Bloomberg News

Sinovel, Scholastic, TCW, Dinosaurs: Intellectual Property

October 26, 2011

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

Oct. 26 (Bloomberg) -- Sinovel Wind Group Co., the world’s second-biggest wind-turbine maker, said American Superconductor Corp. is seeking more than 37.9 million yuan ($6 million) for software copyright violations in a claim filed at the Beijing First People’s Court.

AMSC’s Suzhou Meien Superconductor Co. unit requested that Sinovel stop copying, installing and using unauthorized software and delete and destroy all copies used in turbines, Beijing- based Sinovel said yesterday in a filing to the Shanghai stock exchange.

Sinovel, which generated about 70 percent of AMSC’s revenue in fiscal 2009, refused March 31 to accept or pay for shipments of electrical components and spare parts for 1.5-megawatt and 3- megawatt turbines. Massachusetts-based AMSC filed a complaint with the Beijing Arbitration Commission against Sinovel for breach of eight contracts, seeking 490.2 million yuan, Sinovel said Sept. 20.

Sinovel filed a counterclaim of 369.1 million yuan on Oct. 12, denying the charges. It subsequently increased the amount to 575.5 million yuan, it said on Oct. 20.

Scholastic Accused of Infringing Kids’ Book About Penguins

Scholastic Corp.’s Scholastic U.K. and Scholastic Canada units are being sued for copyright infringement by the Canadian author of a children’s book about a penguin, the London Free Press reported.

David Carruthers claims Scholastic’s “The Penguin Who Wanted to Fly” infringes his book “The Bird that Wanted to Fly” and is seeking $2.5 million in damages according to the newspaper.

The author said he submitted his book to Scholastic three times and received a rejection each time, so he published his book using his own money, the London Free Press reported.

Carruthers claims the two books have too many similarities and has posted a list on his Facebook page tallying what he deems the common features of both books, the newspaper reported.

Russian Police Arrest Couple in $1.2 Billion Infringement Case

A Russian couple accused of unauthorized distribution of $1.2 billion worth of films is facing potential jail terms of as long as six years, Russian state news agency Ria Novosti said.

They are being tried in the Timiryazevsky District Court in Moscow for distributing unreleased films through their now- defunct website, interfilm.ru, according to the news agency.

The couple allegedly made unlicensed translations of pirated films they bought from foreigners and sold copies of the films through the website for a small fee, according to the news agency.

The Russian Anti-Piracy Organization assisted police in their investigation and contacted the copyright holders, who gave the $1.2 billion estimate of the value of the infringed films, according to the news agency.

Montana Dinosaur Bones Copyright Dispute Sent Out for Settlement

A federal judge in Montana ordered a copyright dispute over dinosaur bones sent to a magistrate judge for settlement talks.

Black Hills Institute of Geological Research Inc. sued Fort Peck Paleontology Inc. in federal court in Great Falls, Montana, in November 2010, claiming Fort Peck copied the institute’s dinosaur-bone castings and used them to complete a Tyrannosaurus rex skeleton. Fort Peck sold replicas of its completed skeleton, known as Peck’s Rex, according to court papers.

The institute, based in Hill City, South Dakota, asked the court for more than $8 million in damages and for an order to seize all allegedly infringing products.

In a March court filing, Montana-based Fort Peck said that it hadn’t infringed, that the bone castings weren’t covered by copyright and that the institute authorized the use of the castings.

U.S. Magistrate Judge Keith Strong ordered the parties to participate in a phone conference today to pick a date for a settlement conference, according to an Oct. 21 court filing.

Luke St. Angelo of Fort Collins, Colorado, counsel for Black Hills Institute, told the insurance-industry publication Claims Journal that under federal copyright law, the damages could be tripled in the case.

The case is Black Hills Institute of Geological Research Inc. v. Fort Peck Paleontology Inc., 4:10-cv-00076, U.S. District Court, District of Montana (Great Falls).

More NinjaVideo Employees Plead Guilty in Copyright Case

Two more employees of NinjaVideo pleaded guilty in a criminal copyright infringement case involving unauthorized downloads of movies including “Iron Man 2,” the U.S. Justice Department said.

Joshua David Evans, of North Bend, Washington, and Jeremy Lynn Andrew of Eugene, Oregon, both pleaded guilty to one count of conspiracy, the Justice Department said in a statement yesterday. Evans also pleaded guilty to one criminal copyright infringement count, the U.S. said.

In September, two other members of NinjaVideo pleaded guilty to conspiracy and criminal copyright infringement. An arrest warrant has been issued for a fifth member of the group, the U.S. said.

The government said that NinjaVideo.net generated more than $500,000 from visitor donations and Internet advertising during the period of the infringement.

Sentencing for the two men will take place in early 2012. The men could get a prison term of five years on each count, the U.S. said.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Liquidnet Says Wedbush Suit Should Be Dismissed or Halted

Wedbush Securities Inc.’s lawsuit accusing two former employees and Liquidnet Holdings Inc. of taking customer lists and documents should be dismissed or halted, Liquidnet said in court papers.

In the suit, filed Oct. 20 in New York State Supreme Court, Wedbush said New York-based Liquidnet and former employees Louis Kerner and Michael Silverstein worked together to take proprietary information from Los Angeles-based Wedbush to start a competing business.

Wedbush’s suit should be dismissed or delayed because the company failed to file a corresponding demand with the Financial Industry Regulatory Authority, required in disputes between registered members, Liquidnet said in an Oct. 24 filing.

“Wedbush cannot establish a likelihood of success on any of its claims because, inter alia, none of the information claimed to be proprietary to Wedbush constitutes trade secret information, the information is available from public sources and because Kerner and Silverstein are not barred from competing with Wedbush through any agreement,” Liquidnet said.

Liquidnet asked the court to deny Wedbush’s motion for a temporary restraining order, a preliminary injunction and expedited fact-gathering.

Liquidnet said on Oct. 17 that it hired Kerner to run a new group focused on private companies and that he would be joined by Silverstein.

Kerner began working for Wedbush in its New York office in April 2010 and had been managing director of its Private Shares Group since March, Wedbush said. Silverstein began working in the Los Angeles office in February and had reported to Kerner and others since April, it said.

Wedbush is seeking unspecified damages and court orders barring the defendants from using, disclosing or transmitting any records or information related to its business.

The case is Wedbush Securities Inc. v. Liquidnet Inc., 652875/2011, New York State Supreme Court (Manhattan).

TCW, DoubleLine Spar Over Trade-Secret Royalties After Trial

TCW Group Inc.’s expert witness said the asset-management firm is owed $81.7 million in “reasonable royalties” by DoubleLine Capital LP after a jury found that DoubleLine had misappropriated TCW’s trade secrets.

The use of the trade secrets, including portfolio- management systems, would have let DoubleLine avoid risks and delays getting its business operating, Brad Cornell, the witness, told California Superior Court Judge Carl J. West in Los Angeles yesterday.

“TCW’s trade secrets are based on years, if not decades, of actual experience,” Cornell said under questioning by TCW lawyer John Quinn.

TCW, the Los Angeles-based unit of Societe Generale SA, sued its former chief investment officer, Jeffrey Gundlach, 51, in January 2010, after more than half of its fixed-income professionals joined DoubleLine, the rival firm Gundlach started within weeks after TCW fired him. Gundlach countersued, saying TCW pushed him out to avoid paying him hundreds of millions of dollars in fees for the funds his group managed.

After a six-week trial, the jury awarded Gundlach and three other former TCW employees $66.7 million for unpaid wages. The jury also found that Gundlach breached his fiduciary duty and misappropriated TCW trade secrets. The jury awarded TCW no damages on the breach claim. The judge will determine what TCW is owed on the trade-secret claim.

The case is Trust Co. of the West v. Gundlach, BC429385, California Superior Court, Los Angeles County (Los Angeles).

Patents

Drugmakers Still Pay to Keep Generics Off Market, FTC Says

Brand-name drugmakers are continuing an “anticompetitive” trend of paying generic-drug manufacturers to delay introducing their lower-cost products, according to a Federal Trade Commission report.

Drug companies completed 28 potential deals to delay generics in the fiscal year that ended Sept. 30, according to the report released yesterday. That’s just under the record of 31 such agreements in the previous fiscal year, the FTC said.

The commission has been pressing Congress and the courts to limit the deals, which the FTC said delay the introduction of cheaper drugs. Drugmakers have said that the agreements cut legal costs and in some cases speed up the introduction of the less-expensive drugs.

“While a lot of companies don’t engage in pay-for-delay settlements, the ones that do increase prescription drug costs for consumers and the government each year,” FTC Chairman Jon Leibowitz said in a statement.

The 28 deals involved 25 different brand-name drugs with combined U.S. sales of more than $9 billion, according to the FTC. The agreements, which drugmakers are required to report to the FTC, are otherwise confidential, said Mitchell Katz, a commission spokesman.

The FTC has sued Brussels-based Solvay SA along with generic-drug makers Par Pharmaceutical Cos. of Woodcliff Lake, New Jersey, and Watson Pharmaceuticals Inc. of Parsippany, New Jersey, over a deal involving the drug AndroGel, a testosterone replacement therapy.

Cephalon Inc. also is being sued by the FTC, which contends that the Frazer, Pennsylvania-based drugmaker paid more than $200 million for generic companies to drop their challenge to patents on its sleep-disorder drug Provigil.

Prices for generics typically are 20 percent to 30 percent less than the name-brand counterparts, and in some cases are as much as 90 percent cheaper, according to the FTC.

Brand-name companies sometimes pay or provide other compensation to generic companies to settle patent challenges and delay introduction of the cheaper products, the FTC said.

“Patent settlements are a vital aspect of a patent owner’s ability to protect intellectual property,” said Diane Bieri, executive vice president and general counsel at the Pharmaceutical Research and Manufacturers of America, the Washington-based trade association for brand-name drugmakers.

David Belian, a spokesman for the Washington-based Generic Pharmaceutical Association, didn’t immediately return phone calls and an e-mail seeking comment.

For more patent news, click here. For trademark news, click here.

--With assistance from Feifei Shen in Beijing, Jeff Bliss in Washington, Chris Dolmetsch in New York and Edvard Pettersson in Los Angeles. Editors: Andrew Dunn, 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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