduct, Plaintiff Bernard Gross and members of the Arizona Indirect Purchaser Class have been injured in their business and property and are threatened with further injury. d. By reason of the foregoing, defendants entered into agreements in restraint of trade in violation of ARIZ. REV. STAT.§§ 44-1401, et seq. Accordingly, Plaintiff Bernard Gross and the members of the Arizona Indirect Purchaser Class seek all forms of relief available under ARIZ. REV. STAT.§§ 44- 1401, et seq. 154. Plaintiff Humberto Gonzalez, on behalf of himself and the District of Columbia Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint. a. Defendants’ combinations or conspiracies had the following effects: (1) SD Card price competition was restrained, suppressed, and eliminated throughout the District of Columbia; (2) SD Card prices were raised, fixed, maintained and stabilized at artificially high levels throughout the District of

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Columbia; (3) Plaintiff Humberto Gonzalez and members of the District of Columbia Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Humberto Gonzalez and members of the District of Columbia Indirect Purchaser Class paid supra-competitive, artificially inflated prices for SD Cards. b. During the Class Period, defendants’ illegal conduct substantially affected District of Columbia commerce. c. As a direct and proximate result of defendants’ unlawful conduct, Plaintiff Humberto Gonzalez and members of the District of Columbia Indirect Purchaser Class have been injured in their business and property and are threatened with further injury. d. By reason of the foregoing, defendants have entered into agreements in restraint of trade in violation of District of Columbia Code Ann. §§ 28-4502, et seq. Accordingly, Plaintiff Humberto Gonzalez and the members of the District of Columbia Indirect Purchaser Class seek all forms of relief available under District of Columbia Code Ann. §§ 28-4503, et seq. 155. Plaintiff Kou Srimounghanch, on behalf of himself the Kansas Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint.

84a a. Defendants’ combinations or conspiracies had the following effects: (1) SD Card price competition was restrained, suppressed, and eliminated throughout Kansas; (2) SD Card prices were raised, fixed, maintained and stabilized at artificially high levels throughout Kansas; (3) Plaintiff Kou Srimounghanch and members of the Kansas Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Kou Srimounghanch and members of the Kansas Indirect Purchaser Class paid supra- competitive, artificially inflated prices for SD Cards. b. During the Class Period, defendants’ illegal conduct substantially affected Kansas commerce. c. As a direct and proximate result of defendants’ unlawful conduct, Plaintiff Kou Srimounghanch and members of the Kansas Indirect Purchaser Class have been injured in their business and property and are threatened with further injury. d. By reason of the foregoing, defendants have entered into agreements in restraint of trade in violation of Kansas Stat. Ann. §§ 50-101, et seq. Accordingly, Plaintiff Kou Srimounghanch and the members of the Kansas Indirect Purchaser Class seek

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all forms of relief available under Kansas Stat. Ann. §§ 50-101, et seq. 156. Plaintiff Mary Louise Fowler, on behalf of herself and the Massachusetts Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint. a. Defendants were engaged in trade or commerce as defined by G.L. c. 93A. b. Defendants agreed to, and did in fact, act in restraint of trade or commerce in a market which includes Massachusetts, by affecting, fixing, controlling and/or maintaining at artificial and non- competitive levels, the prices at which SD Cards were sold, distributed, or obtained in Massachusetts and took efforts to conceal their agreements from Plaintiff Mary Louise Fowler and members of the Massachusetts Indirect Purchaser Class. c. Defendants’ unlawful conduct had the following effects: (1) SD Card price competition was restrained, suppressed, and eliminated throughout Massachusetts; (2) SD Card prices were raised, fixed, maintained, and stabilized at artificially high levels throughout Massachusetts; (3) Plaintiff Mary Louise Fowler and members of the Massachusetts Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Mary Louise Fowler and members of the

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Massachusetts Indirect Purchaser Class paid supra-competitive, artificially inflated prices for SD Cards. d. As a direct and proximate result of the defendants’ conduct, Plaintiff Mary Louise Fowler and members of the Massachusetts Indirect Purchaser Class have been injured and are threatened with further injury. e. Each of the defendants has been served with a demand letter in accordance with G.L. c. 93A, § 9, or such service of a demand letter was unnecessary due to the defendant not maintaining a place of business within the Commonwealth of Massachusetts or not keeping assets within the Commonwealth. f. By reason of the foregoing, defendants engaged in unfair competition and unfair or deceptive acts or practices, in violation of G.L. c. 93A, §2. Defendants’ and their co-conspirators’ violations of Chapter 93A were knowing or willful, entitling Plaintiff Mary Louise Fowler and members of the Massachusetts Indirect Purchaser Class to multiple damages. 157. Plaintiff Walter Kvasnik, on behalf of himself and the Minnesota Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint. a. Defendants’ combinations or conspiracies had the following effects:

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(1) SD Card price competition was restrained, suppressed, and eliminated throughout Minnesota; (2) SD Card prices were raised, fixed, maintained and stabilized at artificially high levels throughout Minnesota; (3) Plaintiff Walter Kvasnik and members of the Minnesota Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Walter Kvasnik and members of the Minnesota Indirect Purchaser Class paid supra- competitive, artificially inflated prices for SD Cards. b. During the class Period, defendants’ illegal conduct substantially affected Minnesota commerce. c. As a direct and proximate result of defendants’ unlawful conduct, Plaintiff Walter Kvasnik and members of the Minnesota Indirect Purchaser Class have been injured in their business and property and are threatened with further injury. d. By reason of the foregoing, defendants have entered into agreements in restraint of trade in violation of Minnesota Stat. §§ 325D.52, et seq. Accordingly, Plaintiff Walter Kvasnik and the members of the Minnesota Indirect Purchaser Class seek all relief available under Minnesota Stat. §§ 325D.52, et seq.

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158. Plaintiff Susan Keelin, on behalf of herself and the Minnesota Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint. a. Defendants’ combinations or conspiracies had the following effects: (1) SD Card price competition was restrained, suppressed, and eliminated throughout New Mexico; (2) SD Card prices were raised, fixed, maintained and stabilized at artificially high levels throughout New Mexico; (3) Plaintiffs Susan Keelin and members of the New Mexico Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Susan Keelin and members of the New Mexico Indirect Purchaser Class paid supra- competitive, artificially inflated prices for SD Cards. b. During the class Period, defendants’ illegal conduct substantially affected New Mexico commerce. c. As a direct and proximate result of defendants’ unlawful conduct, Plaintiff Susan Keelin and members of the New Mexico Indirect Purchaser Class have been injured in their business and property and are threatened with further injury. d. By reason of the foregoing, defendants have entered into agreements in restraint of trade in violation of New

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Mexico Stat. Ann. §§ 57-1-1, et seq. Accordingly, Plaintiff Susan Keelin and the members of the New Mexico Indirect Purchaser Class seek all relief available under New Mexico Stat. Ann. §§ 57-1-1, et seq. 159. Plaintiff Joe Shaw, on behalf of himself and the New York Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint. a. Defendants agreed to, and did in fact, act in restraint of trade or commerce by affecting, fixing, controlling and/or maintaining, at artificial and non- competitive levels, the prices at which SD Cards were sold, distributed or obtained in New York and took efforts to conceal their agreements from Plaintiff Joe Shaw and the New York Indirect Purchaser Class. b. The conduct of the defendants described herein constitutes consumer- oriented deceptive acts or practices within the meaning of N.Y. Gen. Bus. Law § 349, which resulted in consumer injury and broad adverse impact on the public at large, and harmed the public interest of New York State in an honest marketplace in which economic activity is conducted in a competitive manner. c. Defendants’ unlawful conduct had the following effects: (1) SD Card price competition was restrained, suppressed, and eliminated throughout New York;

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(2) SD Card prices were raised, fixed, maintained, and stabilized at artificially high levels throughout New York; (3) Plaintiff Joe Shaw and members of the New York Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Joe Shaw and members of the New York Indirect Purchaser Class paid supra- competitive, artificially inflated prices for SD Cards. d. During the Class Period, defendants’ illegal conduct substantially affected New York commerce and consumers. e. During the Class Period, each of the defendants named herein, directly, or indirectly and through affiliates they dominated and controlled, manufactured, sold and/or distributed SD Cards in New York. f. Plaintiff Joe Shaw and members of the New York Indirect Purchaser Class seek actual damages for their injuries caused by these violations in am amount to be determined at trial and are threatened with further injury. Without prejudice to their contention that defendants’ unlawful conduct was willful and knowing, Plaintiff Joe Shaw and members of the New York Indirect Purchaser Class do not seek in this action to have those damages trebled pursuant to N.Y. Gen. Bus. Law § 349(h).

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160. Plaintiff Samuel D. Leggett, on behalf of himself and the Tennessee Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint. a. Defendants’ combinations or conspiracies had the following effects: (1) SD Card price competition was restrained, suppressed, and eliminated throughout Tennessee; (2) SD Card prices were raised, fixed, maintained and stabilized at artificially high levels throughout Tennessee; (3) Plaintiff Samuel D. Leggett and members of the Tennessee Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Samuel D. Leggett and members of the Tennessee Indirect Purchaser Class paid supra- competitive, artificially inflated prices for SD Cards. b. During the class Period, defendants’ illegal conduct had a substantial effect on Tennessee commerce. c. As a direct and proximate result of defendants’ unlawful conduct, Plaintiff Samuel D. Leggett and members of the Tennessee Indirect Purchaser Class have been injured in their business and property and are threatened with further injury. d. By reason of the foregoing, defendants have entered into agreements in restraint of trade in violation of

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Tennessee Code Ann. §§ 47-25-101, et seq. Accordingly, Plaintiff Samuel D. Leggett and the members of the Tennessee Indirect Purchaser Class seek all relief available under Tennessee Code Ann. §§ 47-25-101, et seq. 161. Plaintiff Brian Albee, on behalf of himself and the Vermont Indirect Purchaser Class, incorporates and realleges each and every allegation set forth in the preceding paragraphs of this Complaint. a. Defendants’ combinations or conspiracies had the following effects: (1) SD Card price competition was restrained, suppressed, and eliminated throughout Vermont; (2) SD Card prices were raised, fixed, maintained and stabilized at artificially high levels throughout Vermont; (3) Plaintiff Brian Albee and members of the Vermont Indirect Purchaser Class were deprived of free and open competition; and (4) Plaintiff Brian Albee and members of the Vermont Indirect Purchaser Class paid supra-competitive, artificially inflated prices for SD Cards. b. During the class Period, defendants’ illegal conduct substantially affected Vermont commerce. c. As a direct and proximate result of defendants’ unlawful conduct, Plaintiff Brian Albee and members of the Vermont Indirect Purchaser Class have

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been injured in their business and property and are threatened with further injury. d. By reason of the foregoing, defendants have entered into agreements in restraint of trade in violation of Vermont Stat. Ann. 9 §§ 2453, et seq. Accordingly, Plaintiff Brian Albee and the members of the Vermont Indirect Purchaser Class seek all relief available under Vermont Stat. Ann. 9 §§ 2453, et seq. Fifth Claim for Relief (Unjust Enrichment and Disgorgement of Profits) 162. Plaintiffs incorporate and re-allege, as though fully set forth herein, each and every allegation set forth in the preceding paragraphs of this Complaint. 163. Defendants have been unjustly enriched through overpayments by Plaintiffs and class members and the resulting profits, and exclusion of development of alternative NAND Flash Memory Technology from the markets. 164. Under common law principles of unjust enrichment, Defendants should not be permitted to retain the benefits conferred on them by overpayments by plaintiff and class members in the following states: Arizona, California, District of Columbia, Florida, Kansas, Massachusetts, Minnesota, New Mexico, New York, Tennessee, and Vermont. 165. Plaintiffs and class members seek disgorgement of all profits resulting from such overpayments and establishment of a constructive

94a trust from which Plaintiffs and class members may seek restitution. PRAYER FOR RELIEF WHEREFORE, plaintiffs pray: A. That the Court determine that the claims alleged herein under the Sherman Act; California antitrust, consumer protection and unfair competition laws; or, alternatively, the antitrust, consumer protection and unfair competition laws of various Illinois Brick repealer states alleged herein may be maintained as a class action, or class actions with or without sub-classes under Rules 23(a), (b)(2), and (b)(3) of the Federal Rules of Civil Procedure, and as informed by the respective state class action laws. B. That the unlawful conduct, contract, conspiracy or combination alleged herein be adjudged and decreed to be: 1. An unreasonable restraint of trade or commerce in violation of Section 1 of the Sherman Act by the combination, conspiracy and contracts of the Defendants. 2. A per se violation of Section 1 of the Sherman Act by horizontal competitors (the Cartel) combining, conspiring and fixing prices for goods and Intellectual Property where they would otherwise compete on price. 3. Acts of unjust enrichment as set forth herein by all Defendants; 4. An unlawful combination, trust, agreement, understanding, and/or concert of action in violation of the California antitrust laws as set forth herein by all Defendants; and

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5. Violations of the California consumer protection and unfair competition laws as set forth herein by all Defendants. C. That Plaintiffs and members of the Classes alleged herein recover damages, to the maximum extent allowed under such laws as provided by California antitrust laws—or, alternatively, to the maximum extent allowed under such laws as provided by the Indirect Purchaser Classes’ respective states— and that a joint and several judgment in favor of Plaintiffs and the Classes be entered against the Defendants in an amount to be trebled to the extent permitted by such laws; D. That Plaintiffs and members of the Classes alleged herein recover damages, to the maximum extent allowed by California consumer protection laws—or, alternatively, to the maximum extent allowed under such laws as provided by the Indirect Purchaser Classes’ respective states—in the form of restitution and/or disgorgement of profits illegally gained from them. E. That Defendants, their affiliates, successors, transferees, assignees, and the officers, directors, partners, agents, and employees thereof, and all other persons acting or claiming to act on their behalf or in concert with them, be permanently enjoined and restrained from in any manner continuing, maintaining, or renewing the conduct, contract, conspiracy or combination alleged herein, or from entering into any other conspiracy alleged herein, or from entering into any other contract, conspiracy or combination having a similar purpose or effect, and from adopting or following any practice, plan, program, or device having a similar purpose or effect;

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F. That the Court enter an order of divestiture requiring Defendants to rescind and/or dissolve the cooperation agreements, joint ventures and/or cross- license agreements alleged herein between and among them used to facilitate the conspiracy alleged herein; G. That Plaintiffs and members of the Class(es) alleged herein be awarded restitution, including disgorgement of profits obtained by Defendants as a result of their acts of unfair competition and acts of unjust enrichment; H. That Plaintiffs and members of the Class(es) alleged herein be awarded pre- and post-judgment interest as provided by law, and that such interest be awarded at the highest legal rate from and after the date of service of the initial complaint in this action; I. That Plaintiffs and members of the Class(es) alleged herein recover their costs of suit, including a reasonable attorney’s fee, as provided by law; and J. That Plaintiffs and members of the Class(es) alleged herein have such other, further, and different relief as the case may require and the Court may deem just and proper under the circumstances. Dated: November 23, 2011 /s/ Max L. Tribble Max L. Tribble Jr. pro hac vice [email protected] Joseph S. Grinstein pro hac vice [email protected] Eric J. Mayer pro hac vice [email protected] SUSMAN GODFREY L.L.P. 1000 Louisiana, Suite 5100 Houston, TX 77002-5096

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Telephone: 713-651-9366 Facsimile: 713-654-6666 Amanda Bonn (SBN 270891) [email protected] SUSMAN GODFREY L.L.P. 1901 Avenue of the Stars, Suite 950 Los Angeles, CA 90067-6029 Telephone: 310-789-3100 Facsimile: 310-789-3150 Isaac L. Diel (KS 14376) Sharp McQueen PA 6900 College Blvd., Suite 285 Overland Park, Kansas 66211-1547 Tel. 913-661-9931 E-Mail: [email protected] Daniel L. Karon GOLDMAN SCARLATO & KARON, PC 700 West St. Clair Avenue, Suite 204 Cleveland, OH 44113 Tel. 216-622-1851 E-Mail: [email protected] Thomas J.H. Brill Law Office of Thomas H. Brill 8012 State Line Road, Suite 102 Leawood, Kansas 66208-3712 Tel. 913-677-2004 E-Mail: [email protected] Krishna Narine LAW OFFICE OF KRISHNA B. NARINE

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101 Greenwood Ave, Suite 600 Jenkin Town, PA 19046 Tel. 215-277-5770 E-Mail: [email protected] Donna F. Solen MASON LLP 1625 Massachusetts Ave., NW, Suite 605 Washington, D.C., 20036 Tel. 202-429-2294 E-Mail: [email protected] Mary G. Kirkpatrick KIRKPATRICK & GOLDSBOROUGH PLLC Lakewood Commons 1233 Shelburne Road, Suite E-1 South Burlington, VT 05403 Tel. 802-651-0960 Fax. 802-651-0964 Shane Youtz YOUTZ & VALDEZ, PC 900 Gold Ave SW Albuquerque, NM 87102 Tel. 505-244-1200 E-Mail: [email protected] Attorneys for Plaintiffs

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EXHIBIT 1

SIMON J. FRANKEL (Bar No. 171552) EVAN R. COX (Bar No. 133229) COVINGTON & BURLING LLP One Front Street, 35th Floor San Francisco, California 94111 Telephone: (415) 591-6000 Facsimile: (415) 591-6091 Email: [email protected] [email protected] TIMOTHY C. HESTER* DEREK LUDWIN* JONATHAN GIMBLETT* J. MAREN SCHMIDT** COVINGTON & BURLING LLP 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2401 Telephone: (202) 662-6000 Facsimile: (202) 662-6291 Email: [email protected] * admitted pro hac vice ** pro hac vice application pending Attorneys for Plaintiff SAMSUNG ELECTRONICS CO., LTD

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

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SAMSUNG Case No. 10-3098 JSW ELECTRONICS CO., LTD., SECOND AMENDED a Korean corporation, COMPLAINT Plaintiff, v. DEMAND FOR JURY PANASONIC TRIAL CORPORATION, a Japanese corporation; PANASONIC CORPORATION OF NORTH AMERICA, a Delaware corporation; and SD-3C LLC, a Delaware limited liability company. Defendants.

Plaintiff Samsung Electronics Co., Ltd. (“Samsung”), by its attorneys, brings this action for damages, declaratory judgment and injunctive relief, against Defendants Panasonic Corporation, Panasonic Corporation of North America (collectively “Panasonic”) and SD-3C LLC (“SD-3C”) (together with Panasonic, “Defendants”). This Second Amended Complaint is filed in response to the Court’s Order of August 25, 2011, dismissing the First Amended Complaint with leave to amend. As directed in that Order, this Second Amendment provides significantly more detailed allegations in relation to Defendants’ new and independent anticompetitive acts during the limitations period, inflicting upon Samsung new and accumulating injury. Those allegations are set forth at paragraphs 4-

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9, 21-25 and 79-107. Also in response to the Order, additional allegations are included at paragraphs 198- 99 relevant to the claim under California Business and Professions Code § 17200. Samsung alleges as follows: INTRODUCTION 1. Since late 2006, Secure Digital Memory Cards (“SD Cards”) have become the dominant flash memory card format in use in the United States and worldwide. SD Cards are widely used in mobile phones, digital cameras, and other consumer electronics products. In the United States alone, industry revenue from sales of SD Cards in 2009 was $1.5 billion. With annual sales volumes continuing to increase, that figure was predicted to reach approximately $3.5 billion by 2016. Despite the highly commoditized and low-margin nature of the flash memory card business, the SD Card market has been dominated from the beginning by three companies: Panasonic and Toshiba of Japan and SanDisk of the United States (collectively, the “SD Group”). 2. Panasonic, Toshiba, and SanDisk have been able to retain a firm grip over the SD Card market, and to use that control since 2006 to dominate the flash memory card market as a whole, because they have conspired to share a cost advantage over all other manufacturers of SD Cards. Through a series of anticompetitive agreements and actions undertaken by these competitors, other manufacturers must pay them a six percent royalty on all SD Cards they sell, whereas they pay nothing. Having manipulated the original SD Card specification, these companies claim to own essential SD Card technology and have developed a joint licensing scheme administered by their jointly-

102a owned licensing entity, SD-3C, to coerce other industry participants into paying this royalty. 3. By and through their original 2003 SD Card License, the SD Group required every entrant into the SD Card market to pay a 6 percent royalty on sales of the first generation SD Cards covered by the SD Card specification in force at that time, namely full- size SD Cards with capacities up to 2 GB. The 2003 license applied only to SD Cards that met these specifications. But although the first generation SD Cards fared well in the marketplace, the SD Card standard did not come to dominate the flash memory market until the introduction and subsequent widespread adoption of two new types of SD Cards: the high capacity SD Card (“SDHC”)—a full-size SD Card with a capacity of 4 GB or above—and the microSD Card. The specifications for these cards were first released in 2005, and are different from and incompatible with the first generation specifications incorporated into the 2003 license. By 2009, approximately 60 percent of SD Cards sold worldwide were SDHC or microSD Cards, with first generation accounting for only about 40 percent of sales. Adoption of the new types of SD Cards is continuing apace. Analysts predict that by 2016, first generation SD Cards will have virtually no remaining share of the SD Card market. 4. As microSD and SDHC Cards rapidly penetrated the flash memory market in late 2006 and early 2007, the SD Group and SD-3C for the first time moved to impose their 6 percent royalty requirement on sales of these new types of SD Cards. By exercising its market power in the SD Card market in this way, the SD Group was able to consolidate its control over

103a that market and, as the new types of SD Cards tipped the flash memory card market towards the newer SD Cards, to gain dominance in that wider market too. 5. Because the original license agreement they had imposed on other industry participants in 2003 and thereafter did not cover microSD or SDHC Cards, the SD Group met in August 2006 to agree on a new, non-negotiable license requiring a 6 percent royalty on the sales of these new card types. In September 2006, SD-3C commenced a concerted campaign on behalf of the SD Group members to force all existing licensees to execute the new, broader license on these cards that were outside the scope of their original 2003 license. SD-3C ultimately coerced other industry participants into paying the 6 percent royalty on all sales of these new cards, with or without executing the new license. All of this new activity, applying the Defendants’ anticompetitive scheme to products not included in their earlier 2003 agreements, occurred within four years of the filing of the original complaint in this matter. 6. Samsung began selling microSD, SDHC, and first generation SD Cards in the third quarter of 2006. As such, Samsung was first injured by Defendants’ anticompetitive actions when it was subjected to the SD Group’s royalties after it entered the market. Samsung received its first invoice for royalties on November 17, 2006, after reporting its sales to SD-3C on the form prescribed by the 2006 license (because the 2003 license and its royalty form did not apply to sales of the newer microSD and SDHC Cards). SD-3C sent the invoice to Samsung from its offices in California. That first injury occurred within

104a four years of the filing of the original complaint in this matter. 7. Since November 2006, Samsung has been repeatedly injured by its and its customers’ ongoing inability to avoid the anticompetitive terms of the SD-3C licensing regime and the adverse effects of the illegal combination with respect to both first generation SD Cards and the new types of SD Cards that were not covered by the original 2003 license. The efforts by SD-3C and the SD Group members, including the new and affirmative steps taken from August 2006 onwards to apply their anticompetitive scheme to the new microSD and SDHC Cards, undermines the ability of Samsung and its customers to compete on an ongoing basis. Samsung continues to suffer injury as a result of Defendants’ anticompetitive actions and scheme. 8. Although the adverse effects of the SD Group’s conduct reached their current levels only after the market shifted to the new types of SD Cards in late 2006, the origins of the SD Group’s licensing scheme can be traced back to 1999. That is when Panasonic, Toshiba and SanDisk, three major competitors in critical markets for flash memory products and technology, first entered into an illegal and ongoing combination in restraint of trade. They usurped the work of an open standard-setting organization in order to establish their own proprietary standard that forces other industry participants to use technology owned by them. Through their combination, they now exploit control of this manipulated standard to raise their competitors’ costs and to discourage competing innovations. While claiming to have engaged in

105a legitimate standard-setting and licensing activities, they are, in effect, a disguised cartel. 9. By means of the licenses for the various types of SD Cards, and on terms agreed between Defendants, SanDisk and Toshiba, the SD Group members continue to impose on new and prospective manufacturers and sellers of SD Cards what amounts to an “entry fee” that raises the costs of competing SD Card manufacturers, disadvantages new and current sellers and manufacturers of SD Cards, and ultimately raises prices in the SD Card markets. By applying their scheme to the new types of SD Cards, including through their actions from August 2006 onwards to impose a royalty requirement on microSD and SDHC Cards that were admittedly outside the scope of their original licensing arrangements, the SD Group members have reduced competition in the relevant markets by achieving, through an unlawful conspiracy, an ongoing and significant cost advantage over other manufacturers and suppliers of licensed SD Cards. 10. All versions of the SD Card License also contain unequal grantback provisions that reduce the incentives for competitors to develop their own alternative SD Card technologies. And as the SD Card standard has gained broader market acceptance, Panasonic and the other SD Group members, working through SD-3C, have exercised their market power by imposing increasingly onerous and anticompetitive terms on potential licensees, including—through active efforts by SD-3C in 2007 and more recently—terms that, if enforced, would give the SD Group the ability to place a floor on SD Card prices. 11. Although purporting to operate like a patent pool, the licensing arrangements among

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Defendants and the other SD Group members generate none of the procompetitive benefits that might otherwise justify an agreement among horizontal competitors to combine their patent rights and license them out at a single price. Because Panasonic, SanDisk and Toshiba have withheld critical patent rights from the pool, neither the 2003 nor the 2006 versions of the SD Card License offer licensees the efficiency of being able to obtain all the rights owned by the SD Group members needed to manufacture SD Cards. Moreover, notwithstanding illusory disclaimers to the contrary in recent versions of the SD Card License, Panasonic and the other SD Group members do not offer industry participants any alternative to executing the SD Card License—with its built-in “entry fee”—in order to manufacture SD Cards. 12. Nor are Defendants and the other SD Group members engaged in a legitimate form of standard setting. The agreements among three major competitors to replace an existing open standard format with the SD Card and then to jointly license their rights to that card at a single price have never been justifiable on efficiency grounds because they generate no procompetitive benefits. The anticompetitive impact of these agreements, however, has increased significantly since late 2006 as the tipping of the market towards the new types of SD Cards has given the SD Group and SD-3C dominance over the broader flasher memory card market. 13. The agreements between Defendants, SanDisk and Toshiba violate Sections 1 and 2 of the Sherman Act. They violate Section 1 because they are agreements between competitors that suppress competition and that create anticompetitive effects

107a that are not outweighed by countervailing procompetitive benefits. They violate Section 2 of the Sherman Act because the agreements constitute a conspiracy to monopolize the market for SD Card technology. That conspiracy has resulted in the unlawful acquisition and maintenance by SD-3C, acting on behalf of the members of the SD Group, of a monopoly in the market for SD Card technology—a further violation of Section 2. Defendants also have violated both the Cartwright Act and Section 17200 of the California Business and Professions Code. THE PARTIES 14. Plaintiff Samsung Electronics Co., Ltd. is a corporation organized under the laws of the Republic of Korea with its principal place of business at 416 Maetan-dong, Youngtong-gu, Suwon, Kyunggi-Do, 443- 742, Korea. 15. Defendant Panasonic Corporation is a Japanese corporation, with its headquarters at 1006, Oaza Kadoma, Kadoma-shi, Osaka 571-8501, Japan. Prior to October 2008, Panasonic Corporation was known as Matsushita Electric Industrial Co., Ltd. 16. Defendant Panasonic Corporation of North America (“PNA”), a Delaware corporation, is, upon information and belief, a wholly owned subsidiary of Panasonic Corporation, with its principal place of business at One Panasonic Way, Seacacus, New Jersey 07094, and is doing business in this district. 17. Defendant SD-3C LLC is a Delaware limited liability company with its principal place of business at 180 Montgomery Street, Suite 1840, San Francisco, California 94104. On information and belief, SD-3C has conducted licensing activities through its

108a agent, Miller, Kaplan, Arase & Co. LLP, at that address. JURISDICTION AND VENUE 18. This Court has subject matter jurisdiction over this action under 28 U.S.C. §§ 1331, 1337(a), and 1367, insofar as Samsung seeks declaratory relief addressing issues arising under federal antitrust law and asserts claims of violations of the Sherman Act. The Court also has jurisdiction under 28 U.S.C. § 1332, in that the matter in controversy is between a citizen of a foreign state and citizens of a state, and the amount in controversy, exclusive of interest and costs, exceeds $75,000. The Court may grant declaratory relief in this action pursuant to 28 U.S.C. §§ 2201 and 2202. 19. A substantial part of the events or omissions giving rise to this Complaint occurred in this District. Upon information and belief, SD-3C transacts business in this District, both directly and through its agent, and is subject to personal jurisdiction in this District. Furthermore, SD-3C has consented to venue in this District. As such, venue is proper in this Court pursuant to 28 U.S.C. §§ 1391 and 1400 and 15 U.S.C. § 22. INTRA-DISTRICT ASSIGNMENT 20. The SD Group members established SD-3C with its principal place of business in San Francisco County, where a substantial part of the events or omissions giving rise to this action occurred. Pursuant to Local Rule 3-2(d), “all civil actions which arise in the count[y] of . . San Francisco . . . shall be assigned to the San Francisco Division or the Oakland Division.” Therefore, assignment to the San Francisco Division of this Court is appropriate.

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FACTUAL ALLEGATIONS A. The SD Group and SD-3C Engaged in New and Independent Anticompetitive Acts Within Four Years of the Original Filing of this Complaint, Causing New and Accumulating Injury to Samsung 21. In August 2006 and thereafter, the SD Group and SD-3C engaged in new and independent anticompetitive acts that inflicted new and accumulating injury on Samsung. Those acts and the injury they caused are set forth only in summary form in this section. A significantly more detailed account of Defendants’ anticompetitive acts within the limitations period and resulting injury to Samsung may be found in paragraphs 79 to 107 below. 22. At a meeting in Osaka in the week of August 28, 2006, the SD Group and SD-3C agreed to extend their 6 percent royalty requirement to microSD and SDHC Cards (¶¶ 96-98). Subsequently, SD-3C, acting on the SD Group’s behalf, actively enforced this new royalty requirement on Samsung and other industry participants (¶¶ 99-107). By SD-3C’s own admission, the 2003 SD Card License did not cover these new types of SD Cards (¶ 106). The agreement among the SD Group and SD-3C to impose the royalty requirement on these new cards, admittedly not covered by the original 2003 SD Card License, and SD-3C’s active enforcement of the new 2006 agreement were therefore new acts, independent of the 2003 License. 23. Samsung was injured by these acts because the new royalty requirement raised its costs for microSD and SDHC Cards, as well as those of its reseller customers. Given the low margins in this

110a commoditized business, the addition of the 6 percent royalty to the costs of Samsung and/or its customers for these new cards was sufficient to significantly impede their ability to compete with SD Group members (¶ 153). Samsung was injured as a seller of finished SD Cards in competition with SD Group members because the addition to its costs caused it to lose sales to those members (¶ 157). Samsung was also injured as a supplier of SD Cards to other industry participants that resell those cards under their own brands in competition with SD Group members. The addition of the royalty requirement to the costs of Samsung and/or its customers caused Samsung customers to lose sales to SD Group members and therefore to buy fewer cards from Samsung (¶ 158). 24. Samsung’s injury resulting from this conduct within the limitations period is new because, absent the steps taken by the SD Group and SD-3C from August 2006 onwards to impose their royalty requirement on microSD and SDHC Cards, neither Samsung nor its reseller customers would have paid royalties on those cards, which SD-3C admitted were not covered by the original 2003 License. Neither of those card types was subject to royalties under the Defendants’ earlier standard license, and it was only by additional steps taken by Defendants in 2006 that those types became subject to the royalty structure that has adversely affected competition in the relevant markets. The new injury is accumulating because Samsung and its customers will continue to lose additional sales to SD Group members for as long as they are required to pay a 6 percent royalty from which the SD Group has exempted itself.

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25. Samsung did not begin manufacturing and selling SD Cards of any type until the third quarter of 2006 (¶¶ 92-95). Samsung manufactured and sold SDHC Cards no earlier than August 2006 and microSD Cards no earlier than September 2006. It did not receive its first invoice for royalties on any type of SD Cards—whether arising under the 2003 SD Card License or as a result of the new requirement to pay royalties on microSD and SDHC Cards—until November 17, 2006 (¶ 95). Samsung incurred no damages and its claims did not accrue until it received that first invoice. Samsung’s original complaint in this action was filed on July 15, 2010, less than four years after receipt of that invoice. B. Background on the Technologies and Products at issue in this Case 1. Flash Memory 26. Flash memory was developed in the early 1980s by Toshiba and is now widely used in consumer electronics devices, either as embedded memory within devices or in the form of flash memory cards that can be slotted into and communicate with those devices. 27. One of the distinctive features of flash memory is that it is non-volatile, meaning that it can retain data without a continuous power source, unlike the Dynamic Random Access Memory (“DRAM”) traditionally used in computer hard drives. Flash memory is also solid state, meaning that it contains no moving parts and is therefore shock-resistant. An additional advantage of flash memory is that it can be read and programmed faster than many other types of memory. 28. These qualities have helped flash memory become the dominant technology for storing data in

112a numerous types of consumer electronic devices, including digital cameras, digital audio players and cellular telephones. Flash memory is a critical component in such commercially successful products as the iPod and the iPhone. It is also increasingly used in solid state hard drives for personal computers. 29. The two main types of flash memory are NOR and NAND. In NOR flash memory, the memory cells are arranged in parallel. Because this architecture permits random access to data, NOR flash is well-suited for programming applications, such as code storage and execution. In NAND flash memory, the cells are arranged in series. While this architecture prevents random access to data, it allows for significantly faster write and erase operations and a higher storage density than NOR. These characteristics make NAND the preferred form of flash memory for use in data storage applications. Accordingly, the flash memory used in consumer electronic devices is almost exclusively NAND. 30. Panasonic, Toshiba and SanDisk each claim patent rights bearing on NAND flash memory technology. Each of them also demands royalties from other manufacturers of NAND flash memory based on these rights. 2. Flash Memory Cards 31. A significant proportion of NAND flash memory reaches consumers already built into (or “embedded” in) digital devices. Approximately 40-50 percent of NAND flash memory output, however, is sold in the form of flash memory cards. Flash memory cards are portable data storage media that can be inserted directly into compatible slots on host devices such as laptop computers, digital cameras, and

113a mobile phones. Flash memory cards typically combine a flash memory chip with a “controller” (a chip that manages read, write and erase instructions received from the host device), packaged together in a plastic casing. Because of its higher density, NAND flash memory is particularly well-suited for use in flash memory cards, and the vast majority of flash memory cards in use today incorporate NAND flash memory chips. 32. Flash memory chips, the key component of SD Cards, are made in large, specialized manufacturing facilities (commonly known as “fabs”) by manufacturers that include Toshiba, SanDisk (through a joint venture with Toshiba) and Samsung. The chips are combined with other components to form SD Cards in a separate manufacturing process, either by the memory manufacturer itself, or by a manufacturer or an assembler to which the memory manufacturer sells its chips. Panasonic, Toshiba, SanDisk and Samsung all manufacture flash memory cards. Examples of smaller manufacturers and assemblers include Lexar, A-Data, Apacer, Corsair Microsystems, Dane-Elec, Kingston, PNY, PQI, Transcend, TSR, Buffalo and Phison Electronics. 33. Samsung sells flash memory chips to assemblers who combine the chips with other components to form SD Cards. Samsung sells, or has sold, flash memory chips to a variety of manufacturers and assemblers, including Kingston, PQI, Transcend and A-Data. Since the fall of 2006, Samsung also incorporates the flash memory chips into finished SD Cards that Samsung then sells to third parties, which include or have included companies such as Lexar, PNY and Memorex, to sell under their own brand

114a name. Samsung also sells SD Cards directly to device manufacturers, such as Nokia and RIM, for use in their devices. 34. A given flash memory card can be used only in host devices that have a compatible slot corresponding to that card’s “form factor” (the size and shape of the card) and appropriate “driver” software (also called host interface software) to allow the host device to communicate with the memory card. Without the appropriate driver software, an otherwise physically compatible card (i.e., a card that physically fits into a slot in the host device) may not work properly in that device. C. Background on the Means By Which Panasonic, SanDisk and Toshiba Gained the Dominant Position That They Now Seek to Maintain and Exploit. 1. Competition in the Flash Memory Card Industry in the 1990s 35. The development of flash memory cards since they first appeared in the late 1980s has been affected by two overarching factors. First, flash memory card manufacturers have had to innovate constantly to achieve the smaller form factors, faster processing times, and increased data storage capacities required by design improvements in host devices (for example, the development of smaller, higher resolution digital cameras). Second, because consumers value the convenience of being able to use the same flash memory card format in different host devices, flash memory card manufacturers have an incentive to promote broad acceptance of their own formats. During the 1990s, these two factors fostered vigorous technological competition among flash memory card

115a manufacturers, reflected in the release of numerous competing card formats, accompanied by efforts by individual manufacturers to promote industry-wide adoption of their own formats as open standards. 36. The first flash memory cards were generally proprietary designs, such that each one worked only with that manufacturer’s products. By the late 1980s, the industry recognized that in order to advance the acceptance and use of flash memory cards it was necessary to standardize the flash card formats. Accordingly, in 1989, 25 vendors joined together to form a non-profit, open standards organization called PCMCIA (Personal Computer Memory Card International Association) to develop a universal memory card format for laptop computers. 37. The PCMCIA developed a set of protocols describing the form factor and operating characteristics of a NOR-based flash memory card format called the PC Card. The first PC Card specification was published in 1990. The PC Card was an open standard. As an open standard, no company controlled the PC Card format and multiple vendors competed to supply the market with interoperable memory cards that complied with the format. 38. During the mid-1990s, the major flash memory card manufacturers competed to develop smaller memory card formats and to have those formats adopted as open standards by other manufacturers. Panasonic, Toshiba and SanDisk were prominent horizontal competitors at this time, each developing and promoting new formats of their own. 39. In 1994, SanDisk developed the CompactFlash format, a NOR-based flash memory card with a smaller form factor than the PC Card but

116a that could be used in a PC Card slot by means of an adapter. To promote the card as a standard, SanDisk agreed to transfer its Compact Flash trademark and technical specifications to the CompactFlash Association, an open standard-setting body, which made the specifications available under a royalty-free license to other third-party manufacturers that committed to develop, manufacture and supply CompactFlash products. 40. In 1995, Toshiba launched the SmartMedia format, a small NAND-based flash memory card format with no on-board controller, which it proposed as a standard. The SmartMedia Format was promoted as an open, royalty-free standard by the SSFDC (Solid State Floppy Disk Card) Forum. 41. In 1997, Panasonic announced its own NAND-based flash memory card, the Mega Storage Device, previously known in Japan as the SmallPC Card, to target digital cameras, personal digital assistants, and other portable devices. 42. Also in 1997, Siemens and SanDisk jointly developed and introduced the MultiMediaCard (“MMC Card”) specification, a high-density NAND-based flash memory card format, with a form factor about the size of a postage stamp. The development of the MMC Card was encouraged by Nokia, which wanted a smaller form factor memory card for use in cellular telephones. Nokia encouraged the MMC Card as an open standard. 43. In 1998, Siemens, SanDisk and twelve other companies announced the establishment of the MultiMediaCard Association (“MMCA”) “to make the MultiMediaCard a broadly supported new industry standard.” The MMCA had two types of members,

117a executive and affiliate. At its inception, executive members were asked to pay a modest fee of $5,000 to join—and to have full voting rights—while affiliate members were asked to pay only $2,500. All MMCA members were entitled to access and use the MultiMediaCard specification to develop, manufacture and supply MultiMediaCard products on a royalty-free basis. All executive members were entitled to participate on an equal basis in the development of specifications and standards. Samsung joined the MMCA in 2002 as an executive member and began manufacturing MMC cards at that time. Samsung ceased taking orders for MMC cards in 2006 when it transitioned to manufacturing SD Cards. 44. SanDisk’s 1998 SEC Annual Report commented on the “intense competition, rapid technological change [and] evolving industry standards” that characterized the flash memory card market at that time. The report identified both Toshiba and Panasonic as horizontal competitors in the development of flash memory cards and flash memory card technology, observing that: Competing products promoting industry standards that are different from SanDisk’s have been introduced, including Intel’s Miniature Card, Toshiba’s Smart Media (Solid-State Floppy Disk Card), Sony Corporation’s Memory Stick, and Panasonic’s recently introduced Mega Storage cards . . . . 45. SanDisk’s annual report specifically noted that “our MultiMediaCard products are expected to face stiff competition from Toshiba’s SmartMedia flash cards” together with Sony’s Memory Stick.

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46. But by the time SanDisk released its next annual report, covering the 1999 calendar year, the company had embarked on a course of action in concert with Panasonic and Toshiba that was to alter and fundamentally reduce competition in the flash memory card industry. 2. Panasonic, SanDisk and Toshiba Launch Their Initial Joint Activities. 47. Prior to 1999, Panasonic, SanDisk and Toshiba were major horizontal competitors in the flash memory card technology and product markets. Each of these companies had supported open standard-setting as a means of gaining a competitive edge for their formats. Prior to 1999, open standard-setting was the norm in the flash memory card industry for manufacturers that wished to promote broader adoption of a particular format among different host manufacturers. While some single-company proprietary formats, such as Sony’s Memory Stick, had enjoyed limited commercial success, competitor collaborations to promote a jointly-owned proprietary standard were highly unusual. 48. On August 25, 1999, Panasonic revealed that it was working with SanDisk and Toshiba pursuant to an agreement that marked a radical departure from the competitive norms underpinning the development of the industry over the previous decade. Under this agreement, the three major competitors agreed to develop a modified version of the MMC Card in a closed process from which other industry participants were excluded. 49. As described in SanDisk’s 1999 SEC Annual Report, the agreement announced in August 1999 was:

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[A] memorandum of understanding under which we, [Panasonic] and Toshiba will jointly develop and promote a next generation flash memory card called the Secure Digital Memory Card. The Secure Digital Memory Card is an enhanced version of our MultiMediaCard that will incorporate advanced security and copyright protection features . . . . SanDisk further stated that it had: joined forces with [Panasonic] . . . and Toshiba to jointly develop, specify, and promote the Secure Digital Memory Card [and] [a]s part of this collaboration, all three companies [would] foster the development of application products using the Secure Digital Memory Card. 50. SanDisk was a founding member of the MMCA, an open standard-setting organization that had as its mission “to encourage all interested members of industry to join in the development and marketing of MultiMediaCard-based technologies.” As such, the MMCA was the natural forum for any development work on an enhanced version of the MultiMediaCard. There was nothing about the additional functionality that the SD Group members incorporated into the SD Card that would have prevented the MMCA from achieving the same result under its open standard- setting rules. The combination of Panasonic, SanDisk and Toshiba—three major horizontal competitors—did not create efficiencies that could not have been achieved in a manner that preserved competition among these companies. Instead, this combination of competitors, created in secret, stymied the existing

120a standard-setting process, and has permitted Panasonic, SanDisk and Toshiba, with SD-3C, to suppress competition to their benefit and without the procompetitive efficiencies that flow from legitimate standard-setting activities. There are significant ongoing anticompetitive effects caused by this conduct, and by the more recent activities of these three horizontal competitors. 51. Indeed, SanDisk’s 1999 SEC Annual Report expressly acknowledged that Panasonic, SanDisk and Toshiba were not uniquely qualified to bring this additional functionality to the marketplace. The annual report observed that “Hitachi, Infineon, Sanyo and Fujitsu have proposed their Secure MultiMediaCard which provides the copy protection function that is included on our Secure Digital Memory Card.” 52. On information and belief, Panasonic encouraged SanDisk to join with it and Toshiba in developing the SD Card outside of the MMCA structure. In addition to being a significant horizontal competitor of SanDisk and Toshiba, as a manufacturer of flash memory cards, Panasonic was (like Toshiba) also a major manufacturer (through Panasonic Corporation) and seller (through PNA) of host devices, and was therefore well-placed to push for adoption of the new format by the consumer electronics industry. 53. The SD Group members successfully induced other manufacturers of host devices to adopt the SD Card format by offering them royalty-free licenses to incorporate SD Card functionality into their products (in contrast to the anticompetitive entry fee later charged to SD Card manufacturers, as described

121a below) and by promising to make SD Cards backwardly compatible with the MMC format. 54. As further described below, by combining their respective market weights and inducing further industry adoption through its royalty-free license for device manufacturers, Panasonic, SanDisk and Toshiba could thus achieve critical mass for the new format under rules of their own choosing, without having to resort to open standard-setting. As an official of SanDisk, then the largest manufacturer of flash memory cards in the world, stated at the time: “The combination of these three firms gives strength. That’s why they came to SanDisk.” 3. Panasonic, SanDisk and Toshiba Agree to Evade the Even-Handed Protections of Open Standard-Setting. 55. If Panasonic, SanDisk and Toshiba had chosen to proceed within the MMCA, their standard- setting activity would have been subject to the MMCA Policies and Procedures (the “MMCA Policies”). Under the MMCA Policies, the SD Group members would have been required to circulate to other members a request for approval to proceed with a change to the MMCA Standard, and the change would then have been considered and approved by the relevant technical committee of the MMCA and subsequently by the MMCA Board of Directors. In furtherance of their long-term anticompetitive goals, the SD Group members deliberately evaded such an open process. 56. In addition, the SD Group members would have been subject to the MMCA’s disclosure and licensing policy on intellectual property. That policy would have required disclosure to the group of any

122a patent rights covered by the SD Group members’ proposal. The MMCA’s rules provided: When considering whether proprietary technology should be included, the Association balances the benefits of such technology with the burden of compliance with licensing requirements. As such, it is essential to the Association’s success that it be fully informed of the existence of proprietary technology in any proposal for inclusion in the specification, at the first showing of that proposal in an Association meeting. Any party submitting a proposal for inclusion in the specification will be required to disclose, at the time of submittal, all known proprietary technology included in the submission. . . . The Association expects that the proposal sponsor will use reasonable diligence to determine if proprietary technology is included in the proposal. Failure to use reasonable diligence or make this disclosure is grounds for expulsion from the Association. 57. Such disclosure would have allowed the MMCA members to assess the potential licensing costs associated with the new proposal, secure nondiscriminatory licensing commitments, and take into account their policy preference for technologies that can be licensed royalty free or on reasonable terms, according to which: [T]he Association will only include a member company’s proprietary

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technology in it’s [sic] specification if the owner of that technology agrees to reasonable and nondiscriminatory licensing terms set forth below. 58. Rather than work within these constraints and submit the development of the SD Card to the MMCA, however, Panasonic, SanDisk and Toshiba agreed to combine among themselves outside of the standard-setting process. The effect and necessary purpose of the steps taken by these three major competitors to subvert and bypass the open standard- setting work of the MMCA was to establish a proprietary standard that they themselves could dominate. Freed from the MMCA’s even-handed rules and patent disclosure and licensing policies, and working instead as a combination of competitors, the SD Group members have put in place and (with SD-3C) continue to enforce a regime for the SD Card that is designed to maintain and exploit that dominance. 4. The SD Group Members’ Manipulation of the SD Card Specification 59. Panasonic, SanDisk and Toshiba issued the first version of the SD Card specification (the “Specification”) in March 2000. 60. The SD Group members’ approach to the Specification represented a radical departure from the previous practice in the flash memory card industry, reflected by such open standards organizations as the CompactFlash Association and MMCA. During the 1990s, SanDisk and other manufacturers had encouraged industry-wide adoption of formats they had already developed by allowing competitors to implement the corresponding specification on a royalty-free basis. The August 1999 agreement among

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Panasonic, SanDisk and Toshiba, by contrast, implemented arbitrary amendments to the existing MMC specification that the three companies subsequently would share only with memory card manufacturers that promised to pay a hefty royalty and subject themselves to the other restrictions imposed by the SD Group members. 61. By choosing to agree among themselves on the Specification without inviting input from or making disclosure to other parties, the SD Group members ignored guidance addressed to, among others, Panasonic and Toshiba by the U.S. Department of Justice (“the DOJ”) in a business review letter of June 10, 1999 related to DVD licensing practices. That letter described the potential anticompetitive nature of the inclusion in patent pools of non-essential patents. In view of the economic incentive that collaborating licensors have “to combine in the pool their competing . . . patents and to foreclose others’ competing patents,” the DOJ stressed the importance of engaging a genuinely independent expert “to undertake a disinterested review of the ‘essentiality’ of the patent rights put forward.” The DOJ’s letter also warned that inclusion in a pool of one of several competing nonessential patents could “unreasonably foreclose the non-included competing patents from use by manufacturers.” 62. Defendants failed to comply with the DOJ guidance in several ways. By excluding other companies from their deliberations, and by failing to engage an independent expert, the SD Group members were able to craft a Specification that, to this day, favors their own intellectual property rights and fails to ensure a “pool” limited to essential patents. The SD

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Group members did this by drafting the Specification to mandate particular technological solutions for certain new features that could have been left to the discretion of the manufacturer without affecting the core functionality of the card. Members of the SD Group then filed patent applications to cover the mandated solutions. 63. For example, SD-3C asserts that the Specification cannot be implemented without infringing two Panasonic patents covering a mechanical write protect switch that prevents consumers from accidentally overwriting the card and destroying data, images or audio. Those patents derive from applications first filed by Panasonic on August 6 and 24, 1999—contemporaneously with Panasonic’s agreement with the SD Group members and immediately before the SD Group members’ first public announcement on August 25, 1999, that they were collaborating on the creation of an SD Card. There was no sound reason to require the practice of Panasonic’s technology in this way. To the contrary, the SD Group members could have written the Specification so as to allow mechanical write protection to be implemented by a variety of means. By unnecessarily including in its “pool” a write protection technology owned by one of its members, the SD Group members unreasonably foreclosed choice in the use of alternatives by manufacturers. 64. As a result of the arbitrary and self- interested way in which Panasonic and the other SD Group members created a Specification that requires the practice of their own patents to implement nonessential features, alternative technologies for implementing such features in a more cost-effective

126a manner have been restrained. By writing a Specification that artificially rendered their own patents “essential,” the SD Group members also created the basis for a licensing scheme that now effectively insulates the SD Group members from competition. 5. The Unequal Rules Imposed by the SD Group Members on the SD Association 65. The SD Group members announced the establishment of the SD Association (“SDA”) on January 6, 2000, at a joint press conference at the Consumer Electronics Show in Las Vegas. The SD Group members required, as a condition of membership in the SDA, that companies agree to observe association rules designed by the SD Group members. The SDA was created, and has been controlled and supported by the SD Group members, in furtherance of their proprietary standard and ongoing combination. PNA, for example, hosted the SDA website without charge until 2007 as part of this combination. 66. As described below, these rules had the effect of entrenching the SD Group members’ own dominant position within the organization, and supporting its ability to maintain a dominant position in the SD Card and related markets. In particular, the SD Group members set up, and have maintained through their control and support, an Intellectual Property Policy (the “IP Policy”) structure for the SDA that now assists them in hiding the nature of the putative “essential” patents and furthers their ability to license these patents only through SD-3C and at a single price. 67. The IP Policy created by the SD Group members is unlike the policy of the MMCA or those of

127a other legitimate standard-setting bodies. The SDA IP Policy requires disclosure of relevant intellectual property rights by some, but not all, of the members. Members who are subject to the disclosure requirements must identify, for example, the name and title of an issued patent, as well as the patent number, the date of filing, the date of issuance, the jurisdiction of issuance, and the patent holder’s name and address. SD-3C and the members of the SD Group, however, are exempted from this detailed disclosure. Instead, the IP Policy provides for a general notice that the SD Specifications contain “intellectual property held by the SD-3C, LLC and/or [the SD Group members] licensed by the SD-3C, LLC through . . . the SD Memory Card License Agreement,” and further states that this vague notice “shall be a sufficient disclosure for purposes of th[e] IP Policy.” 68. The IP Policy thus allows SD-3C and the members of the SD Group to avoid disclosing the specific patents owned by Panasonic, SanDisk and Toshiba that they unilaterally contend are essential for implementation of the Specification. SD-3C explicitly has confirmed that it does not disclose all of the purportedly essential patents included in its license. Instead, to date, SD-3C has disclosed on its website only nine patents owned by the members of the SD Group that “are necessarily and unavoidably infringed by a product that implements the secure digital technology in compliance with the SD Group Specifications.” According to SD-3C, the list of patents “is for information purposes only, it is offered by way of example and may not be exhaustive.” As described later in this Complaint, individual members of the SD Group similarly have refused to provide definitive

128a accounts of the patents owned by them that they claim to be essential for the implementation of the Specification. 69. In a business review letter of November 12, 2002 concerning 3G wireless communications technology, the DOJ indicated that the pooling of patents among competitors might be justified where there was “the potential for efficiencies with respect to the generation and dissemination of information about essential . . . patents, and the identification and evaluation of which patents are actually essential” to the technology in question. The agreement among Panasonic, SanDisk and Toshiba to combine their SD Card patents cannot be justified on this ground. The members of the SD Group make affirmative efforts, directly and through the use of their faulty SDA rules and otherwise, to bypass the prior MMCA rules and similar standard-setting protections that would stimulate the “generation and dissemination of information” about their patents, and would permit an evaluation as to whether their patents were in fact essential (e.g., if the pool helps to clear blocking patents). Instead, the members of the SD Group have avoided the disclosure of patents claimed by them to be essential to implementation of the Specification and have not demonstrated that these patents are otherwise blocking or essential. By creating doubt among other industry participants as to the actual scope of their patents bearing on SD Cards, the SD Group members’ non-disclosure policy discourages third party innovation in SD Card technologies and thereby harms competition. This conduct is not consistent with the activities of a legitimate standard-setting body.

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70. Even if the creation of the SD “standard” could have been justified on the basis of potential efficiencies, the rules imposed on the SDA, and now maintained, by the SD Group members were not necessary to achieve those efficiencies, and had the effect of suppressing innovation and competition. But the combination among the SD Group members was not justified 10 years ago when the SD Card was first introduced because it failed to produce efficiencies that could outweigh the combination’s anticompetitive effects. Indeed, these agreements have only become more damaging to competition since 2006 as microSD and SDHC Cards have made the SD Card the dominant flash memory card format, giving the SD Group and SD-3C the ability to abuse their market power in the broader flash memory market. 6. The SD Group Members’ and SD-3C’s Anticompetitive Licensing Agreements 71. Panasonic, SanDisk, Toshiba and SD-3C require all current and new manufacturers of SD Cards to accept and execute an SD Card License. The SD Card License purports to grant licensees rights to some of the ostensibly essential patent claims of the SD Group members, the Specification, and the SD logo and trademark. In contrast to the royalty-free terms on which rights to CompactFlash, the MMC Card and other formats had previously been offered, the SD Card License requires licensees to pay a 6 percent royalty on their net sales of SD Cards, with fixed adjustments only for sales volume. SD-3C has promulgated two versions of the SD Card License, one in March 2003 (the “2003 License”), and another in September 2006 (the “2006 License”).

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72. The 2003 License reflected the SD Group’s initial means to coerce royalty payments from other manufacturers of SD Cards, and thereby effectuate the imposition of an “entry fee” on those manufacturers. As described below, the 2003 License covered only first generation SD Cards, and forced manufacturers of those SD Cards to accept anticompetitive royalty and other licensing terms. 73. As described below, the SD Card markets shifted to new types of SD Card, created after the SD Group had promulgated the 2003 License. These new types of SD Cards were not covered by the terms of the 2003 License and were not subject to royalties under the 2003 License. The SD Group accordingly undertook new actions that applied their anticompetitive scheme to these new types of SD Cards. This involved an agreement reached among the SD Group in August 2006 to impose a similar fee on those new types of SD Card, so as to extend their cost advantage to these new types of SD Cards that were not covered by the 2003 License. The new agreement and conduct to enforce it caused injury and damages to the SD Group’s competitors, and harmed competition generally. 74. In addition, several aspects of the SD Group’s licensing scheme inherently increased the anticompetitive effects of the SD Group’s activities. As described in Section E below, the members of the SD Group, jointly with SD-3C, provide no alternative to the SD Card Licenses. And those licenses, although varying in some respects, each contain key anticompetitive provisions, and neither provides an effective means by which to obtain licenses from the SD Group members to the rights granted in the SD

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Card License. An SD Card License remains for all practical purposes the exclusive means by which the SD Group members license their SD Card technology. 7. Suppression of Competing Formats 75. In addition to exercising collective control over the SD Card format, the members of the SD Group restrain competition by suppressing the emergence of new competing formats. The members of the SD Group have agreed to avoid competing with the SD Card format or technology, and do avoid such competition, as part of their overall agreement to create and maintain a dominant market position for themselves. This restraint on competition is not justified in light of the anticompetitive effects of the overall agreement among Defendants and the other members of the SD Group. 76. Moreover, on multiple occasions, one or more members of the SD Group, acting in furtherance of their unlawful purposes, have participated in anticompetitive conduct designed to impede the development of MMC formats that would have competed with SD Cards. For example, in March 2006, SanDisk intervened at the last minute in negotiations at the European Telecommunications Standards Institute (ETSI), disclosing MMC-related patent rights in order to prevent the adoption by ETSI of an MMC- based standard for high-speed SIM (Subscriber Identity Module) cards for use in mobile phones. SanDisk informed ETSI that it would not provide the commitment to license other manufacturers on “fair reasonable and non-discriminatory terms” that ETSI’s rules required in order to move forward with an MMC- based SIM card standard. SanDisk had failed to disclose these same patents to the MMCA while it was

132a a member of the board of directors and/or an executive member of that organization. By contrast, SanDisk told ETSI that it would agree to license its patents on fair, reasonable and non-discriminatory terms to other vendors for a SIM card standard based on USB, rather than MMC, technology. As a result of SanDisk’s intervention, ETSI’s decision on high-speed SIM cards was delayed. After SanDisk had made an unsuccessful attempt to persuade ETSI to adopt an SD Card-based standard, ETSI eventually opted for the USB option notwithstanding the fact that, according to contemporary reports, “handsets that can run MMC- based SIMs could reach the market as much as 18 months before comparable USB-based handsets.” 77. On information and belief, other members of the SD Group were informed of and approved SanDisk’s anticompetitive actions in ETSI. By discouraging the adoption of standards based on the MMC format in European and other regional standard- setting organizations, SD Group members successfully sought to prevent the format from achieving sufficient scale to be a commercially viable alternative to the SD Card standard anywhere in the world, including the United States. * * * 78. The anticompetitive conduct accompanying the establishment of the SD Card regime served as a foundation for Defendants’ current and continuing illegal efforts, with SanDisk and Toshiba, to maintain and exploit the dominant position that the SD Group members have created for themselves. By creating and manipulating a specification from which other industry participants were excluded, the members of the SD Group gave themselves the ability to extract an

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“entry fee” toll from all other manufacturers and sellers of SD Cards. By using their combined weight in the host device market, including through PNA, to drive adoption of SD technology in consumer electronic devices, by aggressively undercutting open standard alternatives such as MMC, and by their continued agreement to support only the SD Card format, the members of the SD Group have helped the SD Card to become and remain the dominant flash memory card format. D. The New and Independent Acts of the SD Group and SD-3C Since August 2006 to Coerce Payment of Royalties on microSD and SDHC Cards. 79. Since August 2006, the SD Group and SD-3C have engaged in new acts, independent of the original 2003 SD Card License, that have injured Samsung specifically and competition generally. As demand for cards with a smaller form-factor and/or higher storage capacity cards tipped the flash memory card market towards the SD Card format in 2006 and 2007, the SD Group and SD-3C agreed to require other industry participants to pay royalties on microSD and SDHC Cards. 80. By SD-3C’s own admission, neither microSD nor SDHC Cards are covered by the 2003 SD Card License. The agreement to require royalties on those new types of SD Cards, and the conduct flowing from that agreement, constituted a new chapter in Defendants’ anticompetitive scheme that extended their anticompetitive conspiracy to new SD Card types that were, by SD-3C’s own admissions, outside the scope of the 2003 License. Those new activities came just at the time when SD Cards were establishing

134a themselves as the dominant choice within the market for flash memory cards, thus amplifying their unambiguously anticompetitive effects. Those effects continued to be unmitigated by any genuine procompetitive benefit. 1. The Flash Memory Card Market Tipped Towards the SD Card Format in 2006. 81. SD Cards were first produced on a commercial scale in 2000, in 8 MB to 64 MB sizes. For several years thereafter, few companies other than SanDisk, Toshiba and Panasonic manufactured or marketed SD Cards. The format’s initial survival and growth relied in large part on the willingness of SD Group members, in particular Panasonic and Toshiba, to design products with SD slots and to encourage industry partners to do the same. 82. Until approximately 2005, growth in the flash memory card market was driven in large part by sales of digital still cameras and digital video cameras. In 2005, for example, digital still cameras and digital video cameras together accounted for 60 percent of total worldwide sales of flash memory cards. Panasonic and Toshiba were both significant manufacturers of digital cameras and designed new models to work exclusively with SD Cards. 83. For example, Panasonic launched its Lumix digital still camera line in late 2001 and incorporated SD Card storage into the design. Similarly, Toshiba’s PDR digital cameras originally incorporated SmartMedia storage, but Toshiba switched to SD Card storage in early 2002. To further consumer penetration of SD Cards (as opposed to the then-still compatible MMC card), both companies bundled SD Cards with their cameras for retail sale.

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84. Due in part to the efforts of Panasonic and Toshiba to establish the SD Card format in consumer electronics products, the SD Card became a leading flash memory card format during this period. In 2005, for example, the standard SD Card format accounted for approximately $2.9 billion out of total flash memory card worldwide revenue of approximately $7.5 billion. 85. By early 2006, industry analysts were anticipating a significant shift in the evolution of the flash memory card market. Demand for flash memory cards for use in digital cameras was flattening out. Instead, mobile handsets were widely anticipated to be the new growth area for flash memory cards, as smartphones began to integrate voice telephony with email, digital photography and music. A May 2006 report by one analyst observed: Flash memory card unit demand has been heavily dependent on DSC [digital still camera] demand, which represented 56% of total flash card shipments in 2005. Although DSCs remained the major application in 2005, the DSC market will mature in 2006 as mobile phones become the driving force for memory card demand on a unit basis. The same report predicted that the share of SD Card units accounted for by mobile handsets would increase from 27.2 percent in 2005 to 87.2 percent in 2010, while that for digital still cameras and digital video cameras combined would fall from 60 percent to 10.4 percent over the same period. 86. The first generation SD Card covered by the 2003 SD Card License was too large to be well- suited for use in mobile phones. In anticipation of the

136a shift in demand, SanDisk created miniSD and microSD Cards with smaller form factors. The miniSD Card was quickly rendered redundant by the even-smaller microSD Card, the specification for which was first approved by the SDA on May 18, 2005. Significantly, the microSD Card’s smaller form factor and its larger number of pins as compared to the standard, first generation SD Card rendered it incompatible with the SD Card Specification 1.01 in force when Samsung signed the 2003 SD Card License. 87. The other main flash memory card formats also were moving toward miniaturization. In 2005, the MMCA adopted a specification for a card with a smaller form factor which it called MMCmicro. In February 2006, Sony released a small form factor version of its proprietary format—the Memory Stick Micro. And in January 2007, the MMCA added a small formfactor card; RS-MMC (“reduced-size” MMC). 88. Alongside the trend towards miniaturization, the flash memory card industry was also focused on increasing the storage capacity of cards to provide room for users of digital cameras, mobile phones and other devices to store ever larger quantities of photographs, music and other data. In June 2006, the SDA adopted a specification for full-size SD Cards ranging from 4 GB to 32 GB (“SDHC”). The specification was inconsistent with that in force when Samsung signed the 2003 SD Card License because SDHC cards used a file management system different from that specified for the first generation SD Card. 89. By 2007, the shift toward cards with smaller form factors and higher storage capacities had helped tip the market decisively in favor of SD Cards as the flash memory card format of choice. From 2006

137a onwards, Nokia—formerly a staunch supporter of the MMC format—designed its new mobile handsets exclusively around the smaller form factor SD Cards. Other mobile handset manufacturers followed suit. As described in Section C of this Complaint, SanDisk encouraged these defections by engaging in anticompetitive conduct in March 2006 to impede the adoption by a European standard-setting organization of an MMC-based standard for high-speed SIM (Subscriber Identity Module) cards for use in mobile phones. 90. The SD Card’s success in the mobile handset sector in 2006 far exceeded contemporary analyst expectations and proved to be a decisive development in tipping the overall flash memory card market toward the SD format. In 2007, 56 percent of mobile phone shipments worldwide included a microSD Card. By 2010, that figure had grown to 80 percent and was projected to reach 98 percent by 2016. Whereas sales of all SD Card types accounted for 44 percent of total flash memory card sales in 2005, that share had risen to 61 percent by 2007. The microSD Card alone accounted for 25 percent of the flash memory card market in 2007. 91. These market developments provide context for the conduct of the SD Group and SD-3C from August 2006 onwards. The anticompetitive conduct underpinning the establishment of their original licensing scheme had taken place when the SD Card accounted for only a small share of the overall flash memory card market. By late 2006 and early 2007, however, the SD Card format’s emerging dominance was apparent to the entire industry. At that moment the SD Group and SD-3C took new

138a actions, independent of the 2003 SD Card License, to impose a 6 percent royalty for the first time on sales of the new types of SD Cards that were driving the format’s growing dominance. 2. Samsung Enters the SD Card Market in Late 2006. 92. As the market tipped towards the SD format, some of Samsung’s more important customers requested that it supply them with SD Cards. Among the customers pressing Samsung for SD Cards was Nokia, formerly a staunch supporter of the MMC format and an active member of the MMCA. By the second half of 2006, Nokia had concluded that it needed to transition to the SD Card format. 93. Samsung entered the SD Card market in the third quarter of 2006, with manufacturing and sales of SDHC Cards beginning no earlier than August 2006 and manufacturing and sales of microSD Cards beginning no earlier than September 2006. Given Nokia’s supply requirements for smaller form factor cards, Samsung anticipated that its production of SD Cards would include microSD Cards and miniSD Cards. It was Samsung’s understanding that the royalty-free updated License Agreement for SDA Memory Card Specifications (“LAMS”) issued by the SDA on November 8, 2005, granted rights to both microSD and miniSD Cards. On August 28, 2006, Samsung emailed Michael Quackenbush, the California- based licensing agent for SD-3C, seeking his assistance in obtaining and executing the LAMS license. The email explained that Samsung planned to produce microSD and miniSD Cards and therefore needed the LAMS urgently.

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94. Mr. Quackenbush responded to Samsung’s request on August 30, 2006. He stated that the LAMS covered miniSD only and that a new SD Card License would be required for Samsung to have rights to microSD Cards. The discussions about Samsung’s upcoming entry into the SD Card market continued at a meeting at Samsung’s offices in Hwaseong, Korea, on September 4, 2006, where Mr. Quackenbush asked Samsung to confirm that it intended to begin producing royalty-bearing SD Cards soon. 95. Samsung submitted its first royalty report to SD-3C in North Hollywood, California, on November 15, 2006. The report provided information on Samsung’s sales of full form-factor SD Cards during the third quarter of 2006. Based on this report, on November 17, 2006, SD-3C sent Samsung an invoice, demanding payment of $2,055,890.92 in royalties. SD-3C’s licensing agent sent the invoice from its offices in California. This was the first occasion on which Samsung was subjected to the anticompetitive royalty provision of the SD Card License. 3. The SD Group and SD-3C Agree in August 2006 to Impose Their Royalty Requirement on microSD and SDHC Cards. 96. On information and belief, SD Group members recognized the pivotal importance of the microSD and SDHC cards to their joint efforts to maintain and enhance their control over the evolving SD Card market. During the week of August 28, 2006, the SD Group members met with SD-3C in Osaka and agreed upon measures to impose a 6 percent royalty requirement on the new types of SD Cards. These new types were not covered by the SD Group’s earlier 2003

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License, and accordingly it was necessary for the SD Group and SD-3C to take new action to extend their anticompetitive scheme to cover them. 97. On information and belief, SD-3C was tasked at the Osaka meeting to pressure other industry participants into (i) completing a new royalty reporting form capturing data on sales of microSD and SDHC Cards, (ii) paying royalties on those new cards at the same rate as that provided for in the 2003 SD Card License for the first generation, standard SD Cards; and (iii) signing a new, revised 2006 license agreement incorporating significantly less favorable terms than those contained in the 2003 SD Card Licenses. In furtherance of those objectives, SD-3C has consistently maintained since September 2006 that the 2003 SD Card License does not grant rights to produce and sell microSD Cards or SDHC Cards and that industry participants wishing to produce and sell such cards must execute the new 2006 agreement. 98. The Amended and Restated SD Memory Card License Agreement adopted at the Osaka meeting (the “2006 License”) incorporated at Schedule F a new “Quarterly Royalty Report Form” that required licensees for the first time to report sales of microSD Cards and SDHC Cards. The form subjected such sales to the same royalty requirement as sales of first generation SD Cards, namely a 6 percent royalty on the net sales value of the card for the first 30 million of any type of SD Card sold in a given calendar year by the licensee and 4.5 percent thereafter. The 2006 License had an effective date of August 31, 2006.

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4. Starting in September 2006, SD-3C Enforces the New Royalty Requirement on Behalf of the SD Group. 99. Immediately following the meeting, the SD Group dispatched representatives of SD-3C to establish and enforce the new royalty requirement. 100. On September 4, 2006, SD-3C, represented by its President, Richard Holleman, and Mr. Quackenbush, met with Samsung in Hwaseong, Korea. After acknowledging that the microSD Card originally was intended to be royalty free, Mr. Quackenbush explained that the SD Group members instead had agreed the previous week to require a 6 percent royalty for such cards. Mr. Quackenbush also asserted that the 2003 SD Card License covered only full-sized SD Cards up to 2 GB and did not cover microSD Cards or SDHC Cards. He stated that Samsung would have to sign the new 2006 agreement in order to manufacture the microSD Card and SDHC cards. 101. Soon after the meeting, on September 19, 2006, Mr. Quackenbush followed up by emailing Samsung and all other SD-3C licensees a copy of the 2006 License, demanding that each of them sign the new agreement. For reasons that are explained in greater detail elsewhere in this Complaint, Samsung did not want to sign the 2006 License. Despite persistent pressure to do so from SD-3C and the SD Group, Samsung consistently has declined to execute the new 2006 agreement. 102. Due to the persistent pressure by SD-3C, and in response to the SD Group’s September 2006 and subsequent demands, however, Samsung ultimately acquiesced and agreed to pay royalties on the newer

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SD Cards not covered by the 2003 Agreement, i.e., on microSD and SDHC cards. To do so, Samsung agreed to the SD Group’s demand that it use the royalty reporting form appended as Schedule F to the 2006 License and that it pay royalties on microSD and SDHC Cards in accordance with the instructions on that form. The SD Group and SD-3C have been content to invoice Samsung and accept payment of royalties for microSD and SDHC cards notwithstanding the fact that Samsung did not execute the 2006 License. 103. Samsung’s first royalty report to SD-3C, for the third quarter of 2006, was submitted on November 15, 2006 using the royalty reporting form previously provided in connection with the original 2003 License. Mr. Quackenbush immediately responded by attaching the new royalty reporting form from the 2006 License and demanding that Samsung use that form in the future. As noted above, due to mounting pressures from SD-3C, Samsung complied with that instruction in its subsequent royalty report for the fourth quarter of 2006, which was submitted to Mr. Quackenbush on February 1, 2007. As an interim measure, Samsung reported miniSD and microSD Cards sales separately in a consolidated return for those types of cards covering the second half of 2006. Thereafter, Samsung submitted regular quarterly reports encompassing sales of all SD Cards, including miniSD, microSD and SDHC Cards using the form appended to the 2006 License in compliance with SD-3C’s instructions. Samsung continued to submit those reports to SD-3C’s California offices. 104. From its offices in California, SD-3C first presented Samsung with an invoice for SD Card

143a royalties on November 17, 2006. That invoice, which reflected Samsung’s third quarter sales of full-sized SD Cards, included royalties for SDHC Cards sold by Samsung during that quarter. This was the first occasion that Samsung was subjected to the anticompetitive royalty provision of the SD Card licensing scheme—whether pursuant to the 2003 SD Card License or resulting from the August 2006 agreement between the SD Group and SD-3C—and accordingly the first occasion on which Samsung suffered damages as a result of Defendants’ anticompetitive actions. 105. On April 18, 2007, SD-3C, again from its offices in California, sent Samsung an invoice for royalties on its sales of miniSD and microSD Cards in the second half of 2006. Thereafter, SD-3C presented Samsung with regular quarterly invoices, starting with one dated May 10, 2007 for the first quarter of 2007, breaking out separately the royalties due on full-size SD Cards (including SDHC Cards) and microSD Cards. Since its first royalty payment on November 30, 2006, the large majority of the royalties paid by Samsung have been on sales of SDHC Cards and microSD Cards. 106. Since 2006, SD-3C repeatedly has asserted that Samsung is required to make royalty payments on sales of microSD and SDHC Cards, but not as a consequence of the 2003 SD Card License. For example, in an email of February 1, 2007 responding to Samsung’s submission of its royalty report for the fourth quarter of 2006, Mr. Quackenbush stated: Samsung did not have permission to manufacture and sell MicroSD or SD cards with capacities greater than 4GB under the license agreement that

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Samsung signed. The new CLA provides the ability to manufacture and sell MicroSD cards and capacities greater than 4GB. 107. Nevertheless, the SD Group members determined in 2007 that they would invoice Samsung and accept payment of royalties for these new types of SD Cards notwithstanding Samsung’s failure to execute the 2006 License. Whether this constituted an implied license under the 2006 License or an amendment to the 2003 SD Card License, the arrangement effectuates the SD Group’s and SD-3C’s agreement of August 2006 to extend the royalty provision to new types of SD Cards not otherwise reached by the 2003 license. E. The SD Group Members’ Current Efforts, With SD-3C, To Maintain and Exploit Their Dominant Position. 108. Both the 2003 and 2006 versions of the SD Card License reflect the SD Group members’ current efforts, in coordination with SD-3C, to maintain and exploit the dominant position they have obtained through their anticompetitive scheme, and to prevent the emergence of alternative flash memory card formats that could undermine their dominance. Several aspects of the 2003 and 2006 Licenses are specifically designed to support these goals. 109. Notwithstanding boilerplate language introduced in the most recent versions of the SD Card License, the SD Group members require each existing and potential manufacturer of SD Cards to execute an SD Card License through SD-3C that has the effect of restricting competition and discouraging innovation. The royalty payments required under the SD Card

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License have the effect of raising the costs of every competing manufacturer of SD Cards. The license’s unequal grantback requirement provides competitors with a strong disincentive to develop their own technology. The members of the SD Group have sought further to undermine the pricing freedom of their competitors by attempting to impose new license conditions designed to give the SD Group members the ability to set a “floor price” and to enforce that pricing through the threat of immediate termination (thereby putting at risk a licensee manufacturer’s substantial sunk costs). 110. As described in more detail below, Defendants’ ongoing anticompetitive conduct has injured and continues to injure both Samsung specifically and competition generally. 1. The SD Group Members Have Refused to Negotiate Over the Terms of the SD Card License. 111. The SD Group members, acting through SD-3C and in furtherance of their agreement to impose controls over competing SD Card manufacturers, consistently have refused to negotiate over the terms of the SD Card License. 112. In early 2003, Samsung sought to obtain an SD Card License at the request of a customer that wished to sell SD Cards assembled by Samsung using Samsung memory components. Samsung first communicated with an employee of Panasonic and Mr. Hiro Miyauchi of Toshiba Corp. Samsung tried to negotiate a license directly with Panasonic, but Panasonic refused and referred Samsung to SD-3C. Toshiba directed Samsung to Mr. Quackenbush, who was acting as SD-3C’s licensing agent. Mr. Miyauchi of

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Toshiba provided Samsung with Mr. Quackenbush’s contact information at the San Ramon, California, office of Lindquist LLP. Samsung approached Mr. Quackenbush to secure a license to produce SD Cards. 113. Mr. Quackenbush refused, on behalf of the SD Group members, to engage in any negotiations of license terms with Samsung. For example, Samsung asked early in this discussion that Mr. Quackenbush send a Word version of the SD Memory Card License proposed by the SD Group members to facilitate the exchange of counter-proposals. After initially indicating his assent to this proposal, Mr. Quackenbush subsequently communicated to Samsung that: “I have been asked to not provide the license agreement in a word file to any company. The SD-3C managers are concerned about anyone making changes to the agreement.” The SD Card License therefore was offered to Samsung without any opportunity for modification or negotiation of its terms. 114. On September 24, 2003, Samsung signed the agreement in the form offered by SD-3C, without being given any ability to modify or negotiate the contract. The agreement subsequently was signed by officials of Panasonic, SanDisk and Toshiba on behalf of SD-3C. The effective date of the agreement was November 11, 2003. The agreement had an initial three-year term due to expire on November 11, 2006. 115. The 2006 License was similarly presented to potential licensees as a non-negotiable requirement. As previously alleged, following SD-3C’s September 4, 2006, meeting with Samsung in Korea, Mr. Quackenbush emailed Samsung and other SD-3C licensees on September 19, 2006, attaching the 2006

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License and demanding that the licensees sign the new agreement. Once again, SD-3C provided no opportunity to negotiate the terms of the 2006 License, which was offered on a take-it-or-leave-it basis. Samsung decided not to sign the new agreement and instead to allow the annual renewal provision of its existing SD Card License to take effect. 116. As described in Section D, SD-3C continued to insist that the renewed 2003 License did not cover microSD and SDHC Cards. Following the renewal, SD-3C, acting on behalf of Panasonic and the other SD Group members, repeatedly demanded that Samsung execute the 2006 License, including through correspondence on February 1 and 3, 2007, but did not engage in any negotiations over its terms. Samsung again refused to sign the 2006 License. On information and belief, other manufacturers and/or assemblers of SD Cards have executed the 2006 License. 2. The SD Card Group Provided No Alternative to the SD Card License and Its Provisions. 117. The refusal of Defendants, Toshiba, and SanDisk to negotiate over the terms of the SD Card License ensured that their competitors—competing manufacturers and sellers of SD Card components and finished SD Cards—would be subjected to the royalty and other provisions of the SD Card License. In furtherance of this agreement, the SD Group members also agreed to provide no mechanism by which to separately license their own claimed essential patents. 118. The 2003 Agreement contains no provision permitting separate licenses of the Essential Patents or other intellectual property from the SD Group

148a members or otherwise. It is, by its terms, the sole vehicle for securing the SD Card rights. 119. Pursuant to Section 2.1 of the 2003 Agreement, Samsung (and other licensees) received a “non-exclusive license, on a worldwide basis during the term hereof, to make, design, have made, use, offer for sale, sell, import, export or otherwise dispose of SD Memory Cards . . . under the Essential Patent Claims Licensable by Licensor.” The fact that the license was “non-exclusive” did not mean that it was available from other sources. Instead, the ordinary meaning of “non- exclusive” in this context is that the license did not grant Samsung exclusive rights to the SD Card technologies licensed under the agreement. In fact, pursuant to this provision, other licensees, such as A-Data, Delkin Devices and Phison Electronics, have obtained licenses from SD-3C. 120. The 2006 License also did not realistically permit separate licensing of the rights granted by the SD Card License. The 2006 License included preambular language and an Article 12.5 purporting to affirm the right of licensees “to separately negotiate a license with any or all SD Group members under any and all Essential Patent Claims Licensable by each such SD Group member under terms and conditions to be independently negotiated by each such member.” This is contrary to the position taken by the individual members of the SD Group in their communications with Samsung, including as recently as 2010. As detailed below, each of the SD Group members has represented that it lacks the authority to license the essential patent claims that are jointly owned by the members of the SD Group.

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121. The agreement of Defendants, Toshiba and SanDisk to require competing manufacturers to execute an SD Card License is also confirmed by their public statements. For example, the SD-3C website states explicitly that: You need to execute the [SD Card License] if you are making semiconductor memory products (e.g., flash memory cards, ROM cards, SD I/O Combo Cards, miniSD Cards) which utilize SD technology (for example, cards based on the SD Group Specifications (as defined in the [SD Card License])). 122. Even if the purported right to license independently were effective, it would address only a portion of the rights—the putatively “Essential Patent Claims” owned by individual members of the SD Group—granted by the SD Card License. Under either the 2003 or 2006 License, even if licensees could negotiate separate licenses for these Essential Patent Claims from individual members of the SD Group, those licenses would be in addition to, rather than a substitute for, the continuing requirement on industry participants to execute the SD Card License—and thereby pay the SD Group members an “entry fee”—if they wish to manufacture or sell SD Cards. As a consequence, whether or not individual rights can be obtained from individual SD Group members, it is still necessary for any manufacturer or seller of SD Cards to hold a license from SD-3C. 123. In particular, the SD Card Specification, logo and other trademarks are not licensable by individual SD Group members. In communications with Samsung, Mr. Quackenbush, SD-3C’s licensing

150a agent, has taken the position that this intellectual property is available only from SD-3C. For example, on April 14, 2007, Mr. Quackenbush, acting on behalf of Defendants and the other members of the SD Group, refused to provide Samsung with requested logo guidelines for the second generation SD Cards, explaining instead that this intellectual property is “only used by licensees who have signed the [2006 License].” By conditioning the use of this intellectual property on Samsung’s willingness to accept the terms of the 2006 License, SD-3C confirmed both that this intellectual property is available only from SD-3C and that the royalty requirement on these SD Cards arises independently of the 2003 License. 124. The SD Group members also use their control over the SD Card Association to further the requirement that all competing manufacturers of SD Cards execute the SD Card License. As explained on the SD Association website, “the SD Association’s Licensing Program operates in conjunction with SD-3C” and “SD-3C, LLC represents the interests of the founding patent holders—Panasonic, SanDisk, and Toshiba—while also serving as the licensing authority for all SD technology.” The SD Card Association requires SD Card manufacturers and sellers to execute its license (known as the “License Agreement for SDA Memory Card Specification or LAMS”), which obligates licensees to “acknowledge and agree” that manufacturing or selling “SD Memory Cards requires [the] Licensee to enter into the” SD Card License with SD-3C. 125. As described above, even if the SD Group members were willing to enter into separate licenses for their “Essential Patents,” Samsung (or another

151a licensee) would still need to obtain an SD Card License. That license provides on its face for a 6 percent royalty rate, and neither the 2003 Agreement nor the 2006 License provide a mechanism for reducing the 6 percent royalty in the event that a party successfully obtains separate licenses from individual members of the SD Group. Mr. Quackenbush confirmed in December 2006, for example, that SD-3C “required a royalty to be paid to SD-3C since the [second generation SD Card also] uses SD-3C technology.” In these ways, the members of the SD Group have ensured that the entry fee imposed by the SD-3C license will apply to all other manufacturers and sellers of SD Cards. Because any licensee is required by the terms of the 2003 and 2006 agreements to pay a 6 percent royalty whether or not it separately licenses rights to certain patents from the individual members of SD-3C, and because the terms of the SD-3C licenses are not negotiable, the offer that a licensee could also negotiate separately for patent rights with individual members of SD-3C (and thereby pay an additional royalty on top of the 6 percent fee required by SD-3C) is an illusion. 3. The SD Group Members Refuse to Negotiate Separate Licenses for Their Essential Patents 126. In communications with the individual members of the SD Group, including Mr. Richard Chernicoff from SanDisk, Mr. Hiroshi Miyauchi from Toshiba, and Mr. Tetsyuki Watanabe from Panasonic, Samsung repeatedly stated that it does not wish to pay the SD-3C royalties and sought information directly from the SD Group members about their claimed essential patent rights. No member of the SD Group

152a has indicated a willingness to negotiate a separate license with Samsung for SD rights pursuant to Article 12.5 of the 2006 License. Instead, all three members of the SD Group have taken the position that the jointly owned Essential Patents can be licensed only through SD-3C. Moreover, two members of the SD Group have taken actions to preclude such negotiations or such a license. 127. Critically, Defendants, Toshiba, and SanDisk have refused to disclose purportedly “essential patents” that would, in the absence of the license, be infringed by a product that implements the SD Specification. As described earlier in the Complaint, through their control and support of SDA, the SD Group members have developed and maintain SDA rules that excuse the SD Group members from disclosing this information under the IP Policy. Defendants, Toshiba and SanDisk also did not provide this information in the 2003 Agreement or the 2006 License. They also have not provided this information through SD-3C, which similarly failed to identify all of the purportedly essential patents, and instead lists on its website only 9 patents “for information purposes only” and “by way of example” and further notes that the list “may not be exhaustive.” The SD Group members also have refused to disclose this information in bilateral discussions with Samsung. By denying licensees information about their individual patent holdings, the SD Group members have effectively impeded any effort to negotiate separate licenses with individual members of the SD Group. 128. For example, Samsung asked Panasonic during discussions in 2009 to identify the patents owned by Panasonic that are essential to the

153a manufacture of SD Cards and therefore conveyed as part of the SD Card License. Pressed on this point by Samsung, Panasonic identified its five illustrative essential patents as listed on the SD-3C website and eventually showed Samsung a list of 29 patents Panasonic “believe[d] are SD essential patents although they ha[d] not yet been evaluated by a third party evaluator.” Panasonic, however, refused to allow Samsung to retain a copy of the list or to confirm that the list was a definitive and comprehensive description of Panasonic’s essential SD Card patents. 129. Similarly, in 2007, Samsung asked SanDisk to identify the patents owned by SanDisk that are essential to the manufacture of SD Cards and therefore conveyed as part of the SD Card License. SanDisk refused to provide Samsung with this information. 130. By declining to provide the requested information on their putative essential patents, Panasonic and SanDisk eliminated any ability on the part of Samsung to negotiate a separate license for these patents. In so doing, Panasonic and SanDisk acted in furtherance of the ongoing and renewed anticompetitive agreement between the members of the SD Group and SD-3C to require industry participants wishing to manufacture or sell SD Cards to execute an SD Card License. 131. Moreover, as recently as last year, Panasonic has insisted that Samsung deal directly with SD-3C in matters involving licensing of rights to manufacture SD Cards, in lieu of expressing a willingness to engage in separate licensing discussions. For example, in a letter of January 18, 2010, responding to Samsung’s concerns about the scope of the claimed “essential patents” and whether they

154a included certain of Panasonic’s claimed patents, Mr. Tetsuyuki Watanabe, Director of Panasonic’s Licensing Center stated: [Y]our primary grievance appears to stem from your interpretation of the [SD Card License] to cover flash memory patent claims as Essential Patent Claims. Although we believe there is no ambiguity about it, and that the flash memory claims are clearly excluded, you are kindly requested to contact SD-3C, LLC, should you have any questions. 4. The SD Group Members Have Exercised Their Market Power by Coercing Licensees to Agree to a Price Stabilization Provision. 132. The 2006 License also contains two provisions that, if enforced, would provide Defendants, Toshiba, and SanDisk with the ability to stabilize SD Card prices by setting a “floor price,” as well as the ability to monitor and enforce this floor price. 133. First, Article 7.3 of the Amended and Restated Memory Card License (“2006 License”) gives SD-3C the power to determine a “fair market price” for SD Cards that would serve as a minimum reference price for the calculation of licensees’ royalty obligations. Under this provision, if a licensee sells at a retail price below the “fair market price” set by SD-3C, it will be penalized directly by having to pay a higher percentage of its actual retail price as a royalty to SD-3C. For example, if the SD-3C determined that the “fair market price” was $50, and the licensee actually charged only $40, it would still need to pay SD-3C a 6 percent royalty based on $50 (or $3), thus effectively

155a charging the licensee a 7.5 percent royalty ($3 royalty on a $40 price). 134. The effect of the “floor price” provision, if enforced, would be to constrain the ability of licensees to sell SD Cards at prices below a level determined by Panasonic, SanDisk and Toshiba. By agreeing to include this provision in the 2006 License and to coerce licensees into accepting it, Defendants, SanDisk and Toshiba sought to exploit their market power by ensuring that the price of SD Cards is set at a level of their choosing. 135. Second, Panasonic and the other SD Group members included in the 2006 License a provision that would permit them to enforce the “floor price” by giving them power over the licensee’s continued ability to produce SD Cards. The 2003 SD Card License provided a three-year license that was renewable at the licensee’s option for up to 10 years. Under this version of the SD Card License, SD-3C could terminate the agreement only in the event of a material breach or a failure to perform any material obligation on the part of the licensee. That provision gave the licensee protection for the significant sunk cost investments in infrastructure and other capital requirements necessary to produce SD Cards. 136. By contrast, Article 14.1 of the 2006 License gave SD-3C (and, through it, the SD Group members) the ability to terminate the agreement each year on the anniversary of the effective date, until the maximum 10-year term of the agreement. This new term increased the SD Group members’ leverage over licensees, whose sunk cost investments would now be at the mercy of their competitors, and would greatly

156a increase the pressure to conform to floor pricing levels set by members of the SD Group. 137. On information and belief, the SD Group has not enforced the price stabilization provision since 2006—perhaps because Samsung’s refusal to execute the 2006 License undermined its potential effectiveness, by leaving a major competitor free to price at a level of its choosing. 5. The SD Group Members Seek to Maintain Their Dominance Over SD Card Technology Through Improper Grantback Requirements. 138. The SD Card License also includes a grantback provision that has the effect of entrenching the SD Group members’ control over SD Card technology. Article 2.4 of the SD Card License requires licensees to grant to each member of the SD Group: under the Essential Patent Claims Licensable by Licensee, a non-exclusive, non-transferable, royalty-free license to and release from any and all claims of infringement, on a worldwide basis, to make, design, have made, use, offer to sell, self, import, export or otherwise dispose of SD Memory Cards . . . . 139. The requirement that licensees give SD Group members royalty-free access to any new essential technology they might develop contrasts with the 6 percent royalty demanded by SD Group members for their own essential patent claims. This provision ensures that licensees can expect to receive no financial reward for developing technology for use in SD Cards and submitting the technology for inclusion in the

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Specification. This provision necessarily has the effect of limiting licensees’ development and contribution of technology that would reduce the share of SD Card technology owned by the SD Group members and SD-3C. 140. The grantback provision of the SD Card License fails to protect against the threat of anticompetitive harm associated with such provisions. In its 1999 business review letter related to DVD licensing practices, the DOJ recognized the potential for grantback provisions to result in “significant discouragement of research and development.” The letter indicated that this potential can be alleviated by arrangements that ensure that licensees subject to a grantback provision benefit from introducing new essential patents into the pool. 141. The SD Card License grantback provision lacks the critical redeeming feature highlighted by DOJ—that is, the ability of a licensee to benefit from its innovation efforts. Instead, innovation on the part of a licensee will support royalties earned by the SD Group members, which undermines or eliminates the incentive for innovation. 142. Moreover, the anticompetitive effect of the grantback provision is magnified because licensees do not have access to the SD Group members’ claimed essential patent portfolios. That failure to disclose further impedes the ability of the licensees to design improvements or otherwise take into account the claimed essential patents, and impairs the ability of licensees to identify intellectual property (even their own) that might be subject to the grantback provision. In contrast to a legitimate patent pool, which is based on transparency, the secretive operation of the SD

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Group members’ combination increases its anticompetitive effects. 143. For these reasons, the grantback provision’s significant potential to harm competition among technologies outweighs any potential procompetitive benefit. 6. The SD Card License Does Not Convey All of the Rights to Make an SD Card From the SD Group Members. 144. Panasonic, SanDisk and Toshiba claim substantially all of the flash memory technology rights needed to manufacture an SD Card. Instead of including all of these rights within the scope of the SD Card License, however, these companies have agreed to hold back their flash memory rights from the SD Card License. Panasonic, SanDisk and Toshiba each require competing manufacturers of SD Cards to license their respective flash memory rights in separate bilateral license agreements. 145. Consistent with these requirements, the SD Card License requires licensees to pay a 6 percent royalty, but by its terms does not provide licensees with all the rights needed to manufacture an SD Card. Article 2.3 of the SD Card License provides: “IT IS EXPRESSLY UNDERSTOOD THAT THE RIGHTS AND LICENSES GRANTED PURSUANT TO THIS AGREEMENT DO NOT EXTEND TO ANY SEMICONDUCTOR MEMORY TECHNOLOGY OR SEMICONDUCTOR PROCESS/PACKAGING TECHNOLOGY.” 146. By requiring SD Card licensees to enter into separate bilateral transactions for their memory technology, the SD Group members have eliminated

159a any efficiency benefit stemming from the pooling of their putative essential SD Card patents in the SD Card License. To the contrary, the need to license the SD Group members’ intellectual property both from SD-3C and from the members themselves increases the transaction costs for a licensee seeking to manufacture SD Cards. That increased cost and decreased efficiency is particularly striking because the SD Group members simultaneously require licensees to negotiate memory licenses with them directly and refuse to offer the rights to all of their SD Card-related technology during those negotiations. 147. The separate licensing of memory technology also provides the SD Group members with an opportunity to extract additional royalties from licensees that increase the cost advantage enjoyed by SD Group members in the manufacture of SD Cards. 148. That cost advantage is magnified by the structure of the SD Card License royalty itself. Although the SD Card License purports to exclude flash memory rights from its scope, and although the SD Group members charge licensees for the rights to that intellectual property, the SD Card License nonetheless bases royalties on the memory portion of the SD Card. 149. Specifically, the SD Card License provides that the 6 percent royalty is payable on net sales of SD Cards, rather than on a per-card basis. The price of an SD Card, and therefore the amount of royalty owed, is generally proportional to the amount of flash memory contained within it. For example, the advertised price of SanDisk SD/SDHC Cards at www.flash-memory- store.com on July 15, 2010, was $9.95 for 2 GB, $14.95 for 4 GB, $21.95 for 8 GB, $34.95 for 16 GB and $73.95

160a for 32 GB. The cost of non-memory components in SD Cards does not vary significantly, regardless of the memory capacity of the card in which they are incorporated. By requiring royalties to be calculated based on net sales, the SD Card License therefore effectively requires that licensees pay a royalty with respect to the quantity of memory included in an SD Card, even though that memory is expressly excluded from the scope of the license grant. 7. Panasonic, SanDisk and Toshiba Continue to Renew and Reaffirm Their Unlawful Agreement With SD-3C. 150. Defendants, SanDisk and Toshiba actively continue to take new and independent action in furtherance of their anticompetitive combination, and repeatedly have expanded the anticompetitive agreements among themselves to maintain their monopoly of SD Card technology and their dominance of the SD Card markets. In November 2007, for example, the members of the SD Group and SD-3C executed a Second Amended and Restated Master Licensing Agreement codifying the updated and expanded agreements among the SD Group members to collectively license their SD Card technology only through SD-3C and at a single price. 151. In furtherance of these renewed and ongoing agreements, the SD Group members have taken the position in their bilateral negotiations with Samsung that they lack the authority to negotiate separate licenses with SD Card manufacturers for any jointly owned SD-3C intellectual property. Similarly, the SD Group members prevent SD-3C from varying the terms of its license, thereby rendering ineffective any potential separate license of essential patents. By

161a these means, the SD Group members and SD-3C continue to ensure that any licenses granted by individual SD Group members would still require payment of an additional “entry fee,” not paid by members of the SD Group, that the SD Card License imposes on rival manufacturers of SD Cards. 8. The SD Card License is Part of the SD Group Members’ Broader Effort to Jointly Create and Maintain a Permanent Cost Advantage Over Competitors. 152. The effect and necessary purpose of the agreements among Panasonic, SanDisk, Toshiba and SD-3C has been to impose and maintain costs on competitors that the members of the SD Group do not themselves bear. To this end, in parallel with their agreement to license their SD Card patents through SD-3C at a single price, the members of the SD Group have entered into cross-licensing arrangements that granted them royalty-free access to the patents for which they charge others an entry fee. In its annual report for 1999, for example, SanDisk disclosed: While other flash card manufacturers will be required to pay the SD Association license fees and royalties which will be shared between [Panasonic], Toshiba and SanDisk, there will be no royalties or license fees payable among the three companies for their respective sales of the Secure Digital Memory Card. 153. On information and belief, the SD Group members continue to abide by these cross-licensing arrangements. In conjunction with the other elements of their licensing arrangements, including the agreement to license SD Card technology only through

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SD-3C and at a single price, to withhold critical memory technology from the SD Card license, to impose an entry fee on competitors, and to impose an unequal grantback provision on licensees, this cross- licensing agreement allows three major competitors to enjoy a permanent cost advantage over other competing manufacturers and sellers of royalty- bearing SD Cards. Given the low-margin, commoditized nature of the SD Card business, this cost advantage is sufficient to significantly impede the ability of other industry participants to compete with SD Group members. This combination does not provide efficiencies that outweigh its significant anticompetitive effects. F. The Effects of Defendants’ Conduct on Competition and on Plaintiff’s Business 154. The illegal and ongoing combination among Defendants and the other members of the SD Group has suppressed competition in the markets for SD Cards and related technologies and products. That combination has caused, and continues to cause, injury to Samsung and other current and new entrants into these markets. The SD Card is now the dominant format in the flash memory card market, due in large part to the widespread adoption of microSD and SDHC Cards from 2006 onwards. The SDA states that it is “the de-facto industry standard” and that “SD technology is used by more than 400 brands across dozens of product categories and in more than 8,000 models.” SD Cards accounted for more than 80 percent of all flash memory cards sold worldwide in 2009. MMC cards, by contrast, now represent only a negligible portion of the flash memory cards sold and used by consumers. Defendants are perpetuating their illegal

163a combination to maintain the dominance of this format and their control over it, and to restrain competition from other SD Card manufacturers and other products and technologies. 155. The conspiracy between Defendants and the other members of the SD Group has suppressed the emergence of new and different flash memory card formats. In contrast to the profusion of new formats entering the market during the 1990s, no significant alternative to the SD Card format has been introduced since the SD Card was launched in 2000. SD Group members have reduced competition in flash memory card technology, including by agreeing among themselves not to compete with the SD Card format, by imposing grantback provisions on SD Card manufacturers that inhibit the emergence of new and improved technologies, and by actively impeding the emergence of competing new formats. Consumers have been harmed by the resulting diminution in choice between flash memory card formats, by the decreased innovation in SD Card and flash memory technologies, and by the restraints imposed on the SD Card and related markets by Defendants, Toshiba and SanDisk. 156. Starting when it received its first invoice from SD-3C on November 17, 2006, Samsung has been and continues to be injured by the agreement among and between the SD Group and SD-3C to impose a royalty requirement on first generation SD Cards pursuant to the non-negotiable 2003 SD Card License. Samsung also has been and continues to be injured by the new and independent actions of the SD Group and SD-3C from August 2006 onwards to impose a similar royalty requirement on microSD and SDHC Cards. In 2010, approximately 85 percent of the SD Cards sold by

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Samsung were microSD Cards. In the same year, approximately 55 percent of Samsung’s sales of full- sized SD Cards were SDHC cards. 157. The illegal combination among Defendants, Toshiba and SanDisk has injured and continues to injure Samsung in three ways. First, the illegal combination has injured and continues to injure Samsung by causing it to lose significant sales where it competes with SD Group members. Samsung manufactures and supplies finished SD Cards in competition with the SD Group members, including to such companies as Nokia and RIM. The ongoing 6 percent royalty imposed by the illegal combination places Samsung at a sustained cost disadvantage to the SD Group members that it would not face in a competitive market. This sustained cost disadvantage results in a significant loss of sales opportunities to the SD Group members. 158. Second, the illegal combination has injured and continues to injure Samsung by reducing its volume of sales to customers that compete with the SD Group members. Samsung sells finished SD Cards to other manufacturers and assemblers, who then sell those cards under their own brand names in competition with the products of SD Group members. Because these sales are subject to SD-3C’s royalties and the cards are more expensive as a result, the resellers are placed at a sustained cost disadvantage to SD Group members. This cost disadvantage causes Samsung’s manufacturer and assembler customers to lose sales to SD Group members, and causes those customers in turn to buy fewer finished SD Cards from Samsung. Since late 2006, Samsung’s sales of finished SD Cards to reseller customers have progressively

165a diminished as the additional costs imposed by the illegal combination have hindered both sales of SD Cards by those customers and Samsung’s sales to those customers. 159. Third, Samsung is injured by the SD Group’s and SD-3C’s imposition of a 6% royalty on the sales of all SD Cards sold by Samsung, whether under the 2003 SD Card License or pursuant to the actions of the SD Group and SD-3C from August 2006 onwards to apply the royalty requirement to new types of SD Cards. As a manufacturer of SD Cards, Samsung has been required to abide by the 2003 SD Card License without any opportunity to renegotiate its anticompetitive terms, or to separately license the intellectual property rights from the SD Group members. Pursuant to the license, Samsung has been required to pay an ongoing 6 percent royalty to SD-3C, a significant proportion of which relates to purportedly unlicensed memory contained in SD Cards sold by Samsung. By the end of the first quarter of 2011, Samsung had paid more than $165 million to SD-3C in royalties on its sales of all SD Cards — including both those subject to and not subject to the 2003 License. Moreover, the artificial exclusion of memory technology rights from the scope of either the 2003 SD Card License and/or 2006 revised agreement has forced Samsung to enter into additional royalty-bearing license agreements covering such memory rights with each member of the SD Group. For example, Samsung continues to pay royalties to Panasonic on the memory component of SD Cards. This effectively amounts to a double royalty on SD Cards, increasing transaction and royalty costs, and again negating any licensing efficiencies that could have flowed from the activities of

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SD-3C, acting on behalf of Panasonic and other SD Group members. 160. The individual members of the SD Group have benefited, and continue to benefit, handsomely from their anticompetitive conduct. This conduct has allowed the members of the SD Group to extract hundreds of millions of dollars in royalty flows each year from numerous competing SD Card manufacturers, as well as to enjoy the fruits of their dominant share of the SD Card market. The burden of the royalties and other anticompetitive restraints has handicapped the ability of rival manufacturers to compete with SD Group members in the sale of SD Cards. Panasonic, SanDisk and Toshiba have been able collectively to dominate the SD Card product market. Together they account for at least 65 percent of the worldwide market for SD Cards (including cards manufactured by an SD Group member and sold by a third party under its own brand name). The SD Group members collectively account for a dominant share of both standard SD Cards (even allowing for the negligible sales volume of MMC cards that can be operated in some cases in SD Card slots) and second generation SD Cards, such as miniSD and microSD Cards. The SD Group members’ collective share of the total U.S. market for SD Cards, including both retail and sales to original equipment manufacturers such as Motorola, is greater than 70 percent. Consumers have paid higher prices for SD Cards, and have enjoyed diminished choice and innovation, than would have been the case if SD Group members had been required to compete on an even playing field with other manufacturers.

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RELEVANT MARKETS 161. There is a relevant antitrust market in the sale of finished SD Cards to third parties for use with devices that contain slots made for full-size SD Cards, including versions of such cards with a storage capacity of 4 GB and above (the “Full-Size SD Card market”). Such finished SD Cards are broadly used in interstate commerce for a range of applications, including particularly for data storage in digital cameras, PDAs, digital audio players, and other electronic devices equipped with an SD Card slot. Millions of such devices have been sold, and continue to be sold, in the United States. Consumers with devices equipped with a full-size SD card slot generally would regard an SD Card as the only option for use in the devices. Most consumers who operate a device that has a full-size SD Card slot would not regard any memory card other than an SD Card as reasonably interchangeable for the memory card required by that device. Even if an MMC Card could be used in a full-size SD Card slot in some devices, this is not true for all devices with full-size SD Card slots. Even for devices with a full-size SD Card slot that could technically accept an MMC Card, most consumers would in any event not be aware of that technical substitutability. Those customers would not regard an MMC Card as interchangeable in use even for devices that technically might be able to use an MMC Card in lieu of a full-size SD Card. 162. There is a relevant antitrust market in the sale of finished SD Cards to third parties for use with devices that contain slots for reduced-size SD Cards, such as miniSD and microSD Cards (the “Reduced-Size SD Card Market”; collectively with the “Full-Size SD Card Market” the “SD Card Market”).

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In such devices, the Reduced-Size SD Cards will be the only available option for operating the device in conjunction with a flash memory card. Such finished Reduced-Size SD Cards are broadly used in interstate commerce for a range of applications, including particularly for data storage in smaller-sized electronic devices, such as mobile telephones, equipped with a Reduced-Size SD Card slot. Millions of such devices have been sold, and continue to be sold, in the United States. Consumers with devices equipped only with a Reduced-Size SD card slot would not regard any other kind of flash memory card as a reasonably interchangeable alternative to a Reduced-Size SD Card. 163. There is a separate relevant antitrust market in the technology used in the production of SD Cards, consisting of technology developed for this end- use or that might be applied toward this end-use (the “SD Card Technology market”). The SD Card Specification requires that certain SD Card functions be implemented either by a specific technology or by a particular solution for which the technological options are limited. The technologies required by the Specification or capable of providing a solution required by the Specification are not reasonably interchangeable with other technologies. 164. There is a separate relevant antitrust market in the technology used in the production of flash memory cards (the “Flash Memory Card Technology market”). This includes not only technology used in the production of SD Cards but also technology used in the production of other flash memory card formats. The technologies included in the Flash Memory Card Technology market are not

169a reasonably interchangeable with other technologies that are not suitable for use in flash memory cards. 165. There are no barriers to the interstate sale or exchange of SD Cards, SD Card Technology or Flash Memory Card Technology. Accordingly, in each case above, the relevant geographic market is the United States and its territories, or, alternatively, the world. Competition among SD Cards and technology occurs on a uniform basis throughout the United States and throughout the world. CAUSES OF ACTION CLAIM I Agreement in Restraint of Trade in Violation of Section 1 of the Sherman Act against Panasonic and SD-3C LLC (in the SD Card Market) 166. Plaintiff hereby incorporates by reference Paragraphs 1 through 165 of this Complaint, as though fully set forth herein. 167. Panasonic, SD-3C and the other members of the SD Group entered into a continuing contract, combination, agreement, and/or conspiracy to unreasonably restrain trade and commerce in the markets for SD Cards. 168. By agreeing to require industry participants wishing to manufacture SD Cards to execute an SD Memory Card License and at a single price, Panasonic, the other members of the SD Group and SD-3C have raised the costs of other manufacturers of SD Cards, thereby reducing competition in the SD Card markets. The 2003 SD Card License and the 2006 License together require SD Card manufacturers to pay a royalty of 6 percent on net sales of all SD Cards, but the SD Group

170a members have exempted themselves from this fee. The entry fee required by the SD Card License insulates SD Group members from competition in the SD Card market by giving them a permanent cost advantage over rival manufacturers. The adverse effect of this cost advantage on competition in the SD Card market is exacerbated by the additional royalties that SD Group members separately demand from competitors for licenses to their flash memory patents. As a result of their strategy of raising the costs of rival manufacturers, the SD Group members have been able to establish and maintain a dominant position in the SD Card market. Through their dominant position the members of the SD Group have sought to impose increasingly onerous and anticompetitive terms on potential licensees, including—since September 2006— terms that would have the effect of stabilizing SD Card prices. These agreements to restrain competition are ongoing and continuing. 169. The anticompetitive effects of the agreement between Panasonic, SD-3C and the other members of the SD Group are not offset by any countervailing benefits. Absent the agreement between the members of the SD Group, other industry participants were ready and willing to develop a flash memory card with substantially the same functionality of an SD Card. Panasonic, SanDisk and Toshiba have made no showing that their agreement to jointly develop and jointly license flash memory card technology has cleared blocking patent positions held by those companies. The single, pooled license offered by SD-3C does not enhance licensing efficiency by eliminating the need for multiple licenses. On information and belief, the key patent rights covering

171a flash memory used in SD Memory Cards are claimed by the SD Group members. By its terms, however, the SD Card License excludes these rights, thereby requiring that companies that wish to manufacture SD Cards seek separate licenses for flash memory technology from each of Panasonic, SanDisk and Toshiba. 170. The unreasonable restraint of trade created by Defendants’ agreement, and the effects thereof, continue. As a result of Defendants’ agreement and acts in furtherance thereof, Samsung has suffered and will continue to suffer irreparable injury to its business and property. 171. An actual, justiciable controversy appropriate for damages and declaratory relief exists among the parties. CLAIM II Agreement in Restraint of Trade in Violation of Section 1 of the Sherman Act against Panasonic and SD-3C LLC (in the SD Card Technology Market) 172. Plaintiff hereby incorporates by reference Paragraphs 1 through 171 of this Complaint, as though fully set forth herein. 173. Panasonic, SD-3C and the other members of the SD Group entered into a continuing contract, combination, agreement, and/or conspiracy to unreasonably restrain trade and commerce in the SD Card Technology market. 174. Panasonic conspired with SanDisk and Toshiba to manipulate the SD Card Specification by arbitrarily requiring the use of patent rights owned by SD Group members to implement non-central features of the card. The SD Group members, through SD 3-C,

172a also required all other industry participants wishing to manufacture SD Cards to execute an SD Memory Card License. By this means, the SD Group members have agreed on a single price that all three SD Group members will charge for their technology related to SD Cards. By the same means, the SD Group members have foreclosed competition from alternative technologies that, absent the SD Group members’ manipulation of the SD Specification, could be used to implement aspects of that Specification. In addition, Panasonic and SD-3C have agreed with the other members of the SD Group to include in the SD Card License a discriminatory grantback provision that has the purpose and effect of discouraging licensees from developing SD Card technologies that might compete with the technologies owned by SD Group members. As the SD Card standard has gained broader market acceptance, the SD Group members, working through SD-3C, have sought to exploit their control of purportedly essential technology to impose increasingly onerous and anticompetitive terms—since September 2006 on current licensees, such as Samsung, and potential licensees. 175. For the reasons set forth above, including in paragraph 169, the anticompetitive effects of the agreement between Panasonic, SD-3C and the other members of the SD Group are not offset by any countervailing benefits. 176. The unreasonable restraint of trade created by Defendants’ agreement, and the effects thereof, continue. As a result of Defendants’ agreement and acts in furtherance thereof, Samsung has suffered and will continue to suffer irreparable injury to its business and property.

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177. An actual, justiciable controversy appropriate for damages and declaratory relief exists among the parties. CLAIM III Agreement in Restraint of Trade in Violation of Section 1 of the Sherman Act against Panasonic and SD-3C LLC (in the Flash Memory Card Technology Market) 178. Plaintiff hereby incorporates by reference Paragraphs 1 through 177 of this Complaint, as though fully set forth herein. 179. Panasonic and SD-3C entered into a continuing contract, combination, and/or conspiracy with the other members of the SD Group to unreasonably restrain trade and commerce in the market for Flash Memory Card Technology. 180. Panasonic, SanDisk and Toshiba were significant horizontal competitors in the Flash Memory Card Technology market. Prior to their agreement to form the SD Group, the three companies developed competing flash memory card technologies and reached independent decisions on whether and at what price to license those technologies to other industry participants. Following their independent business judgment, each company supported open standard- setting initiatives as a means of encouraging industry adoption of the flash memory card technologies they had developed. 181. Panasonic’s agreement with the other SD Group members and SD-3C has caused anticompetitive effects in the Flash Memory Card Technology market. Acting in furtherance of their agreement designed to achieve control over the SD Card and to make that card the dominant industry standard, Panasonic,

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SanDisk and Toshiba have agreed not to support the development of formats that could compete with the SD Card, thereby discouraging the development of new flash memory card technologies. Panasonic’s participation in this agreement has denied the potential sponsors of new flash memory card technologies the cooperation of an important manufacturer (Panasonic Corp.) and distributor (PNA) of host devices, creating a significant barrier to the propagation of new formats. By agreeing to include a discriminatory grantback provision in the SD Card License, and by continuing efforts to require current and potential manufacturers of SD cards to execute this license, the SD Group members have reduced the incentive of other industry participants to develop alternative flash memory card technologies. Individual members of the SD Group have sought to impair the ability of other formats, in particular the MMC card, to compete effectively. On information and belief, the relevant conduct of these SD Group members was known and approved by the Group’s other members. These agreements to restrain competition are ongoing and continuing. 182. For the reasons set forth above, including in paragraph 169, the anticompetitive effects of the agreement between Panasonic, SD-3C and the other members of the SD Group are not offset by any countervailing benefits. 183. The unreasonable restraint of trade created by Defendants’ agreement, and the effects thereof, continue. As a result of Defendants’ agreement and acts in furtherance thereof, Samsung has suffered and will continue to suffer irreparable injury to its business and property.

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184. An actual, justiciable controversy appropriate for damages and declaratory relief exists among the parties. CLAIM IV Monopolization in Violation of Section 2 of the Sherman Act against SD-3C LLC (SD Card Technology Market) 185. Plaintiff hereby incorporates by reference Paragraphs 1 through 184 of this Complaint, as though fully set forth herein. 186. SD-3C holds monopoly power in the market for SD Card Technology. SD-3C licenses substantially all of the purportedly essential patent claims covering SD Cards under the Specification developed by the SD Group members. On information and belief, other members of the SDA have not identified any patent rights owned by them that are essential for manufacture of SD Cards under the Specification. 187. SD-3C has engaged in exclusionary conduct in order to acquire and maintain this monopoly power. It has collaborated in the manipulation of the Specification by the members of the SD Group, by representing patent rights owned by SD Group members as essential for implementation of the Specification and collecting royalties on that basis. It has failed to disclose fully all the patents owned by SD Group members that the SD Group members and SD-3C claim to be essential for implementation of the Specification. It has coerced industry participants into taking an SD Card License that imposes a supra- competitive royalty fee on companies other than the members of the SD Group and incorporates a discriminatory grantback provision, requiring licensees to give SD Group members royalty-free access to any

176a essential patent claims the licensees may themselves develop covering SD Cards. This grantback provision has the purpose and effect of depriving competitors of the incentive to develop competing SD Card technologies. Using its monopoly power, SD-3C has sought to impose increasingly onerous and anticompetitive terms on potential licensees, including—since September 2006—terms that would have the effect of stabilizing SD Card prices. 188. Defendant’s unlawful monopoly in the SD Card Technology market and the effects thereof continue. 189. An actual, justiciable controversy appropriate for damages and declaratory relief exists among the parties. CLAIM V Conspiracy to Monopolize in Violation of Section 2 of the Sherman Act against Panasonic and SD-3C LLC (SD Card Technology Market) 190. Plaintiff hereby incorporates by reference Paragraphs 1 through 189 of this Complaint, as though fully set forth herein. 191. Panasonic and SD-3C conspired with the other members of the SD Group unlawfully to acquire monopoly power in the market for SD Card Technology, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. Defendants entered into this conspiracy with the specific intent of obtaining by unlawful means a monopoly in this market. 192. Defendants have each committed one or more overt acts in furtherance of the conspiracy to monopolize the SD Card Technology market. Panasonic has joined with SanDisk and Toshiba to

177a exclude and disadvantage rivals by, among other things, (1) agreeing to jointly replace an existing open standard format with the SD Card and then to jointly license their rights to that card at a single price; (2) manipulating the SD Specification to arbitrarily require the use of their own patents and foreclose other potential competing formats; (3) requiring companies that want to manufacture or sell SD Cards to enter into the SD Card License with SD-3C; (4) requiring users of SD Card Technology, other than themselves, to pay an anticompetitive entry fee under the SD Card License; and (5) imposing on licensees a discriminatory grantback provision that discourages the development of competing SD Card technologies. SD-3C has enforced the SD Group members’ anticompetitive scheme, including its unequal licensing and grantback provisions, in furtherance of the objectives of the conspiracy. 193. Panasonic and the SD Group members’ unlawful conspiracy to monopolize and the effects thereof continue. 194. An actual, justiciable controversy appropriate for damages and declaratory relief exists among the parties. CLAIM VI Unfair Competition Under California Business and Professions Code Section 17200 et seq. against Panasonic and SD-3C 195. Plaintiff hereby incorporates by reference Paragraphs 1 through 194 of this Complaint, as though fully set forth herein. 196. The acts and conduct of Panasonic and SD-3C as alleged above in this Complaint constitute methods of unlawful, unfair, and/or fraudulent business

178a practice as defined by California Business & Professions Code Section 17200. 197. Panasonic and SD-3C’s acts and practices, as described above, amount to an unlawful business act or practice under Section 17200 in at least the following respects. Panasonic and SD-3C (1) entered into a continuing contract, combination, and/or conspiracy to unreasonably restrain trade and commerce; (2) manipulated the standard-setting process to raise costs to rivals and significantly threaten or harm competition; (3) required non-negotiable and discriminatory grantback requirements on SD Card licensees; and (4) thereby foreclosed the development of other flash memory card technologies, all in violation of the Sherman and Cartwright Acts. 198. Under the Cartwright Act, Panasonic and SD-3C owed a duty to Samsung not to conspire to restrain trade. Both Panasonic and SD-3C are liable for breaching that duty. 199. Under California Business & Professions Code Section 17200, conspiratorial liability for SD-3C’s anticompetitive conduct in California attaches to Panasonic, because Panasonic breached its duty to Samsung under California’s Cartwright Act by conspiring with SD-3C to restrain trade. CLAIM VIII Violation of the Cartwright Act, California Business and Professions Code Section 16700 et seq. against Panasonic and SD-3C 200. Plaintiff hereby incorporates by reference Paragraphs 1 through 199 of this Complaint, as though fully set forth herein. 201. Panasonic and SD-3C have, through the acts and conduct described herein, entered into an

179a unlawful trust as defined by California Business & Professions Code Sections 16720 and 16726. 202. Panasonic, SD-3C, and the other SD Group members entered into a combination with the purpose of restraining competition by, among other things: (1) limiting or reducing the production of and/or increasing the price of flash memory card technology, SD Card technology and SD Cards; (2) preventing competition in the sale of flash memory card technology and SD Cards; and (3) fixing the price of SD Card technology. 203. As a result of Panasonic and SD-3C’s actions, trade and commerce have been restrained in the following markets: (1) the Flash Memory Card Technology Market; (2) the SD Card Technology Market; and (3) the SD Card Market. 204. Plaintiff has been harmed by Panasonic and SD-3C’s unlawful conduct, by being required to pay higher royalties for the production of SD Cards than it would have in a free and competitive market, and through foreclosure of its ability to sell SD Cards and components to its customers. 205. Such effects are continuing and will continue until injunctive relief is granted. PRAYER FOR RELIEF WHEREFORE, Plaintiff seeks the following relief: 1. Pursuant to 28 U.S.C. § 2201, a declaration that Panasonic and SD-3C have unreasonably restrained trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; 2. Pursuant to 28 U.S.C. § 2201, a declaration that the SD Card License is an unreasonable restraint

180a of trade that violates Section 1 of the Sherman Act, 15 U.S.C. § 1; 3. Pursuant to 28 U.S.C. § 2201, a declaration that SD-3C has monopolized the market for SD Card Technology in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; 4. Pursuant to 28 U.S.C. § 2201, a declaration that Panasonic and SD-3C have engaged in a conspiracy to monopolize the SD Card Technology market in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; 5. Restitution of all sums paid as royalties by Samsung under the SD Card License since the execution thereof; 6. Pursuant to 28 U.S.C. § 2202, such further relief as may be necessary or proper based upon the Court’s declaratory judgment; 7. Pursuant to 15 U.S.C. § 15, trebled damages resulting from Panasonic’s and SD-3C’s violations of the Sherman Act; 8. Injunctive relief preventing and restraining Defendants from collecting royalties on SD Cards manufactured by third parties; 9. Pursuant to California Business & Professions Code Sections 16750 and 17203, restitution of royalties paid by Samsung under the SD Card License since the date of execution and an injunction to prevent Panasonic and SD-3C’s continued acts of unfair competition; 10. Pre-judgment and post-judgment interest at the maximum legal rate; 11. Plaintiff’s costs, expenses, and reasonable attorneys’ fees in bringing this action; and

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12. Such other relief as the Court may deem just and proper. Dated: September 16, 2011 COVINGTON & BURLING LLP By: /s/ Simon J. Frankel Simon J. Frankel Attorneys for Plaintiff SAMSUNG ELECTRONICS CO., LTD.

DEMAND FOR JURY TRIAL Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff demands a trial by jury. Dated: September 16, 2011 COVINGTON & BURLING LLP By: /s/ Simon J. Frankel Simon J. Frankel Attorneys for Plaintiff SAMSUNG ELECTRONICS CO., LTD.