Bloomberg News

DuPont, EBay, Google, Lauder, SingTel: Intellectual Property

September 15, 2011

(This is a daily report on global news about patents, trademarks, copyright and other intellectual property topics. Adds SAP AG item to copyright section.)

Sept. 15 (Bloomberg) -- DuPont Co. deserves more than $919 million in damages from South Korea’s Kolon Industries Inc. over the theft of trade secrets involving DuPont’s Kevlar-brand fiber, used in protective clothing for police and the military, a jury ruled.

Jurors in federal court in Richmond, Virginia, deliberated about 10 hours over two days before finding Gyeonggi, South Korea-based Kolon and its U.S. unit wrongfully obtained DuPont’s proprietary information about Kevlar by hiring some of the company’s former engineers and marketers. The $919.9 million award today is the third-largest jury verdict this year, according to data compiled by Bloomberg.

Kevlar and Nomex, a heat-resistant fiber used in firefighting gear, accounted for about $1.4 billion of DuPont’s $31.5 billion in sales last year. The $500 million expansion is the biggest capacity increase since Kevlar was introduced in 1965, company officials said earlier this year.

Kolon disagrees with the verdict and will appeal, said Dan Tudesco, a U.S.-based spokesman for the company.

The verdict “is the result of a multiyear campaign by DuPont aimed at forcing Kolon out of the aramid fiber market,” Tudesco said in an e-mailed statement.

Cathy Andriadis, a DuPont spokeswoman, didn’t immediately return a call for comment.

DuPont, the largest U.S. chemical company by market value, sued Kolon in February 2009 alleging it stole confidential data about Kevlar, a bullet-resistant fiber used in body armor, military helmets, ropes and cables. Kolon began making its own version of Kevlar in 2005.

DuPont argued in court filings that Kolon executives conspired with five former employees of the U.S. chemical maker or its Japanese joint venture, DuPont-Toray Co., to gain access to Kevlar information.

To spur sales of its Heracron aramid fiber, Kolon hired Michael Mitchell, a former DuPont engineer who also had served as a Kevlar marketing executive, DuPont said in court papers. DuPont contended that Mitchell, hired as a consultant, provided Kolon with proprietary information about the Kevlar.

Mitchell “retained certain highly confidential information on his home computer” and passed the information to Kolon, DuPont alleged in court filings.

After learning about Mitchell’s activities, DuPont executives alerted the Federal Bureau of Investigation, according to U.S. Justice Department officials.

Mitchell later pleaded guilty to theft of trade secrets and obstruction of justice charges and was sentenced in March 2010 to 18 months in prison.

Kolon also recruited other former DuPont workers, including engineers and researchers, as part of a “concerted effort” to obtain information about Kevlar, according to court filings.

“DuPont’s investment in developing this information, amounting to hundreds of millions of dollars over many years, was thereby essentially lost,” the company said in a filing in October. “Kolon is now able to compete against DuPont in the aramid marketing using DuPont’s own information against it.”

The case is E. I. du Pont de Nemours & Co. v. Kolon Industries Inc., 3:09-cv-00058-REP, U.S. District Court, Eastern District of Virginia (Richmond).

EBay’s Dispute With Craigslist Being Probed by U.S. Prosecutors

EBay Inc. said it’s cooperating with a U.S. Justice Department investigation of its dispute with Craigslist Inc.

Prosecutors are investigating whether EBay employees stole confidential information from Craigslist, according to a copy of a grand jury subpoena. The online classified company claims in a lawsuit in state court in San Francisco that EBay stole the information to start a competing online ad site when the two companies were negotiating over EBay buying a stake in Craigslist.

“EBay believes that Craigslist’s allegations against EBay are without merit.” Amanda Miller, an EBay spokeswoman, said in a Sept. 13 e-mail.

The Sept. 7 grand jury subpoena of Craigslist seeks information pertaining to “incidents where EBay employees engaged in alleged criminal activities and misconduct focused around the misappropriation of proprietary/confidential information from Craigslist.”

The incidents include a February 2005 request by Pierre Omidyar, EBay’s chairman and founder, for information about Craigslist’s approach to adding new cities and advance notice of plans to launch new cities, according to the subpoena.

In March 2007, without Craigslist’s knowledge or consent, Brian Levey, EBay’s deputy general counsel, forwarded Craigslist’s confidential financial information from 2004 and 2007 to members of a team starting an EBay online classified ad site, according to the subpoena.

Troy Sauro, an attorney for San Francisco-based Craigslist, and Jack Gillund, a spokesman for the U.S. Attorney’s office in San Francisco, declined to comment on the investigation. “

EBay, based in San Jose, California, bought a 28 percent stake in Craigslist in 2004. The company developed an online classified site called Kijiji in 2007. The site was renamed EBayClassifieds.com.

Craigslist owners James Buckmaster and Craig Newmark then enacted takeover defenses in an attempt to strip EBay of its board seat on grounds that the minority shareholder posed a threat to their company.

EBay sued Craigslist in Delaware, alleging the company’s so-called poison-pill plan was enacted to punish it for starting a competing site. EBay won a ruling last year throwing out the poison-pill plan and upholding most of its rights as a minority investor.

“Craigslist asserted allegations of misconduct against EBay as a defense in the Delaware case, but the Delaware court did not rule in Craigslist’s favor on the defense,” Miller said in the e-mail.

Craigslist sued EBay in state court in San Francisco alleging breach of contract, breach of fiduciary duty, negligent misrepresentation and violation of California securities law. EBay has denied wrongdoing and claims Craigslist breached terms of a shareholders’ agreement between the two companies.

The state court case is Craigslist v. EBay, 475276, Superior Court of California (San Francisco).

Patents

Google, Facebook Sued Over Text-Completion Technology

Google Inc. and Facebook Inc. were sued for allegedly infringing a patent covering technology that provides auto- completion for computer users searching the Internet.

Google, the world’s most-used search engine, and Palo Alto, California-based Facebook, the world’s largest social network, infringed on the auto-completion technology patent by incorporating it on their websites, officials of Auto-Completion Solutions LLC contend in their lawsuit.

The companies’ use of the patented function without permission harmed ACS, which deserves “to recover damages adequate to compensate it for such infringement,” lawyers for the Frisco, Texas-based company said in a complaint filed Sept. 13 in federal court in Wilmington, Delaware.

In dispute is patent 6,879,691, issued in April 2005. According to the database of the U.S. Patent and Trademark Office, the patent was assigned to Acacia Patent Acquisitions LLC. That assignment was recorded in the database on Sept. 6.

The patent was then assigned to Auto-Complete Solutions, which has the same address as Acacia, a company that doesn’t make products covered by the patents it holds. The new assignment was recorded in the database Sept. 13, the same day this patent suit was filed.

Other Internet information providers named in the complaint include Sunnyvale, California-based Yahoo! Inc. and Linkedin Corp., which like Google, is based in Mountain View, California.

“We have not yet received a copy of the complaint and won’t be able to comment until we’ve had a chance to review it,” Jim Prosser, a Google spokesman, said in an e-mailed statement.

Evonne Gomez Morantes, a Yahoo spokeswoman, and Erin O’Hara, a spokeswoman for Linkedin, declined in e-mails to comment on the suit. Andrew Noyes, a spokesman for Facebook, didn’t immediately return calls and e-mails seeking comment.

The case is Auto-Completion Solutions LLC v. Facebook Inc., 1:11-cv-00809-UNA, U.S. District Court, District of Delaware (Wilmington).

Google Purchases 1,023 Patents From IBM to Bolster Portfolio

Google Inc. bought 1,023 patents from International Business Machines Corp., part of its efforts to bolster its portfolio as the Android operating system comes under legal attack from rivals.

IBM transferred the patents to Google on Aug. 17, according to records posted Sept. 13 on the U.S. Patent and Trademark Office’s website. Jim Prosser, a spokesman for Google, confirmed the transfer and said the Mountain View, California-based company wasn’t providing any details.

The transfer was first reported by the SEO by the Sea blog.

For more patent news, click here.

Trademark

Lauder to Become Fragrance Licensee for Italian Designer Marni

The Estee Lauder Cos., a New York-based fragrance and cosmetics company, will become the worldwide licensee for the Milan fashion house Marni Srl, according to a company statement.

Closely held Marni, established as a line of women’s and men’s luxury clothing and accessories in 1994 by Conseuelo and Gianni Fastiglioni, sells its merchandise through freestanding boutiques and stores-within-stores, in addition to its own website.

According to the Italian company’s website, its handbags sell for up to $1,925, coats up to $2,020, boots up to $1,000 and t-shirts up to $370.

Among the other designers for whom Estee Lauder has produced licensed products are Tommy Hilfiger, Donna Karan, Michael Kors, Missoni, Tom Ford and Ermenegildo Zegna. The company also produces its own brands of fragrances and cosmetics including Aramis, Clinique, Prescriptives and Estee Lauder.

Terms of the multi-year licensing arrangement with Marni were not disclosed.

Target’s Missoni for Target Products Showing up on EBay

One day after Target Corp. began sales of Missoni-branded products, the Minneapolis-based discount retailer’s more than 1,500 retail outlets were more or less stripped bare of a wide range of the merchandise licensed by Sumirago, Italy’s Missoni SpA, according to news reports.

Instead, the Missoni for Target items were turning up in large numbers on the Internet auction site belonging to San Jose, California’s EBay Inc.

When accessed yesterday morning, EBay had listings for more than 27,000 Missoni for Target items, many offered at two or three times the products’ original selling price. Sellers were asking for up to $1,125 for the Missoni bikes, which were listed on the Target website for $399.99.

Target’s website crashed frequently Sept. 13, the day the Missoni for Target products were released.

VF Corp. Adds Timberland, Smartwool to Stable of Brands

VF Corp., holder of the Healthtex, Gitano, Britannia and Wrangler brands, acquired the Timberland and Smartwool trademarks and related IP as part of a $2.3 billion transaction, according to a company statement.

The Timberland unit will remain in Stratham, New Hampshire, and Smartwool will remain in Steamboat Springs, Colorado, the company said in the statement. While Timberland goods are oriented toward hiking and mountaineering, in recent years its gear has become a favorite of pop musicians including Nick Jonas and Jay-Z.

Greensboro, North Carolina-based VF will “take the Timberland and Smartwool brands to the next level,” Jeff Swartz, former Timberland president and chief executive, said in the company statement.

For more trademark news, click here.

Copyright

SingTel’s Opus Seeks Declaration Broadcasts Don’t Infringe

Singapore Tellecommunications Ltd.’s Australian unit is taking the Australian Football League and the National Rugby League to court for the right for delayed broadcasts of their game to phone and Internet customers, the Melbourne Herald Sun reported.

The two leagues had threatened to sue the SingTel Optus unit for copyright infringement for broadcasting the games, according to the Herald Sun.

An Optus spokesman told the newspaper that the company believes the leagues’ claims are without foundation, and will seek a court declaration that it’s not infringing the leagues’ copyrights.

Melbourne-based Telstra Corp. Ltd. has a contract with the AFL for Internet and Broadcast rights, according to the Herald Sun.

Ex-SAP Unit Pleads Guilty to Illegal Oracle Downloads

SAP AG’s former TomorrowNow software maintenance unit pleaded guilty to charges related to unauthorized downloading of Oracle Corp. software and agreed to pay a $20 million penalty.

U.S. District Judge Phyllis Hamilton accepted the guilty plea by the closed SAP unit yesterday in Oakland, California.

TomorrowNow was charged Sept. 8 with 11 counts of unauthorized computer access and one count of criminal copyright infringement.

“No other SAP entity, including SAP AG or SAP America, will face charges arising out of the office’s investigation,” James Dever, an SAP spokesman, said in an e-mailed statement of the Justice Department probe.

SAP, the world’s largest maker of business software, shut the Bryan, Texas-based unit in 2008. The Waldorff, Germany-based company was sued by Oracle in 2007 over the downloads. SAP didn’t contest that it was liable for infringement by TomorrowNow, which offered software upgrades and fixes to customers who used products made by companies that were acquired by Oracle.

Hamilton last week threw out a jury’s $1.3 billion damage award to Oracle in its civil lawsuit against SAP. Hamilton called the amount “grossly excessive,” and said Oracle could agree to accept no more than $272 million in damages or retry its case.

The criminal case is U.S. v. TomorrowNow Inc., 11-00642, U.S. District Court, Northern District of California (Oakland).

For more copyright news, click here.

--With the assistance of Lauren Coleman-Lochner in New York, Susan Decker in Washington, Jef Feeley in Wilmington, Delaware, Gary Robertson in Richmond, Virginia, and Karen Gullo and Joel Rosenblatt in San Francisco. Editors: Mary Romano, Peter Blumberg

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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