Bloomberg News

Novartis, Facebook, Vivendi, Aereo: Intellectual Property

April 02, 2013

India’s Supreme Court denied Novartis AG (NOVN)’s request for patent protection for its Gleevec cancer treatment, allowing the nation’s generic-drug makers to continue to sell copies of the drug at a lower price.

In a decision watched by non-profit groups seeking to expand access to medicine and drugmakers concerned about India’s position on intellectual property, the court yesterday upheld regulatory rulings dating to 2006 that the drug wasn’t sufficiently innovative to merit a patent. Basel, Switzerland- based Novartis argued that the molecule imatinib, on which Gleevec is based, required years of research and modification to make it an effective, safe leukemia treatment.

“Repetitive patent is not permissible on the same drug,” Justices Aftab Alam and Ranjana Prakash Desai said in the court’s ruling in New Delhi. “The drug is neither new nor complies” with provisions of the patent law, they ruled.

The decision may add to concern among Western pharmaceutical companies that India allows domestic generic-drug makers to profit from products that deserve patent protection. Scientists credit Gleevec with turning a deadly blood cancer into a chronic disease, and the drug was Novartis’s best-selling product last year with sales of $4.7 billion.

The Indian Patent Office in 2006 denied a patent to Novartis, a decision upheld by the Indian Intellectual Property Appellate Board. The board cited a provision of Indian law that aims to prevent “evergreening,” in which companies make an incremental change to a drug’s chemical makeup, without any real medical benefit, to extend its patent life and prevent the introduction of low-cost generic copies.

Novartis appealed to the nation’s highest court. Generic versions of the drug are on the market in India.

Novartis and aid groups agree that the drug itself is of secondary importance in the larger debate over intellectual property.

Sales of Gleevec in India are negligible, because more than 90 percent of volume in the country is donated through Novartis programs, available to the poor, Paul Herrling, who heads Novartis’s Institute for Tropical Diseases in Singapore, said in an interview before the decision.

Besides denying a patent to Gleevec, India has angered pharmaceutical companies by allowing generic-drug makers to produce copies of patent-protected medicines to ensure they’re available in the country at affordable prices. Drug companies say they have programs in place to make expensive medicines available to the poor.

For more patent news, click here.

Trademark

Facebook Must Face Trademark Trial Over ‘Timeline’ Feature

Facebook Inc. (FB:US), owner of the world’s largest social- networking service, lost bid to end a trademark-infringement lawsuit over its use of “timeline” and related terms.

Timelines Inc. started a website in 2009 that lets users create chronologies tracing historical events such as wars, sporting events and advances in science. It sued Facebook for infringement and unfair competition in September 2011, a week after the social-network announced it was adding a “timeline” feature to its user pages.

Facebook counter-sued, claiming Timelines’ registered marks weren’t sufficiently distinctive to warrant protection and asking for judgments of non-infringement and a cancellation of the registrations.

Facebook “has failed to demonstrate, as a matter of law, that the marks are generic,” U.S. District Judge John W. Darrah in Chicago wrote in a ruling yesterday. “At this stage in the proceedings, it is not unreasonable to conclude that as to this group of users, ‘timeline(s)’ has acquired a specific meaning associated with plaintiff.”

The judge said Timelines had “more than nominal” sales and more than a thousand active users. A jury trial is set for April 22.

Andrew Noyes, a spokesman for Menlo Park, California-based Facebook, said in an e-mail that the company declined to comment on Darrah’s decision.

“We’re happy with the ruling,” Douglas Albritton, an attorney for Chicago-based Timelines, said yesterday in a phone interview. His client is seeking damages equivalent to Facebook’s timeline-derived ad revenue, he said.

The case is Timelines Inc. v. Facebook Inc., 11-cv-06867, U.S. District Court, Northern District of Illinois (Chicago).

Swedish Match Unit Can Keep ‘Cohiba’ Trademark, U.S. Board Rules

An appeals board at the U.S. Patent and Trademark Office dismissed a request from the Cuban government-owned tobacco company to cancel the “Cohiba” trademark belonging to Swedish Match AB (SWMA)’s General Cigar unit.

The board said that because Cuban Assets Control Regulations bar Empresa Cubana Del Tabaco from having any property interest in the mark in the U.S. “at any time, by any means,” it doesn’t have standing to request cancellation of the trademark.

The dispute originally played out in U.S. federal courts, with the state-owned company seeking an order barring Swedish Match’s use of the name. The Cuban company has registered the Cohiba trade name in 115 other countries. The name was first used for a cigar created decades ago for Cuban dictator Fidel Castro.

The dispute went to the U.S. Supreme Court, which refused in 2006 to hear an appeal of a ruling from the New York-based 2nd U.S. Circuit Court of Appeals, which said the trade embargo barred the Cuban company from acquiring rights to the mark.

The patent office appeals board said that in light of that appellate court ruling, the Cuban company lacks a legitimate commercial interest in the “Cohiba” mark in the U.S. As a result, the board said, the company’s contention that it’s harmed by consumer confusion is unfounded.

For more trademark news, click here.

Copyright

Vivendi Wins Copyright Ruling in Used-Digital-Song Case

ReDigi Inc., an online service that lets people buy and sell second-hand digital songs, violates the copyrights of Vivendi SA (VIV)’s Capitol Records, a federal judge ruled.

U.S. District Judge Richard Sullivan in Manhattan granted a motion by Capitol for judgment without a trial. In a filing dated March 30, Sullivan denied ReDigi’s request to dismiss the case. The litigation will continue to determine whether the site will be shut down and monetary damages assessed.

“ReDigi vicariously infringed Capitol’s copyrights,” Sullivan said in his decision. “ReDigi exercised complete control over its website’s content, user access and sales.”

Capitol sued ReDigi in January 2012, claiming that it infringes song copyrights by allowing unauthorized copying of digital music files. Record companies have sued many online music services to prevent erosion of sales of CDs and digital songs.

“ReDigi offers a service whose very economic survival depends on the unauthorized reproduction and distribution of copyrighted sound recordings,” Capitol said in its motion for summary judgment.

ReDigi, which is based in Cambridge, Massachusetts, argued in court papers that it makes no unauthorized copies of songs. It said it provides digital music storage and a marketplace for tracks legitimately bought from Apple Inc.’s iTunes.

“The technology behind our sale process does not involve the making of even a single copy,” John Ossenmacher, the chief executive officer and a founder of ReDigi, said in a declaration filed with the court.

The case is Capitol Records v. ReDigi, 12-cv-00095, U.S. District Court, Southern District of New York (Manhattan).

Diller-Backed Aereo Beats Networks’ Bid to Close TV Service

Major U.S. television networks failed to persuade an appeals court to shut down Aereo Inc., the Barry Diller-backed online TV service that they claim violates their copyrights.

Broadcasters including Walt Disney Co. (DIS:US)’s ABC and Comcast Corp. (CMCSA:US)’s NBC unsuccessfully petitioned the U.S. Court of Appeals in New York to overturn a lower-court order denying a preliminary injunction that would have put New York-based Aereo out of business.

The networks sued Aereo in March 2012, claiming that it infringed copyrights by capturing their over-the-air signals and retransmitting the programming to subscribers on computers and smartphones. Aereo’s transmissions are public performances and require licenses, they said. Its service would devalue their programming and cut viewership, jeopardizing revenue from

In an earlier case, television networks sued pay-TV provider Cablevision Systems Corp. (CVC:US) for offering subscribers a remote digital video recording service for TV shows.

The broadcasters said the conditions of the Cablevision case don’t apply to Aereo. Cablevision provided a storage service not a retransmission service, they said.

Dennis Wharton, a spokesman for the industry trade group National Association of Broadcasters, said in a statement the NAB was disappointed in the decision and that we “will be evaluating the opinions and options going forward.”

The decision from the Second Circuit Court of Appeals “again validates that Aereo’s technology falls squarely within the law, and that’s a great thing for consumers who want more choice and flexibility in how, when and where they can watch television,” Chet Kanojia, the founder and chief executive officer of Aereo, said in a statement.

Before the service began, Aereo received support from Diller’s digital media company IAC/Interactive Corp. (IACI:US), which led a $20.5 million round of financing for the startup. Diller, who is on Aereo’s board, once ran News Corp. (NWSA:US)’s Fox Broadcasting Co.

Other plaintiffs in the Aereo case include News Corp.’s Fox, CBS Corp. (CBS:US), WNET and the Public Broadcasting Service.

“Plaintiffs have not demonstrated that they are likely to prevail on the merits on this claim in their copyright infringement action,” Droney said in the opinion.

The appeals are American Broadcasting Cos. v. Aereo, 12- 02807, and WNET v. Aereo, 12-02786, U.S. Court of Appeals for the Second Circuit (Manhattan). The lower-court cases are American Broadcasting Cos. v. Aereo, 12-cv-01540, and WNET v. Aereo, 12-cv-01543, U.S. District Court, Southern District of New York (Manhattan).

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Ex-Bud Worker Accuses Company of Shakedown Over Diluted Beer

A former Anheuser-Busch InBev NV (ABI) employee who claims the company sells watered-down beer told a judge the beer maker is out to punish his whistle-blowing with a lawsuit alleging he divulged trade secrets.

AB InBev sued James Clark, a former director of operations support, one week after the company was accused of overstating the alcohol content in several of its beers. The case, which accuses Clark of misappropriating trade secrets, should be dismissed because California law bars using so-called strategic lawsuits against public participation as a means of intimidation, Clark said in papers filed March 29 in federal court in Sacramento.

The lawsuit “is designed to silence Mr. Clark and to punish him for standing up for consumers,” Clark’s attorney Robert Carichoff said in the filing. “To allow AB to proceed with this vindictive litigation would empower all employers to punish former employees like Mr. Clark for reporting misconduct and for speaking out on behalf of consumers.”

Beer drinkers have filed at least eight lawsuits accusing Anheuser-Busch InBev NV’s St. Louis-based Anheuser-Busch Cos. of adding water to several products including Bud Ice, Budweiser, Busch Ice and Michelob. Lawyers for the consumers are seeking to have the suits consolidated in federal court in San Francisco and to proceed as group cases on behalf of customers nationwide who have purchased AB InBev products in the past five years.

Clark worked at Anheuser-Busch from 1998 until June, when he resigned to become a lawyer. He held several quality- assurance positions at the company before rising to director of operations support, according to court papers filed with his request to dismiss the case.

From 2008 to 2012, Clark said, he complained to about 20 senior managers at Anheuser-Busch about the company’s practices regarding alcohol content. He became involved in the proposed class-action complaint shortly after his resignation, Clark said in court papers. He denied disclosing company trade secrets to any competitors or in connection with any regulatory approval process.

Terri Vogt, a spokeswoman for Anheuser-Busch, didn’t return a phone call or e-mail seeking comment on Clark’s allegations. Carichoff declined to comment beyond the filing. The case is Anheuser-Busch Cos. v. Clark, 13-cv-00415, U.S. District Court, Eastern District of California (Sacramento).

IP Moves

Cooley Expands Technology Transfer Group With Hire From Foley

Cooley LLP hired Matthew A. Karlin for its technology- transfer practice group, the San Francisco-based firm said in a statement yesterday.

Karlyn, who will be working in the Cooley group that helps clients develop and manage their IP strategy, joins from Milwaukee’s Foley & Lardner LLP.

He has an undergraduate degree from Union College, a master’s degree in business from the University of Chicago and a law degree from Temple University.

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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