The suit, filed last Thursday (20 August) in the Superior Court of the State of California County of Santa Clara, alleges that Palm used "fraudulent, unfair, deceptive and false advertising" to market its m130 handheld.
Palm had marketed the m130 as a device that could display more than 65,000 colours, a screen display targeted for use with 16-bit applications. However earlier this month the company disclosed that the m130 actually used a display designed for 12-bit applications, but used a technique known as "dithering" to produce 58,621 colour combinations. Dithering involves blending nearby pixels to create the appearance of more colours.
Palm has already apologised to customers about the false colour claims made for the m130 but had not determined how or if it would compensate customers who purchased the m130, Marlene Somsak, a spokeswoman for Palm said in an earlier interview.
Somsak said yesterday (28 August) that Palm is devising a compensation package for customers who purchased the m130, though details of that package have not been finalised. The process is being slowed down because the compensation must be applicable in all of the markets where the devices are sold.
"This has to be implemented with an appropriate compensation that we can put into effect around the world," Somsak said.
Palm said that as of yesterday it had not yet been served with the lawsuit. Somsak also noted that the company has received just eight calls through its customer service department about the issue.
Two plaintiffs named in the class-action case - Jonathan Lipner, of Pennsylvania, and Yansu Ouyang, of California - argue in a filing with the court that the marketing mishap reveals a pattern of unfair and deceptive marketing practices by the hardware maker. Plaintiffs are seeking refunds for all customers who purchased an m130, attorney fees as well as an undetermined reward for damages, according to the text of the lawsuit.
It is estimated that Palm has sold 400,000 m130 devices worldwide since it was released in March, according to Todd Kort, principal analyst with Dataquest, a division of Gartner. He noted that the shortage of colours would not be apparent to most customers and was unlikely to be intentional.
"It's not a huge problem but its always disconcerting when some company is found to be misrepresenting its products," Kort said.