Will A New Wave Of Class Actions Spring From Patent Infringement Litigation?

It is no secret that many private class actions are filed as follow-on lawsuits to news reports, government investigations, regulatory developments, and identical earlier-filed class actions. But a recent gambit by the plaintiffs’ bar is among the more creative efforts we have seen. Earlier this week, a well-known plaintiffs’ firm filed Dang v. Samsung Electronics Co., in the Northern District of California. The complaint alleges that Apple’s victory over Samsung (at least in part) in certain highly publicized patent infringement actions establishes that Samsung has violated California’s consumer protection law as well as warranty statutes in 49 states and the District of Columbia.

The background of the patent battle between Apple and Samsung is well known, so we mention only a few highlights. In fall 2013, the federal court for the Northern District of California found Samsung liable for infringing several patents relating to Apple’s iPhone. The International Trade Commission also found that certain devices were infringing and precluded Samsung from importing or selling those devices. The same court already has granted partial summary judgment to Apple in a second patent lawsuit targeting additional Samsung devices, with a jury trial set for the end of March. (The battles are not over, to be sure.)

The Dang lawsuit alleges that Samsung induced consumers to purchase its devices by concealing its infringing activities, and that once those activities became known, the resale prices of Samsung smartphones and tablets “dropped dramatically,” injuring consumers and unjustly enriching Samsung. Mr. Dang alleges that “[h]ad [he] known the Product he purchased infringed on the patents held by [Samsung’s] competitor, Apple, he would not have purchased the Product.” He seeks to represent everyone in the U.S. who has purchased one of the allegedly infringing devices since 2008—a proposed class that undoubtedly totals in the millions.

Will Dang become a model for other plaintiffs’ lawyers to follow? The short answer: It depends on whether courts will accept the notion that the alleged infringement harms consumers (as opposed to competitors). Color us skeptical—to put it mildly, we have a number of questions:

  • How plausible is it that the interpretation of complex technology patents matters to consumers when they purchase a product?
  • How many Samsung purchasers even know that there is litigation involving Apple patents, much less the determination of the claims?
  • In light of the Ninth Circuit’s decision in Mazza v. American Honda Motor Co.—a case we have discussed before—what are the chances that a nationwide class could be certified given the variations among state warranty and consumer protection laws?
  • Is it realistic to believe that injury and damages can be proven on a classwide basis?

Nevertheless, it is easy to see why plaintiffs’ lawyers might find these kinds of cases attractive. 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.

The theory espoused in Dang parallels the strategies used by plaintiffs’ firms in the recent wave of false advertising class actions against food and beverage manufacturers. As we have discussed, many of these lawsuits rely on California’s wholesale incorporation of the federal Food Drug and Cosmetic Act (“FDCA”). Plaintiffs attempt to convert alleged technical violations of FDCA labeling requirements into consumer claims alleging that the mere sale of such products is illegal—without the need to show that class members actually were deceived by or relied on the alleged mislabeling. And most of those lawsuits have landed in the Northern District of California—now known as the nation’s “Food Court.”

It’s no coincidence that the Dang lawsuit was filed in the Northern District of California by two plaintiffs’ firms that are highly active in the Food Court wars. Will plaintiffs’ lawyers next flock to copycat class actions seeking to leverage findings of patent infringement? Stay tuned. We’ll be monitoring the situation.