Bloomberg News

NFL, Aereo, Fox, Martha Stewart: Intellectual Property

April 09, 2013

The National Football League won preliminary court approval of the settlement of a lawsuit accusing it of failing to compensate former players for using their likenesses in promotions.

The accord, which calls for the creation of a special licensing agency to market those publicity rights and the creation of a $42 million fund overseen by former players to aid their peers, was approved yesterday by U.S. District Judge Paul A. Magnuson in St. Paul, Minnesota.

Magnuson’s approval was granted over the objections of some of the ex-players who filed the 2009 case. Opponents include Fred Dryer of the Los Angeles Rams, the Minnesota Vikings’ Jim Marshall and Dan Pastorini of the Houston Oilers.

“These players contend that the settlement is not appropriate because it does not directly benefit them,” the judge wrote, “ignoring the fact that the settlement in fact directly benefits those in whose name the lawsuit was purportedly brought: the players who toiled in obscurity and now are destitute.”

The accord’s opponents contended that distributing the bulk of the settlement proceeds to the fund was only the second-best use of the money. The league is also paying $8 million toward defraying the plaintiffs’ legal costs and setting up the licensing agency.

“For the first time in the history of the game, retired players will be represented at the table,” said Pro Football Hall of Fame member Jim Brown in a joint statement with other ex-players and their lawyers who lauded yesterday’s ruling. Brown, a former player with the Cleveland Browns, is among those named as initial members of the supervisory panel for the fund and of the licensing agency created under the accord.

Magnuson scheduled a final approval hearing for Sept. 19.

Lawyer Michael Ciresi, who represented the objecting players, didn’t immediately reply to an e-mailed request for comment.

“The decision speaks for itself,” said NFL spokesman Brian McCarthy.

The case is Dryer v. National Football League, 09-cv-02182, U.S. District Court, District of Minnesota (St. Paul).

Macy’s Accuses J.C. Penney of Exclusive Martha Stewart Sales

Macy’s Inc. accused J.C. Penney Co. (JCP:US) of selling Martha Stewart-branded goods in categories exclusive to Macy’s as a trial resumed over the right to sell some of the merchandise.

Macy’s, J.C. Penney and Martha Stewart Living Omnimedia Inc. (MSO:US) returned to court yesterday in Manhattan to pick up a trial that began Feb. 20. New York State Supreme Court Justice Jeffrey K. Oing ordered the two retailers and home merchandise company into mediation on March 7 after about two weeks of proceedings. The trial resumed without any comments by lawyers or the judge on the mediation process.

Ted Grossman, a lawyer for Macy’s, told the judge that J.C. Penney sells products on its website that are in categories exclusive to Macy’s under “Martha Stewart Celebrations,” including champagne flutes, wine glasses and pitchers.

Eric Seiler, an attorney for Martha Stewart Living, said the items are plastic and disposable and don’t violate a preliminary injunction issued by Oing last year blocking Martha Stewart Living from selling items exclusive to Macy’s.

J.C. Penney in December 2011 acquired a 17 percent stake in New York-based Martha Stewart Living for $38.5 million as the department-store chain seeks to revive sales with new mini- stores dedicated to Martha Stewart and other brands.

Macy’s, which has sold Martha Stewart-branded home goods since 2007, sued her company in January 2012, saying it had the exclusive right to sell items in certain categories including bedding and cookware. Macy’s sued Plano, Texas-based J.C. Penney about three months later.

Mark Epstein, an attorney for J.C. Penney, said he believes the items are allowed under Oing’s injunction. Attorneys for the company are looking into the items and will stop selling them if they are determined to violate the injunction, Epstein said.

Macy’s Grossman said the “basic shapes and designs” of the items are the same as some being sold at Macy’s.

Oing said he will allow attorneys for J.C. Penney and Martha Stewart Living to look into the matter and will listen to oral arguments on any motion Macy’s may make on the issue.

In an unrelated development, J.C. Penney yesterday ousted Ron Johnson as chief executive officer. He’s being replaced with his predecessor, Myron Ullman III.

The cases are Macy’s Inc. (M:US) v. Martha Stewart Living Omnimedia Inc., 650197/2012; Macy’s Inc. v. J.C. Penney Corp., 652861/2012, New York State Supreme Court (Manhattan).

For more trademark news, click here.

Copyright

News Corp. to Take Fox Off Air If Courts Back Aereo Service

News Corp. (NWSA:US)’s Fox network will go off the air and become a cable channel if U.S. courts don’t stop Internet startup Aereo Inc. from retransmitting shows like “The Simpsons” without permission, said Chief Operating Officer Chase Carey.

Fox and its affiliate stations would stop broadcasting and serve only pay-TV customers to protect the billions of dollars spent annually on programs, along with advertising revenue and hard-won fees from pay-TV systems, Carey told TV executives yesterday in Las Vegas. A U.S. appeals court last week rejected broadcasters’ pleas to shut down Aereo.

Carey is threatening to upend traditional broadcast TV to counter Aereo, a company backed by Barry Diller, the Fox network founder. If CBS, NBC and ABC follow, it would and mark an end to television as it’s been known since “The Honeymooners” aired in the 1950s. Fox and other networks are evaluating what to do next after the appeals court ruling.

“We need to be able to be fairly compensated for our content,” Carey said. “This is not an ideal path we look to pursue, but we can’t sit idly by and let an entity steal our signal. We will move to a subscription model if that’s our only recourse.”

The broadcast networks sued Aereo in March 2012, claiming it infringed copyrights by capturing their over-the-air signals with tiny antennas and delivering shows to subscribers on computers and smartphones.

With the appeals court ruling, Aereo can go ahead with a planned national expansion of its service from its base in New York, Diller said in an e-mail last week. Virginia Lam, a spokeswoman for Aereo, had no immediate comment on Carey’s remarks. Bloomberg LP, which owns Bloomberg News, is an Aereo partner and offers its cable channel on the service.

For more, click here.

For more copyright news, click here.

Technology Companies

Facebook COO Sheryl Sandberg Seeks to Quash Subpoena in Suit

Facebook Inc. (FB:US) Chief Operating Officer Sheryl Sandberg will move to quash a subpoena requiring her to give a deposition in a lawsuit alleging that seven technology companies broke antitrust laws by agreeing not to recruit from one another, according to a court filing.

A hearing to resolve Sandberg’s opposition to the subpoena will be conducted by U.S. Magistrate Judge Paul S. Grewal, U.S. District Judge Lucy H. Koh in San Jose, California, said in court yesterday. On April 1, Koh said lawyers for employees suing the companies could schedule a deposition of Sandberg around April 23.

“We’ve been working out cooperatively a schedule that works for Ms. Sandberg and her counsel,” Kelly Dermody, a lawyer for the employees, told Koh yesterday. A lawyer for Sandberg wasn’t in court.

Sandberg and her lawyers say they “have worked cooperatively” to agree on a schedule, according to an April 5 status report, and requested a hearing either May 21 or May 23. The planned April 23 deposition has been taken off the calendar.

Defendants in the 2011 case include Google Inc., (GOOG:US)Apple Inc. (AAPL:US), Intuit Inc. (INTU:US), Intel Corp., Adobe Systems Inc. (ADBE:US), Walt Disney Co. (DIS:US)’s Pixar animation unit and Lucasfilm Ltd. Neither Facebook nor Sandberg, a former Google executive, is a defendant.

Plaintiffs’ lawyers contend senior officers at the companies personally entered into nonsolicitation agreements to eliminate competition.

Sarah Feinberg, a spokeswoman for Menlo Park, California- based Facebook, has declined to comment on a Sandberg deposition.

The San Jose case is In Re High-Tech Employee Antitrust Litigation, 11-cv-02509, U.S. District Court, Northern District of California (San Jose). A previous case is U.S. v. Adobe Systems, 10-cv-01629, U.S. District Court, District of Columbia (Washington).

Oracle’s Free-Speech Appeal Delays HP Itanium Server Trial

A trial in Hewlett-Packard Co. (HPQ:US)’s dispute with Oracle Corp. (ORCL:US) over software support for servers running Intel Corp. (INTC:US)’s Itanium microprocessors will be delayed while Oracle appeals a ruling on a motion in the case.

The second phase of a trial was set to begin this week to determine whether Oracle breached the contract at issue, and if so, what amount Hewlett-Packard should be awarded in damages. That proceeding was put on hold after Oracle yesterday challenged a decision by a state judge in San Jose, California, that it was late in filing a claim that Hewlett-Packard was violating its free-speech rights.

In the trial’s first phase, Superior Court Judge James Kleinberg agreed with Hewlett-Packard that Oracle made a commitment to develop software supporting servers that run on Itanium chips, under an agreement the companies reached over Mark Hurd’s transition from chief executive officer of Hewlett- Packard to co-president of Oracle.

Oracle filed a motion to throw out the case based on free- speech claims and filed an immediate appeal when the trial court decided the motion was untimely. A state appeals court must now rule on that question before the trial can proceed.

Before the trial, Hewlett-Packard said it was seeking about $500 million in damages, according to a person familiar with the matter who asked not to be identified because the damages request is confidential.

The case is Hewlett-Packard Co. v. Oracle Corp., 11- cv-203163, California Superior Court, Santa Clara County (San Jose).

For more, click here.

Trade Secrets

Pangang Group Summons in U.S. Trade Secret Case Ruled Faulty

China’s Pangang Group Co., facing criminal allegations by the U.S. that it conspired to steal secrets about titanium dioxide technology from DuPont Co. (DD:US), won a court ruling that prosecutors failed to serve a summons.

U.S. District Judge Jeffrey S. White in San Francisco rejected prosecutors’ arguments that they had properly served the company and three of its units with court papers.

“The United States has still not met its burden to show it has satisfied the delivery requirement,” White said yesterday in an 11-page ruling.

Pangang runs the largest titanium complex in China and is one of the country’s biggest titanium pigment producers, according to its website.

Pangang, a California businessman and two former DuPont employees were charged last year with conspiring to steal information about chloride-route titanium dioxide, a white pigment used in paint, plastics and paper.

The U.S. defendants sold the confidential information to Pangang so it could develop a large-scale factory in Chongqing, prosecutors alleged. DuPont, based in Wilmington, Delaware, is the world’s largest manufacturer of titanium dioxide, and won’t sell or license its technology to Chinese companies.

The U.S. encountered difficulty delivering notice of the charges to the corporate defendants, leading the court to initially quash service against them last year.

White ruled yesterday that prosecutors still haven’t fulfilled legal requirements.

The judge directed prosecutors and the defendants to appear in court on April 18 to address how they intend to proceed.

The case is U.S. v. Liew, 11-cr-00573, U.S. District Court, Northern District of California (San Francisco).

Cybersecurity

Huawei Defends Equipment Security Amid U.S. Spying Concerns

Huawei Technologies Co., China’s largest maker of telecommunications equipment, said it doesn’t pose a U.S. security threat as it defended itself against foreign governments’ concerns that it aids intelligence agencies.

The Shenzhen-based company “never sold key equipment into U.S. networks,” Deputy Chairman Guo Ping said yesterday after the company released its annual report. Huawei became one “of the world’s top three smartphone makers” in the fourth quarter and expects the proportion of sales from networking equipment, the area that has drawn foreign scrutiny, will decline.

Huawei is fighting concerns over cybersecurity in markets from the U.S. to Australia as American intelligence agencies and security companies traced Web attacks to China. Softbank Corp. (9984) and Sprint Nextel Corp. (S:US) told a U.S. lawmaker last month they won’t integrate equipment from the Chinese company into Sprint’s network after they merge, the legislator said.

“There has never been any incident of our product threatening cybersecurity or network security,” Guo said. Huwaei serves more than 600 telecommunications operators in more than 140 countries, he said.

Huawei is the world’s second-largest maker of equipment for phone networks, after Ericsson AB.

For more, click here.

Law Firms Trying to Profit from Cybersecurity Concerns

Lawyers and consultants have taken to lobbying various members of the federal government on cybersecurity issues.

David Ransom, a partner at McDermott Will & Emery LLP, spoke with Bloomberg Law about how a wide range of industries is concerned about the potential impact of cybersecurity legislation.

“The reason you’re seeing all these lobbying registrations on this issue is just the breadth of the industries affected,” he said.

To see the interview, click here.

To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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Companies Mentioned

  • JCP
    (JC Penney Co Inc)
    • $10.27 USD
    • 0.04
    • 0.35%
  • MSO
    (Martha Stewart Living Omnimedia Inc)
    • $3.96 USD
    • -0.02
    • -0.51%
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