Stolichnaya, Bank of America: Intellectual Property
The ownership of the Stolichnaya trademark is in question following a ruling Oct. 8 by the 2nd U.S. Circuit Court of Appeals. The three-judge panel reversed a lower court ruling that found that the trademark was “incontestable.”
The case may affect the deal announced Oct.7 in which Stolichnaya will become the official vodka of the new Barclays Center in Brooklyn, New York. SPI Group, one of the defendants in the trademark suit, signed a five-year, multimillion dollar agreement with Brooklyn Sports & Entertainment, the sales and marketing arm of the Barclays Center, where the New York Nets will play basketball beginning in 2012. According to a statement, the agreement is Stolichnaya’s first sports deal. Mikhail Prokhorov, Russia’s richest man, owns 80 percent of the team and 45 percent of the Barclays Center.
A Soviet agency originally marketed and distributed the vodka but after the breakup of the Soviet Union in 1991, two Russians affiliated with the agency assigned the trademark to PepsiCo Inc. and ultimately to Allied Domecq Ltd. The Russian government claims that the men who assigned the rights didn’t do so lawfully. The 2nd Circuit has sent the issue back to the U.S. District Court to determine whether the assignment was lawful, but upheld the dismissal of the fraud charges in the initial complaint.
Representing the Russian agency that brought the case, the Federal Treasury Enterprise Sojuzplodoimport, is Quinn Emanual Urquhart & Sullivan. Partner David W. Quinto said that the Stolichnaya trademarks had been “hijacked” following the breakup of the Soviet Union and it “took quite awhile to figure out who was entitled to what.”
But Andrey Skurikhin, partner at SPI Group, the Stolichnaya brand owner, said the 2nd Circuit’s ruling “cannot and will not affect any” of his firm’s marketing plans.
Washington law firm Covington & Burling represents SPI Group, along with the other defendants, Spirits International, SPI Spirits Ltd. and Yuri Shefler and Alexey Oliynik, the two men who originally assigned the trademarks to PepsiCo in the patent suit. Covington partner Eugene Gulland said in an e- mailed statement that “SPI is confident that it will prevail and that discovery will demonstrate that the claims have no merit and that the complaint was purely politically motivated.”
Covington didn’t represent SPI in its arena agreement, a Covington spokeswoman said. John Weiss, of the Susan Magrino agency, who represents Stolichnaya, didn’t know which firm negotiated the Barclays Center deal.
David Bernstein of Debevoise & Plimpton, who represents Allied Domecq, a wholly owned subsidiary of Pernod Ricard, said by e-mail that Pernod Ricard is confident that the district court will reject plaintiffs’ remaining claims when it considers the final issues in the case, and that the court will conclude that the Stolichnaya trademarks were properly assigned to Allied Domecq.” Bernstein said that Pernod no longer imports or markets Stolichnaya.
The case is Federal Treasury Enterprise Sojuzplodoimport v. Spirits International NV, 06-3532-cv, 2nd U.S. Circuit Court of Appeals (New York).
Patents
Bank of America Faces Patent Trial Over Check Imaging
Bank of America Corp., the largest U.S. bank by assets, will proceed with a trial this week in a patent-infringement lawsuit brought by DataTreasury Corp. over technology related to the digital imaging of checks.
A court filing Oct. 8 showed that an agreement had been reached with Bank of America and the company’s LaSalle Corp., but that agreement applied only to the parent companies, and not the bank units that process the checks, said Eric Wetzel, a DataTreasury spokesman.
“The case has not been settled,” Wetzel said in a telephone interview. “The trial is moving forward.”
Closely held DataTreasury, based in Plano, Texas, is seeking $868.7 million in damages from Charlotte, North Carolina-based Bank of America. SunTrust Banks Inc. also is a defendant, and DataTreasury is seeking $121.7 million from that bank, according to a Jan. 19 court filing.
Banks including Wells Fargo & Co., JPMorgan Chase & Co., PNC Financial Services Group Inc. and BB&T Corp. have already settled with DataTreasury, which sued more than two dozen banks in 2006. The company was seeking more than $1 billion in damages from the industry for infringing patents related to the imaging, transmission and storage of checks in a central repository.
The only case to go to trial, against U.S. Bancorp and Viewpointe, resulted in a $27 million verdict. U.S. District Judge David Folsom on Sept. 27 added an additional $26.6 million in damages against U.S. Bancorp because the jury found the infringement to be intentional. It had been seeking $202 million.
DataTreasury was started by Claudio Ballard, a computer engineer who said he came up with the idea after talking with a Long Island, New York, restaurant owner about the storage of credit-card receipts, the company said.
More than 3.9 billion check images were shared or exchanged in 2009, according to Viewpointe, a New York-based company that processes and stores the digital images for banks.
The U.S. Senate, as part of a failed patent law proposal, considered in 2008 a provision that would have insulated banks from paying damages in any patent suit over a “check collection system.” The proposal was withdrawn after the Congressional Budget Office said the provision would constitute a taking of property and would cost the government $1 billion in reimbursements.
The case is DataTreasury Corp. v. Wells Fargo & Co., 06cv72, U.S. District Court, Eastern District of Texas (Marshall).
Vestas Seeks Edge on China in Low Wind-Speed Markets
Vestas Wind Systems A/S, the world’s largest wind turbine- maker, is planning to counter competition from China by expanding into areas of lower wind speed with more efficient wind-machine blades.
“It’s about driving into new and lower wind speed markets, and keeping the technology edge when we’ve got a lot of very stiff Chinese competition for doing what we used to do,” Managing Director of Vestas Technology Research and Development Rob Sauven said in a London interview.
Vestas introduced a new 3-megawatt turbine model suitable for both land and sea in September. With a rotor diameter of 112 meters (367 feet), about the length of two blades, the machine is more efficient and can be used in lower wind-speed areas. This opens up new markets previously thought unprofitable for commercial wind power, Sauven said.
“We have to do something different,” the Vestas executive said yesterday. China is now the largest wind power market in the world in terms of installed capacity, according to Bloomberg New Energy Finance. The past two years, Chinese turbine manufacturers have narrowed Vestas’s lead as first in terms of global wind power market share, according to the wind industry group BTM Consult APS.
Lower wind speed areas are prominent in the U.S., Australia and central and southern Europe, according to Vestas. Larger rotor diameters make wind machines more efficient by increasing the area “swept” by the turbine with the result being more power output.
Vestas’s strategy is investing heavily in technology, Sauven said. The company is spending 50 million pounds ($80 million) on a new U.K. blade testing center on the Isle of Wight, due to start early next year. The company’s global spending on technology is “probably five times that,” he said. Last year, Vestas spent 1.4 percent of revenue on research and development, or about 92 million euros ($128 million).
The race is for intellectual property rights, according to Sauven. Vestas filed 153 applications for wind turbine-related patents in 2008 and 165 last year.
Overall, the company has filed 787 patents connected to wind turbines, according to the Intellectual Property Office database. General Electric Co. has filed 666, Siemens AG has lodged 242 and Gamesa Corporacion Tecnologica SA 102.
C2 Exchange Asks Federal Court to Rule on Trading System
A new options exchange owned by CBOE Holdings Inc. asked a U.S. court Oct. 8 to rule that the trading system it will use doesn’t infringe a patent held by the International Securities Exchange.
C2 Options Exchange, which filed for a “declaratory judgment” in federal court in Illinois, is an electronic market that plans to begin trading equity derivatives contracts this month. CBOE Holdings also owns the Chicago Board Options Exchange, the largest venue by volume traded.
The move is the latest relating to litigation that began in November 2006, when New York-based ISE sued CBOE for infringing a patent it received in 2003. The exchange said CBOE’s so-called hybrid trading system infringed its patent for an automated system that matches outstanding orders with incoming buy and sell requests.
“In filing its complaint against ISE, C2 is seeking to be proactive in asserting and protecting its rights relating to its trading platform,” according to an e-mailed statement from C2. The patent “is the same one that ISE previously asserted against CBOE’s Hybrid Trading System in a co-pending litigation.”
Molly McGregor, an ISE spokeswoman, declined to comment. ISE is owned by Frankfurt-based Eurex.
C2 said in its complaint that it wants to operate the new exchange “free from any and all charges of infringement.” A lawyer for ISE told the judge in the pending litigation case on Sept. 28 that ISE “regarded the C2 exchange to be an infringement” of its patent, the complaint said.
ISE in 2000 became the first new exchange approved by the U.S. Securities and Exchange Commission since 1973.
For more patent news, click here.
Legislation
Obama Signs Law to Aid Deaf, Blind With Digital-Age Devices
President Barack Obama signed into law a measure requiring smartphones, TV programs, cable program guides and devices of the Internet age to be accessible to Americans with vision or hearing loss on Oct. 8.
“It sets new standards, so that Americans with disabilities can take advantage of the technology our economy depends on,” the president said at a signing ceremony at the White House, joined by producer, musician and songwriter Stevie Wonder.
Under the new law, mobile phone companies are required to make Web browsers, text messaging and e-mail on smartphones fully accessible. Cable television companies must make program guides, emergency broadcast information and selection menus accessible to people with vision loss.
“This law opens the door to the digital age for the 25 million of us with vision loss, who have been largely shut out due to inaccessible design,” Paul Schroeder, a vice president at the New York-based American Foundation for the Blind, said in an e-mailed statement. An aging baby boomer population likely means increased rates of vision loss and hearing loss, the group said.
The bill, S. 3304, known as the Twenty-First Century Communication and Video Accessibility Act, passed the Senate on Aug. 5 and the House on Sept. 28.
Trademarks
Madden Converts Betsy Johnson Debt to Mark Ownership
Steven Madden Ltd., a footwear designer and marketer, swapped $27.6 million of secured debt for ownership of the trademarks and intellectual property of 60-store women’s wear retailer Betsey Johnson LLC.
In a regulatory filing October 8, Madden, based in Long Island City, New York, gave a license for the marks back to Johnson in return for royalties. The statement said that Madden purchased $48.8 million of secured debt owed by Johnson for $27.6 million. The debt is secured by all of Johnson’s assets.
As part of the arrangement, Madden also acquired 10 percent of the Class B preferred shares. At the same time, Madden made a $3 million loan to Johnson. The loan will pay interest at 8 percent and mature in December 2015.
Castanea Partners, the majority owner of Johnson, made a new capital investment, the statement said.
Unilever Ordered to Stop Selling Andrelon Champagne Shampoo
Unilever, the world’s second-biggest maker of food and detergent, has to stop selling and recall its Andrelon Champagne shampoo because the Champagne label is protected under European Union rules, The Hague district court ruled Oct. 8.
The Rotterdam- and London-based company already stopped distributing the shampoo, issued as a limited edition of 340,000 bottles in the Netherlands, about a month ago, Fleur van Bruggen, a spokeswoman for Unilever, said by telephone Friday.
For more trademark news, 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: David E. Rovella at drovella@bloomberg.net.
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