WUXI MULTIMEDIA, LTD. ("Wuxi")  … complains against defendants 3C DVD PATENT GROUP ("3C"), KONINKLIJKE PHILIPS ELECTRONICS,  N.V.  …, SONY CORPORATION OF JAPAN ("Sony"), and Plaintiff Wuxi is a corporation incorporated under the laws of Hong Kong, The Peoples Republic of China with its principal place of business in Hong Kong  Case No. 04 CV 1136 DMS (BLM)

The defendants in the case received a Business Review letter from the DOJ in 1998 

According to a summary by counsel for WUXI,  Handal & Associates

The suit alleges that the 3C group and its constituents have engaged in anti-competitive behavior in violation of 15 U.S.C. § 1 (the Sherman Act) as well as other State statutes amounting to unfair trade practices and competition. The suit charges the 3C group with illegal horizontal integration in furtherance of a conspiracy to monopolize the DVD player markets. The Group pools patents filed in the United States for the purpose of illegally forcing their competitors into succumbing to license and royalty agreements. Included in the pool of patents are ones that are not essential to the manufacture or sale of DVD players resulting in an illegal tying arrangement between these non-essential and essential patents. The suit further charges the Defendants with price fixing and market manipulation.

The suit seeks a Declaratory Judgment finding that the 3C patent pool is unenforceable due to the Doctrine of Patent Misuse and for a monetary judgment equal to a refund of all the DVD player royalties collected over the last 3 - 4 years into a pool to be distributed to all those companies that have paid royalties on DVD Licensing Agreements. Further, the complaint seeks a trebling of the damages as a punitive measure to prohibit such conduct in the future.

Excerpts from Original Complaint June 15, 2004  and First Amended Complaint December 24, 2004 and  Second Amended Complaint June 25, 2005

... This is an action to recover treble damages for injuries resulting from Defendants' violations of the antitrust laws of the United States, as set forth in Title 15 of the United States Code.

... The Mission of the Consortium was to create a world-wide standard for the use and enjoyment of DVD media. In so doing the companies that were a part of the consortium promoted their own ideas and properties to the exclusion of competing ideas and technologies.

... the adoption of the Consortium’s standards would ultimately be incorporated in what was to become known as the DVD Standard Specification.

... Each of the members of the Consortium was a holder or assignee of patents that in some way involved a use or application of DVD technology. These patents were valuable properties that each of the members of the Consortium knew could be of value if combined with the patents of the other Consortium members to create complete products and systems that had broad appeal in consumer markets.

…The Defendants, by virtue of their control over the 3C Group, have and continue to possess monopolistic market power over the sale of DVD players and have carried out predatory and anticompetitive conduct directed towards establishing and maintaining market power in the relevant markets and submarkets within the United States. In carrying out this intent, the 3C Group has taken certain steps that include but are not limited to the following:

a. Combining to create and advance a specific set of DVD related standards in which they have a unique financial interest;

b. Securing patents relevant to the manufacture and use of products (DVD Players) so that any competitor wishing to participate in the development of competing DVD related technologies would face an insurmountable task of creating non-infringing specifications that would normally have to be adopted by Content providers in order to secure viable markets therefor;

c. Entering into favorable cross-licensing arrangements so as to achieve an anticompetitive and unfair pricing advantage over competitors who are not part of the 3C Group;

d. Enforcing through customs seizures and litigation, their control and dominance of the relevant markets and sub-markets in an effort to intimidate Plaintiffs and others in the markets into paying royalties to the 3C Group. These actions have been taken despite the meritorious defenses of the Plaintiffs as to the enforceability of the patents;

e. Boycotting and refusing to license qualified manufacturers of DVD related products in an effort to control the supply and consequently the price of products in these markets and submarkets; and,

f. Profitably maintaining pricing above competitive levels.

... Specifically, the Plaintiffs seek, among other things, a declaration that each of the patents in the 3C patent pool is unenforceable as a matter of law by reason of the doctrine of patent misuse and unclean hands arising from the Defendants’ pattern of abuse and misuse of the United States patent system, by using and employing abusive and coercive strategies to intimidate parties to pay royalties to Defendants by:

a. creating unlawful tying arrangements as more thoroughly described above,

b. anticompetitively dominating the DVD player markets,

c. engaging in price fixing in violation of United States laws,

d. misrepresenting the nature of their licensing activities to the DOJ,

e. operating at variance with the terms of the DOJ business review letter,

f. demanding and collecting double royalties, and