Bloomberg News

Cisco, Nikon, Redskins, Google: Intellectual Property

March 25, 2013

Cisco Systems Inc. (CSCO:US), the world’s largest maker of networking equipment, must pay patent-licenser XpertUniverse Inc. $70 million in civil fraud damages in connection with a failed partnership, a federal jury decided.

After a two-week trial, the jury of six women and two men in federal court in Wilmington, Delaware, also decided Cisco infringed two patents for contacting experts online to answer questions and owes more than $33,000 on those counts. In dispute were patents 7,366,709 and 7,499,903.

XpertUniverse, based in New York, sued San Jose, California-based Cisco in 2009, contending officials strung it along for more than six months, holding out the possibility of a lucrative partnership, without revealing that Cisco had rejected the deal.

Alleging “fraudulent concealment,” XpertUniverse lawyer Charles Cantine told jurors Cisco’s actions “led to destruction of the company,” when it might have pursued potentially more- profitable alliances and survived.

Cisco’s lawyer, Brett Schuman, told the jury that XpertUniverse “never had a product, customers or revenue,” that Cisco was at first interested in a partnership and backed out after realizing the only result of the smaller company’s research was “a demo” for a future product.

Schuman told the jury “mismanagement” and “lack of leadership” caused XpertUniverse’s failure.

“XpertUniverse is a small company with intellectual property as its primary asset,” it said in court papers. The software-development firm was founded in the 1990s by Ukrainian immigrant Victor Friedman as Homework911 to help schoolchildren. It changed its name as it switched to the richer corporate call- center market, Friedman testified when the trial began March 12.

Cantine said his client was “very happy that Friedman and the company were vindicated.”

“We are surprised and extremely disappointed with the jury’s verdict,” Kristin Carvell, a Cisco spokeswoman, said Friday in an e-mailed statement. “We are confident that Cisco’s conduct was appropriate throughout our relationship with XpertUniverse.”

She said that Cisco didn’t believe “the evidence presented at trial supports this verdict,” and that the company may appeal.

The case is XpertUniverse Inc. v. Cisco Systems Inc., 09- cv-00157, U.S. District Court, District of Delaware (Wilmington).

Nikon LCD Patent Suit Brought by Anvik Revived by Appeals Court

Nikon Corp. (7731), Samsung Electronics Co. and other makers of electronics using liquid crystal displays must face a revived patent-infringement suit brought by Anvik Corp., a U.S. appeals court ruled Friday.

A lower court had ruled the three Anvik patents invalid for failing to describe the best way of emulating the inventions. The U.S. Court of Appeals for the Federal Circuit in Washington said there “remain disputed issues of material fact” on that issue, so remanded the case for further proceedings. The court’s opinion was posted on its website.

Other companies named in the suit by Anvik included AU Optronics, Sharp Corp., LG Electronics Inc. (066570) and Chi Mei Optoelectronics Corp.

Anvik filed the first case in the series in March 2005. That case is Anvik Corp. v. Nikon Precision Inc., 1:05-cv-09891- AKH-LMS, U.S. District Court, Southern District of New York. The appeal is Anvik Corp. v. Nikon Precision Inc., 12-1320, U.S. Court of Appeals for the Federal Circuit.

For more patent news, click here.

Trademark

‘Redskins’ Trademark Cancellation Bill Sent to Congress

A non-voting delegate to the U.S. Congress has authored a bill that would cancel all trademark registrations for “Redskins.”

Representative Eni Faleomavaega, an American Samoa Democrat, wrote H.R. 1278, which would amend the Trademark Act of 1946 regarding “the disparagement of Native American persons or peoples through marks that use the term ‘redskin,’ and for other purposes.”

The measure has been referred to the House Committee on the Judiciary. The bill’s introduction follows a hearing before a board at the U.S. Patent and Trademark Office March 7 at which a group of American Indians argued for the cancellation of the mark, which is used by Washington’s National Football League team.

According to the patent office database, a number of the team’s trademarks were at issue at this hearing, including “Redskinettes,” “the Redskins,” and “Washington Redskins.”

The team has argued in its filings that the name was intended to honor American Indians, an honor that some representatives of various native groups find dubious.

In February, a symposium -- Racist Stereotypes and Cultural Appropriation in American Sports -- was held at the National Museum of the American Indian in Washington. The Washington Post reported that Robert Holden, deputy director of the National Congress of American Indians, said “Honors like that we don’t need.”

Rival Golf Club Will Oppose ‘St. Andrews’ Trademark Application

The director of a golf-course development in Scotland has characterized St. Andrews Links Trust’s application to register “St. Andrews” as a trademark as farcical and arrogant, the U.K.’s Courier newspaper reported.

Ewan McKay, director of St. Andrews International Golf Club told the Courier his company will file objections to the registration for fear of possible restrictions to the name of his club.

McKay said the trust can’t claim sole credit for the fame of St. Andrews in the golf world, according to the Courier.

For more trademark news, click here.

Copyright

Google Clash With Publishers Pivots on Meaning of Snippet

As German authorities consider the exact definition of a snippet -- the short text from a website that’s displayed alongside links in search results -- Google Inc. (GOOG:US) and other online aggregators in Europe face a potential squeeze on their profits in the region.

A landmark copyright bill that would allow publishers to charge for such online uses of their material is working its way through Germany’s legislature and is being closely watched by neighboring countries. Although it’s been watered down during its legislative journey, the bill may still leave room for a judge to side with publishers and allow them to charge for significant use of news articles, including in search.

The legislation, part of Chancellor Angela Merkel’s coalition platform, pits Google against media conglomerates, such as Axel Springer AG (SPR), publisher of Die Welt and Bild, and Hubert Burda Media Holding GmbH & Co., which specializes in fashion and lifestyle magazines. It’s seen by both Google and European media companies as a vital front in the search giant’s battle with European newspapers.

The bill could allow publishers to form a royalty collection group for newspaper snippets -- akin to ASCAP (the American Society of Composers, Authors & Publishers) for journalism -- and gain leverage with Google, which has more than 85 percent of the search market in Germany.

Google’s sales in the U.K., the only European market where the company breaks out revenue, rose 23 percent to $1.3 billion in the three months through December, more than Axel Springer’s total revenue that quarter. Google shares have jumped about 15 percent this year, compared with 13 percent gain for French publisher Lagardere SCA (MMB) and a 6.2 percent increase at Axel Springer.

The search-engine operator notched an important victory days before the bill passed out of the German lower house on March 1, winning an exemption for “individual words or the smallest excerpts of text.”

“Although the law creates some uncertainty,” said Ralf Bremer, a Google spokesman in Germany, “we believe it makes clear that regular snippets remain legal.”

Axel Springer public affairs head Christoph Keese said aggregators will still need permission to use text beyond headlines, and should the issue go to court, “we feel comfortable with what the legislative intent established.”

Rihanna Costing 49% More as Australia Probes Apple Pricing

Rihanna’s album “Unapologetic” is 49 percent more expensive to buy from iTunes in Australia than the U.S., prompting the nation’s parliament to summon content owners including Apple Inc. (AAPL:US) and other technology companies to explain how they set prices.

Microsoft Corp. (MSFT:US) and Adobe Systems Inc. (ADBE:US) also were called by Australian lawmakers on threat of contempt proceedings to appear at a hearing today in Canberra. The companies previously declined to appear before the committee, Chairman Nick Champion said in an October speech.

Software and hardware products in Australia sell for a median 50 percent more than their U.S. equivalents, according to a 2012 survey of 186 songs, games, programs and computers by Choice, a not-for-profit consumer advocacy group. Companies could face restrictions on their ability to set prices in Australia under measures being considered by lawmakers.

“There’s been price discrimination against Australian consumers,” said Matthew Rimmer, a professor at Australian National University in Canberra, who specializes in copyright law. “If the distribution is digital, why are the prices so much higher?”

Rihanna’s album costs A$22.99 ($23.98) in the Australian iTunes store, compared with the $15.99 that fans in the U.S. pay. Bruno Mars’s “Unorthodox Jukebox,” in the Top 10 of both nation’s charts, costs 42 percent more.

Downloads of Microsoft’s Office Professional 2013 software package cost A$599 in Australia, about 50 percent above the $399.99 charged in the company’s U.S. Web store.

“We would love to see lower prices for content in the Australian store,” Tony King, managing director of Apple’s Australia unit, said at the committee hearing in the capital Canberra today. “We would urge the committee to talk to those folks who own the content.”

The biggest difference in prices for music and films was due to the wholesale price set by music labels and film and television studios, he said.

Customers “will vote with their wallets” and buy alternative products if prices are too high, Pip Marlow, managing director of Microsoft’s Australia division, told the committee.

Different packaging distinguished products sold in Australia from those sold elsewhere, Adobe’s Australian managing director Paul Robson said.

“I’d consider a box that has different writing on it to be materially different,” he said.

Sales taxes, different labor and rental costs, marketing spending and the decisions of third-party resellers can all cause Australian prices to be higher, Redmond, Washington-based Microsoft said in its filing to the committee. Even download sites incur costs for maintenance and support, the company said.

The strength of the Australian dollar has increased the contrast between local and international prices for software, music and entertainment.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Telenor Target of Large-Scale Cyber Attack; Military Alerted

Telenor ASA (TEL), the Scandinavian region’s largest phone operator, was the target of a large-scale industrial espionage attack, TechWorld reported.

The attacks were of sufficient severity that Norway’s national emergency response team and Cyberforsvaret -- the nation’s cyber-attack defense force -- were put on alert, according to TechWorld. The company, which hasn’t revealed what has been stolen, said it became aware of the problem when it observed suspicious traffic from individual employees’ computers to external destinations, TechWorld reported.

The attack was believed to have been initiated through links that installed what are known as “Trojans,” that then stole filed and emails, according to TechWorld.

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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