Bloomberg News

NBC Universal, France Telecom: Intellectual Property

June 27, 2012

Federal copyright law doesn’t preempt contract rights under state law, the U.S. Court of Appeals for the Second Circuit ruled yesterday.

The production company Forest Park Pictures, along with actor Hayden Christensen and his brother Tove, had developed an idea for a television series involving what’s known as a concierge doctor, according to the ruling.

They submitted the idea in 2005 to USA Network, a division of Comcast Corp.’s NBC Universal. Although they had a meeting, no agreement was reached, according to the ruling.

Four years later, USA began airing “Royal Pains” about a physician who treats the affluent in the Hamptons, according to the ruling. The Christensens and Forest Park sued for breach of an implied contract.

U.S. District Judge Colleen McMahon initially dismissed the case. On appeal, the three-judge appeals panel reversed, finding that the federal copyright law doesn’t preempt contractual rights under state laws.

The appeals panel said a number of other circuits have “concluded that at least some contract claims involving the subject matter of copyright” aren’t the equivalent of copyright claims “and thus are not preempted” by federal law.

Cory Shields, a spokesman for NBC Universal, said in a telephone interview that “the claim is totally without merit and we expect to prevail after all the evidence is presented.”

David Marek, a partner at Liddle & Robinson LLP who represents the writers, said he was pleased with the ruling and that the case will now proceed to the discovery phase.

Lisa Pearson, a partner at Kilpatrick Townsend & Stockton LLP who specializes in copyright law, said in a telephone interview that “these types of claims are prevalent in the entertainment industry, most often filed in California and New York.”

Pursuing these types of claims can be “very fact-intensive and protracted,” Pearson said.

The case is Forest Park Pictures v. Universal Television Network Inc., 11-2011-CV, U.S. Court of Appeals for the Second Circuit (New York).

For more copyright news, click here.

Patents

Apple Wins Court Order Blocking U.S. Sales of Samsung Galaxy Tab

Apple Inc. (AAPL:US) won a court order immediately blocking U.S. sales of Samsung Electronics Co.’s Galaxy Tab 10.1 tablet computer as the companies continue their global patent dispute.

U.S. District Judge Lucy Koh in San Jose, California, issued the order yesterday after rejecting a similar request in December. Apple’s request, part of a broader patent dispute over smartphones and tablets, was based on an appeals court finding that it will probably win its patent-infringement claim relating to the Tab 10.1 tablet.

The world’s two biggest makers of high-end phones have accused each other of copying designs and technology for mobile devices and are fighting patent battles on four continents to retain their dominance in the $219 billion global smartphone market. Suwon, South Korea-based Samsung said in a statement that it was disappointed in the ruling, but that it won’t have significant impact on its business. Other Tab products will continue to be available to U.S. consumers, the company said.

The U.S. sales ban follows last week’s ruling in The Hague that Apple has to compensate Samsung for damages caused by a breach of patents since August 2010. Apple also sought a U.S. ban on the latest model of the Galaxy S smartphone, which went on sale in the market this month.

The case is Apple Inc. v. Samsung Electronics Co. (005930) Ltd., 11- cv-01846, U.S. District Court, Northern District of California (San Jose).

For more, click here.

France Telecom Sues Marvell Semiconductor Over Data Patent

France Telecom SA (FTE) sued Marvell Semiconductor Inc., claiming that it infringed a patent for methods of coding digital data.

France Telecom, a Paris-based telecommunications provider, said Marvell used the patent in making processors for BlackBerry wireless devices, according to a filing yesterday in federal court in Manhattan.

Claude Berrou received at least three awards for being the inventor of the patent, according to the complaint. He invented data elements known as “turbo codes,” which according to the suit “revolutionized digital communications.”

France Telecom said telecommunications companies including Qualcomm Inc. and Broadcom Corp. have obtained licenses to use the patent and pay royalties.

Daniel Yoo, a spokesman for Santa Clara, California-based Marvell, didn’t immediately respond to a message seeking comment on the suit.

The case is France Telecom v. Marvell Semiconductor Inc., 12-4986, U.S. District Court, Southern District of New York (Manhattan).

Microsoft’s Fight Nears End With European Antitrust Ruling

Microsoft Corp. (MSFT:US)’s decade-long struggle against a European Union antitrust probe that led to more than 1.68 billion euros ($2.1 billion) in fines will enter its final phase today when an EU court rules on the company’s challenge.

The world’s largest software company asked the EU General Court to void an 899 million-euro fine imposed after Microsoft failed to comply with a 2004 antitrust order to provide rivals with data to help them work with the company’s operating-system software. The fine was on top of Microsoft’s earlier penalties of 497 million euros and 280.5 million euros and surpassed only by a 1.06 billion-euro levy against Intel Corp.

“The two fines for Microsoft and Intel certainly sent a message,” said Ted Henneberry, a lawyer at Bingham McCutchen LLP in Washington who previously worked for Microsoft on matters not related to the EU case. “This thing is history now. Today companies realize that you’re better served trying to work things out with the” European Commission.

Microsoft is the only company in more than 50 years of EU competition policy penalized for failing to comply with an order. The Redmond, Washington-based company agreed to a settlement in 2009 in a bid to repair the company’s relationship with the European Commission. Microsoft is now on the other side of the fence, filing complaints against Google Inc. (GOOG:US) and what is now its Motorola Mobility unit.

Google, based in Mountain View, California, was told by the EU last month it could avoid an antitrust complaint over allegations that it discriminates against rivals if it offered to settle a probe by early July.

“The big issue is whether it was reasonable for the commission to fine an enormous amount of money for non- compliance with what was not a bright-line issue,” said Becket McGrath, a lawyer at Edwards Wildman Palmer UK LLP in London. “The issue of whether or not there was compliance is a very technical one” and depends on the price Microsoft charged for the interoperability information and what it had to disclose.

The tribunal “might give guidance” on whether Microsoft’s proposed royalty rates for the interoperability information were excessive, said Thomas Vinje, a lawyer at Clifford Chance LLP who represented International Business Machines Corp. (IBM:US) and Oracle Corp. (ORCL:US), which opposed Microsoft in the case.

Fair and reasonable licensing terms, or FRAND, form “the core” of three investigations regulators opened this year into whether Samsung Electronics Co. and Google’s Motorola Mobility used their control of standard technology patents to block competitors’ devices, the EU’s antitrust chief Joaquin Almunia said this month. He said there was a need “to clarify what are the implications of FRAND and how FRAND negotiations should be conducted.”

For more, click here.

For more patent news, click here.

Data Theft

U.S. Arrests Two Dozen in Undercover Credit Card Operation

U.S. agents arrested two dozen people in 13 countries as part of a global undercover operation targeting credit-card hacking that may have affected hundreds of thousands of customers.

The scheme may have also reached dozens of companies and educational institutions, U.S. Attorney Preet Bharara said in a statement. Two suspects were caught through an undercover website set up by the U.S. Federal Bureau of Investigation, he said.

The FBI established the website “as an online meeting place where the FBI could locate cybercriminals, investigate and identify them and disrupt their activities,” prosecutors said in a criminal complaint unsealed yesterday.

“The FBI estimates that it helped financial institutions prevent many millions of dollars in losses from credit card fraud and other activity,” according to the complaint.

The website set up by the FBI allowed users to discuss topics relating to “carding,” or stealing credit and debit card data to get money, services and merchandise, according to the complaint.

The FBI monitored discussions and recorded the Internet addresses of the users’ computers, according to the complaint.

The case is U.S. v. Hicks, 12-mg-1639, U.S. District Court, Southern District of New York (Manhattan).

Wyndham Hotels Sued by FTC Over Alleged Data Security Breach

Wyndham Worldwide Corp. (WYN:US), the franchiser of Days Inn hotels and Super 8 motels, was sued by the U.S. Federal Trade Commission over security breaches that led to more than 500,000 credit cards being compromised.

The data breaches led to fraudulent charges on customers’ accounts and the export of credit card information to an Internet domain address registered in Russia, the FTC said in a statement on its website yesterday.

“Wyndham’s privacy policy misrepresented the security measures that the company and its subsidiaries took to protect consumers’ personal information,” the FTC said in a complaint filed yesterday in federal court in Arizona. The breaches led to more than $10.6 million in “fraud losses,” the FTC said.

Wyndham, based in Parsippany, New Jersey, licenses the Wyndham name to about 90 hotels under franchise and management agreements. The company in April reported that first-quarter revenue rose about 9 percent to $1.04 billion, while net income fell 56 percent to $32 million because of early extinguishment charges related to debt tender offers. The shares have climbed 59 percent in the past year.

“We regret the FTC’s recent decision to pursue litigation, as we have fully cooperated in its investigation and believe its claims are without merit,” Michael Valentino, a Wyndham spokesman, said in an e-mailed statement. Wyndham will fight the agency’s suit and doesn’t expect it to have a material impact on the company, he said.

According to the FTC’s complaint, Wyndham exposed consumers’ personal data to unauthorized access three times between 2008 and 2009 and failed to take security measures to prevent future intrusions.

The case is Federal Trade Commission v. Wyndham Worldwide Corporation, 12-cv-01365, U.S. District Court, District of Arizona (Phoenix).

To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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