Bloomberg News

Paulson, Macy’s, Samsung, Apple: Intellectual Property

April 11, 2013

Paulson & Co. executives were sued for alleged conflicts in the handling of intellectual property assets in the bankruptcy of a group of resorts including Miami’s Doral golf course, where Tiger Woods won his 76th PGA Tour event last month.

Michael Barr, Daniel Kamensky and Jonathan Shumaker were sued in New York state court by Five Mile Capital Partners, which accused them of failing to get the highest value for the IP assets as directors. The complaint was filed April 9 in New York State Supreme Court in Manhattan.

The lawsuit stems from the bankruptcy filing in 2011 of five resorts owned by Paulson, a hedge-fund firm: the Grand Wailea in Hawaii, La Quinta and PGA West in California, the Arizona Biltmore, the Claremont in California and the Doral. Doral was sold to Donald Trump and the other four were sold to Government of Singapore Investment Corp., a sovereign wealth fund, for $1.5 billion.

The lawsuit is “completely without factual basis or legal merit,” Armel Leslie, a spokesman for New York-based Paulson, said in an e-mailed statement.

“Five Mile Capital has filed numerous other claims directed at other parties and every one of them has been decisively rejected by the bankruptcy court,” Leslie said.

Five Mile is a lender under a $50 million mezzanine loan to an affiliate of MSR Hotels & Resorts Inc., which guaranteed the debt. MSR Hotels is one of a related group of companies that owned and operated the resorts, and it separately owns resort trademarks, logos and copyrights, according to the complaint.

Five Mile alleged in the complaint that Barr, Kamensky, Shumaker and a fourth defendant, Mohsin Meghji, were conflicted because they served as directors of MSR Hotels at the same time they were directors of subsidiary companies that owned the resort hotels. They allowed the entities in bankruptcy to use the intellectual property without paying for the assets and allowed the Singapore fund to continue to use them at no cost, according to the filing.

The case is Five Mile Capital SPE B LLC v. MSR Hotels & Resorts Inc., 651267-2013, New York State Supreme Court, New York County (Manhattan).

Martha Stewart Gets ‘Secondary Matter’ Tossed in Macy’s Trial

Martha Stewart Living Omnimedia Inc. (MSO:US) persuaded a judge to reject a “secondary” claim in a breach-of-contract lawsuit by Macy’s Inc. over the exclusive right to sell Martha Stewart- branded products in its stores.

Martha Stewart Living didn’t violate the confidentiality requirement of its Macy’s contract by disclosing it to rival J.C. Penney Co., New York State Supreme Court Justice Jeffrey Oing ruled yesterday.

The judge is hearing motions by the three retailers after the conclusion of Macy’s case. If any part of the lawsuit survives, Martha Stewart Living and J.C. Penney may be forced to present a defense. Afterwards, the judge will deliver a verdict in the non-jury trial.

Oing today will hear Martha Stewart Living’s arguments that he dismiss Macy’s more central contract claim. J.C. Penney (JCP:US), which is also being sued by Macy’s for carrying some Martha Stewart products, will seek dismissal of Macy’s claims, and Macy’s will seek to extend Oing’s preliminary injunction.

Macy’s seeks to include a bar on the retailers’ sale of unbranded products, in certain exclusive categories, designed by Martha Stewart Living.

The three sides returned to court this week to resume a trial of Macy’s lawsuits following a monthlong break, during which mediation efforts ordered by Oing were unsuccessful. The trial, which began Feb. 20, has featured testimony from Martha Stewart, Macy’s Chairman Terry Lundgren and former J.C. Penney Chief Executive Ron Johnson, who was ousted the day the trial resumed.

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).

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Patents

Bayer Sues FDA Seeking to Block Sales of Generic Baytril

Bayer AG (BAYN) sued the U.S. Food and Drug Administration seeking to block sales of a generic form of the livestock antibiotic Baytril 100 being sold by competitor Norbrook Laboratories Ltd.

Bayer, in a complaint filed yesterday in Washington, said the FDA’s approval of Norbrook’s Enroflox 100 product to treat bovine respiratory disease was unlawful because the agency hadn’t responded to Bayer’s concerns that the generic would be used for an off-label dosage. The Leverkusen, Germany-based company asked a judge to halt sales of the generic while the lawsuit is being considered.

The FDA approved Norbrook’s application for its Enroflox product on March 29, according to the complaint. Norbrook, based in the U.K., sought FDA approval in 2008 to market a generic version of Baytril 100 that would be labeled as a multiday dosing regimen. Bayer alleges the product will be used in a single dose.

Sandy Walsh, an FDA spokeswoman, didn’t immediately respond to an e-mail seeking comment on the lawsuit.

A telephone message seeking comment on the lawsuit left at Norbrook’s U.S. office in Lenexa, Kansas, after regular business hours wasn’t immediately returned.

The case is Bayer Healthcare LLC v. U.S. Food and Drug Administration, 13-cv-00487, U.S. District Court, District of Columbia (Washington).

Apple, Google Not Interested in Patent Settlement, Judge Says

Apple Inc. (AAPL:US) and Google Inc. (GOOG:US)’s Motorola Mobility unit are more interested in using litigation as a business strategy than in resolving disputes over the use of patented technology, a federal judge in Florida said.

“The parties have no interest in efficiently and expeditiously resolving this dispute; they instead are using this and similar litigation worldwide as a business strategy that appears to have no end,” U.S. District Judge Robert Scola in Miami said in an order dated April 9 in which he denied a request for a case-management conference and refused to extend some deadlines.

The companies have accused each other of infringing patents related to wireless technology and the case has grown with additional patents since first filed in 2010. It’s part of a global battle for market share as Apple challenges what it considers copycats of its iPhone that run on Google’s Android operating system.

The case in Florida involves more than 180 claims related to 12 patents and disputes over the meaning of more than 100 terms, Scola said in his order. Cupertino, California-based Apple and Mountain View, California-based Google were unable to streamline the case, he said, calling the companies’ actions “obstreperous and cantankerous conduct.”

He gave them four months to narrow the case’s scope. If they don’t, he said, he will put the case on hold until he resolves all of the disputes over the definition of patent terms.

Matt Kallman, a spokesman for Google, declined to comment. Amy Bessette, a spokeswoman for Apple, didn’t immediately respond to requests for comment.

Other judges have complained about the hard-nosed legal fighting between the two. A federal judge in Wisconsin last year threw out breach-of-contract claims brought against Motorola Mobility. U.S. District Judge Barbara Crabb had planned to set a royalty rate on certain Motorola Mobility patents until Apple said it would agree to take a license only if the judge set the rate at $1 or less for each iPhone.

The case is Motorola Mobility LLC v. Apple Inc., 12- cv-20271, U.S. District Court, Southern District of Florida (Miami).

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Trade Secrets

Samsung Office Searched by Police in OLED Technology Leak Probe

South Korean police searched the offices of Samsung Electronics Co. (005930)’s display-making unit April 9 in connection with an investigation into alleged technology theft.

Samsung Display Co., which dominates the market for organic light-emitting diode, or OLED, panels, said investigators at the Seoul Metropolitan Police Agency went to its headquarters in Asan, south of the capital, and searched for documents related to the technology.

Police are investigating whether partners of rival panel maker LG Display Co. (034220) leaked technology secrets and whether Samsung is involved, Nathan Kim, a spokesman for Samsung, said by phone yesterday. The two companies have been involved in criminal probes of alleged technology theft since last year. In July, six employees of LG Display were charged over theft of OLED technology from Samsung.

“We have no reason to steal other companies’ technology, as we have the world’s best OLED technology,” Jun Eun Sun, a spokeswoman for Samsung, said by phone yesterday in Asan.

LG Display said it didn’t report Samsung to police in connection with the current investigation.

“The latest investigation is related to large-sized OLED TV panel technology, but the police have made the allegation themselves,” Son Young Jun, a Seoul-based LG Display spokesman, said by phone yesterday.

LG said in July the information its employees were charged with leaking or stealing at the time was widely known in the industry and wasn’t considered to contain trade secrets.

Copyright

Taymor Settles With ‘Spider-Man Turn Off the Dark’ Producers

Julie Taymor, the original director of the Broadway musical “Spider-Man Turn Off the Dark” settled a suit over her dismissal from the show against the musical’s producers, Glen Berger and 8 Legged Productions LLC.

According to a statement yesterday from the parties, the agreement resolves Taymor’s claims against 8 Legged in connection with her work on the book of the musical. A settlement has been in the works since last summer.

Taymor was removed from the $75 million show in March 2011, after it was criticized during an extended 182-performance preview period. She sued the producers in November 2011, saying they violated her intellectual-property rights by making changes without her permission and didn’t pay royalties due her as a co- book writer.

U.S. District Judge Katherine Forrest in Manhattan, who presided over the case, on Jan. 10 restored the lawsuit to her active court calendar, saying that while both sides told her in August they had agreed to a tentative settlement over royalties and creative control, they hadn’t completed it. Forrest also scheduled a May trial date. The parties told the judge the case settled on Jan. 22. The agreement was only announced yesterday.

Michael Cohl and Jeremiah Harris of 8 Legged Productions said in a joint statement: “We’re happy to put all this behind us. We are now looking forward to spreading ‘Spider-Man Turn Off the Dark’ in new and exciting ways around the world.”

Taymor said in the statement that she was “pleased to have reached an agreement and hope for the continued success of ‘Spider-Man,’ both on Broadway and beyond.”

Taymor’s lawyer Charles Spada, a partner at Lankler Siffert & Wohl LLP, didn’t return a call seeking comment on the settlement.

Dale Cendali, a partner at Kirkland & Ellis LLP who represents Cohl, Harris and 8 Legged Productions, declined to comment other to say that the final deal was signed April 9. The case is Taymor v. 8 Legged Productions LLC, 11-cv-08002, U.S. District Court, Southern District of New York (Manhattan).

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Internet

Google Sued by Streetmap for Anti-Competitive Behavior

Google Inc., operator of the world’s largest search engine, was sued in London by a U.K. Internet company for promoting its own maps over those of competitors.

Streetmap, a provider of Internet maps, filed a complaint in London March 15, according to court records. Google’s actions have made its products “harder to find,” the U.K.-based company said yesterday in a statement.

Streetmap said its complaint mirrors an antitrust probe by the European Union into whether Google favors its own services over competitors in search results. The European Commission has asked Mountain View, California-based Google to submit proposals that could lead to a settlement.

“We have had to take this action in an effort to protect our business and attract attention to those that, like us, have started their own technology businesses, only to find them damaged by Google’s cynical manipulation of search results,” Kate Sutton, commercial director of Streetmap, said in the statement.

A spokesman for Google declined to comment on the suit.

The case is Streetmap.eu Ltd. v. Google Inc., case no 13-1013, High Court of Justice, Chancery Division.

Law Firm News

Bingham McCutchen LLP expanded its intellectual property and litigation practices with the addition of five partners in its Santa Monica, California, office.

Richard de Bodo, Siegmund Gutman, Andrew Devkar, Olga Berson and Bruce Kuyper are joining the firm from DLA Piper LLP. De Bodo, co-chairman of DLA Piper’s patent litigation and life sciences practices, will serve as co-chairman of Bingham’s intellectual property and life sciences practice groups.

The group brings a patent litigation and counseling practice that includes pharmaceuticals, biologics, biotechnology, electronics, software and Internet technologies, with strong industry connections in the U.S. and Japan, Bingham said in a statement.

Bingham has approximately 1,000 lawyers in 14 offices in the U.S., Europe and Asia.

Cybersecurity

SEC Adopts Identity-Theft Rules as White Takes Over

The U.S. Securities and Exchange Commission yesterday approved rules requiring brokers and investment advisers to adopt identity-theft prevention programs.

The meeting was the first for newly confirmed SEC chairman Mary Jo White.

The five-member panel unanimously approved an identity- theft protection rule almost identical to one previously issued by the Federal Trade Commission. It requires financial firms to administer identify-theft “red flags,” the SEC said.

Companies subject to the rule will have seven months to comply, the SEC said in a fact sheet.

“These rules are a common-sense response to the growing threat of identity theft to all Americans who invest, save or borrow money,” White said.

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

  • MSO
    (Martha Stewart Living Omnimedia Inc)
    • $4.44 USD
    • 0.03
    • 0.68%
  • JCP
    (JC Penney Co Inc)
    • $9.22 USD
    • 0.03
    • 0.33%
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