Bloomberg News

Global Piracy, SAP, Takeda, Goldman: Intellectual Property (1)

May 02, 2013

Ukraine’s copyright protections have deteriorated to a level where the Obama administration may consider trade sanctions, according to a U.S. report that also cites China for trade-secret theft.

The U.S. Trade Representative’s office labeled Ukraine as the lone “priority foreign country” yesterday in its annual assessment of enforcement of intellectual property rights. The designation, reserved for nations the U.S. considers egregious violators of IP trade law, can spark an investigation and, potentially, an increase in tariff rates.

In releasing the report, the U.S. pledged “to take strong action to support critical jobs and exports in IP-intensive industries,” acting U.S. Trade Representative Demetrios Marantis said yesterday in a statement.

The U.S. also urged China’s government leaders to take “serious steps” to stop trade secret theft from American companies tied to Chinese operators. “The theft of trade secrets is an escalating concern,” according to the report.

Cyber attacks and corporate espionage originating in the Asian nation have added tension in relations between the U.S. and China, the world’s largest economies. White House National Security Adviser Thomas Donilon said in a March 11 speech that the U.S. is concerned about “cyber intrusions emanating from China at a very large scale.”

President Barack Obama’s administration in February released a strategy to combat trade-secret theft, including use of the USTR report to identify weaknesses in trade-secret protections.

China remained on the agency’s “priority watch list” for concerns about its failure to enforce intellectual property rights, according to the report. Other countries on the list are Algeria, Argentina, Chile, China, India, Indonesia, Pakistan, Russia, Thailand, and Venezuela.

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U.S. Finds Porn, Not Secrets, on Suspected China Spy’s Laptop

A Chinese research scientist suspected of spying on the National Aeronautics and Space Administration -- and pulled from a plane in March as he was about to depart for China -- is set to plead to a misdemeanor charge of violating agency computer rules.

Bo Jiang, who was indicted March 20 for allegedly making false statements to the U.S., was charged April 30 in a separate criminal information in federal court in Newport News, Virginia. Jiang unlawfully downloaded copyrighted movies and sexually explicit films onto his NASA laptop, according to the court filing. A plea hearing is set for later today.

Along with the misdemeanor, the government said it had resolved the false statements case, Assistant U.S. Attorney Gordon Kromberg said in a filing yesterday.

At the time of his arrest in March, Jiang was under federal investigation at NASA’s request for a possible conspiracy involving violations of the Arms Export Control Act, according to an FBI affidavit. Prosecutors said in court papers on April 2 that they were trying to determine whether Jiang had taken, or was seeking to take, “secret, confidential or classified information” to China.

Jiang, 31, was one of about 281 nationals from countries designated as security threats employed at NASA facilities, according to congressional testimony in March by NASA Administrator Charles Bolden. He was blocked from resuming his work at NASA’s Langley Research Center in Hampton, Virginia, after coming back from a monthlong trip to China in December, according to court filings.

Jiang’s lawyer, Fernando Groene, declined to comment on the new charge and plea hearing. Zachary Terwilliger, a spokesman for U.S. Attorney Neil MacBride, didn’t immediately respond to a phone and e-mail messages seeking comment on the plea agreement.

Jill Shatzen, a spokeswoman for Wolf, didn’t immediately respond to an e-mail message seeking comment on the plea agreement.

The case is U.S. v. Jiang, 13-mj-00076, U.S. District Court, Eastern District of Virginia (Newport News).

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For more copyright news, click here.

For trademark news, click here.

Patent

SAP Loses Bid to Overturn $345 Million Patent Verdict Loss

SAP Inc., (SAP:US) the world’s biggest maker of business-management software, lost a bid to overturn a $345 million jury verdict won by Versata Software Inc. over ways to customize pricing.

The U.S. Court of Appeals for the Federal Circuit in Washington did say an order limiting SAP’s sales and maintenance of its software was too broad, and ordered the trial judge to modify that part of the case. The decision was posted yesterday on the court’s website.

“Sufficient evidence supports the jury’s verdict of infringement,” Chief Circuit Judge Randall Rader wrote for the three-judge panel, rejecting SAP’s arguments that it didn’t use the invention.

The dispute is over software that can customize pricing based on factors such as the particular customer, product and size of the order. Closely held Versata sold its software, called Pricer, in the late 1990s to customers such as International Business Machines Corp. and Motorola Inc. Walldorf, Germany-based SAP began offering customized pricing as part of its enterprise software in 1998, according to the court’s opinion.

Versata “had tremendous sales success until precisely the point in time that SAP entered the market with the patented product,” said Michael McKool of McKool Smith, which represented Versata. He said the company, which still sells software, was pleased with the ruling.

SAP said its lawyers are reviewing the court’s ruling.

“We are pleased the court found the injunction was overbroad and remanded it to the lower court for modification,” Andy Kendzie, an SAP spokesman, said yesterday. “Until we have had a chance to review this ruling in detail, we will not comment further.”

The case is Versata Software Inc. v. SAP America Inc., 12-1029, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Versata Software Inc. v. SAP America Inc., 07-cv-00153, U.S. District Court, Eastern District of Texas (Marshall).

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Takeda Gets $6.5 Million Diabetes-Drug Verdict Thrown Out

Takeda Pharmaceutical Co. (4502) persuaded a judge to throw out a $6.5 million jury verdict over its Actos diabetes drug because lawyers for a California man didn’t produce sufficient evidence to show his cancer was caused by the medication.

Judge Kenneth Freeman in state court in Los Angeles ruled yesterday Jack Cooper’s attorneys weren’t able to properly link the former telephone-company worker’s bladder cancer to his Actos use and jurors shouldn’t have had a chance to return their verdict against Asia’s largest drugmaker. It was the first of more than 3,000 lawsuits over the medication to go to trial.

Testimony from a doctor who concluded Cooper’s Actos use caused his bladder cancer turned out to be “inherently unreliable” and that justified throwing the case out, Freedman said in a 27-page ruling.

The verdict came almost three months after Takeda won U.S. regulatory approval for Nesina, a diabetes drug to replace Actos, which lost patent protection last year. Actos sales peaked in the year ended March 2011 at $4.5 billion, or 27 percent of Takeda’s revenue at the time, according to data compiled by Bloomberg.

“We agree with the court’s finding that Mr. Cooper’s allegations were not supported by the evidence,” Kenneth Greisman, general counsel for Takeda’s U.S. unit, said in a telephone interview yesterday.

Takeda faces more than 3,000 suits alleging Actos caused bladder cancer or other ailments, according to court records. Cooper’s suit was among those gathered before Freeman in Los Angeles. Other cases are in state court in Illinois.

Michael Miller, one of Cooper’s lawyers, said he would appeal the post-verdict ruling throwing out the case.

“We believe the court has misinterpreted the law and feel confident the decision will be reversed,” Miller said in a telephone interview.

The case is Cooper v. Takeda Pharmaceuticals America Inc., CGC-12-518535, California Superior Court (Los Angeles).

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Trade Secrets

Ex-Goldman Sachs Programmer Loses Bid to Toss State Charges

Sergey Aleynikov, the former Goldman Sachs Group Inc. (GS:US) programmer who won reversal of a federal conviction for stealing proprietary software code from the firm, lost a bid to throw out New York charges based on the same allegations.

State court Justice Ronald A. Zweibel in Manhattan denied Aleynikov’s request in a 40-page ruling made public yesterday. The state charges were filed last year after the U.S. Court of Appeals in New York overturned a jury’s conviction of Aleynikov.

Defense attorney Kevin Marino argued in January that his client had the right to copy the code and that the state’s charges created double-jeopardy, which is barred by the New York and U.S. constitutions.

“Neither of the crimes defendant is charged with in his state indictment requires that his access to Goldman’s computers be unauthorized,” Zweibel wrote, distinguishing the elements of those charges from the ones Aleynikov faced in federal court.

The state’s evidence in support of its counts was legally sufficient to allow the case to proceed, the judge also said in the ruling dated April 5.

Aleynikov faces one count of unlawful duplication of computer-related material and two counts of unlawful use of scientific material.

“We were advised weeks ago that the motion to dismiss would be denied but we have yet to receive the court’s opinion,” Marino said in an e-mail. “We are confident Mr. Aleynikov will again be exonerated.”

The office of Manhattan District Attorney Cyrus Vance Jr. declined to comment on the court’s decision.

Aleynikov is scheduled to return to court on May 21.

The federal laws under which he was charged -- the National Stolen Property Act and the Economic Espionage Act -- didn’t apply to his case, the appellate panel said.

The state case is New York v. Aleynikov, 04447-2012, New York State Supreme Court (Manhattan).

Ex-GM Engineer’s Husband Gets Three Years in Secrets Theft

A former General Motors Co. (GM:US) engineer’s husband was sentenced to three years in prison for stealing hybrid technology trade secrets from the carmaker to help develop vehicles in China.

Yu Qin, the husband of the ex-GM employee, was accused of using the Detroit-based carmaker’s data to seek business ventures or employment with its competitors, including China’s Chery Automobile Co. His wife, Shanshan Du, was accused of copying GM’s private information on the motor control of hybrids and providing documents to her husband. Du was given a year and a day in prison.

“This is an extremely serious case involving a serious crime,” U.S. District Judge Marianne O. Battani said at the sentencing hearing in federal court in Detroit yesterday.

Qin was convicted in November of three counts of trade secrets theft, three of wire fraud and one of obstruction of justice. Du was convicted on three trade-secret counts.

“This is all my fault,” Qin said at the hearing. “I want to take full responsibility. I want to apologize to the court for all the trouble I caused.”

The secrets at issue were worth more than $40 million to General Motors, prosecutors said in a presentencing memorandum filed last week. The U.S. asked Battani to sentence Qin and Du to as long as 10 years and a month in prison.

The defendants, who had pleaded not guilty, said the information didn’t consist of trade secrets, wasn’t stolen and was useless for other companies. They sought probation.

The case is U.S. v. Qin, 10-cr-20454, U.S. District Court, Eastern District of Michigan (Detroit).

Technology

Taxi Smartphone Hail Program in N.Y. Blocked by Appeals Court

New York livery car groups won a bid to block a pilot program that would enable people to hail and pay for rides in one of the city’s 13,000 yellow taxis using location-based smartphone applications.

The measure adopted by the New York City Taxi & Limousine Commission in December would run for 12 months and exempt areas such as airports that have provisions for taxi lines. While all licensed city cab drivers would be eligible, participation would be optional.

The Livery Roundtable, Black Car Assistance Corp. and several car-service firms sued the TLC in February, claiming the program violates city codes and may let drivers discriminate against racial minorities based on their names or locations, as well as the elderly, who are less likely to own smartphones.

New York State Supreme Court Justice Carole Huff in Manhattan last week dismissed the lawsuit and lifted her March 7 order blocking the program. Yesterday, Associate Justice Helen E. Freedman of the Appellate Division, First Department, issued an emergency injunction blocking the program from going forward and ordered expedited review by a full panel of appeals court judges, Randy Mastro, an attorney for the livery cab companies with Gibson Dunn & Crutcher LLP, said in an e-mail.

The ruling came a day after Uber Technologies Inc., the first company approved for the program, said its service was available in the city.

Mastro said he expects the appeals court to hear arguments on the case this month.

“We’re disappointed that there is a further delay in implementing the e-hail pilot program,” Michelle Goldberg-Cahn, senior counsel in the administrative law division of the Law Department, said in a statement. “It’s unfortunate that taxi riders will not be able to continue to test this innovative tool for hailing taxis.”

The case is Black Car Assistance Corp. v. City of New York, 100327-2013, Supreme Court for the State of New York, County of New York (Manhattan).

For more, 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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