Bloomberg News

Pfizer, SEB, Amazon, Blockbuster: Intellectual Property

June 01, 2011

(This is a daily report on global news about patents, trademarks, copyright and other intellectual property topics. Updates with SEB item in top section.)

June 1 (Bloomberg) -- Pfizer Inc., the world’s biggest drugmaker, settled claims against Teva Pharmaceutical Industries Ltd. over generic versions of the Neurontin epilepsy drug, ending a trial in federal court.

Financial terms are confidential, Teva, the world’s biggest generic-drug company, said in a statement. Teva will be able to continue selling the copy under a license from Pfizer, according to a filing in the case. U.S. District Judge Faith Hochberg in Newark, New Jersey, who was presiding over the trial that began May 17, dismissed the suit yesterday, according to the court docket.

Pfizer claimed that copies of the pill made by Teva and its Ivax unit, along with Actavis Group hf’s Purepac unit, infringe a patent that expires in 2017. The drugmaker was seeking compensation for profit it lost when sales plunged to $150 million in 2005 from $2.5 billion the previous year because of the low-cost competition.

The agreement covers Teva, its Ivax unit and Actavis Group hf’s Purepac unit, which had an agreement with Teva over its Neurontin copy, said Chris Loder, a spokesman for New York-based Pfizer. He declined to provide any financial details.

Low-cost versions of Neurontin have been on the market since 2004. A federal appeals court in 2007 overturned a U.S. judge’s ruling that Teva and Ivax didn’t infringe Pfizer’s patent.

The generic-drug companies also argued that Warner-Lambert Co., which Pfizer purchased in 2000, turned Neurontin into a blockbuster drug by illegally marketing it for uses not approved by the U.S. Food and Drug Administration. In 2004, Warner- Lambert pleaded guilty and agreed to pay $430 million to resolve U.S. criminal and civil allegations that it marketed Neurontin for so-called off-label uses.

The subject of the trial is patent 6,054,482, which covers a process to make gabapentin, the active ingredient in Neurontin, with fewer contaminants.

The case is Warner-Lambert Co. v. Purepac Pharmaceutical, 00-cv-2931, U.S. District Court, District of New Jersey (Newark).

Patent Fee Changes ‘Critical’ to Economy, Commerce Tells House

Letting the U.S. Patent and Trademark Office set its own fees and keep all the money it collects is “critical” to promoting innovation, according to the Commerce Department, which oversees the agency.

The House is considering a measure known as the America Invents Act that would mark a fundamental change in how patents are reviewed and the biggest revision to U.S. patent law since 1952. Commerce Secretary Gary Locke wrote in support of the proposed legislation in letters yesterday to Representative Lamar Smith, a Texas Republican who chairs the House Judiciary Committee, and Michigan Representative John Conyers, the panel’s top-ranking Democrat.

The Senate passed a similar measure in a 95-5 vote on March 8. Locke said the administration, which supported the Senate version, wants “prompt passage” of legislation, saying it may help promote job creation.

“Enactment of a balanced bill is an important part of the administration’s goal of ‘out-innovating’ our economic competitors and winning the future -- and it can be done with no cost to taxpayers and no addition to the deficit,” Locke wrote.

The House may take up the measure next month, according to the office of Majority Leader Eric Cantor, a Virginia Republican.

A key provision of the legislation would give the patent office more power over its funding by allowing the agency to alter its fee structure and keep Congress from diverting fees for non-patent purposes.

“This structure is critical to enable the USPTO to better meet the needs of America’s innovators,” Locke wrote, suggesting there should be technical changes to allow the patent office to make interim fee adjustments “so it can best use this new authority on day one.”

The measure also calls for granting patents to the first inventor to file an application, eliminating an often years-long procedure to determine who first came up with an idea. The first-to-file system is used in most countries.

The House patent bill is H.R. 1249.

SEB Wins U.S. Supreme Court Patent Fight With Global-Tech

The U.S. Supreme Court, in a decision limiting the rights of some patent holders, upheld a $5 million award against a home-appliance maker for persuading retailers to sell a copycat version of an SEB SA deep fryer.

The 8-1 ruling set a high bar for claims that one company induced another to infringe a patent, while saying SEB met that standard in its suit against Hong Kong-based Global-Tech Advanced Innovations Inc. The majority said the patentholder must prove the defendant knew about the infringement or at least was “willfully blind” to it.

The ruling will help companies that make mobile phones or design software, said Edward Reines, a patent lawyer with Weil Gotshal & Manges LLP. “This is a big deal,” said Reines, who filed a brief on behalf of companies including Red Hat Inc., General Motors Co., Yahoo! Inc., EBay Inc. and Hewlett-Packard Co. “In a world with products that are so versatile and flexible, a higher standard to prove inducement of infringement makes sense.”

The case divided businesses along what have become familiar lines in patent cases -- with large technology companies including Google Inc. and Microsoft Corp. urging limits on infringement suits, and the drug industry arguing for robust patent protection.

Writing for the Supreme Court, Justice Samuel Alito said a lower court standard made it too easy for patentholders to win suits alleging inducement to infringe.

At the same time, Alito said SEB met the Supreme Court’s new standard. SEB proved to a jury that a Global-Tech unit “took deliberate steps to avoid knowing” that it was selling a knockoff version of a patented SEB fryer, Alito wrote.

In developing its fryer, Pentalpha bought an SEB fryer in Hong Kong and copied its “cool touch” features, Alito said. Pentalpha never told its lawyer that it had copied the design, and the lawyer later issued a written opinion that the fryer didn’t violate any of the patents he had uncovered, Alito said.

Justice Anthony Kennedy was the lone dissenter.

The case is Global-Tech Appliances v. SEB SA, 10-6.

For more patent news, click here.

Trademark

College Bookstore Association Seeks Dismissal of Amazon Suit

A trade group for college bookstores that has challenged Amazon.com Inc.’s advertising claims for discounted textbooks asked a federal judge to dismiss the online retailer’s lawsuit against it.

The National Association of College Stores Inc. was sued by Amazon.com May 3 in a complaint seeking a court order declaring that its advertised 30 percent discounts on new textbooks and 90 percent discounts on used books aren’t false or misleading. Amazon asked the court to say those ads didn’t violate federal trademark law.

In March, the Oberlin, Ohio-based group asked the Better Business Bureau’s national advertising division to review the ads, which it says are deceptive and haven’t been substantiated. Amazon.com hasn’t been harmed by the association or its request for a review, so the complaint should be thrown out, the group said in a May 27 filing in federal court in Seattle.

The lawsuit appears to have been filed to thwart the college store group’s effort to have the Amazon.com ads reviewed by the bureau, the filing says. The complaint was closed because the bureau doesn’t accept cases that are the subject of lawsuits, the filing says.

A voice-mail message left at Seattle-based Amazon.com’s media office wasn’t immediately returned.

The case is Amazon.com v. National Association of College Stores Inc., 11-754, U.S. District Court, Western District of Washington (Seattle).

NCR Sues Blockbuster Trust Over Movie-Rental Kiosks

NCR Corp. sued a trust set up by Blockbuster Inc. in a bid to continue licensing the company’s name for movie-rental kiosks.

The Blockbuster Express name, design and related trademarks are held by the BB 2009 trust, NCR said in the lawsuit filed in U.S. District Court in Wilmington, Delaware. Blockbuster, once the largest video-rental chain, sold its assets to Dish Network Corp. in April for about $320 million.

Dish rejected the NCR contract and sent the company a termination letter, NCR said. NCR, based in Duluth, Georgia, builds kiosks, often placed in grocery and convenience stores, where customers can rent and drop off movies. The company, which branded more than 9,000 kiosks with the Blockbuster name, pays for use of the brand and collects all revenue from rentals.

“NCR has undertaken significant time and expense in establishing and operating kiosks throughout the United States branded with the trademarks, and has earned substantial revenues from those operations,” Melanie Sharp, an attorney representing NCR, said in court papers filed May 27.

Blockbuster transferred its interest in the trust to Dish as part of its asset sale, according to court papers. NCR contends that the trust wasn’t included in the sale because it wasn’t part of Blockbuster’s bankruptcy filing. In addition, only the trust has the right to terminate the license, not Dish, NCR claims.

Marc Lumpkin, a Dish spokesman, didn’t immediately respond to an e-mail seeking comment. Dish, based in Englewood, Colorado, is the second-largest satellite-television provider in the U.S.

The case is NCR Corp. v. BB 2009 Trust, 11-cv-481, U.S. District Court, District of Delaware (Wilmington).

St. Laurent Tells Court Red Shoe Soles Neither New Nor Unique

Yves Saint Laurent America Inc. responded to a trademark- infringement case brought by Christian Louboutin SA by saying there is nothing particularly distinctive about putting a red sole on a pair of shoes.

Louboutin sued St. Laurent in federal court in Manhattan April 7, accusing the French fashion house of misleading the public and tarnishing the shoemaker’s reputation. The shoemaker introduced the red soles in 1992 and since then they have been on all of the company’s luxury shoes, according to the lawsuit.

On Barneys’s website, Louboutin red-sole shoes are priced from $445 to more than $4,000 a pair.

Saint Laurent has been selling red-sole shoes under brand names such as Tribute, Palais and Woodstock at high-end fashion stores that also sell Louboutin footwear, including Saks Fifth Avenue, Barneys New York and Bergdorf Goodman, according to the complaint.

In its response to the complaint, St. Laurent said red soles have been used for centuries, including those worn by France’s King Louis XIV in the 17th century. Dorothy, the heroine of “Wizard of Oz” clicked together the heels of her red-soled ruby slippers and was transported home at the end of the 1939 film, St. Laurent said in its pleadings.

Louboutin “cannot plausibly assert that red outsoles are singularly associated with the Louboutin brand,” the French fashion house said. St. Laurent accused Louboutin of making a “demonstrably false” statement to the U.S. Patent and Trademark Office when the shoemaker claimed in a trademark filing that its use of the red sole was exclusive.

St. Laurent also said that it isn’t using a red sole as a signature element. It colored the soles of all its shoes to match the uppers, achieving a monochromatic effect, the company claims. Yves Saint Laurent, the Algeria-born French fashion designer for whom the fashion house is named, died in 2008.

In addition to seeking a judicial declaration that it isn’t infringing, St. Laurent asked the court to order the cancellation of the Louboutin red-sole trademark and for awards of money damages, attorney fees and litigation costs. St. Laurent asked for extra damages because of what it called “Louboutin’s malicious, willful, tortuous interference and unfair competition.”

The case is Christian Louboutin SA v. Yves Saint Laurent America Inc., 11-2381, U.S. District Court, Southern District of New York (Manhattan).

For more trademark news, click here.

For copyright news, click here.

Trade Secrets/Industrial Espionage

Texas Lawmakers Seek Public Disclosure of ‘Fracking’ Formulae

Oil drilling companies that operate in Texas may soon be unable to protect as trade secrets the formulas for the chemicals they use to fracture rock formations, Associated Press reported.

The state House of Representatives approved a measure May 28 requiring drilling companies to disclose their so-called “fracking” chemicals, the news service reported. The governor hasn’t said whether he will sign it, AP said.

Drillers pump millions of gallons of water containing their proprietary blend of chemicals into the ground in their quest for oil, according to AP. Some environmental groups are concerned that the chemicals can harm groundwater or soil, AP said.

--With assistance from Dawn McCarty in Wilmington, Delaware; Karen Gullo in San Francisco federal court; Susan Decker and Greg Stohr in Washington; David Voreacos in Newark, New Jersey; and Don Jeffrey in New York. Editor: Stephen Farr.

To contact the reporter on this story: Victoria Slind-Flor in Oakland, California, at vslindflor@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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