Opinion

Alison Frankel

New class action: Real victims of Samsung infringement are consumers

Alison Frankel
Feb 10, 2014 19:55 UTC

Once again, we are reminded that defendants underestimate the creativity of the class action bar at their own peril.

Last week, the firms Reese Richman and Halunen & Associates filed quite an interesting class action complaint in federal court in San Francisco. The case asserts that Samsung’s infringement of various Apple patents in its mobile devices – as established in a jury trial in federal court and in a proceeding at the U.S. International Trade Commission – has injured unwitting Samsung mobile device buyers who believed they were purchasing non-infringing products. According to the complaint, the resale market for Samsung devices has been hard-hit by infringement findings against the company; the suit claims that Samsung owners are actually in danger of violating the Tariff Act of 1930 if they attempt to resell infringing tablets and smartphones.

As you may recall, Samsung is on the hook to Apple for more than $900 million in damages after a partial damages retrial in November of its first round of patent infringement claims against Samsung in San Francisco federal court. The purported nationwide consumer class action actually claims far more than that on behalf of Samsung device purchasers. Under one of the suit’s causes of action, the class wants Samsung to repay the entire cost of the infringing mobile devices to the consumers who bought them – or at least the lost value consumers have realized as a result of Samsung’s infringement. Under another theory, class members assert that Samsung must disgorge to them all of its profits from selling infringing devices. That’s a lot of money: According to Apple, Samsung took in $3.5 billion in revenue from the sale of almost 11 million infringing devices.

So what are these theories that give rise to such outsize potential liability? The complaint claims breach of warranty on behalf of Samsung purchasers nationwide, citing state consumer warranty laws. It also claims violations of New York and New Jersey deceptive trade practices laws on behalf of the nationwide class. The New York law, according to the complaint, provides for at least $50 in statutory damages to every purchaser of an infringing device (or, if Apple’s sales tally is correct, $550 million). The New Jersey law allows consumers to seek damages based on arguments that they wouldn’t have bought the devices at all if they’d known of Samsung’s infringement. But that’s not all: The suit also alleges unjust enrichment under California, New York and New Jersey statutes, demanding restitution of the full purchase price of the infringing products. (In addition, the complaint alleges California unfair trade practices laws on behalf of a California-only class.)

Mayer Brown‘s Class Defense Blog, where I first heard about the Samsung consumer suit, points out some of the potential obstacles for consumers claiming damages from the purchase of infringing products, some specific to smart device cases (Did consumers really know or care about infringement claims when they bought tablets and smartphones?) and some the usual class action defenses, such as whether injury and damages can be shown on a nationwide class basis. Mayer Brown’s Archis Parasharami says in the blog post that he’s skeptical judges will buy the theory that infringement harms consumers, but if they do, you can expect a proliferation of such claims. “It is easy to see why plaintiffs’ lawyers might find these kinds of cases attractive,” he wrote. “If the result of a battle between competitors is that a product has been determined to be infringing by a court or agency, that may substantially reduce the work a plaintiffs’ lawyer needs to do to pursue the case. And that lawyer will likely argue that key aspects of liability have already been established before the class action even gets started.”

Samsung goes after jury foreman in bid to reverse Apple verdict

Alison Frankel
Sep 27, 2012 04:02 UTC

By Alison Frankel and Dan Levine

Samsung doesn’t want you to know why it believes juror misconduct tainted the $1.05 billion verdict that a San Jose federal court jury delivered to Apple in August. Its lawyers at Quinn Emanuel Urquhart & Sullivan redacted that entire section of the motion for judgment as a matter of law that they filed Friday with U.S. District Judge Lucy Koh in San Jose, California. But from a close examination of the statute and cases Samsung cited in the redacted section, we’ve discerned Samsung’s two-pronged argument for juror misconduct: The nine-person jury improperly considered extraneous evidence during deliberations and jury foreman Velvin Hogan failed to disclose in voir dire that he was involved in 1993 litigation with a former employer that led him and his wife to declare personal bankruptcy.

In an exclusive interview Tuesday about Samsung’s secret new allegations, Hogan, an engineer, confirmed that he was a party in two cases cited in Samsung’s brief, a 1993 case from municipal court in Santa Cruz titled Seagate Technology v. Hogan and a 1993 federal bankruptcy case titled In re Velvin R. Hogan. According to Hogan, when Seagate hired him in the 1980s and he moved from Colorado to California, his new employer agreed to split the cost of paying off the mortgage on his Colorado home. But after Hogan was laid off in the early 1990s, he told us, Seagate claimed he owed the company that money. Hogan said he sued Seagate for fraud, Seagate countersued, and he ultimately declared personal bankruptcy to protect his house.

Can Quinn Emanuel credibly argue that Koh needs to hold a hearing to determine whether Hogan’s failure to disclose the 1993 litigation is grounds to throw out an unrelated patent infringement verdict for Apple? Again, we don’t know precisely what Samsung’s argument is, but several of the cases it cited in the new brief’s table of authorities concern juror bias and the failure to disclose relevant information in the jury selection process. In U.S. v. Perkins, for instance, the 11th Circuit Court of Appeals ruled in 1984 that the defendant in a criminal obstruction of justice case was entitled to a new trial because a juror didn’t reveal that he had previously been both a defendant in a civil case over stolen union funds and a witness in a criminal case involving the firebombing of a union hall. In a 1989 2nd Circuit ruling called U.S. v. Colombo, the court called for an evidentiary hearing on whether a juror deliberately failed to disclose that her brother-in-law was a government prosecutor in order to get on the jury, and held that if she hid her ties to the government, convictions in a huge Mafia racketeering case must be vacated.

Why Judge Koh nixed Apple bid to bar Samsung phones and tablets

Alison Frankel
Dec 6, 2011 13:58 UTC

The standard for U.S. judges to grant a preliminary injunction is notoriously high. Plaintiffs have to show that they’re likely to succeed on the merits; that they’ll suffer irreparable harm if the injunction isn’t granted; that the injunction is in the public interest; and that the balance of fairness supports awarding the bar. In patent cases, the analysis of likely success on the merits offers two outs for defendants: they can show that the plaintiffs’ patent probably isn’t valid or that they didn’t infringe it. In other words, there’s a long list of reasons for a judge to refuse to grant a preliminary injunction (which is one reason why so many patent holders also seek injunctions overseas).

In the most consequential injunction case of the moment — Apple’s attempt to bar sales of three Samsung smartphones and Samsung’s new Galaxy tablet — U.S. District Judge Lucy Koh of San Jose federal court picked reasons from all over the no-injunction menu as she refused late Friday to grant the injunction. (Here’s the Reuters story from Dan Levine.) There’s no real theme running through Koh’s decision, which analyzes each asserted patent and each allegedly infringing product. That’s frustrating for anyone hoping to find a broader meaning for smartphone litigation in her ruling, but it gives Apple and Samsung a pretty clear indication of how they’re likely to fare as the merits case moves forward.

Apple asserted that two Samsung phones — the Galaxy 4G and Infuse 4G — infringe two Apple design patents. Based on the precedent established by the U.S. Court of Appeals for the Federal Circuit in a case called Egyptian Goddess v. Swisa, Koh applied an “ordinary observer” test to evaluate infringement. She concluded that although it is “a close question,” an ordinary observer would likely find Samsung’s Galaxy and Infuse phones infringe Apple’s patent on a flat, black, rectangular smartphone with a translucent face. She found that under the Durling v. Spectrum Furniture test for obviousness, Samsung was likely to succeed in challenging one of Apple’s smartphone design patents as invalid — but she found Samsung had not raised substantial questions about the validity of the other patent.

2011: A Samsung litigation odyssey

Alison Frankel
Aug 24, 2011 23:36 UTC

As all the world knows, Samsung is engaged in a do-or-die international patent battle with Apple. On Wednesday alone, Samsung saw a court in the Netherlands enjoin it from infringing an Apple smartphone patent; planned for an injunction hearing in Germany, where a court enjoined the Samsung Galaxy Tab, then lifted the preliminary injunction; and went before Judge Lucy Koh in San Jose federal court, where Apple is demanding yet another injunction barring Samsung devices.

But all that bet-the-company stuff doesn’t mean there’s no place for fun. In an August 23 declaration that set the tech world snickering, Samsung’s lawyers at Quinn Emanuel Urquhart & Sullivan asserted that Apple’s extremely broad design patents on the iPad were anticipated by (among other pop culture reference points) Stanley Kubrick’s 1969 movie 2001: A Space Odyssey. Quinn even helpfully provided a link to a YouTube clip of the crew of the Kubrick spaceship Discovery using thin rectangular devices that look curiously like iPads. (A similar Star Trek clip suggests Captain Picard also used an iPad before Apple invented it.)

The argument isn’t quite as wacky as you might think. Just recently, lawyers for Yves Saint Laurent told Manhattan federal judge Victor Marrero that Christian Louboutin can’t trademark red soles because Dorothy had red shoes in The Wizard of Oz; Judge Marrero cited Dorothy’s “famous ruby slippers” on the first page of his opinion knocking out Louboutin’s trademark. Trademarks have squishier standards than patents, but if it worked for Yves, maybe it’ll work for Samsung as well.

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