Dell, Ferrero, Lucasfilm, EBay, UMG: Intellectual Property

Dell Inc. (DELL), the world’s second- largest personal-computer maker, and two suppliers were told to pay $5.4 million to closely held Convolve Inc. after a jury found they infringed a patent related to hard-disk drives.

The federal jury in Marshall, Texas, late yesterday said Dell should pay $1.5 million, Western Digital Corp. (WDC) $2.5 million and Hitachi Ltd. (6501) $1.4 million, according to the verdict sheet posted on the court’s website.

Convolve, based in Armonk, New York, sued in 2008, claiming disk drives made by Western Digital and Hitachi for Round Rock, Texas-based Dell computers infringed its patent 6,314,473. The patent, issued in November 2001, covers a user interface to control the drives and reduce vibrations and noise.

Western Digital, based in Irvine, California, is the largest maker of computer hard-disk drives, and Tokyo-based Hitachi is the third-largest, trailing Seagate Technology Plc. Western Digital said in March it would buy Hitachi’s global storage business for $4.3 billion in cash and stock.

Dell, Western Digital and Hitachi denied infringement, and claimed the patent didn’t cover an invention much different than what others in the field had already done.

“We are pleased that the jury award was only 2 percent of what the plaintiff asked for in damages,” Steve Shattuck, a spokesman for Western Digital, said in an e-mail. “We are evaluating post-trial and appellate options.”

He said the technology feature related to Convolve’s patent is no longer used in Western Digital products.

The case is Convolve Inc. v. Dell Inc., 08cv244, U.S. District Court for the Eastern District of Texas (Marshall

For more patent news, click here.

Trademark

Ferrero Wins Singapore Ruling Coffee Chain Infringed Name

Ferrero SpA’s Nutella trademark was violated by a Singapore coffee shop that sold a drink called Nutello, a judge ruled.

The Italian maker of the Nutella hazelnut spread, which is controlled by billionaire Michele Ferrero, sued Sarika Connoisseur Cafe Pte to stop the owner of the 31-outlet TCC coffee shop chain from associating its beverage with the food.

Sarika had “passed off by promoting, selling and offering for sale the Nutello drink as being the product of” Ferrero, Singapore High Court Judge Chan Seng Onn wrote in a 102-page ruling July 26. “Because of the similarity on marks and goods, there exists a likelihood of confusion on the part of the public.”

A separate hearing will be held to determine damages, according to the ruling.

Sarika started selling Nutello in 2007 and stopped in July 2010 when it revamped its drinks menu, according to the ruling. Ferrero objected in December 2009 to the use of the Nutello name and sought S$50,000 ($42,000) in damages, Chan wrote.

Ferrero’s lawyers M. Ravindran and Sukumar Karuppiah had argued the Nutella mark was the “lifeblood of the product.”

By infringing the Nutella trademark, Sarika may have restricted Ferrero’s expansion into Singapore’s drinks industry, Chan said. Ferrero, based in Alba, Italy, sells about 2 million units of the hazelnut spread in Singapore each year, according to the ruling.

The judge disagreed that Sarika had taken “unfair advantage of the distinctive character” of Ferrero’s trademarks. Ferrero “had no other evidence that Nutello sold better because it was named in a manner similar to Nutella,” he said.

Ferrero, which has 21,700 employees, also makes Ferrero Rocher truffles and Tic Tacs candy. Michele Ferrero and his family ranked 32nd among the world’s wealthiest people with $18 billion, Forbes magazine’s U.S. edition reported in March.

The case is Ferrero SpA v. Sarika Connoisseur Cafe Pte. S9/2010 in the Singapore High Court.

Smucker Seeks Non-Infringement Declaration Over Gingham Lids

J.M. Smucker Co., the company that produces Smucker’s preserves, Jif peanut butter and Crisco cooking oil, asked a federal court to declare it isn’t infringing trademarks belonging to an importer and maker of French preserves.

In a complaint filed July 26 in federal court in Akron, Ohio, Smucker said that even though the two companies have a 27- year-old license agreement, Andros SA claims the trade dress of its Bonne Maman preserves is infringed by Smucker’s packaging.

Smucker received a cease-and-desist letter from Andros in May claiming the packaging on Smucker’s premium line of Orchard’s Finest products was infringing. The letter additionally accused Smucker of deliberately placing its product next to Bonne Maman on retailer shelves.

Both products are packaged with lids bearing a gingham design. A 1984 royalty-free license between the two companies permits Andros to use the gingham design on its lids, according to court filings. Smucker registered the gingham lid as a trademark in March 1981, according to the database of the U.S. Patent and Trademark Office.

An exchange of letters between counsel for Orrville, Ohio- based Smucker and Andros is included in the case file. In a June 10 letter, counsel for Smucker said there was no likelihood of confusion between the two products and that it hadn’t suggested the two lines of preserves be placed next to each other on retailers’ shelves.

In a subsequent letter, Andros said the license agreement between the two companies needs to be changed and threatened that litigation between the two companies could be imminent.

Smucker asked the court to declare that the trade dress of the two companies’ products aren’t likely to be confused, that it’s not infringing any of Andros’ IP rights, and that the 1984 contract between the two companies is valid and enforceable.

Smucker is represented by Ashley H. Zio, Angela R. Gott and Timothy P. Fraelich of Washington’s Jones Day.

The case is J.M. Smucker Co., v. Andros Foods USA Inc., 5:11-cv-01544-JRA, U.S. District Court, Northern District of Ohio (Akron).

For more trademark news, click here.

Copyright

Lucasfilm Loses in U.K. Supreme Court on Stormtrooper Helmet

George Lucas’s production company Lucasfilm Ltd. failed to convince Britain’s highest court that its U.K. copyrights were violated by sales of replica Imperial Stormtrooper helmets from the movie “Star Wars.”

The ruling yesterday by the U.K. Supreme Court in London upheld a December 2009 appeals court finding that British engineer Andrew Ainsworth, who helped design the white helmets, didn’t infringe U.K. law by selling the copies, which he cast from original molds.

The ruling “maintains an anomaly of British copyright law under which the creative and highly artistic works made for use in films -- which are protected by the copyright laws of virtually every other country in the world -- may not be entitled to copyright protection in the U.K.,” Lucasfilm said yesterday in a statement.

The company, based in Nicasio, California, filed the U.K. case after winning a $20 million judgment against Ainsworth in a California lawsuit over the helmet sales in 2006. The judge in that case said Ainsworth’s company, Shepperton Design Studios Ltd., infringed Lucas’s copyright and made misleading claims about the helmets’ authenticity.

Lucas had already determined the look of the fictional soldiers for his 1977 science-fiction epic, before asking Ainsworth to work on the helmets, Lucasfilm argued.

Lucasfilm didn’t convince the court the helmet qualified as a sculpture, as opposed to being a purely utilitarian creation. If the court had deemed it a sculpture, Ainsworth’s online sales would have been violating U.K. copyright law.

“It was the Star Wars film that was the work of art that Mr. Lucas and his companies created,” the justices wrote. “The helmet was utilitarian, in the sense that it was an element in the process of production of the film.”

People interested in intellectual-property protection may now be watching for Lucasfilm to take its case to the European Court of Justice in Luxembourg, said Thayne Forbes, a managing director at brand-valuation company Intangible Business Ltd.

“The Star Wars films are an upmarket, fantasy experience for the audience, and the merchandise must be reflective of this or it risks damaging the brand value,” Forbes said. “What Lucasfilm quite rightly wants to avoid is stormtrooper helmets and armor being found in cheap plastic-toy territory.”

Yesterday’s ruling gave Lucasfilm a partial victory by granting it some rights to sue in the U.K. over infringement of foreign copyrights. That portion of the judgment is an “important step” in modernizing U.K. law and bringing it into line with the European Union, Lucasfilm said.

The decision is important for business because it clears up a long-running controversy over whether U.K. courts can decide if non-U.K. copyrights have been infringed, said Nigel Jones, a partner at London-based Linklaters LLP.

“That uncertainty has now gone,” Jones said. “If you want to sue here, that is good news. If you want to avoid being sued here, it may be less welcome.”

The U.K. Court of Appeal in London said in its 2009 decision that Lucasfilm couldn’t enforce the California judgment in the U.K. and warned Ainsworth about the risks of further sales in the U.S.

The “surprise” decision from the Supreme Court could lead to a flood of copyright lawsuits filed in the U.K. over foreign infringements, said David Allen, who leads the litigation practice at Chicago-based Mayer Brown LLP’s London office.

“This will be particularly significant where infringement takes place in a country with less stable and internationally respected legal systems than the U.K., for example such as in the developing world,” Allen said.

Music Companies Best Composers in Indian Copyright Fight

Companies that record music own the copyright rather than the composer or the lyricist, the Bombay High Court ruled, the Times of Indian reported.

The court said the collecting society that represents composers and lyricists isn’t entitled to royalties or license fees for the playing of recordings of their music on FM radio stations, according to the Times.

The only collecting society that can demand licenses or royalties is Phonographic Performances Ltd., which represents the recording companies, the newspaper reported.

The court did say that this ruling still permits composers and lyricists to make a different recording of the same work without infringing the music companies’ copyrights, according to the Times.

PayPal Joins Visa, Mastercard in Blocking Payment to Pirates

EBay Inc. (EBAY)’s PayPal unit, which enables online funds transfers, said it will block payments to websites selling pirated music, Computer Weekly reported.

The payment company joins Visa Inc. (V) and Mastercard Inc. (MA), which require websites identified with piracy to provide proof they have rights to the music they are selling, according to Computer Weekly.

To date the companies have withdrawn payment services from 24 Ukrainian and Russian websites, with another 38 sites under consideration for similar action, Computer Weekly reported.

The City of London Police are assisting the payment companies in the anti-piracy campaign, according to Computer Weekly.

Photographer’s Infringement Suit Against Rihanna Moves Forward

A Los Angeles photographer’s copyright-infringement lawsuit against the singer known as Rihanna and her recording label can go ahead, a federal judge in New York ruled.

David LaChapelle sued Universal Music Group’s Island Def Jam unit, Black Dog Films Inc., and singer Robyn Rihanna Fenty for copyright infringement in federal court in Manhattan in Feb. 14. He claimed the music video for Rihanna’s performance of “S&M,” which was released in January, infringed the copyrights to a series of his photos.

In the complaint he said the storyboards on which the video was based contained prints of his photos and were based on his work. He said the music photo copied the “composition, total concept, feel, tone, mood, theme, colors, props, settings, decors, wardrobe and lighting” of his photos.

Because of the video’s “blatant” reliance on his work, LaChapelle accused the defendants of deliberate infringement.

In her July 19 ruling, U.S. District Judge Shira A. Scheindlin said LaChapelle successfully asserted that his photos were actually copied, and that the video duplicated protectable elements of his work. “An ordinary observer may well overlook any differences” and find the aesthetic appeal of the video and LaChapelle’s photo to be the same, she said.

Scheindlin rejected Rihanna’s argument that use of the photographer’s imagery fell into copyright law’s “fair use” exception because the video was used to criticize how the singer is treated by the media.

The judge said this argument was “misguided” and “commenting on and criticizing Rihanna’s treatment by the media is unrelated to the photographs and does not require copyright protectable elements of LaChapelle’s work.”

Although the judge rejected Rihanna’s motion to dismiss the case for copyright infringement, she did toss out LaChapelle’s claims for trade dress infringement, unfair competition and unjust enrichment. The next status conference in the case is set for Aug. 10.

LaChapelle is represented by Debra Anne Mayer of Shatzkin & Mayer PC of New York. Rihanna’s lawyers are Brad David Rose, Tom J. Ferber and Jacob Boyd Radcliff of New York’s Pryor Cashman LLP. Island Def Jam was represented by Amanda Marie Leith and Robert Penchina of Washington’s Levine Sullivan Koch & Schulz LLP.

The case is LaChapelle v. Fenty, 1:11-cv-00945, U.S. District Court, Southern District of New York (Manhattan).

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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