Australia will become the first country to require cigarettes to be sold in uniform packages after its top court rejected a challenge from tobacco companies, setting a precedent for other nations to follow.
The High Court of Australia yesterday dismissed claims by Japan Tobacco Inc. (2914), British American Tobacco Plc (BATS), Philip Morris International Inc. (PM:US) and Imperial Tobacco Group Plc (IMT) that the government illegally seized their intellectual property by barring the display of trademarks on packs.
The ruling is a victory for a government faced with A$31.5 billion ($33 billion) in annual health costs from smoking, a habit it estimates killed 900,000 Australians over six decades. New Zealand and the U.K. are among countries whose governments have indicated interest in implementing similar legislation, which takes effect in Australia Dec. 1.
The Australian law requires cigarettes to be sold with no company logos and with the same font for all brands on a dark brown background. Graphic health warnings will cover 90 percent of the back of the packaging and 70 percent of the front.
Trademark laws vary in other countries, and the Australian decision isn’t necessarily precedent-setting, Japan Tobacco, the maker of the Camel brand, said in an e-mail.
Philip Morris plans to pursue claims against the Australian government for the loss of its ability to use trademarks, said Chris Argent, a spokesman for the maker of Marlboro cigarettes.
Once a country implements a tobacco-control measure, it becomes easier for other countries to do the same, Rob Cunningham, a senior policy analyst at the Canadian Cancer Society in Ottawa, said in an e-mail. Canada was the first to make pictorial health warnings mandatory in 2001 and about 50 nations followed, he said.
The government in New Zealand, where consultations are being held on plain packaging, has watched the Australian developments with “huge interest,” said Tariana Turia, Associate Minister of Health.
Consultations on a U.K. government plan to enforce standardized packaging for tobacco products ended last week, with the International Chamber of Commerce among bodies raising concerns. The plain-pack requirements would probably breach a number of the U.K.’s international obligations, including World Trade Organization intellectual property pacts, Andrew Wilson, the ICC’s director of policy, said Aug. 9 after the hearings.
In the U.S., cigarette makers have relied on the First Amendment of the Constitution, which protects the right to freedom of expression from government interference.
Philip Morris has said the Australian law violates a treaty with Hong Kong and may cause billions of dollars in damages. The New York-based company is pursuing the case in international arbitration, it said.
The case is British American Tobacco Australia Ltd. v the Commonwealth of Australia, S389/2011, High Court of Australia (Canberra).
Secret Ikea Fortune Gets Less Foggy After Rights Sale
The complex ownership structure behind Ikea, the world’s largest furniture retailer created by billionaire Ingvar Kamprad, became more transparent last week after Ikea’s franchiser published its financial performance publicly for the first time.
The new details allow for a more complete valuation of the secretive Ikea empire, increasing the Bloomberg Billionaires Index estimate of Kamprad’s fortune by more than $1.4 billion, to almost $39 billion.
The financial details were contained in the 2011 annual report issued by Inter Ikea Group, Ikea’s franchiser. It disclosed a January transaction to acquire Ikea’s closely held intellectual property, including the Ikea trademarks, by Inter Ikea Systems BV, a wholly owned subsidiary of Inter Ikea, for 9 billion euros ($11 billion).
Swedish-born Kamprad, 81, has said that the Ikea fortune is no longer his since he separated the company he founded in 1943 into two parts more than 30 years ago. Bloomberg attributes the full value of Ikea to him on the basis of his ultimate control over the structure. The split, Kamprad said at the time, was designed to protect the long-term survival of the business.
In the 1980s, Kamprad placed all of the shares of the Ingka Group, which owns most of Ikea’s retail stores, into the Leiden, Holland-based Stichting Ingka Foundation. At year-end 2011, Ingka owned 290 of Ikea’s 325 retail stores.
At the time, Kamprad also separated out Ikea’s intellectual property rights, which, until the January transaction, were held by Interogo Foundation, a Vaduz, Liechtenstein-based holding company that owns all of Inter Ikea Group. Kamprad controls Interogo, which financed the January rights transfer with a 3.4 billion euros capital injection and a 5.6 billion euros loan.
The disclosure marks the second time in the past three years the companies opened their books. In 2011, the Ikea retail operation reported net income of almost 3 billion euros on revenue of 25 billion euros, while the franchiser delivered profit of 87 million euros on revenue of 2.4 billion euros.
All Ikea franchisees pay a fee of 3 percent of gross sales to Inter Ikea, amounting to 789 million euros in 2011. Inter Ikea then paid Interogo 550 million euros for the rights to use the Ikea trademarks in its franchise concept. The cost was about 18 times that 2011 license fee, which reflects the current and future value of the brand, Gydell said.
The trademark valuation was conducted by two outside financial groups and vetted by local tax authorities, including regulators in the Netherlands.
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Lululemon Accuses Calvin Klein of Infringing Yoga-Pants Patents
Lululemon Athletica Inc. (LULU:US), the Canadian yoga-wear retailer, sued Calvin Klein Inc. claiming the clothing brand infringed three patents for pants.
Calvin Klein’s “Performance” brand pants violate three design patents issued in June and September 2011, lawyers for Lululemon said in the complaint filed Aug. 13 in federal court in Wilmington, Delaware. Lululemon seeks unspecified damages, including lost profits and royalties, and a court order barring the alleged infringement.
“The accused products include substantially the same waistband design elements and pant style,” Lululemon said in the complaint.
Founded in 1998, Lululemon describes itself as a pioneer and innovator of yoga and exercise pants and has built a cult- like following since moving into the U.S. in 2003. The company generated a record $1 billion in sales last year and boasts the fourth-highest sales per square foot among North American retailers after Apple Inc. (AAPL:US), Tiffany & Co. (TIF:US) and Coach Inc.
The company lists 47 stores in Canada and 108 stores in the U.S. as of Jan. 29, according to the complaint.
Lululemon sells products governed by the patents listed in the suit in the U.S. under the brand name Astro Pant. Calvin Klein’s alleged infringing products include its performance knee-length running tights and performance compression overlapping waistband pants.
Calvin Klein was acquired in 2003 by PVH Corp. (PVH:US), which also owns the Tommy Hilfiger label.
Malcolm Carfrae, a spokesman for Calvin Klein, didn’t immediately return a phone call and e-mail seeking comment on the complaint.
In dispute are patents D645,644, D661,872 and D662,281.
The case is Lululemon Athletica Canada Inc. v. Calvin Klein Inc., 12-01034, U.S. District Court, District of Delaware (Wilmington).
Apple, Samsung Judge Asks CEOs to Talk Before Deliberations
The judge presiding over an intellectual property dispute between Apple Inc. and Samsung Electronics Co. (005930) said the chief executive officers of the contending companies should talk again before the jury begins deliberating.
“I’m going to make one more request that CEOs from both sides speak by phone,” U.S. District Judge Lucy Koh said in federal court yesterday in San Jose, California. “I see risks here for both sides,” she said.
Koh earlier this year ordered Apple CEO Tim Cook to meet face to face with his counterpart at Samsung, Choi Gee Sung. That conference didn’t yield a settlement.
“It’s at least worth one more try,” the judge said. Koh has given each side 25 hours to present its case.
Apple sued Samsung in April 2011, accusing it of copying patented designs for mobile devices, and Samsung countersued. The case is the first to go before a federal jury in a battle being waged on four continents for dominance in a smartphone market valued by Bloomberg Industries at $219.1 billion.
Apple is claiming at least $2.5 billion in damages for patent and trade-dress infringement. Cupertino, California-based Apple also wants to make permanent a preliminary ban it won on U.S. sales of a Samsung tablet, and extend the ban to Samsung smartphones.
“If all you wanted is to raise that you have IP on these devices, message delivered,” Koh said. “In many ways, mission accomplished,” she said. “It’s time for peace.”
The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11- cv-01846, U.S. District Court, Northern District of California (San Jose).
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Home Depot Accused of Infringing Decorative Iron Products
Home Depot Inc. (HD:US), the largest retailer of home-improvement items, was sued for copyright infringement by a designer of decorative iron products.
According to the complaint filed Aug. 14 in federal court in Atlanta, Home Depot is carrying exact copies of the iron items designed by Nafra Worldwide LLC of Lawrenceville, Georgia.
Nafra claims it made an initial presentation of its designs to Atlanta’s Home Depot in October 2004. At that time, the company said, Home Depot expressed a desire to carry products made to these designs.
The complaint details a series of meetings with Home Depot officials through September 2007, after which Nafra set up merchandise for display at a newly opened Home Depot store in North Carolina. Nafra said it wasn’t informed until June 2008 that Home Depot decided not to carry the products.
In February 2011, Nafra said it discovered exact copies of its designs were sold at a Home Depot store in Florida, and later learned they were produced by a company headed by a former Home Depot employee.
Nafra said it’s harmed by the alleged infringement, and asked the court to order any additional unauthorized copying of its designs.
The company also asked for money damages, attorney fees and ligation costs.
Home Depot didn’t respond immediately to an e-mail request for comment.
The case is Nafra Worldwide LLC v. The Home Depot Inc., 12-028080-TCB, U.S. District Court, Northern District of Georgia (Atlanta).
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Trade Secrets/Industrial Espionage
Ex-Bridgestone Scientist Indicted for Trade Secret Theft
A resident of Hudson, Ohio, was indicted for theft of trade secrets relating to tires at a Bridgestone Corp. (5108) research facility in Akron, Ohio.
Xiaorong Wang, 50, was a research scientist at the center from May 1995 until he was terminated in April 2010, according to the indictment filed in federal court in Cleveland, Ohio, Aug. 14.
He was also charged with making a false statement to investigators from the Federal Bureau of Investigation that he wasn’t planning to leave the country when, in fact, he was planning to accept a job at a university in China, according to court documents.
He was also allegedly lied about having approached anyone in China regarding setting up a research facility at that university, and about denying that he was asked to provide information from Tokyo-based Bridgestone.
Wang is represented by Paul F. Adamson of Burdon & Merlitti of Akron, who didn’t respond immediately to an e-mailed request for comment.
The case is U.S. v. Wang, 5:12-cr-000380-PAG, U.S. District Court, Northern District of Ohio (Akron).
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