Global-Tech, Chimei-Thomson, Celgene, RIM, Darden: Intellectual Property

The U.S. Supreme Court will referee a dispute between household appliance makers over a patent on a deep fryer, agreeing to review a $5 million award against Global-Tech Advanced Innovations Inc. in favor of SEB SA.

The appeal centers on the standards that apply under U.S. law when a company is accused of inducing its customers to infringe a patent. A jury found that Global-Tech’s Pentalpha unit directly infringed the patent and also caused infringement by customers Montgomery Ward and Fingerhut.

Pentalpha sold deep fryers to compete with ones sold under the T-Fal name by SEB, a home-appliance maker based in Aix-en- Provence, France. A U.S. appeals court upheld the jury finding last year, saying Pentalpha had a “deliberate indifference” as to whether its fryers would infringe the SEB patent.

The high court case will “have an impact on how companies conduct themselves, what they have to do to avoid infringement and what kinds of due diligence they have to do if they’re coming out with a new product,” said Gary Hnath, a patent lawyer with Mayer Brown in Washington who has written on the case. “The question is can you shut your eyes to what would seem to be a very real risk of patent infringement?”

In developing its fryer, Pentalpha bought an SEB fryer in Hong Kong and copied its “cool touch” features, according to the U.S. Court of Appeals for the Federal Circuit. Pentalpha never told its lawyer that it had copied the design when it obtained a written opinion that the fryer didn’t violate 26 patents, the appeals court said.

Pentalpha contends the appeals court erred in using the deliberate indifference standard in finding inducement. Instead, the company contends patent owners should be required to show there was a “purposeful, culpable expression and conduct” to encourage infringement.

The case could have broad implications for the software, electronics and biotechnology industries, said patent lawyer Edward Reines of Weil, Gotshal & Manges LLP in Redwood Shores, California.

The case is Global-Tech Appliances v. SEB SA, 10-6.

Patents

Chimei Faces U.S. Investigation of Thomson’s LCD Patent Claims

Chimei Innolux Corp., Taiwan’s largest maker of liquid- crystal display panels, will be investigated by a U.S. trade agency to determine if it violates patents owned by Technicolor’s Thomson Licensing SA.

The U.S. International Trade Commission said yesterday that it will look into the patent-infringement claims made in August by Thomson. A violation may result in a ban on imports of LCD panels made by Chimei, including ones with controllers made by MStar Semiconductor Inc. MStar, a Hsinchu, Taiwan-based chip designer, also was named in the complaint.

Thomson claims Miaoli, Taiwan-based Chimei infringes five patents related to ways that improve the image on the LCD. Three of the patents originated with Xerox Corp. and Palo Alto Research Center Inc. before they were assigned to Thomson, according to the complaint.

Thomson, based in Paris, filed a patent-infringement lawsuit making the same claims in federal court in Wilmington, Delaware, in July.

The case is In the Matter of Certain Liquid Crystal Display Devices, Including Monitors, Televisions and Modules, 337-741, U.S. International Trade Commission (Washington).

Celgene Sues Natco to Block Generic Copy of Revlimid Drug

Celgene Corp., a maker of blood-cancer drugs, filed a lawsuit to prevent Natco Pharma Ltd. from selling a generic version of its top-selling medicine Revlimid in the U.S.

Natco is seeking U.S. Food and Drug Administration approval to sell a copy of the medicine. Celgene contends that a generic version would infringe 10 patents and is seeking a ruling that would block approval until all expire. The patents expire from 2016 through 2026, according to information on the FDA website.

Revlimid, approved by U.S. regulators in 2005, is Summit, New Jersey-based Celgene’s biggest product, accounting for 64 percent of the company’s sales last year. In April, Celgene projected Revlimid sales as high as $2.3 billion this year, up from $1.71 billion in 2009.

The drug treats multiple myeloma, which hobbles the immune system by destroying bone marrow and impairing the production of white blood cells, red blood cells and platelets. The patents cover lenalidomide, the active ingredient in Revlimid; solid forms of the compound; and methods of using or administering the drug, according to the complaint filed Oct. 8 in federal court in Newark, New Jersey.

As part of its FDA application, Hyderabad, India-based Natco said the patents are invalid, unenforceable or not infringed. The lawsuit is standard under federal law to clarify patent rights while the FDA is considering the drug application.

The case is Celgene Corp. v. Natco Pharma Ltd., 10cv5187, U.S. District Court for the District of New Jersey (Newark).

Cephalon, Eurand, Impax Reach Settlement Over Muscle Relaxant

Cephalon Inc. entered into an agreement with Eurand Inc. and Impax Laboratories Inc. to settle patent litigation over Amrix, a muscle relaxant, Cephalon said in a regulatory filing.

Under the agreement, Cephalon’s Anesta affiliate and Eurand will grant Impax a non-exclusive, royalty-bearing license to the Eurand patent for the drug.

International Regulation

France’s Music-Download Program Wins Approval From EU

France won European Union approval for a plan to give young people 25 euros ($34.70) of free music when they buy subsidized download cards, in an effort to combat online piracy.

The European Commission said yesterday that it saw no competition problems with the program. French consumers aged between 12 and 25 will pay 25 euros for a card giving them 50 euros worth of music downloads.

“Music online is certainly a driver for the success of the Internet and for economic development,” said Competition Commissioner Joaquin Almunia in an e-mailed statement. “However, we shall ensure that such initiatives are implemented in compliance with the EU state aid rules.”

France is trying to encourage legal downloads of music after criticism of its new anti-piracy law that allows courts to suspend Internet access for people who repeatedly download illegal content. Record companies such as Vivendi SA and film industry representatives have pushed for such a law to tackle online copyright infringement and Web piracy.

Illegal downloading of songs reached an all-time high last year, eroding revenue in Spain, France and Brazil, the International Federation of the Phonographic Industry said in January. Digital sales of music accounted for 27 percent of revenue at the biggest record companies in 2009, it said.

An estimated one in five Internet users in Europe’s top markets often engages in illegal music sharing, according to market analyst Jupiter Research.

RIM Has Until Year-End to Let India Access BlackBerry

India’s government gave Research In Motion Ltd. until the end of the year to come up with a solution to allow security agencies to monitor RIM’s BlackBerry enterprise e-mail service, a government official said.

The official, who spoke on condition of anonymity, didn’t give more details. The official said that a two-month reprieve granted at the end of August would be extended by another two months.

RIM averted a ban in the world’s second-largest mobile- phone market by giving a temporary solution on Aug. 30 to allow monitoring of BlackBerry data. India, concerned that terrorists may take advantage of the encryption in smartphones, has stepped up its scrutiny over the telecommunications industry since the 2008 Mumbai terror attacks that left 166 dead.

The company was also expected to offer a permanent solution, that would include real-time access, in three to four months, Home Secretary G.K. Pillai said last month. India’s dispute with the Canadian company resumed this year after RIM upgraded BlackBerry encryption, making it difficult for Indian authorities to access data, Pillai said at the time.

Satchit Gayakwad, a spokesman in Mumbai for Waterloo, Ontario-based RIM, didn’t respond to a call to his mobile phone.

Last week, RIM averted a ban in the United Arab Emirates, when the country’s phone regulator said it wouldn’t implement a planned stoppage of BlackBerry service. Saudi Arabian authorities canceled a planned shutdown in August, citing the “positive development” in meeting the country’s monitoring needs.

RIM said Oct. 8 it continues to follow the principles for working with government officials it laid out in an Aug. 12 statement and wouldn’t comment further on confidential regulatory matters.

Trademarks

Darden Files Infringement Suit Against TGI Fridays Franchisee

A Darden Restaurants Inc. unit sued Briad Restaurant Group, owner of the franchises for 68 T.G.I. Friday’s restaurants, over a promotion in the San Diego market for “never ending shrimp.”

Darden claims that the promotion infringes its trademark for the “never ending pasta bowl,” used by its Olive Garden subsidiary. T.G.I. Friday’s wasn’t named in the suit.

“We’ve defended it before against IHOP in a suit that was settled in 2005,” Darden spokesman Rich Jeffers said. “Our trademarks and other intellectual property are valuable business assets and our policy is to vigorously oppose any infringement of them.”

Belinda J. Scrimenti and Scott T. Lonardo of Chicago’s Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP represent Darden in the suit, filed Oct. 6 in federal court in San Diego. Gregory S. Markow and Joshua Sonne of San Diego’s Hecht Solberg Robinson Goldberg Bagley LLP also represent Darden.

Briad, based in Livingston, New Jersey, also operates Wendy’s franchises, as well as Marriott and Hilton hotels, according to the company’s website. Rick Barbrick, Briad’s president, declined to comment on the lawsuit.

The case is Darden Concepts Inc. v. Briad Restaurant Group, 3:10-cv-02077 IEG, U.S. District Court, Southern District of California (San Diego).

Zelnick Discusses Brand Protection via Social Media

Robert Zelnick, a partner at McDermott Will & Emery, spoke to Bloomberg Law’s legal analyst Spencer Mazyck about business strategies for protecting and communicating brands via social media. To watch the interview, 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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