Bloomberg News

Apple, Paddy Power, Perdue, Netflix: Intellectual Property

July 31, 2012

Apple Inc. (AAPL:US)’s $2.5 billion patent- infringement lawsuit against Samsung Electronics Co. opened yesterday in federal court in California with the selection of a jury in the first U.S. trial to consider the global smartphone dispute.

U.S. District Judge Lucy Koh in San Jose, who practiced as an intellectual-property litigator in Silicon Valley for eight years, is presiding over the trial. Jurors will decide each company’s claims that its rival infringed patents covering designs and technology for mobile devices, with potential damage awards reaching billions of dollars.

The case is the first U.S. jury trial of a battle being fought on four continents for dominance of a mobile-device market that Bloomberg Industries said was $312 billion last year. Apple, the iPhone maker based in Cupertino, California, just 11 miles from the courthouse, won’t benefit from any bias from a jury drawn from Silicon Valley, said Stanford Law School Professor Mark Lemley.

“Just as many people in the valley work for Android companies like Google as work for Apple,” Lemley said in an e- mail, referring to Google Inc. (GOOG:US)’s Android operating system that some Samsung products use. “I expect that a Silicon Valley jury will be more technologically sophisticated than most, and that may work in Samsung’s favor.”

Samsung, based in Suwon, South Korea, has countersued and will present claims that Apple is infringing two patents covering mobile-technology standards and three utility patents. Samsung is demanding royalties of as much as 2.4 percent for each device sold, according to a court filing.

Samsung Chief Executive Officer Choi Gee Sung and Apple CEO Tim Cook failed to settle the San Jose case at a court-ordered May 21 meeting in San Francisco. Previously, company officials met in September and December and on May 4 to discuss resolving a related dispute before the U.S. International Trade Commission.

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

Smartphone Patent Fights See U.K. IP Lawsuits Almost Triple

U.K. courts are a battleground for the global technology patent wars as intellectual property claims almost tripled last year, according to a report by law firm EMW Law LLP.

There were 183 new patent and registered design claims filed in the U.K. in 2011, the highest number in more than five years, as firms seek to maintain their advantage over competitors in a difficult economic climate, EMW said. There were 65 similar claims filed in 2010.

“Some technology businesses have amassed a huge war chest of patents, which they can use to swamp the competition with patent infringement claims,” said Mark Finn, IP law principal at EMW. “Even if the claim doesn’t stick and is eventually rejected by the courts, it can still keep rivals’ products off the market for long enough to gain a competitive advantage.”

Smartphone makers including Apple Inc., Samsung Electronics Co. (005930), Nokia Oyj (NOK1V) and HTC Corp. (2498) have filed dozens of suits against each other in the U.K. over the last two years as part of a global litigation strategy in the mobile-device market that Bloomberg Industries said was $312 billion last year. The rise in IP litigation comes as the U.K. economy shrank the most in three years, forcing companies to fight “for every edge they can find,” Finn said.

Companies in patent-heavy industries look for “any way” to maintain their advantage, Finn said.

Finn said companies rush to sue before the disputed product establishes itself in the country, because U.K. patent courts may take a year to reach a judgment.

“IP litigation often isn’t just about compensation for claimants,” Finn said. “It’s a vital tool for defending profits and market share.”

Samsung Wins Continued Stay of Order Banning Galaxy Nexus

Samsung Electronics Co.’s request for a continued stay on an order banning the importation of its Galaxy Nexus phones was granted by a federal appeals court.

The federal court in San Jose that’s hearing the patent dispute between Samsung and Apple Inc., had issued a temporary order banning importation of the phones that Apple claimed infringed its patents. That ban had extended into 2013.

The U.S. Court of Appeals for the Federal Circuit, the Washington-based court that hears appeals for patent suits, said yesterday the stay remains in effect throughout the appeal of the lower court’s order. Oral arguments in that appeal are set for Aug. 20 in Washington.

A jury trial between the two companies over patents Apple says are infringed by the Samsung Galaxy tab began yesterday in the same court.

The case involving the Galaxy Nexus phones is Apple Inc., v. Samsung Electronics Co., 2012-1507, U.s. Court of Appeals for the Federal Circuit. The lower court case is Apple Inc. v. Samsung Electronics Co., 5:12-cv-00630-LHK, U.S. District Court, Northern District of California (San Jose).

For more patent news, click here.

Trademark

Paddy Power ‘Egg-and-Spoon’ Olympics Spoof Ads Remain in Place

Billboards promoting Paddy Power PLC (PWL), the Dublin-based betting and gaming group, have remained up around London despite what organizers of the London Olympics have considered part of an ambush marketing scheme, the U.K.’s Marketing Week reported.

The ads, which had been placed on JC Decaux SA (DEC) billboards, promoted the “Paddy Power Egg-and-Spoon Race in London,” and the Olympics organizers had initially claimed the ads used words barred under the London Olympic Games and Paralympic Games Act of 2006, according to Marketing Week.

The text to which the committee objected was “Official sponsor of the largest athletics event in London this year! There you go, we said it,” the magazine reported.

The committee told Marketing Week that it raised its concerns with the bookmaker, and, while it decided not to pursue the matter any further at that time, would continue to monitor Paddy Power ads.

Perdue Fails to Win Dismissal of Trademark Infringement Suit

Perdue Farms Inc.’s request to have a trademark infringement suit dismissed was rejected by a federal court in Nebraska.

Tecumseh Poultry LLC, a Nebraska chicken processer, sued Perdue in federal court in Lincoln, Nebraska, in February. Tecumseh had objected to Perdue’s use of “Simply Smart” with some of its chicken products.

The Nebraska company claimed this infringed the “Smart Chicken” trademarks it had used since 1995. Perdue’s use of “Simply Smart” confused consumers, Tecumseh said in its court filings.

In a July 24 order, U.S. District Judge John M. Gerrard said that while he had some reservations about the Nebraska company’s claims, they did not “weight so strongly against Tecumseh to mandate dismissal, nor do they show Tecumseh’s claims to be implausible.”

The case is Tecumseh Poultry LLC v. Perdue Holdings Inc., 4:12-cv-03032-JMG-CRZ, U.S. District Court, District of Nebraska (Lincoln)

For more trademark news, click here.

Copyright

Netflix, Dish’s Blockbuster Sued for Infringing Screenplay

Netflix Inc. (NFLX:US), the world’s largest video-subscription service, was sued for copyright infringement by a screenwriter from Bay Point, California.

Co-defendant with Los Gatos, California-based Netflix is Dish Network Corp. (DISH:US)’s Blockbuster unit, which provided videos and video games to home users.

Tony Tiscareno, who is unrepresented by counsel, claims the two video services were duped into distributing “Killspeed,” a film he claims infringes his “Fastglass” screenplay written in 1996.

His screenplay, Tiscareno says, was lifted from one of several websites screenwriters use to make copies of their work available to those who might be interested in producing the film. He claims that “Killspeed,” produced by Afterburner Films Inc., is based on this stolen script.

Afterburner, which is not named as a defendant, made the film so badly that it “received scathing reviews,” according to court papers.

Tiscareno said that to no avail he sent a takedown request to Blockbuster and Netflix, claiming that “Fastglass” infringed his copyright.

He asked the court to award him damages of $1.2 million for the alleged infringement, together with the proceeds of the rental fees the companies received for this film.

Neither Dish nor Netflix responded immediately to e-mailed requests for comment.

The case is Tony Tiscareno v. Netflix Inc., 3:12-cv-03841- LB, U.S. District Court, Northern District of California (San Francisco).

Floridian May Face Five-Year Prison Sentence in Copyright Case

A resident of Ocala, Florida, was convicted of criminal copyright infringement.

Raul Zaragoza-Vaquero, 31, a Mexican national, was arrested after selling counterfeit CDs at a flea market in Sumter County, Florida, according to a government statement. An undercover investigation turned up more than 16,000 counterfeit CDs, together with apparatuses for their reproduction, plastic cases, printers, commercial shrink wrap and paper-cutting machines, the government said.

The case was investigated by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Recording Industry Association of America.

On July 25 the jury found him guilty on one count of criminal infringement of a copyright for commercial advantage. His sentencing is set for Oct. 16.

Zaragoza-Vaquero faces a sentence of as long as five years in prison and a fine of as much as $250,000.

The case is U.S. v. Zaragoza-Vaquero, 5:12-cr-00019-CEH- PRL, U.S. District Court, Middle District of Florida (Ocala).

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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