Bloomberg News

Kodak, Delano Farms, Hachette: Intellectual Property

August 31, 2011

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

Aug. 31 (Bloomberg) -- Eastman Kodak Co., seeking to generate cash from its intellectual property, has signed confidentiality agreements with numerous potential buyers of patents it put up for sale last month, Chief Executive Officer Antonio Perez said.

“At the moment we announced that, the phone started to ring,” Perez, 65, said in an Aug. 29 telephone interview. Lazard LLC, Kodak’s adviser, has “contacted a large number of people. There are a number of people who signed their NDAs,” he said, referring to non-disclosure agreements protecting details about inventions covered by the patents.

Kodak, headed for its sixth annual loss in the past seven years, is trying to generate cash for its inkjet printers and other digital businesses Perez is counting on to turn the company around. The U.S. International Trade Commission has delayed a ruling on Kodak’s attempts to win $1 billion in licensing fees from Apple Inc. and Research In Motion Ltd. for image-preview technology used in cameras.

Perez, CEO since 2005, said he’s seeking patent deals that give Kodak cash up front as well as preserve licensing rights to its technology.

“All of this litigation takes a lot of time, and it’s very expensive and demands a lot of my time,” he said. “We would rather get an infusion of cash in advance, being able to have a series of relationships with many of those companies that otherwise we’d have to be in legal conflict with.”

The more than 1,100 patents Kodak put up for sale July 20 may generate more than $2 billion, according to MDB Capital Group, a Santa Monica, California-based investment bank specializing in intellectual property.

“What we are selling is the part of the portfolio that does not apply to the core investments and the future of the company,” said Perez, who declined to disclose potential bidders and specifics of negotiations.

He said Rochester, New York-based Kodak is trying to tap a “very hot” market for intellectual property.

Google Inc., the biggest maker of smartphone software, agreed to buy Motorola Mobility Holdings Inc. for $12.5 billion this month. Google had earlier bid for more than 6,000 Nortel Networks Corp. patents and applications, losing out to a $4.5 billion offer from a group including Apple, Research in Motion and Microsoft Corp.

“This is the right time,” Perez said. “The conversations are going. We are hoping quickly to get to a good conclusion.”

Delano Farms Allowed to Sue Government Agency in Patent Case

Delano Farms Co., a grape grower based in Hoquiam, Washington, can sue to challenge three patents issued to the U.S. Agriculture Department, a federal appeals court ruled.

The grape grower sued the Agriculture Department and its licensee, the California Table Grape Commission, in federal court in Fresno, California, in November 2007.

Delano, joined by two other growers, claimed the patents, which covered three varieties of table grapes, weren’t valid because they had been known, used and sold before the patent applications were filed. They also claimed that federal antitrust law was violated.

In dispute are patents PP15,891, for the Sweet Scarlet grape variety; PP16,229, for Scarlet Royal grapes; and PP16,284, covering the Autumn King variety.

The Agriculture Department had licensed the patents to the grape commission, a marketing agency whose mission is to promote the state’s table-grape industry. The commission is funded by a tax levied on each box of table grapes produced in California.

The three plaintiffs claimed the commission contacted California table-grape growers in 2004, telling the growers they could keep their vines and avoid a lawsuit if they admitted they possessed them, paid the commission $2 per vine they reproduced and $2 a box of grapes they previously shipped and promised not to propagate any more of those varieties.

This letter was sent before the patent applications were filed, and the letter wasn’t disclosed in the patent application, according to court papers.

In response to the suit, the Agriculture Department said it couldn’t be sued under a legal doctrine that bars such actions against the federal government. The trial court agreed, held that unless the Agriculture Department was a party to the suit, the patent claims couldn’t proceed, and dismissed the case.

The growers then appealed, arguing that the federal agency wasn’t a necessary party to the patent claims. They also claimed that their patent case against the government wasn’t barred under the so-called sovereign immunity doctrine.

The appeals court said that because license between the government and the commission didn’t give the commission any right to enforce the patent against infringement, the government had to be a party to the suit.

It found that federal law waiving sovereign immunity for non-monetary claims against federal agencies is broad enough to permit the growers to pursue patent-invalidation actions against the Agriculture Department.

The appeals court did uphold the trial court ruling barring the antitrust allegations. It said the growers failed to provide a plausible basis for finding the patent grape varieties formed a relevant antitrust market.

The growers’ case was argued by Lawrence M. Hadley of Hennigan Dorman LLP of Los Angeles. The California Table Grape Commission’s argument was made by Randolph D. Moss of Washington’s Wilmer Cutler Pickering Hale & Dorr LLP. The government’s case was argued by Susan L.C. Mitchell of the Commercial Litigation Branch of the Civil Division of the U.S. Justice Department.

The lower court case is Delano Farms Co. v. California Table Grape Commission, 1:07-cv-01610-OWW-SMS, U.S. District Court, Eastern District of California (Fresno). The appeal is Delano Farms Co. v. California Table Grape Commission, 10-01546, U.S. Court of Appeals for the Federal Circuit.

Microsoft to Withdraw Trade Claims Over Datel Xbox Controllers

Microsoft Corp. said it would withdraw part of its patent- infringement case against Datel Design & Development Ltd. over controllers for the Xbox 360 video-game system.

Datel redesigned its controllers and stopped importing versions known as TurboFire2 Xbox 360 Wireless that were at the heart of a complaint before the U.S. International Trade Commission in Washington, Microsoft said in a filing Aug. 29 that sought to withdraw the case. The software maker said it still will pursue cash compensation for past infringement through a civil lawsuit lodged against Datel last year.

“Datel’s voluntary exclusion of the accused products from the U.S. market has obviated the need to devote valuable public and private resources” of the ITC, Redmond, Washington-based Microsoft said in the filing.

The controllers made by Staffordshire, England-based Datel can turn single-shot electronic pistols used in games like “Call of Duty” into fully automatic weapons. Closely held Datel filed an antitrust lawsuit in November against Microsoft, claiming the company seeks to monopolize the markets for multiplayer online gaming systems and for accessories not sold directly with the Xbox. Those claims also are proceeding.

The case is In The Matter of Certain Game Controllers, 337- 715, U.S. International Trade Commission (Washington). The antitrust case is Datel Holdings Ltd. v. Microsoft Corp., 09cv5535, U.S. District Court for the Northern District of California (San Francisco). For more patent news, click here.

Trademark

Hachette Romance Novel Infringes Trademark, Texas DOT Claims

Hachette Book Group Inc. and its Grand Central Publishing unit were sued for trademark infringement by the Texas Department of Transportation.

The suit, filed in federal court in Austin, is related to the title of a book published by Grand Central. The book, by Houston-based author Christine Craig, is “Don’t Mess with Texas.”

The DOT registered the phrase with the U.S. Patent and Trademark Office in September 2002, and uses it in conjunction with its anti-litter campaign. The phrase is also used on clothing, beverage containers, magnets, jewelry and printed materials, and the state says it’s received “numerous awards and favorable publicity” in connection with the mark.

The book, classified as a “romance novel,” is objectionable to the DOT because it contains “numerous graphic references to sexual acts, states of sexual arousal, etc.,” according to court papers. The title is used without the DOT’s authorization, the state says in its pleadings.

The state transportation department said it has licensed rights to a book also titled “Don’t Mess with Texas” that is sold in Barnes & Noble Inc.’s stores and that the public is likely to be confused by the similarity of the names.

The romance novel title is likely to tarnish the state’s trademark, the department says in its complaint.

It asked the court to bar the defendants -- which include the author -- from infringing the mark. This would include a ban on the sale of the romance novel under that title. This would extend to Barnes & Noble, which is also a defendant in the case.

Additionally, the department requested money damages and profits derived from the sale of the allegedly infringing book, and for awards of litigation costs and attorney fees.

Hachette’s Grand Central Publishing unit didn’t respond immediately to an e-mailed request for comment.

The Department of Transportation is represented by Dwayne K. Goetzel and Eric B. Meyertons of Meyertons Hood Kivlin Kowert & Goetzel PC of Austin, Texas.

The case is Texas Department of Transportation v. Craig 1:11-cv-00726-SS, U.S. District Court, Western District of Texas (Austin).

Bravado Files Infringement Suit Related to Metallica Tour

Bravado International Group Merchandising Services Inc., which sells concert-related merchandise for the heavy metal band Metallica, filed a preemptive trademark infringement suit in federal court in Oakland, California, Aug. 29.

The suit was filed against 100 unnamed defendants and one unnamed company.

According to court papers, the unnamed defendants will be present in Northern California, at the time of an upcoming Metallica concert. The band is set to perform tonight in San Francisco and the concert is sold out.

Bravado, which sells clothing, posters, tour books and related items at the concert venue, is seeking to halt the sale of unauthorized merchandise at tonight’s concert and at other upcoming U.S. venues for tour. London-based Bravado is the merchandiser for a wide range of musical performers including Alicia Keys, Katy Perry, Green Day and Justin Bieber.

According to the band’s website, Metallica will be performing in New York’s Yankee Stadium in September, and after traveling to India and Brazil, will return for four sold-out performances in San Francisco in December.

Bravado claims that the unauthorized merchandise is of lower quality and injures both the company and the band because the sellers of the fake items don’t pay royalties. Additionally, the counterfeit goods are not subject to the same quality control, Bravado says.

The company asked the court for orders barring the sale of the counterfeit goods, and authorizing the seizure and destruction of all the fake goods. Bravado asked that the U.S. Marshals Service, local law enforcement or its own agents be authorized to seize the counterfeit merchandise.

Additionally, the company seeks awards of money damages, attorney fees and litigation costs.

Bravado is represented by Cara R. Burns of Santa Monica, California’s Hicks Mims Kaplan & Burns.

The case is Bravado International group Merchandising Services Inc. v. John Does 1-100, 4:11-cv-04244-SBA, U.S. District Court, Northern District of California (Oakland).

Slep-Tone Uses Trademark Law Against Karaoke Infringers

Slep-Tone Entertainment Corp., a maker of karaoke accompaniment tracks, sued more than 20 Florida companies for trademark infringement.

According to the complaint, the defendant companies are accused of using media-shifted copies of Sound Choice karaoke accompaniment tracks without having acquired the original authorized disks. As a result, they aren’t paying royalties to the owners of the copyrights in the underlying musical works.

The unauthorized copies contain Slep-Tone’s registered trademarks, the company says in its pleadings. Widespread karaoke piracy “has contributed to the loss of more than 60 jobs” at the company as well as “several consecutive years of operating losses,” Slep-Tone claims.

The suit, filed in federal court in Pensacola, Florida, is one of 24 trademark suits the Charlotte, North Carolina-based company has filed this year. In a posting on the SoundChoiceSucks.com blog, Kurt Slep, chief executive officer of Slep-Tone’s Sound Choice unit, said he chose to sue for trademark infringement “because it was simply easier than doing both copyright and trademark infringements and made our case easier to prove.”

The defendants are accused of “turning a blind eye” to the actions of what are known as “karaoke jockeys” who operate the unauthorized systems.

Slep-Tone asked the court to order the defendants to stop infringing its trademarks, and for awards of money damages, defendants’ profits related to the alleged infringement, and for extra damages to punish the defendants for their actions. The company also asked for a court order for seizure and destruction of all infringing items, and for awards of attorney fees and litigation costs.

The North Carolina company is represented by James M. Harrington and Maria D. Floren of Harrington Law PC of Concord, North Carolina.

The case is Slep-Tone Entertainment Corp. v. Tequila Mexico of Pensacola Inc., 0:11-cv-61908-JIC, U.S. District Court, Southern District of Florida (Fort Lauderdale).

For more trademark news, click here.

Copyright

Pirate Bay Founders Say New Site Won’t Infringe Copyrights

Two founders of the Pirate Bay file-sharing site say they’ve started a new site that will respect copyright rules, the BBC reported.

Pirate Bay, founded in Sweden in 2003, has been a frequent target of litigation aimed at illegal sharing of music and other content, the BBC reported.

The new site, to be called BayFiles, will let users share and store music, movies and other content with designated others rather than the general public, according to the BBC.

BayFiles founders Peter Sunde and Fredrik Neij told the BBC they will comply with legitimate requests to remove infringing content, and will warn those who attempt to download and share content without authorization.

For more copyright news, click here

--With assistance from Chris Burritt in Cedar Island, North Carolina and Susan Decker in Washington. Editors: Glenn Holdcraft, Mary Romano

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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