Bloomberg News

Twitter, VirnetX, BCE, Gawker, FIFA: Intellectual Property

July 13, 2012

Amid the technology industry’s penchant for patent lawsuits, Twitter Inc. unveiled a plan in April designed to curb the court confrontations. The proposal, which limits how companies could use patents against rivals, had a strong ally in Yammer Inc.

That might now change, according to a Tech Blog report on Bloomberg.com.

Last month, Microsoft Corp. (MSFT:US) said it would buy Yammer, which makes social-networking tools for companies, for $1.2 billion. Patent experts said it’s unlikely the software giant will handicap its new toy with the restrictive patent rules.

“I doubt that Microsoft would allow this to transpire,” Victor Siber, the former chief intellectual property counsel for International Business Machines Corp. (IBN:US) who’s now a partner at Baker & Hostetler LLP, wrote in an e-mail. “Because Microsoft is a substantial target for patent litigation, it would reserve all of its options to countersue or initiate litigation.”

Days before Twitter started talking about its patent initiative, Microsoft agreed to pay $1.06 billion to acquire more than 800 patents from AOL Inc. Microsoft has recently engaged in several patent lawsuits, including with Google Inc. (GOOG:US)’s Motorola Mobility unit and TiVo Inc. (TIVO:US)

The effort by Twitter was widely publicized as a flower- power, feel-good solution to all the litigation. The proposal came at a time when Yahoo! Inc. (YHOO:US) and Facebook Inc. (FB:US) were still entangled in lawsuits over social-networking patents and when the mobile industry had become increasingly confrontational.

Twitter touted its proposal, called the Innovator’s Patent Agreement, as a way to prevent lawsuits from impeding innovation. It was also seen as a way to attract talent in the highly competitive market for tech workers. For companies that adopt the new rules, patents could only be used for defensive reasons unless the people named on a patent give permission for filing a lawsuit.

Carolyn Penner, a Twitter spokeswoman, declined to comment on the progress of that initiative. Mac Brown, a spokesman for Microsoft, and Shelley Risk, a spokeswoman for Yammer, declined to comment on their plans because the acquisition hasn’t closed yet.

Letting Yammer adopt the patent policy would be “too big a change for Microsoft given the recent history,” said Ron Laurie, a managing director for consulting firm Inflexion Point Strategy LLC who has done work with Microsoft. “It would be very strange to me if they would follow the Twitter policy given the intense competition in that market.”

VirnetX, Mitel End Patent Litigation, Sign Licensing Agreement

VirnetX Holding Corp. (VHC:US), an Internet security company, has settled patent litigation against Mitel Neworks Corp. (MITL:US), according to a joint company statement.

Under terms of the agreement, Mitel, of Kenata, Ontario, has taken a license to some VirnetX patents for a one-time payment and an ongoing royalty on future sales. The license agreement runs through to the expiration date of the licensed patents, the companies said.

The patent infringement case VirnetX brought against Mitel in federal court in Texas is to be dismissed, the companies said. No other terms of the settlement were disclosed.

VirnetX sued Mitel in federal court in Tyler, Texas, in January 2011, alleging that patents 6,502,135, 7,418,504, and 7,921,211 were infringed.

The case is VirnetX Inc. v. Mitel Networks Corp. (MITL:US), 6:11-cv- 00018-LED, U.S. District Court, Eastern District of Texas (Tyler).

For more patent news, click here.

Trademark

AOL, Huffington Post, Accused of Infringing ‘Mindful’ Trademarks

AOL Inc. (AOL:US), the New York-based web services company, and its Huffington Post unit were sued for trademark infringement by a Georgia resident.

In a complaint filed July 11 in federal court in Atlanta, Kathleen Hall of Clarkesville, Georgia, claims her “Mindful Living,” and “Mindful Travel” trademarks were infringed. The two marks were registered, respectively, with the U.S. Patent and Trademark office in August 2009 and August 2011.

She uses the marks in association with various services she offers related to spiritual and personal growth, she said in her pleadings. She objects to a Huffington Post website related to healthy living, and to the use of the phrases “Mindful Living” and “Mindful Travel” on that site.

Hall said she has never authorized the Huffington Post’s use of her marks, and that she is damaged by the company’s actions. The public is confused by the unauthorized use of her marks, she says.

She asked the court to bar AOL and the Huffington Post’s use of her marks, and for the company’s profits derived from the alleged infringement. Additionally, she requested awards of money damages, litigation costs and attorney fees.

AOL didn’t respond immediately to an e-mailed request for comment on the lawsuit.

The case is Kathleen Hall v. AOL Inc., 1:12-cv-02415, U.S. District Court, Northern District of Georgia (Atlanta).

For more trademark news, click here.

Copyright

Canada Top Court Partly Upholds Rogers Music Download Appeal

Canada’s Supreme Court ruled that while Internet providers don’t have to pay communication tariffs when consumers download music to computers or mobile phones, they must pay tariffs when music is streamed over networks.

“Copyright protection is not dependent on the technicalities of methods of transmission,” the court said in a decision released yesterday. “It is necessary to consider the broader context.”

A group of carriers including BCE Inc. (BCE), Rogers Communications Inc. (RCI/B), Telus Corp. (T) and Shaw Communications Inc. (SJR/B) had appealed a Federal Court of Appeal decision that said downloading content from an online music service qualifies as communication “to the public,” and should be subject to tariffs levied on broadcasters.

The Society of Composers, Authors and Music Publishers of Canada had argued that tariffs should apply both when music is downloaded to be played later and when it is sent over a network to be played simultaneously.

In a separate case, the court ruled that copyright tariffs don’t apply when previews of songs are played by online music stores owned by companies such as Apple Inc.

The cases are Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 33922, and Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 33800, Supreme Court of Canada.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Gawker’s Jalopnik Receives Demand to Remove 2014 Corvette Images

Gawker Media LLC’s website aimed at car aficionados received a cease-and-desist letter for posting images of what is allegedly General Motors Co. (GM:US)’s 2014 model Corvette.

Ray Wert, Jalopnik.com’s editor in chief, said in the story accompanying the images that “GM so doesn’t want you to see these.” The images were derived from a marketing video from a GM supplier intended to show off the supplier’s manufacturing capabilities, according to Jalopnik.

That film included renderings of the 2014 Corvette model, Jalopnik said.

Jalopnik then received a letter from Schafer & Weiner PLLC of Bloomfield Hills, Michigan, counsel for the supplier. The letter, which is posted on the Jalopnik.com website, demanded that the offending images be removed and all access to them be disabled.

The images disclosed trade secrets belonging both to the supplier and to GM itself, the law firm said in the letter. “Simply put, it is well-known in the industry, including automotive publications such as Jalopnik, that the information the Images contain is closely guarded proprietary information, and not consensually available to the public,” according to the firm’s letter.

The supplier threatened litigation and warned that if this were to ensue, Jalopnik could potentially face having to pay money damages and court costs, including the supplier’s attorney fees.

Jalopnik refused to remove the images, saying they were “newsworthy and a matter of public concern” and that they already were available to the public through the posting of the film on Google Inc.’s YouTube video-sharing site.

FIFA Head Says Kickbacks Revealed in Secret Documents were Legal

The president of soccer’s governing body, FIFA, Sepp Blatter, said he took no action against his predecessor and the ex-head of the Brazilian soccer federation over kickbacks they received because the payments weren’t illegal.

The Swiss Federal Court ordered the release July 11 of previously secret documents that showed former FIFA President Joao Havelange and Ricardo Teixeira, who was a member of the soccer body’s executive committee, received as much $22 million between them from the collapsed International Sport and Leisure marketing company. The payments were for deals related to the World Cup.

The report’s publication had been delayed as Teixeira and Havelange attempted to have it blocked. FIFA last year agreed for it be released after coming under media pressure. Instead of disciplining the duo, FIFA paid a Swiss court 2.5 million Swiss francs ($2.54 million) in compensation on the condition that criminal proceedings against Havelange and Teixeira were dropped.

Blatter confirmed that he was an individual listed as “P1” in the report. The report said P1 and Havelange signed marketing deals with ISL on behalf of Zurich-based FIFA in 1997 and that Havelange and Teixeira, Havelange’s former son-in-law, profited from the agreements. Havelange and Teixeira received at least $1 million and $13 million, respectively. Blatter today referred to the payments as “commission” that was legal at the time.

“Back then, such payments could even be deducted from tax as a business expense,” Blatter said in an interview published on FIFA’s website. “Today, that would be punishable under law. You can’t judge the past on the basis of today’s standards. Otherwise it would end up with moral justice. I can’t have known about an offense that wasn’t even one.”

Blatter said he’d have preferred the names of all officials mentioned in the document to have been published “to put an end to the speculation once and for all.”

Blatter’s re-election in 2011 to a fourth four-year term came after his only challenger, Mohamed bin Hammam, quit before an investigation was opened into allegations he tried to bribe voters. Bin Hammam, who denies wrongdoing, is appealing a life ban from the sport.

The soccer organization is reforming its structures as a response, and after a group tasked by Blatter said the ethics committee he created in response to ISL in 2006 wasn’t fit for purpose. On July 17 it will name heads of two new bodies designed to investigate and adjudicate on officials accused of breaking rules.

“The reform process is moving exactly in this direction,” Blatter said.

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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