Apple, FDA, U.S. Patent Office; Nokia: Intellectual Property

Apple Inc.’s growing competition from Google Inc. and tablet makers may shield it from possible antitrust concerns over its iPad newspaper subscriptions services, said European Union regulators.

The European Commission, which probes alleged abuses of monopoly power in the 27-nation region, said it couldn’t judge whether Apple has a dominant position because the tablet market is “relatively new and evolving.”

“Alternative applications platforms exist and several companies have recently launched or are expected to launch in the near future a number of devices similar in terms of functionality to the iPad,” Andris Piebalgs, an EU commissioner, wrote in a response dated Feb. 11 to questions from a Belgian member of the European Parliament.

Apple said on Feb. 15 it was starting a subscription service for publishers to sell newspapers and magazines on the iPad and other devices through the company’s online App Store. It will take a 30 percent cut of any subscription purchased through the App Store. Publishers that participate will have to offer their lowest subscription rates within Apple’s store.

The following day, Google unveiled a rival service in which the company would keep 10 percent of fees charged by publishers. It will run on tablet computers made by HTC Corp., Samsung Electronics Co. and others, running Google’s Android operating system.

Belgian lawmakers have made antitrust complaints about Cupertino, California-based Apple after European newspapers raised concerns over changes to its iPad subscriptions policy.

Apple’s App Store offers more than 350,000 applications to users of the iPhone, iPod and iPad, according to the company. About $1.1 billion of applications were sold through the App Store in 2010, making Apple’s revenue share about $317 million, according to estimates from Brian Marshall, an analyst at Gleacher & Co. in San Francisco.

The Wall Street Journal reported on Friday that the U.S. Justice Department and the Federal Trade Commission are examining whether Apple’s new media subscription service violates antitrust laws, according to two people familiar with the matter.

The agencies haven’t decided whether to pursue a more formal investigation as the examination is at a preliminary stage, said the people, who requested anonymity because the matter is confidential.

The FTC has been reviewing separate allegations that Apple is engaging in anti-competitive tactics to restrict rivals in the mobile-advertising market. The Justice Department is looking into Apple’s business practices regarding its iTunes digital music service.

Google Competitor Files EU Antitrust Complaint Over Ads

Google Inc., the world’s leading search engine, has been accused of blocking smaller companies from generating advertising revenue, a competitor said in a complaint to European Union regulators.

1PlusV sent a complaint to the European Commission today claiming Google refused to allow so-called vertical search sites to use its advertising service, the French Web publisher said.

“1PlusV accuses Google of pursuing a strategy of foreclosure against vertical search engines,” the company said in a statement. Vertical search engines limit their answers to one category, such as travel information. Google, Microsoft Corp.’s Bing and others offer horizontal search engines that comb all categories for information.

Google also appears to give preferential treatment to its Google Books pages in searches and includes some websites in its search results without their consent, 1PlusV said in a statement. The EU is already investigating Google over claims it discriminated against other services in its search results and stopped some websites from accepting rival ads. Microsoft’s Ciao from Bing was among those that made that complaint.

Google will “continue to work cooperatively with the European Commission, explaining many aspects of our business,” Al Verney, a spokesman for the company in Brussels, said in an e-mailed statement. There’s always “room for improvement and so we’ll be working with the commission to address any concerns.”

Amadeu Altafaj Tardio, a spokesman for the European Commission, said in an e-mailed statement that regulators “will give Google the opportunity to comment on the allegations raised before deciding on what, if any, further steps to take.”

The EU’s antitrust probe of Google requires “careful analysis” to make “a thorough assessment of the allegations” against the company, Joaquin Almunia, the EU’s competition commissioner, said earlier this month.

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Patents

FDA’s Rules for Copying Amgen, Roche Drugs Coming ‘Very Soon’

U.S. regulators plan to unveil rules for reviewing the first copies of biologic medicines “very soon,” according to Food and Drug Administration Commissioner Margaret Hamburg.

The health-care overhaul passed last year included a provision authorizing a process for approving cheaper copies of compounds made from living cells. The FDA is evaluating whether to require extensive clinical trials to judge whether the so- called biosimilars work as well as the products they copy. The outcome may differ from generic versions of common drugs now substituted at pharmacies to keep costs down.

Americans would save $25 billion in a decade through government rules allowing copies of biotech drugs. The products would be patterned on drugs made by companies such as Amgen Inc. and Roche Holding AG that have been on the market at least 12 years and whose patents have expired, according to the Congressional Budget Office.

“This is critically important,” Hamburg said Feb. 18 in an interview. “We obviously have been thinking about this for some time as different models have been discussed and debated. We will be more formally implementing in the very near term time frame.”

The FDA isn’t focused on a proposal in the White House budget to shorten exclusivity to seven years to generate additional savings because that would require Congress to change the law, Hamburg said. She declined to say when the first so- called biosimilar products may be approved under the new rules.

To listen to the interview, click here.

U.S. Patents Held Hostage by Lawmakers in Budget Fight

Efforts to make the U.S. Patent and Trademark Office more efficient for businesses may be derailed by the inability of Congress to agree on a federal budget.

The office, one of the few self-funded federal agencies, may not be able to use an estimated $200 million in fees to be collected from patent and trademark owners in fiscal 2011 because of a budget impasse in Congress. Director David Kappos has said that money is needed to hire examiners and speed up new patent reviews to reduce a backlog of 700,000 applications, many of them by technology companies such as Intel Corp.

“It’s infuriating, fees are being paid into the office that aren’t being used for the work they were paid for,” said Q. Todd Dickinson, former head of the patent office who’s now executive director of the American Intellectual Property Law Association in Arlington, Virginia. “It’s scandalous.”

Getting to the money wouldn’t be an issue if the patent office was given the power to keep all its fees. Instead, a budget is set for the agency based on estimates of what it will collect. Any money above that figure is put into the U.S. general treasury, where Congress can use it for other purposes.

“I don’t see why Congress treats user fees specifically designed to fund the patent office as if they were taxpayer’s funds,” Paul Michel, the former chief judge of the U.S. Court of Appeals for the Federal Circuit who retired last year, said in an interview. “Not a single dollar of tax money is involved. The funding is private money from private corporations.”

More than $800 million has been kept by Congress since a 1990 law mandated the office pay for itself through fees, according to the agency’s 2010 performance report. President Barack Obama has sought to change that. His federal budget proposal for fiscal 2011 would have boosted the patent office’s preapproved spending about 23 percent to $2.3 billion and let the agency keep any fees it collects above that.

Five months into the 2011 fiscal year, Congress has yet to vote on that budget. Obama on Feb. 14 presented his fiscal 2012 spending proposal, which includes a 34 percent increase for the patent office over 2010 levels. House leaders have said there may be a need to set all federal spending at 2008 levels for the rest of this fiscal year, which would amount to about $1.98 billion for the patent office.

That may mean no new hiring and overtime, and delays on information technology improvements as 2010 budget levels are insufficient, Kappos told a House subcommittee on Jan. 25.

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Nokia Loses IPCom Case Over Sales of Some 3G Handsets in Germany

Nokia Oyj lost a patent ruling in a German court last week over technology used in some 3G mobile-phone handsets.

The Regional Court of Mannheim granted patent holding company IPCom GmbH & Co. an injunction that could allow it to ban the sales of such devices in Germany, IPCom said in an e- mailed statement Feb. 18. Espoo, Finland-based Nokia said in a separate statement the ruling doesn’t affect its German business.

“We are pleased that the courts have finally ruled in our favor in this matter after three years,” said Bernhard Frohwitter, IPCom’s managing director. “We hope that Nokia will return to the negotiating table, so that we can together find a mutually acceptable solution.”

IPCom, based in Pullach, Germany, is seeking to force Nokia to pay royalties for a portfolio of mobile-technology patents it acquired from Robert Bosch GmbH in 2007. The two companies are entangled in patent litigation across Europe.

IPCom can enforce the ruling after posting a bond of 30 million euros ($40.7 million), the company said.

Nokia, the world’s largest maker of mobile phones, said it no longer uses the technology at issue in the case and the feature at stake has never been used by a mobile network in Germany.

The case is LG Mannheim, 7 O 100/10.

Mitsubishi Sues LG Electronics Over Handset Patents, Kyodo Says

Mitsubishi Electric Corp. sued LG Electronics Inc. in Japan, claiming the South Korean company infringed its mobile- phone related patents, Kyodo News reported, without saying where it got the information.

Mitsubishi is seeking 380 million yen ($4.6 million) in damages and an injunction against imports of the handsets, according to the report.

Nespresso Patent Suit Rejected by Zurich Court, SDA Reports

The commercial court in Zurich rejected a lawsuit by Nestle SA and its Nespresso unit against Swiss supermarket chain Denner AG and Alice Allison SA over alleged patent violations, SDA reported, citing the court’s written decision.

The judges decided that Denner’s sale of coffee capsules that are compatible with Nespresso machines doesn’t violate patent laws, according to the newswire. Denner commissioned Alice Allison to produce the capsules which it sold at a lower price than Nespresso capsules, SDA said.

Regulations

FCC May Ask Internet Providers to Police Web, Costing Millions

U.S. regulators may ask Internet-service providers such as AT&T Inc. and Comcast Corp. to adopt a voluntary standard for fighting computer viruses that may cost millions of dollars in network upgrades.

The Federal Communications Commission set up a working group last year to provide recommendations for securing residential broadband systems, and in December the panel issued a report identifying best practices for the industry. The agency is now weighing whether to ask companies to endorse those suggestions.

The debate over industry standards illustrates the tension between the need to protect against rising cybercrime and the potential cost for ISPs of bolstering network defenses.

“Government involvement is good in its intent, but if it doesn’t get the details right, it could be very detrimental to business,” Mike Glenn, the director of risk at Denver-based Internet-provider Qwest Communications International Inc., said in an interview. “If a mandatory clean-up action comes down from the FCC, or through legislation, the security program we have in place might not be in compliance.”

Fifty percent of U.S. personal computers have been infected with viruses and malicious software, according to a report last month from APWG, a Cambridge, Massachusetts-based industry association that tracks Internet scams. Cybercrime costs large U.S. companies an average of $3.8 million each annually, and about 9 million Americans have their identities stolen each year, a group of U.S. senators said Jan. 26 after introducing a bill aimed at tightening Web security.

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To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

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