Bloomberg News

Samsung, Keurig, KB Home, MPAA, Orbitz: Intellectual Property

October 18, 2013

Samsung Electronics Co., the world’s biggest maker of smartphones, pledged to avoid legal injunctions in Europe for key phone patents as it sought to end a European Union antitrust probe triggered by a dispute with Apple Inc. (AAPL:US)

Samsung won’t seek injunctions to block sales of smartphones and tablets using its standard-essential patents for five years against companies willing to seek fair licensing terms, according to proposals outlined by the European Commission in a statement yesterday.

“Abuses must be prevented so that standard-setting works properly and consumers do not have to suffer negative consequences from the so-called patent wars,” EU Competition Commissioner Joaquin Almunia said in the statement.

The EU is cracking down on patent abuses as Google Inc. (GOOG:US)’s Motorola Mobility unit, Microsoft Corp. (MSFT:US), Apple and Samsung trade victories in divergent court rulings across the world on intellectual property. Almunia has said he’s targeting “rules of the game” to prevent companies from unfairly leveraging their inventions to thwart rivals.

The proposed commitments “will not affect Samsung’s distribution practices or production capabilities in any way,” Rhee So-eui, a company spokeswoman in Seoul, said by e-mail.

Seeking an injunction on a patent used in a standard agreed by an industry may break EU antitrust rules if the patent-holder previously promised to license the patents on fair, reasonable and nondiscriminatory terms and a licensee is willing to pay a fair fee, the commission said in its statement.

Almunia said forthcoming decisions on other standards cases will give more guidance, including two involving Motorola Mobility (MMI:US) Holdings. “There are some other elements that will come in the next ones,” he told reporters in Brussels yesterday.

Samsung must negotiate licenses for as long as 12 months and agree to terms set by a court or an arbitrator if no agreement can be reached. Samsung and a potential licensee will have to accept arbitration if they can’t agree on a court or arbitrator.

Green Mountain’s Keurig Loses Bid to Revive Sturm Patent Suit

Treehouse Foods Inc. (THS:US)’s Sturm unit didn’t infringe patents held by the Keurig unit of Green Mountain Coffee Roasters Inc. (GMCR:US), a federal appeals court said yesterday, affirming a lower-court ruling.

The dispute involves patents covering the method of operating the Keurig single-serve beverage brewer. The devices use cartridges that are inserted into the machine, and Keurig claimed that its patents were infringed by anyone who used Sturm cartridges in the Keurig machine. Keurig sued Oak Brook, Illinois-based Sturm for inducing patent infringement by making the cartridges.

The appeals court agreed with the lower court that Keurig’s patent rights were exhausted once it started selling the devices covered by the patent. The company had no right to determine how buyers of the machines used them, the court said.

Keurig, based in Waterbury, Vermont, was “attempting to impermissibly restrict purchasers of Keurig brewers from using non-Keurig cartridges by invoking patent law to enforce restrictions on the post-sale use of its patented product,” the Washington-based appeals court said.

The lower court case is Keurig Inc., v. Sturm Foods Inc., 1:10-cv-00841-SLR-MPT, U.S. District Court, District of Delaware (Wilmington). The appeal is Keurig Inc. v. Sturm Foods Inc., 13-1072, U.S. Court of Appeals for the Federal Circuit.

For more patent news, click here.

Trademark

KB Home Sues Dissatisfied Customers Over Critical Website

KB Home (KBH:US), the homebuilder that targets first-time buyers, sued five Florida homeowners for trademark infringement after they set up a website critical of the company.

The dispute stems from the customers’ unhappiness with condominiums built in Florida’s Manatee County. Some of the units were deemed unsafe by county officials and suffered problems including sinking floors and water intrusion, according to an August 2012 story in the Bradenton Herald.

The company is paying an independent contractor selected by the condo association to make “extensive repairs,” according to a complaint filed by KB Home in federal court in Tampa, Florida. Los Angeles-based KB Home said it has already paid “millions of dollars” for the repairs and expects to pay millions more, according to the complaint.

The builder said the five named defendants have repeatedly demanded that KB Home buy back their units at the original purchase price plus damages and costs.

To that end, they have set up www.theKBHome.com, which criticizes the quality of KB Home’s construction, attempts to discourage prospective buyers and tries to drive down the builder’s share price, the company said in the complaint.

One defendant taught others how to hack into the independent contractor’s computer system and intercept confidential e-mail correspondence with KB Home, according to the complaint.

The website confuses the public, KB Home said. The company claimed that it’s damaged by the disparagement of its trademarks and the interception of confidential e-mail. The builder is seeking control of the website’s domain names, as well as money damages, litigation costs and attorney fees.

The company also demanded the return of all copies of the allegedly intercepted e-mails and an order barring the defendants from attempting to register any Internet domain name that infringes on its trademarks.

An e-mail sent to www.theKBHome.com seeking comment on the lawsuit didn’t receive an immediate response.

The case is KB Home v. Smith, 13-cv-02644, U.S. District Court, Middle District of Florida (Tampa).

For more trademark news, click here.

Copyright

Isohunt to Pay Film Studios $110 Million in Copyright Settlement

Isohunt Web Technologies Inc., a BitTorrent file-sharing system, settled a copyright infringement suit brought by the major Hollywood movie studios, according to a court filing yesterday.

Gary Fung, the founder of Isohunt, and his company agreed to pay the studios damages of $110 million. Isohunt was the one of the most popular BitTorrent sites, with 44.2 million users, according to a statement from the Motion Picture Association of America, a film industry trade group.

Studios including Walt Disney Co. (DIS:US), Paramount Pictures and Columbia Pictures Industries Inc. sued for copyright infringement in federal court in Los Angeles in September 2006, claiming Isohunt infringed their copyrights and facilitated infringement by others.

U.S. District Judge Stephen H. Wilson in March 2010 barred Isohunt and Fung from a wide range of what the judge deemed infringing conduct. Earlier he found Fung and Isohunt liable for infringement because they “engaged in purposeful, culpable expression and conduct aimed at promoting infringing uses” of their website.

A federal appeals court ruled in March that Fung and his company induced others to infringe and that they were ineligible for the Digital Millennium Copyright Act’s “safe harbor” provisions because they profited from advertising and knew that the content passing through the website was copyright-protected and unlicensed.

In addition to paying the $110 million in damages, the defendants agreed to shut down the Isohunt system. Fung was also barred permanently from profiting from the infringement of content owned by the movie studios.

The lower court case is Columbia Pictures Industries Inc. v. Fung, 06-cv-05578, U.S. District Court, Central District of California (Los Angeles). The appeal is Columbia Pictures Industries v. Fung, 10-55946, U.S. Court of Appeals for the Ninth Circuit, (San Francisco).

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Orbitz Can Keep Indiana Hotel Rates Secret, Court Says

Orbitz Worldwide Inc. (OWW:US), the online travel service, won the right to keep its rates for Indiana hotels from public disclosure in a state-court tax dispute.

The company asked the Indiana Tax Court to bar public access to contracts it had with three hotels in the state, claiming this information is proprietary.

In an Oct. 16 ruling, the court agreed, despite a general rule in Indiana that anything submitted to public entities should be accessible by the public.

The court determined that the rates constituted information with economic value that’s not generally known by the public and that Orbitz took “reasonable efforts” to maintain secrecy.

As such, the rates fell within the state’s definition of a trade secret and deserved a mandatory exception to the public disclosure policy, the court said.

The case is Orbitz LLC v. Indiana Department of state Revenue, 49T10-0903-TA-10, Indiana Tax Court.

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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