Bloomberg News

AOL, Genzyme, NASA, Lin, Righthaven: Intellectual Property

March 26, 2012

AOL Inc. (AOL) hired Evercore Partners Inc. (EVR) to find a buyer for its more than 800 patents and explore other strategic options, three people with knowledge of the matter said.

Private-equity firms, including Providence Equity Partners Inc., TPG Capital and Silver Lake (SLR), have approached AOL about taking the company private, yet those overtures haven’t resulted in a deal, said the people, who asked not to be identified because the matter hasn’t been disclosed.

Evercore is trying to help the company wring value from a patent portfolio that AOL shareholder Starboard Value LP said may yield more than $1 billion in licensing income. AOL has explored options as an alternative to remaining public amid mounting subscriber losses and a slump that has sliced revenue 29 percent since the 2009 spinoff from Time Warner Inc. (TWX)

AOL’s share price has climbed 74 percent since Aug. 10, when it fell to its lowest level since the spinoff, amid speculation it might be sold to a private-equity firm. It has become too expensive for the financing of a leveraged buyout, people said.

Private equity firms are often drawn by a company’s ability to generate cash. AOL’s appeal is diminishing as its dial-up business dries up, the people said. Sales in that division have plunged each of the past four quarters.

Maureen Sullivan, a spokeswoman for AOL, declined to comment. Representatives of Evercore and the private-equity firms declined to comment.

AOL’s portfolio includes “some of the foundation patents for the Internet,” AOL Chief Executive Officer Tim Armstrong said at a Barclays Capital conference this month.

“It’s beachfront property in East Hampton,” he said. “It’s basically extremely valuable.”

Armstrong said in a December interview that he was open to going private. It “doesn’t matter” whether AOL remains public or goes private, he said. Remaining an independent entity is the “first desired course of action,” he said.

Genzyme Patent for Kidney Disease Drug Hectorol Ruled Valid

Genzyme Corp. (GENZ) and Bone Care International Inc. (BCII) won a U.S. judge’s ruling that their patent for the kidney disease drug Hectorol is valid and enforceable.

U.S. District Judge Robert M. Dow affirmed the patent’s validity in a 78-page ruling published March 22. The companies, now part of Paris-based Sanofi (SAN), filed suit seeking that ruling in 2008 to prevent U.S.-based drugmakers Pentech Pharmaceuticals Inc. and its Cobrek Pharmaceuticals Inc. unit from making a competing generic version.

The case was tried before Dow in Chicago in October and November 2010.

An injectable drug, Hectorol is used to treat patients with end-stage kidney disease who are undergoing dialysis and suffering from hyperactivity in that part of the thyroid gland that regulates calcium and phosphorus levels.

Closely-held Pentech and Cobrek are based in the Chicago suburb of Rolling Meadows, Illinois. Citing their non-public status, an employee of the company who declined identify herself said the businesses declined to comment on Dow’s ruling.

The case is Bone Care International Inc. v. Pentech Pharmaceuticals Inc., 08cv1083, U.S. District Court for the Northern District of Illinois (Chicago).

NASA To Sell Three Lots of Patents at ICAP Ocean Tomo Auction

The National Aeronautics and Space Administration’s Goddard Space Flight Center is selling technology covered by 12 patents at the March 29 ICAP Ocean Tomo auction in Chicago, according to a NASA statement.

The patents are related to robotics, artificial intelligence, wireless sensor networks, industrial process control and software development.

The action is part of NASA’s technology transfer program, aimed at licensing NASA-developed technologies. Detailed information about the patents can be found in the online auction catalog.

One of the other government entities offering intellectual property at the action is Lawrence Livermore National Security LLC, which is selling an exclusive license to a technology for improved medical devices for angioplasty and other surgery. Included in that lot is a license to six patents.

For more patent news, click here.

Trademark

Skydive Arizona Infringement Verdict Stands, Damages Award Cut

Skydive Arizona Inc.’s trademark-infringement judgment against a Georgia-based competitor was affirmed by a federal appeals court, which cut part of the damages award.

The Eloy, Arizona-based company sued Cary Quattrocchi and his Atlanta Skydiving Center in federal court in Phoenix in August 2005. Quattrocchi also did business as 1-800-Skyride. Skydive Arizona claimed the Georgia company was infringing Skydive Arizona’s trademarks, deliberately misleading the public, and falsely claimed to be doing business in Arizona.

The jury agreed with Skydive Arizona’s claim and awarded $7.6 million. The trial judge then increased that amount to almost $10 million. Quattrocchi’s appeal argued the trial court erred in upholding the jury’s damages award, and overreached by increasing it.

The appeals court said that the Arizona company presented adequate evidence of the damages it incurred, “proving that customers were very angry with and blamed Skydive Arizona for problems called by Skyride.”

While it was true that counsel for Skydive “asked the jury to ‘fill in” the amount of damages it found reasonable,” this wasn’t “an invitation for the jury to conjure the amount of damages out of the vapor,” the appeals court said.

Quattrocchi and his Skyride had also objected to the $2.5 million in lost profit the trial court awarded Skydive. The appeals court said Skyride “failed to assert any basis for challenging the lost profits award based on the record as it exists.”

The appeals court did overturn the trial court’s doubling of the damages, saying the ruling “revealed its punitive motivation.” While federal trademark law permits compensation, it “has been construed to expressly forbid the award of damages to punish an infringer,” the appeals court said.

Skydive’s case was argued in the appellate court by Sid Leach of Snell & Wilmer LLP (1364L) of Phoenix. Quattrocchi’s case was argued by Daniel H. Bromberg of Los Angeles-based Quinn Emanuel Urquhart & Sullivan LLP.

The case at the trial court is Skydive Arizona Inc. v. Quattrocchi, 2:05-cv-2656-DGC, U.S. District Court, District of Arizona (Phoenix). The appeals court case is Skydive Arizona Inv. v. Quattrocchi, 10-16196, 9th U.S. Circuit Court of Appeals (San Francisco).

Jeremy Lin’s Lawyers Seek to Stop ‘Linsanity’ Pot Offerings

Lawyers representing New York Nicks star Jeremy Lin sent cease-and-desist letters to marijuana dispensaries that have been selling a “Linsanity” line of product, the Huffington Post reported.

Some of the shops have already complied and removed the product, Lin’s lawyer, Pamela Deese of Washington’s Arent Fox LLP (1377L), told the Huffington Post.

She said their enthusiasm for the player “got ahead of their understanding of the law,” according to the Huffington Post.

Deese also told the Huffington Post that her firm sent cease-and-desist letters to the 24 applicants who had tried to register his name as a trademark with the U.S. Patent and Trademark Office and most have said they were sorry and have withdrawn their applications.

For more trademark news, click here.

Copyright

Cendali Withdraws From Righthaven Cases, Says Legal Fees Unpaid

Stephens Media Group’s efforts to enforce copyrights to its newspapers included hiring a high-profile IP specialist from a Chicago firm.

The cases, which were filed by Righthaven LLC of Las Vegas, set up to enforce Stephens copyrights, have largely come to naught, as judges determined that Righthaven lacked sufficient control over the copyrights to be able to enforce them.

According to a May 4 filing, Righthaven hired Dale Cendali from Kirkland & Ellis LLP (1132L) to help litigate a case against the Pahrump Life website on which an article from the Las Vegas Review-Journal was posted without authorization.

Cendali may be best known for her successful representation of Harry Potter’s U.S. publisher Scholastic Corp. (SCHL) in a trademark case. She has also represented the Associated Press in the copyright-infringement case involving the photo of President Barack Obama used by artist Shepard Fairey.

When she was with Los Angeles-based O’Melveny & Myers LLP (1227'L) she represented the Martha Graham Center of Contemporary Dance in a trademark suit involving the name of the late Martha Graham. Cendali moved from O’Melveny to Chicago-based Kirkland & Ellis in March 2009.

In two March 21 filings, Celdali sought to withdraw as counsel in two cases. She said she had been hired solely in connection with one issue -- whether Righthaven had standing to sue for infringement. Righthaven’s lawyers were to handle the rest of the case. She said that in July, she was told “that her job was done” and that the rest of the work would be handled by others.

She said that other than an initial retainer, she and her firm hadn’t been paid any of the legal fees Righthaven owed.

Righthaven’s assets, including the copyrights it said it was enforcing, were awarded to a defendant in a different infringement suit March 5. Its Internet domain name sold at auction to satisfy an attorney-fee judgment.

Righthaven no longer has an office, phone or e-mail address where anyone could be asked to comment on Celdali’s filings and the company has failed to appear in court for scheduled events.

One of the cases from which Cendali withdrew is Righthaven v. Pahrump Life, 2:10-cv-01575-JCM-PAL, U.S. District Court, District of Nevada (Las Vegas). The other case is Righthaven LLC v. Democratic Underground LLC, 2:10-cv-01356-RLK-GWF, U.S. District Court, District of Nevada (Las Vegas).

The case in which the intellectual property was awarded to the defendant is Righthaven LLC v. Hoehn, 2:11-cv-00050-PMP-RJJ, U.S. District Court, District of Nevada (Las Vegas).

For more copyright news, click here.

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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