Bloomberg News

Bristol-Myers, Stem Cells, Facebook, Dow: Intellectual Property

October 19, 2011

(This is a daily report on global news about patents, trademarks, copyright and other intellectual property topics.)

Oct. 19 (Bloomberg) -- Bristol-Myers Squibb Co. and Sanofi won an appeals court ruling that upholds a $442 million patent- infringement judgment against Apotex Inc. related to generic copies of the blood thinner Plavix.

The U.S. Court of Appeals for the Federal Circuit in Washington declined to make Apotex pay an additional $107.9 million in interest, according to the decision posted yesterday on the court’s website. The court also rejected Apotex’s argument that a trial judge should have let the generic-drug maker pursue additional claims to challenge the 2007 infringement finding.

Plavix, sold by New York-based Bristol-Myers in the U.S. and Paris-based Sanofi elsewhere, is the second-biggest selling medicine, behind Pfizer Inc.’s Lipitor. Apotex began selling a generic version in 2006 after a lawsuit settlement agreement fell apart. The Toronto-based company was ordered by a judge to halt sales, and later lost a court challenge to the main patent on the drug, which has a chemical name of clopidogrel bisulfate.

The agreement capped the amount closely held Apotex would have to pay to no more than 50 percent of sales of the generic version. The Federal Circuit said that the agreement didn’t allow the court to also order prejudgment interest on the award.

About 34 percent of Bristol-Myers’s $19.5 billion in revenue last year came from Plavix. The drug has generic challengers in Europe and will have competition in the U.S. in May.

The case is Sanofi-Aventis v. Apotex Inc., 2011-1048, U.S. Court of Appeals for the Federal Circuit (Washington). The lower case is Sanofi-Synthelabo v. Apotex Inc., 02cv2255, U.S. District Court, Southern District of New York (Manhattan).

Embryonic Stem-Cell Patents Infringe EU Law, Top Court Says

The European Union’s highest court said that stem-cell research involving human embryos can’t be patented, in a ruling that scientists called “devastating” for medical research.

Inventions based on the use of human embryonic stem cells for scientific research purposes can’t be patented, the European Court of Justice in Luxembourg said. The case was triggered when Greenpeace challenged a German patent awarded to Oliver Bruestle, a professor and specialist in stem-cell research.

“This is an unbelievable setback for bio-medical research in the area of stem cells,” Bruestle said in an interview after the ruling. The EU court “took an extreme position on restrictions in this area, which will have huge repercussions globally, especially in the competition with the U.S. and Asia, and in scientific research.”

Under an EU law from 1998, research methods that involve human embryos for industrial or commercial purposes can’t be patented. A German court handling the dispute at the center of yesterday’s case sought the EU tribunal’s view on how to interpret the phrase “for scientific research involving human embryos” and to clarify the term “human embryo.”

“A process which involves removal of a stem cell from a human embryo at the blastocyst stage, entailing the destruction of that embryo, cannot be patented,” the EU court said. The blastocyst stage is about five days after fertilization.

Greenpeace, which said it sued for “ethical reasons,” argued the patent for a stem-cell research process developed by Bruestle to treat neural diseases is invalid because it covers cells derived from human embryos. The Federal Court of Justice, Germany’s highest civil court, last year asked the EU tribunal for guidance on the case.

The court clarified that “only use” of human embryos “for therapeutic and diagnostic purposes which are applied to the human embryo and are useful to it” are patentable.

“One consequence is that the benefits of our research will be reaped in America and Asia,” said Austin Smith, a professor at the Wellcome Trust Centre for Stem Cell Research at the University of Cambridge.

The ruling might actually allow scientists a “sigh of relief,” said Julian Hitchcock, a lawyer and intellectual property specialist in the London office of law firm Field Fisher Waterhouse LLP.

Researchers “won’t have to worry about inadvertently infringing someone else’s patent,” Hitchcock said in a phone interview. “While the ruling restricts patentability of such inventions, it doesn’t in any way restrict the use of embryonic stem cells.”

While patent protection might not be available, European scientists can seek so-called data exclusivity, which protects documentation for as much as eight years and prevents the marketing of competing products based on the same data for up to 10 years, said Hitchcock.

The case is: C-34/10, Prof. Dr. Oliver Bruestle v. Greenpeace e.V.

For more patent news, click here.

Trademark

Facebook Seeks Trademark for Provision of Data on ID Cards

Facebook Inc., operator of the most-used social-networking site, applied to register its name as a trademark for a use that may indicate a new business direction for the Palo Alto, California-based company.

In an application filed Oct. 5 with the U.S. Patent and Trademark Office, Facebook said it wants to register its familiar lower-case white-on-blue logo for “facilitating social and business networking through the provision of data for use on business and identity cards.”

The company said it would also use this logo for business cards and “non-magnetically coded identity cards.”

For more trademark news, click here.

Copyright

Viacom Tells Court YouTube Deliberately Violated Copyrights

Viacom Inc. told an appeals court that Google Inc.’s YouTube video-sharing website willfully violated copyrights by letting users post videos of television shows without authorization.

Both sides made oral arguments yesterday before the U.S. Court of Appeals in Manhattan. YouTube told the court it removed infringing videos from the site when it was notified by copyright owners.

Viacom sued YouTube in 2007, claiming the site’s users were illegally uploading thousands of videos from Viacom as well as movies from its Paramount Pictures studio. The New York-based entertainment company sought $1 billion in damages.

In the appeal, Viacom seeks to overturn a decision in Google’s favor last year by a judge without a trial.

Viacom raised questions of fact “a jury might find relevant” in its court papers, Circuit Judge Jose Cabranes told a lawyer for Mountain View, California-based Google. The three- judge panel said it will announce a decision later.

U.S. District Judge Louis Stanton ruled last year that YouTube was protected from liability by the Digital Millennium Copyright Act because it removed the offending videos when told they had been posted.

“There’s no evidence of a single clip YouTube knew was infringing that it failed to take down,” Andrew Schapiro, a lawyer for YouTube, told the panel yesterday.

Viacom said YouTube was aware of the copyright violations when it displayed the videos without authorization.

The lower-court ruling, if not reversed, “will lead to massive exploitation of copyrighted material on the Internet,” Paul Smith, a lawyer for Viacom, said at yesterday’s hearing.

More than 125 briefs supporting either Google or Viacom were filed by parties such as the Associated Press, Microsoft Corp., the Songwriters Guild of America, singers Garth Brooks and Sting.

Google, operator of the world’s biggest Internet search engine, bought YouTube in 2006 for $1.65 billion. It said in its brief that Viacom was also interested in buying the site. After negotiations over a content partnership broke down and Google made its successful offer, Viacom sent the “takedown” notices required by law when a content provider wants infringing material removed from a site.

Viacom said YouTube offered it a partnership agreement valued at $590 million before talks ended. Viacom also alleged that YouTube refused to deploy filtering technology to identify infringing videos unless Viacom agreed to be a financial partner.

The cases are Viacom International v. YouTube, 10-03270, and the Football Association v. YouTube, 10-03342, U.S. Court of Appeals for the Second Circuit (Manhattan).

Losing $13.5 Billion to Piracy Spurs Europe Law Reformers

Microsoft Corp. and Adobe Systems Inc. are among software companies that lost $13.5 billion to program pirates and counterfeiters in Europe last year. Their message to lawmakers: Learn from the U.S. and punish the thieves.

As the European Union considers changes to its intellectual property rules, it needs to make sure that higher damage payments deter pirates, who often benefit because of insufficient fines, said Warren Weertman, manager of legal affairs for the Washington-based Business Software Alliance trade group. Its members include Microsoft, Adobe, Apple Inc. and Siemens AG.

In Europe, about 35 percent of software deployed on personal computers was pirated every year since 2007, compared with 20 percent in the U.S., according to a May study by BSA and researcher IDC.

Last year, France lost $2.6 billion in pirated software, while Germany lost $2.1 billion, Italy $1.9 billion and the U.K. $1.8 billion. Across the EU, Bulgaria recorded the highest rate of software piracy in 2010 at 65 percent, while Luxembourg had the lowest at 20 percent, according to BSA.

Globally, the value of pirated software rose 14 percent to $58.8 billion last year, almost double the total in 2003. In China, almost four out of five programs in use are pirated, and 65 percent in Russia is stolen, according to BSA.

The European Commission, the 27-nation EU’s executive arm, last year published a report showing that some provisions of the current law, which was introduced in 2004, need “further clarification and have resulted in diverging interpretations at national level,” said Chantal Hughes, a spokeswoman for EU Internal Markets Commissioner Michel Barnier.

Software firms such as engineering and design software company Autodesk Inc. say they also suffer from so-called under licensing, where clients only pay for some of the programs used.

In Germany, Europe’s biggest economy, there are neither statutory nor punitive damages but it is up to the discretion of the court whether to fine, with no fixed amount, Weertman said. The highest total settlement in an “end-user case” was 1.5 million euros, he said. In the U.K.’s criminal courts, the maximum statutory fine is 10,000 pounds ($15,800) and punitive damages aren’t recognized, he said.

In the U.S., punitive damages are often awarded in piracy cases, with a statutory maximum rate per infringement of $150,000 if it is found to be willful, according to the BSA.

The low rate of piracy in Belgium, one of the EU countries where lump-sum or multiple damages are possible, backs up the software companies’ claim. About 25 percent of software deployed on PCs in the country was pirated in 2010, below the EU average of 35 percent.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Ex-Dow Scientist Admits to Economic Espionage, U.S. Says

An ex-Dow AgroSciences LLC researcher pleaded guilty to economic espionage in connection with the alleged theft of trade secrets from that company to benefit a Chinese university, the U.S. Justice Department said.

Kexue Huang, 48, who is also known as John, also admitted to stealing trade secrets from Minneapolis-based Cargill Inc., the U.S. said in a statement.

“Mr. Huang used his insider status at two of America’s largest agricultural companies to steal valuable trade secrets for use in his native China,” Assistant U.S. Attorney Lanny Breuer said in the statement.

Huang entered guilty pleas today in two separate criminal cases before U.S. District Judge William T. Lawrence in Indianapolis. Financial losses from his conduct exceed $7 million, the U.S. said.

His attorney, James Edgar of Indianapolis, didn’t immediately reply to voice-mail and e-mail messages seeking comment.

Huang worked for the Indianapolis-based unit of Midland, Michigan-based Dow Chemical Co., researching the development of organically-derived pesticides, from 2003 to 2008, then went to work for Cargill as a biotechnologist.

While at Dow, he shared confidential information with at least two unnamed people, one of whom conducted research first at the Hunan Normal University in China and then in Dresden, Germany, according to a signed plea agreement filed with the court.

A U.S. grand jury in Indianapolis indicted Huang on 17 counts in June 2010. A separate federal grand jury in Minnesota returned a single-count indictment accusing him of stealing a trade secret related to food processing from Cargill in November.

That case was transferred to Indianapolis federal court where it was unsealed yesterday.

The crime of economic espionage is punishable by as long as 15 years imprisonment, and trade secret theft carries a term of up to 10 years, the Justice Department said.

The cases are U.S. v. Huang, 10cr102 and 11cr163, U.S. District Court, Southern District of Indiana (Indianapolis).

--With assistance from Andrew Harris in Chicago, Don Jeffrey in New York, Susan Decker in Washington, Katie Linsell in London and Stephanie Bodoni in Luxembourg. 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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