Preview
FILED: NEW YORK COUNTY CLERK 08/26/2022 02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 31 RECEIVED NYSCEF: 08/26/2022
Exhibit A
Motion Sequence Nos. 002 & 003
{12085856:1}
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
SAMSUNG ELECTRONICS CO., LTD.,
Index No. _________
Plaintiff,
SUMMONS
-against-
Jury Trial Demanded
MPEG LA, L.L.C.,
Plaintiff designates New York
Defendant. County as the place of trial.
TO THE ABOVE NAMED DEFENDANT:
PLEASE TAKE NOTICE THAT YOU ARE HEREBY SUMMONED and required to
serve upon the attorneys for Plaintiff Samsung Electronics Co., LTD (“Samsung”), at the address
stated below, an Answer to the Complaint in this action within twenty (20) days after the service
of this Summons (excluding the day of service itself) or within thirty (30) days after service if
this Summons is not personally delivered to you within the State of New York. Venue is proper
in this Court pursuant to CPLR § 501 based on a contractual forum selection clause. You have
consented to the personal jurisdiction of this Court pursuant to a contractual forum selection
clause. Plaintiff designates New York County as the place of trial. Samsung has incurred or
faces damages in excess of the $500,000 monetary threshold required for jurisdiction in the
Commercial Division of New York County.
This is an action for breach of contract.
The relief that Samsung seeks includes (a) damages; (b) an award of interest, costs, and
attorneys’ fees; and (c) such other and further relief as the Court may deem just and proper.
YOU ARE HEREBY NOTIFIED that, on your failure to appear or answer, a judgment
will be entered against you by default granting the relief requested above.
1 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
Dated: New York, New York
May 16, 2022
QUINN EMANUEL URQUHART &
SULLIVAN, LLP
By: /s/ Michael B. Carlinsky
Michael B. Carlinsky
William B. Adams
Owen F. Roberts
51 Madison Avenue, 22nd Floor
New York, New York 10010
(212) 849-7000
michaelcarlinsky@quinnemanuel.com
williamadams@quinnemanuel.com
owenroberts@quinnemanuel.com
Kevin Hardy (pro hac motion forthcoming)
1300 I Street, N.W., Suite 900
Washington, DC 20005
(202) 538-8000
kevinhardy@quinnemanuel.com
Attorneys for Plaintiff Samsung Electronics
Co., Ltd.
TO:
MPEG LA, L.L.C.
8101 E. Prentice Avenue, Suite 900
Greenwood Village, CO 80111
MPEG LA, L.L.C.
c/o Registered Agent Solutions, Inc.
838 Walker Road, Suite 21-2
Dover, DE 19904
2
2 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
SAMSUNG ELECTRONICS CO., LTD.,
Index No. _________
Plaintiff,
COMPLAINT
-against-
Jury Trial Demanded
MPEG LA, L.L.C.,
Defendant.
Plaintiff Samsung Electronics Co., Ltd. (“Samsung”), by its attorneys Quinn Emanuel
Urquhart & Sullivan, LLP, brings this complaint against Defendant MPEG LA, L.L.C. (“MPEG
LA”). Samsung alleges as follows:
Nature of the Case
1. This case arises from MPEG LA’s breach of its contractual duty to pay Samsung
royalties for patents that Samsung owns and licenses to third-party licensees via a patent pool
that MPEG LA administers. In short, third parties are paying MPEG LA licensing fees for the
right to practice Samsung’s patents, but MPEG LA is paying Samsung at most half of the
royalties that Samsung is owed. MPEG LA’s attempt to punish Samsung by depriving it of
licensing revenues that MPEG LA generates from Samsung’s patents is a breach of contract and
breach of the implied covenant of good faith and fair dealing under governing New York law
that has cost Samsung more than $10 million to date and continues to damage Samsung by
millions of dollars each quarter.
2. The patent pool in question concerns patents that are necessary, or essential, to
practicing the High Efficiency Video Coding (“HEVC”) Standard for compressing digital video
content. Samsung is one of the leading companies in the world in this field and holds a large
3 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
portfolio of patents that relate to the HEVC Standard. These patents are the result of years of
work and substantial investments in research and development.
3. On May 12, 2014, Samsung and a number of other leading technology companies
(collectively, the “Licensors”) entered into the Agreement Among Licensors Regarding The
HEVC Standard (the “AAL”1), the purpose of which was to create a single license (the “HEVC
Patent Portfolio License”) covering the HEVC Essential Patents that the Licensors had the right
to license or sublicense. As with other patent pools, the MPEG LA HEVC patent pool offers a
licensee who seeks to make use of multiple patents from multiple patentholders the opportunity
to enter into a single Portfolio License covering thousands of related patents owned by dozens of
companies and even a university.
4. On the same day, May 12, 2014, Samsung and its fellow Licensors entered into an
agreement with MPEG LA—the Licensing Administrator Agreement Regarding The HEVC
Standard (the “LAA”2). Under the LAA, MPEG LA was appointed as the administrator of this
HEVC patent pool and the contemplated Portfolio Licenses. As the pool administrator, MPEG
LA is required to collect payment from licensees and distribute royalties to Licensors. The AAL
and the LAA (collectively, the “Agreements”) contain detailed provisions establishing how the
royalties that MPEG LA receives from issuing the HEVC Patent Portfolio Licenses are to be
allocated and distributed among the various Licensors.
5. The Agreements contain termination rights allowing a Licensor to leave the
MPEG LA HEVC patent pool after January 1, 2020. However, all Portfolio Licenses granted
prior to the effective date of termination remain in force after that termination and are entitled to
renewal. Thus, after a Licensor leaves the pool, MPEG LA cannot issue any new HEVC Patent
1
The AAL is attached to this Complaint as Exhibit 1.
2
The LAA is attached to this Complaint as Exhibit 2.
2
4 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
Portfolio Licenses covering that party’s patents, but any preexisting HEVC Patent Portfolio
Licenses still grant a licensee the right to practice that party’s patents and may be renewed. The
Agreements expressly provide that in this circumstance, a Licensor that has terminated its role in
the pool is entitled to continue to receive its share of the revenues from the Portfolio Licenses
that grant rights to its patents.
6. In early 2020, Samsung exercised its termination rights under the AAL and LAA.
These terminations became effective on March 27, 2020. There has been no dispute over
whether Samsung’s termination was proper or effective; it was both. Samsung’s right to receive
royalties under the Agreements for preexisting Portfolio Licenses survived termination.
7. For a brief period of time after Samsung’s termination, MPEG LA continued to
collect royalties from licenses that cover Samsung’s patents, and continued to pay Samsung
royalties for such licenses—just as the Agreements require.
8. MPEG LA, however, has since breached its obligations to pay Samsung the
royalties it is due. At some point in or around June 2020, MPEG LA engineered a scheme to
reduce the amount of royalties it would pay to Samsung under the Agreements by fifty percent as
punishment for Samsung’s decision to exercise its termination rights. Specifically, MPEG LA
devised a plan to amend Section 7 of the AAL, which is not the section of that contract that sets
forth how royalties will be distributed, to add a provision stating that any party that exercises its
termination right would receive only half of the royalties otherwise due. Although MPEG LA
has asserted that the remaining Licensors (or some subset thereof) adopted this proposed
amendment, MPEG LA has never provided a copy of any actual amendment, and in any event,
as discussed below, any such changes are a nullity with respect to Samsung’s vested rights.
3
5 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
9. MPEG LA not only failed to obtain Samsung’s agreement to reduce the revenues
Samsung would receive from Portfolio Licenses that continue to provide rights to Samsung’s
patents, but in fact did not even disclose what it had done to try to circumvent those rights.
Instead, in or around Q3 2020, MPEG LA began to include a footnote in documents reflecting
royalty payments to Samsung, stating that Samsung’s payments pursuant to the AAL and LAA
now reflected “the current allocation per the HEVC Agreement Among Licensors as amended.”
It was not until months later, when Samsung inquired about its reduced royalties, that MPEG LA
acknowledged its scheme to amend the AAL to halve the royalties paid to Samsung and any
other party that exercised its right to leave the pool.
10. The purported amendment of Samsung’s rights under the AAL, without
Samsung’s knowledge or consent, is a nullity and cannot excuse MPEG LA’s breach for at least
four reasons. First, under New York law, no other party could erase Samsung’s vested and
surviving contractual rights without Samsung’s agreement. Second, under the express terms of
the Agreements, Samsung had an effective veto right over any amendments to revenue allocation
terms, which require supermajority approval. Third, any purported amendment to Section 7 of
the AAL cannot excuse MPEG LA’s express obligation under the LAA to pay Samsung royalties
pursuant to Section 5 of the AAL, which MPEG LA does not even claim was amended. Finally,
the June 2020 purported amendment, by its own terms, only applies to Licensors who terminate
their participation in the pool after July 1, 2020, not to Samsung, which terminated its
participation earlier.
11. For these and other reasons set forth below, MPEG LA has breached its express
and implied contractual obligations to Samsung.
4
6 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
Jurisdiction and Venue
12. Jurisdiction in this Court is proper pursuant to CPLR 301 because, upon
information and belief, at least one of MPEG LA’s members is a resident of New York, and
because under Section 12.9 of the LAA the parties “irrevocably consent[ed] to the personal
jurisdiction of the courts located within the State of New York for the resolution of any dispute
arising under or in connection with [the LAA].”
13. Venue in this Court is proper pursuant to CPLR 501, because Section 12.9 of the
LAA reflects the parties’ agreement to fix the courts located within the State of New York as the
place of trial of any disputes arising under or in connection with the LAA.
Governing Law
14. Samsung’s claims against MPEG LA are governed by the law of the State of New
York pursuant to Section 12.9 of the LAA, a choice-of-law provision. Specifically, “the validity,
construction and performance of this Agreement shall be governed by the substantive law of the
State of New York, United States of America, without regard to the conflict of law rules.”
The Parties
15. Plaintiff Samsung is among the world’s leading technology companies. Samsung
is organized and exists under the laws of the Republic of Korea and has its principal place of
business in Suwon City, Korea.
16. Defendant MPEG LA is a limited liability company organized and existing under
the laws of the State of Delaware with a principal place of business in Denver, Colorado. On
information and belief, MPEG LA’s members include at least one resident of New York.
5
7 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
Factual Background
A. Samsung And The Other Licensors Execute The AAL, Whereby The Licensors
Consent To Participate In The MPEG LA HEVC Patent Pool
17. On May 12, 2014, Samsung and a number of other leading technology companies,
including Apple and Fujitsu, entered into the AAL. The purpose of the Agreement was “to make
available license rights in a single license … under all HEVC Essential Patents that they or their
Affiliates now or in the future may own or have the right to license or sublicense.” The AAL
defines Samsung and the other signatories thereto as “Parties.” MPEG LA is not a signatory or
party to the AAL.
18. Section 5.1 of the AAL sets forth how the royalties collected by MPEG LA from
licensing the Parties’ patents shall be apportioned among the Parties and provides that royalties
“shall be distributed to the Parties by [MPEG LA] in accordance with the terms of the [LAA].”
19. Section 6.1 of the AAL sets forth how the AAL can be amended. Although most
amendments require written agreement from three-fourths of the AAL’s Administrative
Committee,3 amendments to “allocations among Parties pursuant to Article 5 … shall require the
approval of a supermajority consisting of (i) eighty (80) percent of current Licensors and (ii) of
any group of Licensors that collectively received eighty (80) percent of the royalty distributions
over the twelve (12) month period preceding any such vote.”
20. Section 7.2 of the AAL contains a termination clause that allows a Licensor to
leave the pool after January 1, 2020. Section 7.2.1 clarifies that “all sublicenses granted … prior
to the effective date of termination … shall remain in full force and effect.” Section 7.2.2 further
explains that “a Party which terminates … shall be entitled to continue to receive its apportioned
3
Under Section 3.1 of the AAL, the Administrative Committee consists of one
representative from each Party to the AAL, with each Party having one vote.
6
8 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
share of revenues in accordance with Section 5.1 for royalties received under HEVC Patent
Portfolio Licenses which include Patents owned by the Terminating Party,” and Section 7.2.3
obliges terminated parties to continue to pay their share of expenses and fees. Section 7.3.2
confirms that among the rights that survive a party’s termination is “the right to receive royalty
distributions pursuant to Section 5.1 to the extent that such right has accrued as of the date of …
termination.”
B. The Licensors And MPEG LA Execute The LAA, Whereby MPEG LA Is Obligated
To Pay Samsung Royalties For Licenses Covering Samsung’s Intellectual Property
21. On the same day that the Licensors executed the AAL, they also entered into the
LAA with MPEG LA. Under the LAA, MPEG LA was granted the right to administer this
HEVC patent pool and the Portfolio Licenses contemplated in the AAL. In Section 6.3 of the
LAA, MPEG LA agreed that “[a]ny Gross Collections received by [it] under the HEVC Patent
Portfolio Licenses which are payable to the Licensors shall be apportioned among the Licensors
as set forth in Section 5.1 of the Agreement Among Licensors, Licensors being the effective
beneficial owners of all royalties collected by [MPEG LA].”
22. Like the AAL, the LAA contains a termination clause in Section 11 that allows a
Licensor to leave the pool after January 1, 2020, and provides for the survival of certain rights
post-termination. These rights include, under Section 11.5.2, “the Licensor’s right to receive
royalty distributions and statements pursuant to Sections 6.3 and 6.4 of this Agreement to the
extent that such right has accrued, pursuant to Section 7.2.1 through 7.2.3 of the [AAL], as of the
date of … termination.”
C. In Early 2020, Samsung Exercises Its Termination Rights Under the AAL and LAA
23. In or around February 2020, Samsung exercised its termination right under the
AAL and LAA. Samsung’s termination was effective on March 27, 2020. Under the terms of
7
9 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
the LAA, MPEG LA was obligated to continue providing Samsung with royalty distributions and
statements with respect to those rights that had vested or accrued by the date of Samsung’s
termination—including, specifically, Samsung’s right to its share of revenues from preexisting
Portfolio Licenses that continued to cover Samsung’s patents.
D. MPEG LA Cuts Samsung’s Royalties In Half, In Violation Of The Agreements
24. After Samsung exercised its termination rights under the AAL and LAA, MPEG
LA continued to provide Samsung with quarterly royalty disbursements, consistent with
Samsung’s post-termination rights. But within a year of exercising its termination rights,
Samsung noticed that the quarterly royalty disbursements had decreased substantially.
25. In February 2021, Samsung contacted MPEG LA to inquire about the steep
decline in the amount of its royalty disbursements. In response, MPEG LA informed Samsung
that it had begun reducing royalty disbursements to Samsung by fifty percent, pursuant to a
purported amendment to Section 7.2.2 of the AAL in Q3 2020. According to MPEG LA, at
some point in Q3 2020, the remaining Licensors to the MPEG LA HEVC patent pool (or some
portion thereof) purported to amend Section 7.2.2 of the AAL to provide that any party that
exercises (or had already exercised) its termination right would receive only half of the royalties
otherwise due.
26. MPEG LA has not provided Samsung with a copy of the purported executed
amendment to the AAL. MPEG LA has claimed that the amendment provides that
A party which terminates as a Party to the AAL shall be entitled to continue to
receive fifty percent (50%) of its apportioned share of revenues in accordance
with Section 5.1 for royalties received under HEVC Patent Portfolio Licenses
which include Patents owned by the terminating Party; provided, however, for
each distribution of revenues made by the Licensing Administrator after
termination becoming effective, the terminating Party’s apportioned share shall be
based solely on the total revenues derived under all HEVC Patent Portfolio
Licenses (and all subsequent renewals thereof) that were granted by the Licensing
Administrator before the effective date of termination of the Licensing
8
10 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
Administrator’s right to grant additional sublicenses under the terminating Party’s
HEVC Patent Portfolio Patents.
27. Based on, inter alia, Samsung’s communications with MPEG LA, it is Samsung’s
information and belief that, although MPEG LA is not a party to the AAL, MPEG LA proposed
the purported amendment and encouraged the remaining Licensors to adopt it. Based on, inter
alia, Samsung’s communications with MPEG LA, itis Samsung’s information and belief that
MPEG LA orchestrated the Licensors’ amendment of the AAL in an attempt to punish Samsung
for exercising its termination rights under the Agreements and to coerce Samsung to rejoin the
AAL. Based on, inter alia, Samsung’s communications with MPEG LA, it is Samsung’s
information and belief that MPEG LA orchestrated the purported amendment of the AAL while
fully aware of the effect that the amendment may have on Samsung’s rights under the LAA.
28. Prior to February 2021, the only indication that MPEG LA had executed a scheme
to halve Samsung’s share of royalties came in the form of a cursory footnote in its Settlement
Statements to Samsung, noting that Samsung’s Total Gross Royalties payments pursuant to the
AAL and LAA reflected “the current allocation per the HEVC Agreement Among Licensors as
amended.”
E. MPEG LA Has Failed To Pay Samsung Millions Of Dollars Of Revenues From
Portfolio Licenses That Grant Rights To Samsung’s Patents
29. MPEG LA’s cursory footnote reference to “the current allocation per the HEVC
Agreement Among Licensors as amended” has appeared on the Settlement Statements that
MPEG LA has sent to Samsung every quarter since Q3 2020. Those Settlement Statements
reflect that Samsung has continued to be charged expenses and fees, including the “Licensing
Administrator Fee,” in every quarter since it terminated its involvement in the MPEG LA HEVC
patent pool.
9
11 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
30. In total, under the five Settlement Statements that Samsung has received from Q3
2020 to Q3 2021, the total “Payment to Samsung Electronics Co., Ltd.” after the improper 50%
deduction is $11,720,311.87. MPEG LA’s breach of its obligations has thus injured Samsung by
at least that amount; Samsung’s distribution should have been twice what it received, or
$23,440,623.74. Every quarter that MPEG LA withholds half of the revenues Samsung is owed
from licenses that cover Samsung’s patents adds millions of dollars more to the damages.
31. Discovery is necessary to identify all of the amounts and categories of damages
that MPEG LA’s conduct has inflicted on Samsung.
F. MPEG LA’s Scheme Cannot And Did Not Excuse Its Obligation To Distribute
Samsung’s Full Share Of Pool Royalties
32. The purported amendment to the AAL that, on information and belief, MPEG LA
spearheaded has no effect on Samsung’s rights to receive royalties for at least four reasons.
33. First, the purported amendment cannot have retrospective effect. Samsung’s right
to receive royalty disbursements for preexisting Portfolio Licenses that continued to offer
licensees the right to practice Samsung’s patents accrued and vested prior to Samsung’s
termination of the Agreements. As both the survival provisions of the Agreements and New
York law make clear, once those rights accrued and vested, they could not be divested from
Samsung without its consent. MPEG LA cannot invoke this purported amendment to deprive
Samsung of the royalties it is owed from licenses that cover Samsung’s patents.
34. Second, even if New York law would allow remaining parties to a contract to
divest a terminated party of accrued and vested rights without the terminated party’s consent (it
does not), no such change was allowed without Samsung’s consent under these Agreements.
Section 6.1 of the AAL makes clear that any changes to “allocations among Parties pursuant to
Article 5” requires “supermajority” approval, including the votes of “Licensors that collectively
10
12 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
received eighty (80) percent of the royalty distributions over the twelve (12) month period
preceding any such vote.” During the 12 months before the purported amendment in June 2020,
Samsung received more than twenty (20) percent of the royalty distributions from the pool, and
the rest of the Licensors combined received less than eighty (80) percent of such distributions.
Thus, it was not possible for any group of Licensors to change the allocations without Samsung’s
consent. For this reason as well, the purported amendment cannot excuse MPEG LA’s failure to
honor its obligation to pay Samsung its full share of royalties.
35. Third, Samsung’s vested right to continued royalty disbursements derives from
sections of the AAL and LAA that MPEG LA has not contended were amended. Under Section
11.5.2 of the LAA, one of the expressly surviving rights after Samsung terminated the LAA was
its “right to receive royalty distributions and statements pursuant to Sections 6.3 and 6.4 of this
Agreement.” Those sections, in turn, oblige MPEG LA to “pay to each Licensor the amounts
apportioned to such Licensor” “as set forth in Section 5.1 of the [AAL].” (Emphasis added.)
Similarly, under Section 7.3.2 of the AAL, one right that survives termination is Samsung’s
“right to receive royalty distributions pursuant to Section 5.1.” (Emphasis added.) Section 5.1
of the AAL has never been even purportedly amended, and it is that section that MPEG LA must
look to when paying Samsung its apportioned amounts. Thus, even if the purported amendment
to Section 7.2 of the AAL applied retrospectively, altered Samsung’s vested rights, and complied
with the amendment policies (it does none of these things), Samsung’s right to receive
disbursements under Sections 11 and 6 of the LAA, which require following Section 5.1 of the
AAL, remains in effect. Once again, the purported amendment did not change what MPEG LA
owes Samsung.
11
13 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
36. Finally, by its own terms, the purported amendment does not apply to Samsung or
any other party that left the MPEG LA HEVC patent pool prior to the amendment. The
amendment uses exclusively prospective language, applying only from July 1, 2020 forward and
only to “a Party which terminates in accordance with Section 7.2,” not to any Party that had
already terminated its participation. This section provides no basis for MPEG LA to withhold
any royalties owed to Samsung; MPEG LA has breached its obligations by paying Samsung only
half of the amount that it is owed.
Causes of Action
First Cause of Action Against MPEG LA
(Breach of Contract)
37. Samsung repeats and realleges the foregoing allegations as though they were fully
set forth here.
38. Samsung and MPEG LA were among the parties to the LAA, which continues to
bind and define aspects of their relationship after Samsung’s termination. They reached
agreement on the material terms of the LAA, which included, among other things, MPEG LA’s
obligation to pay Samsung royalties “as set forth in Section 5.1 of the [AAL].”
39. Samsung’s right to receive royalties pursuant to the terms of the LAA and AAL
survived Samsung’s termination of the LAA and AAL, and is ongoing.
40. Samsung has complied with all of its obligations under the LAA.
41. In breach of the LAA, and without prior notice to Samsung, MPEG LA has paid
Samsung only 50% of the royalties to which Samsung is entitled under that agreement for more
than a year.
42. As a direct, proximate and foreseeable result of MPEG LA’s breach, Samsung has
been damaged in an amount to be determined at trial.
12
14 of 16
FILED: NEW YORK COUNTY CLERK 05/16/2022
08/26/2022 06:19
02:36 PM INDEX NO. 656312/2022
NYSCEF DOC. NO. 1
31 RECEIVED NYSCEF: 05/16/2022
08/26/2022
Second Cause of Action Against MPEG LA
(Breach of the Implied Covenant of Good Faith and Fair Dealing)
43. Samsung repeats and realleges the foregoing allegations as though they were fully
set forth here.
44. In addition to its breach of the express terms of the LAA, MPEG LA breached the
LAA’s implied covenan
Preview
FILED: NEW YORK COUNTY CLERK 08/26/2022 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 31 RECEIVED NYSCEF: 08/26/2022 Exhibit A Motion Sequence Nos. 002 & 003 {12085856:1} FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK SAMSUNG ELECTRONICS CO., LTD., Index No. _________ Plaintiff, SUMMONS -against- Jury Trial Demanded MPEG LA, L.L.C., Plaintiff designates New York Defendant. County as the place of trial. TO THE ABOVE NAMED DEFENDANT: PLEASE TAKE NOTICE THAT YOU ARE HEREBY SUMMONED and required to serve upon the attorneys for Plaintiff Samsung Electronics Co., LTD (“Samsung”), at the address stated below, an Answer to the Complaint in this action within twenty (20) days after the service of this Summons (excluding the day of service itself) or within thirty (30) days after service if this Summons is not personally delivered to you within the State of New York. Venue is proper in this Court pursuant to CPLR § 501 based on a contractual forum selection clause. You have consented to the personal jurisdiction of this Court pursuant to a contractual forum selection clause. Plaintiff designates New York County as the place of trial. Samsung has incurred or faces damages in excess of the $500,000 monetary threshold required for jurisdiction in the Commercial Division of New York County. This is an action for breach of contract. The relief that Samsung seeks includes (a) damages; (b) an award of interest, costs, and attorneys’ fees; and (c) such other and further relief as the Court may deem just and proper. YOU ARE HEREBY NOTIFIED that, on your failure to appear or answer, a judgment will be entered against you by default granting the relief requested above. 1 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 Dated: New York, New York May 16, 2022 QUINN EMANUEL URQUHART & SULLIVAN, LLP By: /s/ Michael B. Carlinsky Michael B. Carlinsky William B. Adams Owen F. Roberts 51 Madison Avenue, 22nd Floor New York, New York 10010 (212) 849-7000 michaelcarlinsky@quinnemanuel.com williamadams@quinnemanuel.com owenroberts@quinnemanuel.com Kevin Hardy (pro hac motion forthcoming) 1300 I Street, N.W., Suite 900 Washington, DC 20005 (202) 538-8000 kevinhardy@quinnemanuel.com Attorneys for Plaintiff Samsung Electronics Co., Ltd. TO: MPEG LA, L.L.C. 8101 E. Prentice Avenue, Suite 900 Greenwood Village, CO 80111 MPEG LA, L.L.C. c/o Registered Agent Solutions, Inc. 838 Walker Road, Suite 21-2 Dover, DE 19904 2 2 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK SAMSUNG ELECTRONICS CO., LTD., Index No. _________ Plaintiff, COMPLAINT -against- Jury Trial Demanded MPEG LA, L.L.C., Defendant. Plaintiff Samsung Electronics Co., Ltd. (“Samsung”), by its attorneys Quinn Emanuel Urquhart & Sullivan, LLP, brings this complaint against Defendant MPEG LA, L.L.C. (“MPEG LA”). Samsung alleges as follows: Nature of the Case 1. This case arises from MPEG LA’s breach of its contractual duty to pay Samsung royalties for patents that Samsung owns and licenses to third-party licensees via a patent pool that MPEG LA administers. In short, third parties are paying MPEG LA licensing fees for the right to practice Samsung’s patents, but MPEG LA is paying Samsung at most half of the royalties that Samsung is owed. MPEG LA’s attempt to punish Samsung by depriving it of licensing revenues that MPEG LA generates from Samsung’s patents is a breach of contract and breach of the implied covenant of good faith and fair dealing under governing New York law that has cost Samsung more than $10 million to date and continues to damage Samsung by millions of dollars each quarter. 2. The patent pool in question concerns patents that are necessary, or essential, to practicing the High Efficiency Video Coding (“HEVC”) Standard for compressing digital video content. Samsung is one of the leading companies in the world in this field and holds a large 3 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 portfolio of patents that relate to the HEVC Standard. These patents are the result of years of work and substantial investments in research and development. 3. On May 12, 2014, Samsung and a number of other leading technology companies (collectively, the “Licensors”) entered into the Agreement Among Licensors Regarding The HEVC Standard (the “AAL”1), the purpose of which was to create a single license (the “HEVC Patent Portfolio License”) covering the HEVC Essential Patents that the Licensors had the right to license or sublicense. As with other patent pools, the MPEG LA HEVC patent pool offers a licensee who seeks to make use of multiple patents from multiple patentholders the opportunity to enter into a single Portfolio License covering thousands of related patents owned by dozens of companies and even a university. 4. On the same day, May 12, 2014, Samsung and its fellow Licensors entered into an agreement with MPEG LA—the Licensing Administrator Agreement Regarding The HEVC Standard (the “LAA”2). Under the LAA, MPEG LA was appointed as the administrator of this HEVC patent pool and the contemplated Portfolio Licenses. As the pool administrator, MPEG LA is required to collect payment from licensees and distribute royalties to Licensors. The AAL and the LAA (collectively, the “Agreements”) contain detailed provisions establishing how the royalties that MPEG LA receives from issuing the HEVC Patent Portfolio Licenses are to be allocated and distributed among the various Licensors. 5. The Agreements contain termination rights allowing a Licensor to leave the MPEG LA HEVC patent pool after January 1, 2020. However, all Portfolio Licenses granted prior to the effective date of termination remain in force after that termination and are entitled to renewal. Thus, after a Licensor leaves the pool, MPEG LA cannot issue any new HEVC Patent 1 The AAL is attached to this Complaint as Exhibit 1. 2 The LAA is attached to this Complaint as Exhibit 2. 2 4 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 Portfolio Licenses covering that party’s patents, but any preexisting HEVC Patent Portfolio Licenses still grant a licensee the right to practice that party’s patents and may be renewed. The Agreements expressly provide that in this circumstance, a Licensor that has terminated its role in the pool is entitled to continue to receive its share of the revenues from the Portfolio Licenses that grant rights to its patents. 6. In early 2020, Samsung exercised its termination rights under the AAL and LAA. These terminations became effective on March 27, 2020. There has been no dispute over whether Samsung’s termination was proper or effective; it was both. Samsung’s right to receive royalties under the Agreements for preexisting Portfolio Licenses survived termination. 7. For a brief period of time after Samsung’s termination, MPEG LA continued to collect royalties from licenses that cover Samsung’s patents, and continued to pay Samsung royalties for such licenses—just as the Agreements require. 8. MPEG LA, however, has since breached its obligations to pay Samsung the royalties it is due. At some point in or around June 2020, MPEG LA engineered a scheme to reduce the amount of royalties it would pay to Samsung under the Agreements by fifty percent as punishment for Samsung’s decision to exercise its termination rights. Specifically, MPEG LA devised a plan to amend Section 7 of the AAL, which is not the section of that contract that sets forth how royalties will be distributed, to add a provision stating that any party that exercises its termination right would receive only half of the royalties otherwise due. Although MPEG LA has asserted that the remaining Licensors (or some subset thereof) adopted this proposed amendment, MPEG LA has never provided a copy of any actual amendment, and in any event, as discussed below, any such changes are a nullity with respect to Samsung’s vested rights. 3 5 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 9. MPEG LA not only failed to obtain Samsung’s agreement to reduce the revenues Samsung would receive from Portfolio Licenses that continue to provide rights to Samsung’s patents, but in fact did not even disclose what it had done to try to circumvent those rights. Instead, in or around Q3 2020, MPEG LA began to include a footnote in documents reflecting royalty payments to Samsung, stating that Samsung’s payments pursuant to the AAL and LAA now reflected “the current allocation per the HEVC Agreement Among Licensors as amended.” It was not until months later, when Samsung inquired about its reduced royalties, that MPEG LA acknowledged its scheme to amend the AAL to halve the royalties paid to Samsung and any other party that exercised its right to leave the pool. 10. The purported amendment of Samsung’s rights under the AAL, without Samsung’s knowledge or consent, is a nullity and cannot excuse MPEG LA’s breach for at least four reasons. First, under New York law, no other party could erase Samsung’s vested and surviving contractual rights without Samsung’s agreement. Second, under the express terms of the Agreements, Samsung had an effective veto right over any amendments to revenue allocation terms, which require supermajority approval. Third, any purported amendment to Section 7 of the AAL cannot excuse MPEG LA’s express obligation under the LAA to pay Samsung royalties pursuant to Section 5 of the AAL, which MPEG LA does not even claim was amended. Finally, the June 2020 purported amendment, by its own terms, only applies to Licensors who terminate their participation in the pool after July 1, 2020, not to Samsung, which terminated its participation earlier. 11. For these and other reasons set forth below, MPEG LA has breached its express and implied contractual obligations to Samsung. 4 6 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 Jurisdiction and Venue 12. Jurisdiction in this Court is proper pursuant to CPLR 301 because, upon information and belief, at least one of MPEG LA’s members is a resident of New York, and because under Section 12.9 of the LAA the parties “irrevocably consent[ed] to the personal jurisdiction of the courts located within the State of New York for the resolution of any dispute arising under or in connection with [the LAA].” 13. Venue in this Court is proper pursuant to CPLR 501, because Section 12.9 of the LAA reflects the parties’ agreement to fix the courts located within the State of New York as the place of trial of any disputes arising under or in connection with the LAA. Governing Law 14. Samsung’s claims against MPEG LA are governed by the law of the State of New York pursuant to Section 12.9 of the LAA, a choice-of-law provision. Specifically, “the validity, construction and performance of this Agreement shall be governed by the substantive law of the State of New York, United States of America, without regard to the conflict of law rules.” The Parties 15. Plaintiff Samsung is among the world’s leading technology companies. Samsung is organized and exists under the laws of the Republic of Korea and has its principal place of business in Suwon City, Korea. 16. Defendant MPEG LA is a limited liability company organized and existing under the laws of the State of Delaware with a principal place of business in Denver, Colorado. On information and belief, MPEG LA’s members include at least one resident of New York. 5 7 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 Factual Background A. Samsung And The Other Licensors Execute The AAL, Whereby The Licensors Consent To Participate In The MPEG LA HEVC Patent Pool 17. On May 12, 2014, Samsung and a number of other leading technology companies, including Apple and Fujitsu, entered into the AAL. The purpose of the Agreement was “to make available license rights in a single license … under all HEVC Essential Patents that they or their Affiliates now or in the future may own or have the right to license or sublicense.” The AAL defines Samsung and the other signatories thereto as “Parties.” MPEG LA is not a signatory or party to the AAL. 18. Section 5.1 of the AAL sets forth how the royalties collected by MPEG LA from licensing the Parties’ patents shall be apportioned among the Parties and provides that royalties “shall be distributed to the Parties by [MPEG LA] in accordance with the terms of the [LAA].” 19. Section 6.1 of the AAL sets forth how the AAL can be amended. Although most amendments require written agreement from three-fourths of the AAL’s Administrative Committee,3 amendments to “allocations among Parties pursuant to Article 5 … shall require the approval of a supermajority consisting of (i) eighty (80) percent of current Licensors and (ii) of any group of Licensors that collectively received eighty (80) percent of the royalty distributions over the twelve (12) month period preceding any such vote.” 20. Section 7.2 of the AAL contains a termination clause that allows a Licensor to leave the pool after January 1, 2020. Section 7.2.1 clarifies that “all sublicenses granted … prior to the effective date of termination … shall remain in full force and effect.” Section 7.2.2 further explains that “a Party which terminates … shall be entitled to continue to receive its apportioned 3 Under Section 3.1 of the AAL, the Administrative Committee consists of one representative from each Party to the AAL, with each Party having one vote. 6 8 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 share of revenues in accordance with Section 5.1 for royalties received under HEVC Patent Portfolio Licenses which include Patents owned by the Terminating Party,” and Section 7.2.3 obliges terminated parties to continue to pay their share of expenses and fees. Section 7.3.2 confirms that among the rights that survive a party’s termination is “the right to receive royalty distributions pursuant to Section 5.1 to the extent that such right has accrued as of the date of … termination.” B. The Licensors And MPEG LA Execute The LAA, Whereby MPEG LA Is Obligated To Pay Samsung Royalties For Licenses Covering Samsung’s Intellectual Property 21. On the same day that the Licensors executed the AAL, they also entered into the LAA with MPEG LA. Under the LAA, MPEG LA was granted the right to administer this HEVC patent pool and the Portfolio Licenses contemplated in the AAL. In Section 6.3 of the LAA, MPEG LA agreed that “[a]ny Gross Collections received by [it] under the HEVC Patent Portfolio Licenses which are payable to the Licensors shall be apportioned among the Licensors as set forth in Section 5.1 of the Agreement Among Licensors, Licensors being the effective beneficial owners of all royalties collected by [MPEG LA].” 22. Like the AAL, the LAA contains a termination clause in Section 11 that allows a Licensor to leave the pool after January 1, 2020, and provides for the survival of certain rights post-termination. These rights include, under Section 11.5.2, “the Licensor’s right to receive royalty distributions and statements pursuant to Sections 6.3 and 6.4 of this Agreement to the extent that such right has accrued, pursuant to Section 7.2.1 through 7.2.3 of the [AAL], as of the date of … termination.” C. In Early 2020, Samsung Exercises Its Termination Rights Under the AAL and LAA 23. In or around February 2020, Samsung exercised its termination right under the AAL and LAA. Samsung’s termination was effective on March 27, 2020. Under the terms of 7 9 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 the LAA, MPEG LA was obligated to continue providing Samsung with royalty distributions and statements with respect to those rights that had vested or accrued by the date of Samsung’s termination—including, specifically, Samsung’s right to its share of revenues from preexisting Portfolio Licenses that continued to cover Samsung’s patents. D. MPEG LA Cuts Samsung’s Royalties In Half, In Violation Of The Agreements 24. After Samsung exercised its termination rights under the AAL and LAA, MPEG LA continued to provide Samsung with quarterly royalty disbursements, consistent with Samsung’s post-termination rights. But within a year of exercising its termination rights, Samsung noticed that the quarterly royalty disbursements had decreased substantially. 25. In February 2021, Samsung contacted MPEG LA to inquire about the steep decline in the amount of its royalty disbursements. In response, MPEG LA informed Samsung that it had begun reducing royalty disbursements to Samsung by fifty percent, pursuant to a purported amendment to Section 7.2.2 of the AAL in Q3 2020. According to MPEG LA, at some point in Q3 2020, the remaining Licensors to the MPEG LA HEVC patent pool (or some portion thereof) purported to amend Section 7.2.2 of the AAL to provide that any party that exercises (or had already exercised) its termination right would receive only half of the royalties otherwise due. 26. MPEG LA has not provided Samsung with a copy of the purported executed amendment to the AAL. MPEG LA has claimed that the amendment provides that A party which terminates as a Party to the AAL shall be entitled to continue to receive fifty percent (50%) of its apportioned share of revenues in accordance with Section 5.1 for royalties received under HEVC Patent Portfolio Licenses which include Patents owned by the terminating Party; provided, however, for each distribution of revenues made by the Licensing Administrator after termination becoming effective, the terminating Party’s apportioned share shall be based solely on the total revenues derived under all HEVC Patent Portfolio Licenses (and all subsequent renewals thereof) that were granted by the Licensing Administrator before the effective date of termination of the Licensing 8 10 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 Administrator’s right to grant additional sublicenses under the terminating Party’s HEVC Patent Portfolio Patents. 27. Based on, inter alia, Samsung’s communications with MPEG LA, it is Samsung’s information and belief that, although MPEG LA is not a party to the AAL, MPEG LA proposed the purported amendment and encouraged the remaining Licensors to adopt it. Based on, inter alia, Samsung’s communications with MPEG LA, itis Samsung’s information and belief that MPEG LA orchestrated the Licensors’ amendment of the AAL in an attempt to punish Samsung for exercising its termination rights under the Agreements and to coerce Samsung to rejoin the AAL. Based on, inter alia, Samsung’s communications with MPEG LA, it is Samsung’s information and belief that MPEG LA orchestrated the purported amendment of the AAL while fully aware of the effect that the amendment may have on Samsung’s rights under the LAA. 28. Prior to February 2021, the only indication that MPEG LA had executed a scheme to halve Samsung’s share of royalties came in the form of a cursory footnote in its Settlement Statements to Samsung, noting that Samsung’s Total Gross Royalties payments pursuant to the AAL and LAA reflected “the current allocation per the HEVC Agreement Among Licensors as amended.” E. MPEG LA Has Failed To Pay Samsung Millions Of Dollars Of Revenues From Portfolio Licenses That Grant Rights To Samsung’s Patents 29. MPEG LA’s cursory footnote reference to “the current allocation per the HEVC Agreement Among Licensors as amended” has appeared on the Settlement Statements that MPEG LA has sent to Samsung every quarter since Q3 2020. Those Settlement Statements reflect that Samsung has continued to be charged expenses and fees, including the “Licensing Administrator Fee,” in every quarter since it terminated its involvement in the MPEG LA HEVC patent pool. 9 11 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 30. In total, under the five Settlement Statements that Samsung has received from Q3 2020 to Q3 2021, the total “Payment to Samsung Electronics Co., Ltd.” after the improper 50% deduction is $11,720,311.87. MPEG LA’s breach of its obligations has thus injured Samsung by at least that amount; Samsung’s distribution should have been twice what it received, or $23,440,623.74. Every quarter that MPEG LA withholds half of the revenues Samsung is owed from licenses that cover Samsung’s patents adds millions of dollars more to the damages. 31. Discovery is necessary to identify all of the amounts and categories of damages that MPEG LA’s conduct has inflicted on Samsung. F. MPEG LA’s Scheme Cannot And Did Not Excuse Its Obligation To Distribute Samsung’s Full Share Of Pool Royalties 32. The purported amendment to the AAL that, on information and belief, MPEG LA spearheaded has no effect on Samsung’s rights to receive royalties for at least four reasons. 33. First, the purported amendment cannot have retrospective effect. Samsung’s right to receive royalty disbursements for preexisting Portfolio Licenses that continued to offer licensees the right to practice Samsung’s patents accrued and vested prior to Samsung’s termination of the Agreements. As both the survival provisions of the Agreements and New York law make clear, once those rights accrued and vested, they could not be divested from Samsung without its consent. MPEG LA cannot invoke this purported amendment to deprive Samsung of the royalties it is owed from licenses that cover Samsung’s patents. 34. Second, even if New York law would allow remaining parties to a contract to divest a terminated party of accrued and vested rights without the terminated party’s consent (it does not), no such change was allowed without Samsung’s consent under these Agreements. Section 6.1 of the AAL makes clear that any changes to “allocations among Parties pursuant to Article 5” requires “supermajority” approval, including the votes of “Licensors that collectively 10 12 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 received eighty (80) percent of the royalty distributions over the twelve (12) month period preceding any such vote.” During the 12 months before the purported amendment in June 2020, Samsung received more than twenty (20) percent of the royalty distributions from the pool, and the rest of the Licensors combined received less than eighty (80) percent of such distributions. Thus, it was not possible for any group of Licensors to change the allocations without Samsung’s consent. For this reason as well, the purported amendment cannot excuse MPEG LA’s failure to honor its obligation to pay Samsung its full share of royalties. 35. Third, Samsung’s vested right to continued royalty disbursements derives from sections of the AAL and LAA that MPEG LA has not contended were amended. Under Section 11.5.2 of the LAA, one of the expressly surviving rights after Samsung terminated the LAA was its “right to receive royalty distributions and statements pursuant to Sections 6.3 and 6.4 of this Agreement.” Those sections, in turn, oblige MPEG LA to “pay to each Licensor the amounts apportioned to such Licensor” “as set forth in Section 5.1 of the [AAL].” (Emphasis added.) Similarly, under Section 7.3.2 of the AAL, one right that survives termination is Samsung’s “right to receive royalty distributions pursuant to Section 5.1.” (Emphasis added.) Section 5.1 of the AAL has never been even purportedly amended, and it is that section that MPEG LA must look to when paying Samsung its apportioned amounts. Thus, even if the purported amendment to Section 7.2 of the AAL applied retrospectively, altered Samsung’s vested rights, and complied with the amendment policies (it does none of these things), Samsung’s right to receive disbursements under Sections 11 and 6 of the LAA, which require following Section 5.1 of the AAL, remains in effect. Once again, the purported amendment did not change what MPEG LA owes Samsung. 11 13 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 36. Finally, by its own terms, the purported amendment does not apply to Samsung or any other party that left the MPEG LA HEVC patent pool prior to the amendment. The amendment uses exclusively prospective language, applying only from July 1, 2020 forward and only to “a Party which terminates in accordance with Section 7.2,” not to any Party that had already terminated its participation. This section provides no basis for MPEG LA to withhold any royalties owed to Samsung; MPEG LA has breached its obligations by paying Samsung only half of the amount that it is owed. Causes of Action First Cause of Action Against MPEG LA (Breach of Contract) 37. Samsung repeats and realleges the foregoing allegations as though they were fully set forth here. 38. Samsung and MPEG LA were among the parties to the LAA, which continues to bind and define aspects of their relationship after Samsung’s termination. They reached agreement on the material terms of the LAA, which included, among other things, MPEG LA’s obligation to pay Samsung royalties “as set forth in Section 5.1 of the [AAL].” 39. Samsung’s right to receive royalties pursuant to the terms of the LAA and AAL survived Samsung’s termination of the LAA and AAL, and is ongoing. 40. Samsung has complied with all of its obligations under the LAA. 41. In breach of the LAA, and without prior notice to Samsung, MPEG LA has paid Samsung only 50% of the royalties to which Samsung is entitled under that agreement for more than a year. 42. As a direct, proximate and foreseeable result of MPEG LA’s breach, Samsung has been damaged in an amount to be determined at trial. 12 14 of 16 FILED: NEW YORK COUNTY CLERK 05/16/2022 08/26/2022 06:19 02:36 PM INDEX NO. 656312/2022 NYSCEF DOC. NO. 1 31 RECEIVED NYSCEF: 05/16/2022 08/26/2022 Second Cause of Action Against MPEG LA (Breach of the Implied Covenant of Good Faith and Fair Dealing) 43. Samsung repeats and realleges the foregoing allegations as though they were fully set forth here. 44. In addition to its breach of the express terms of the LAA, MPEG LA breached the LAA’s implied covenan