Bloomberg News

Twitter, Pfizer, Prada, Kim Dotcom: Intellectual Property

October 21, 2013

Profits aren’t the only thing lacking at Twitter Inc. (TWTR:US) ahead of its planned initial public offering. It’s got a dearth of patents, too.

The microblogging service said in its prospectus last week that it has nine issued U.S. patents. That compares with 774 cited by Facebook Inc. before its initial public offering in May 2012 and International Business Machines Corp.’s 6,478 patents accrued last year alone. Twitter’s smaller patent trove reflects its philosophy of letting engineers and designers own their inventions.

While that policy is meant to limit patent litigation, some investors and analysts are concerned it could backfire. Evidence shows that intellectual property can help companies raise more funds in their offerings, as patents enable investors to quantify the value of technological breakthroughs.

“The lack of a large number of issued patents is a little concerning,” Maulin Shah, managing director at Envision IP LLC, an advisory and research firm in New York, said by phone. “If Twitter does deal with patent-infringement lawsuits, they don’t have too many patents to lean on to countersue. That does put Twitter at a disadvantage.”

Twitter said in its prospectus that many competitors have “substantially larger patent” portfolios, which could make it a target for litigation.

At the same time, Twitter has said that too many patents may hinder innovation. In May, the San Francisco-based company implemented the Innovator’s Patent Agreement, or IPA, to keep ownership of inventions in the hands of the people who created them. As part of the policy, Twitter can’t pursue offensive litigation without the inventor’s permission. The IPA ensures that the patents “will be used only as a shield rather than as a weapon,” according to Twitter’s website.

The IPA will help the company lure and retain more talented engineers, said Robert Clarkson, a partner in the capital markets practice at law firm Jones Day. More than 5,000 patent actions were filed last year, the most ever recorded, according to a 2013 study by PricewaterhouseCoopers LLP.

The policy’s biggest risk is that employees will take their inventions with them, posing a competitive threat if they leave, according to Jeff Sica, president and chief investment officer of Sica Wealth Management LLC.

For more patent news, click here.

Trademark

Swiss Seize 1 Million Bogus Pfizer Xanax Pills in Zurich

Swiss authorities seized more than 1 million fake Pfizer Inc. (PFE:US) Xanax anti-anxiety pills at Zurich airport, part of a wider crackdown on counterfeit medicines posing a public-health threat.

Four crates weighing more than 400 kilograms (880 pounds) were intercepted while in transit from China to Egypt and ordered to be destroyed after tests determined the pills contained no active ingredients, Bern-based Swissmedic, the country’s drug regulator, said in a statement Oct. 18.

Governments are fighting to safeguard the distribution of legitimate drugs and crack down on counterfeit products. Systematic checks of medical shipments are carried out every year, and imports of bogus medicines have been declining in Switzerland, Swissmedic said in June. Counterfeit drugs generated an estimated $75 billion in revenue in 2010, according to the National Association of Boards of Pharmacy.

“I’m angry,” Erik Gordon, a professor of law and business at the University of Michigan in Ann Arbor, wrote in an e-mail. “When criminals counterfeit Hermes scarves, money is stolen. When they counterfeit pills, they kill people.”

Gordon specializes in technology commercialization, including the pharmaceutical industry and intellectual property licensing.

Each year more than 100,000 people around the world may die from substandard and counterfeit medications, according to an estimate by Amir Attaran, an associate professor at the University of Ottawa, and Roger Bate, an economist at the American Enterprise Institute.

The fake Xanax couldn’t be recognized as counterfeit at first glance, said Swissmedic, whose official name is the Swiss Agency for Therapeutic Products. The regulator said it informed authorities abroad of the discovery, in particular in China and Egypt. No patients in Switzerland will be affected, it said.

The Swiss regulator said in June that it had already seized about 90 shipments this year representing a high-potential health risk. It also has ordered the shutdown of websites trading drugs illegally.

Prada Sues Maker of ‘Designer-Inspired’ Perfumes Over Trademark

Prada SpA (PRDSY:US), the luxury fashion house, sued a New York perfume company for trademark infringement over a line of “designer inspired” fragrances.

Preferred Fragrance Inc.’s “Party Candy” has similar packaging and a name and is intended to convey a connection with the “Prada Candy” line, according to a complaint filed Oct. 18 in Manhattan federal court.

Preferred Fragrance describes itself on its website as “the leading distributor of designer-inspired perfumes.” The company said it creates scents that “combine the same premium quality of a designer fragrance with affordable pricing and mass availability.”

The company has also been sued for trademark infringement by Elizabeth Arden Inc., Estee Lauder Inc. and Summit Entertainment Inc.

The “Prada Candy” line, which was introduced in August 2011, is “an elegant mix of white musks combined with a sensual balsamic vanilliac accord of benzoin and sweet caramel,” according to Prada.

According to the complaint, Prada has sold “tens of millions of dollars” worth of the product in the two years it has been on the market.

Prada is seeking court orders barring the use of “Party Candy” as a trade name, the registration of the name as a U.S. trademark and sales of “Party Candy” products.

Prada also asked for money damages, Preferred Fragrance’s profits attributable to the alleged infringement, attorney fees and litigation costs.

Preferred Fragrance didn’t respond to an e-mailed request for comment on the lawsuit.

The case is Prada v. Preferred Fragrance Inc., 13-cv-07371, U.S. District Court, Southern District of New York (Manhattan).

University of Illinois Settles Mascot Dispute, AP Says

The University of Illinois and a group that honors the school’s former mascot settled a dispute over the use of the mascot’s name and official logo, the Associated Press reported.

The school dropped the mascot -- Chief Illiniwek -- in 2007 under pressure from the National Collegiate Athletic Association to quit using a symbol some considered a demeaning portrayal of American Indian culture, according to the AP.

The settlement bars the Honor the Chief Society from using Chief Illiniwek and his image, and the group must post a disclaimer on its website and promotional materials disavowing a connection to the university, the AP said.

The group can hold events with a performance in the nature of “a choreographed tribe to the dance” that was performed by the mascot at school athletic events, the AP reported.

For more trademark news, click here.

Copyright

Kim Dotcom’s Mega Site Not Used by Pirates, CEO Tells Conference

The Mega cloud storage system started in January by Kim Dotcom, who is accused of criminal copyright infringement, is mainly being used by professionals rather than pirates, Chief Executive Officer Vikram Kumar told London’s conference on copyright and technology, the Guardian newspaper reported last week.

Kumar said that accountants, lawyers, financial advisers and architects are willing to pay to use Mega because of the company’s end-to-end encryption technology, according to the newspaper.

He said that very few -- around 100 per day -- of the service’s 5 million customers are receiving takedown notices under the Digital Millennium Copyright Act, the Guardian reported.

Kumar said that the number is very small for any online service provider and that the company is working against external search engines that claim to be able to index files stored on the service, the newspaper reported.

For more copyright news, click here.

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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Companies Mentioned

  • TWTR
    (Twitter Inc)
    • $41.8 USD
    • -0.28
    • -0.67%
  • PFE
    (Pfizer Inc)
    • $29.84 USD
    • 0.35
    • 1.17%
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