Smart Balance, Apple, Summit: Intellectual Property

Smart Balance Inc. (SMBL)’s GFA Brands unit and Brandeis University sued more than a dozen food companies for allegedly infringing two patents related to cholesterol reduction.

The suit, filed Sept. 9 in federal court in Madison, Wisconsin, targets makers of some of the best-known consumer brands of cookies, other baked goods and spreads.

Among those accused of infringing the patents are low-fat versions of Pillsbury Co.’s Grands Biscuits and Crescent Rolls, Nestle SA (NESN)’s Tollhouse Chocolate Chip Cookie Dough, Kellogg Co. (K)’s Keebler Vanilla Wafers and Famous Amos Chocolate Chip Cookies, and Voortman Cookies Ltd.’s Fudge Striped Oatmeal Cookies.

In dispute are patents 5,843,497, issued in December 1998; and 6,630,192, issued in October 2003. According to the complaint, Paramus, New Jersey-based GFA Brands is the exclusive licensee for both patents. Both patents are related to fats and fat blends that decrease LDL cholesterol, sometimes known as the “bad” cholesterol, and increase the HDL “good” cholesterol” blood serum levels.

GFA and Brandeis said they have previously put all the defendants on notice that they were infringing the patents, and claim to be harmed by the defendants’ actions.

They asked the court to order the defendants to halt the alleged infringement and for awards of money damages, litigation costs and attorney fees. They requested extra damages intended to punish the defendants for their actions.

Brandeis and GFA are represented by Anthony A. Tomaselli, Kristin Graham Noel, Martha Jahn Snyder and Stephen J. Gardner of Quarles & Brady LLP of Milwaukee.

The case is Brandeis University v. East Side Ovens Inc., 3:11-cv-00619, U.S. District Court, Western District of Wisconsin (Madison).

Biggest Overhaul of Patent System Since 1952 Passes Senate

The Senate passed an overhaul of the U.S. patent system that President Barack Obama has called crucial to his administration’s effort to boost job growth.

In an 89-9 vote Sept. 8, the Senate cleared a bill passed by the House in June that would fundamentally alter the way patents are reviewed and mark the biggest change to U.S. patent law since at least 1952. The measure, called the America Invents Act, now heads to the White House for Obama’s signature.

The legislation, H.R. 1249, would let the U.S. Patent and Trademark Office set its own fees and exercise greater control over its budget, providing the agency with more funding to address a backlog of almost 700,000 applications awaiting first review.

The legislation, which culminates more than six years of negotiations and lobbying, covers every step of the patent process, setting new procedures to review issued patents while curtailing some litigation. It has the support of large companies including Microsoft Corp. (MSFT), International Business Machines Corp. (IBM) and a group that represents Johnson & Johnson (JNJ), Eli Lilly & Co. (LLY), 3M Co. (MMM) and General Electric Co. (GE)

The funding provision, which also would let the agency increase fees paid by inventors and patent owners, is the cornerstone of the bill and has been a unifying issue even for those who oppose other provisions. Since 1990, the agency says, more than $800 million in fees have been diverted by lawmakers to non-patent purposes.

The patent office is funded entirely by user fees. The Obama administration says the money is needed to hire more examiners and improve agency computer systems to cut the current 34-month wait for patent approval.

The U.S. Chamber of Commerce, Washington’s largest business lobbying organization, supported passage, as did the United Steelworkers. A group representing large technology companies including Google Inc., Apple Inc. (AAPL), and Intel Corp. (INTC) also backed the measure.

A group of technology companies that includes InterDigital Inc. and Tessera Technologies Inc. (TSRA) had said the House-passed measure doesn’t do enough to guarantee more funding for the patent office since the agency still has to get congressional approval to spend money it collects above its annual budget.

Groups representing small businesses say the legislation will benefit large companies over independent inventors, create a rush to the patent office and establish onerous review procedures that will weaken the power of patents to protect inventions.

All newly issued patents may be subject to a challenge from third parties, a variation of a process used by the European Patent Office. Third parties would be allowed to submit information for consideration during the application process.

The bill also would limit patents on tax-avoidance strategies, though companies including Intuit Inc. (INTU) and H&R Block Inc. (HRB) have said they would retain protections for their tax- preparation software.

Banks including Bank of America Corp. (BAC) and Citigroup Inc. (C) would get new power to seek to cancel finance-related business method patents that they argue are of questionable validity. Companies that own such patents, including DataTreasury Corp. and Trading Technologies International Inc., have accused the banks of using their clout in Washington to avoid paying for using someone else’s inventions.

The trade group for generic-drug companies including Mylan Inc. and Watson Pharmaceuticals Inc. opposes the bill because there’s a provision that lets patent owners retroactively correct errors that might otherwise lead a court to invalidate the patents.

The Washington-based Generic Pharmaceutical Association also objects to language in the bill that would ease deadlines for seeking a patent-term extension granted to compensate drugmakers for the time it takes to get regulatory approval.

The provision would provide a clear victory to Medicines Co. (MDCO), which won a court ruling that it was entitled to an extension even though it missed a deadline for an extension on the main patent for its only drug, the anticoagulant Angiomax.

Fresenius SE (FRE)’s APP Pharmaceuticals unit is appealing that decision after the government said it wouldn’t challenge the judge’s decision in favor of Medicines Co.

For more patent news, click here.

Trademark

Apple Wins Ruling on German Samsung Galaxy 10.1 Tablet Ban

Apple Inc., the world’s most valuable technology company, won backing from a German court for a ban on sales of Samsung Electronics Co.’s Galaxy 10.1 tablet computer in the country.

A Dusseldorf court Sept. 9 upheld the temporary sales ban it issued Aug. 9, rejecting Samsung’s bid to overturn it for the most part. The judges won’t ban sales in other European Union countries as Apple had sought, Presiding Judge Johanna Brueckner-Hofmann said when delivering the verdict.

Apple, the maker of the iPad, won a second injunction at the same court earlier, forcing Samsung to pull the new Galaxy Tab 7.7 out of the IFA consumer-electronics show in Berlin. The legal dispute between Cupertino, California-based Apple and its closest rival in tablet computers is intensifying as an increasing number of consumers use devices such as tablets and smartphones to surf the Web, play games and download music.

“The court is of the opinion that Apple’s minimalistic design isn’t the only technical solution to make a tablet computer, other designs are possible,” Brueckner-Hofmann said. “For the informed customer there remains the predominant overall impression that the device looks” like the design Apple has protected in Europe.

Samsung said it will appeal. The ruling “severely limits consumer choice in Germany” and “restricts design innovation and progress in the industry,” the company said in a statement e-mailed after the ruling was issued.

The court didn’t compare the Galaxy tablet with the actual iPad and instead focused on a design Apple filed with the European Union intellectual property agency in Alicante, Spain, Brueckner-Hofmann said.

Samsung’s tablet didn’t keep enough distance from the Apple design, the judge said. While the back of the Galaxy is different from Apple’s registered design, the important feature is the front, which is nearly identical, she said.

“The crucial issue was whether the Galaxy tablet looked like the drawings registered as a design right,” she said. “Also, our case had nothing to do with trademarks or patents for technology.”

The EU-wide ban was upheld for Samsung’s German sales unit. The court doesn’t have jurisdiction to issue an EU-ban against Suwon, South Korea-based Samsung, itself, Brueckner-Hofmann said.

Strategy Analytics analyst Neil Mawston forecasts tablet sales could rise to about 2.4 million units in Germany this year from 0.6 million in 2010, making it Europe’s third-largest market after the U.K. and France.

The Dusseldorf court on Aug. 9 granted Apple a preliminary sales ban in 26 of the 27 EU member countries, only to scale back its reach a week later over jurisdictional issues.

The Sept. 9 case is: LG Dusseldorf, 14c O 194/11.

Summit Entertainment Claims Twilight.com Website Infringes Marks

Summit Entertainment LLC, the film studio that makes the “Twilight” series of films, sued the owner of the twilight.com Website for trademark infringement.

According to the complaint filed Sept. 2 in federal court in Los Angeles, Tom Markson of San Mateo, California, is accused of using the “Twilight” trademarks on his site, falsely leading the public to believe his is the official website associated with the movies.

Summit said it first sent Markson a cease-and-desist letter in April 2009, and in response received a denial he was infringing the company’s intellectual property. Attempts to resolve the dispute through negotiations have failed, according to court papers.

Markson first registered the twilight.com domain name in February 2004, four years before the release of the first “Twilight” film, Summit claimed. The first of Stephenie Meyer’s teen-vampire “Twilight” novels, on which the films are based, was released in October 2005, according to the author’s website.

The owner of the website changed its content after the first movie was released to focus on the film, Summit said in its complaint. The film company said the site made unauthorized use of its copyrighted material in addition to the “Twilight” trademarks.

The site generates revenue for the owner through click- through ads, banner ads, sponsored links and affiliate programs, according to court papers. Markson markets his site to the same group of consumers that are targets of the film company’s advertising, Summit said.

The film company said it’ has been damaged by Markson’s actions, and asked the court to bar him from further infringement. Additionally, Summit asked for awards of money damages, attorney fees and litigation costs. Alleging the infringement is deliberate, Summit seeks extra damages to punish Markson and his company -- TM Consulting -- for their actions.

When accessed Sept. 9, the twilight.com website didn’t have any contact information for Markson. The site did contain links to Amazon.com Inc. (AMZN)’s listings for Meyer’s books, DVDs of the films, and MP3 file downloads for the music used in the movies, and related merchandise.

Summit is represented by Jill M. Pietrini, Diana Iketani Iorlano and Paul A. Bost of Los Angeles-based Manatt Phelps & Phillips LLP.

The case is Summit Entertainment v. Markson, 2:11-cv-07296, U.S. District Court, Central District of California.

For more trademark news, click here.

Copyright

Righthaven Tells Court Bankruptcy May Await Over Fee Awards

Righthaven LLC, the Las Vegas-based entity that has filed more than 200 copyright-infringement cases in recent months, told a federal judge it may need to seek protection through bankruptcy proceedings.

The company made this revelation in a Sept. 9 court filing asking that attorney fee awards made to a defendant be stayed until an appeal is completed.

Righthaven hasn’t fared well in its recent cases. Courts have questioned its standing to enforce the copyrights to content that appeared in Stephens Media Group’s newspapers. In one of the cases, a court in Las Vegas ordered Righthaven to pay attorney fees to a defendant by Sept. 14.

The company said its copyright-infringement cases have been stayed since May 19, pending a ruling on the standing issue. It has delayed filing new suits until the standing determination is made, Righthaven said.

“Throughout this period and despite a lack of incoming revenue given that numerous pending actions are stayed, Righthaven has continued to incur operating expenses,” the company said in its pleadings.

Righthaven claimed in its filing to be concerned that if its assets were seized as a result of its financial difficulties, it “would then be faced with the impossible task of trying to recapture essential intellectual property assets that were seized and liquidated during the appeals process.”

The IP assets to which Righthaven refers are “all copyright works assigned by Stephens Media,” according to the court filing. In an accompanying declaration, Righthaven counsel Shawn A. Mangano also identified “a proprietary search engine software program that it uses to identify potential infringes on the Internet” as one of the company’s IP assets.

The case is Righthaven LLC v. Hoehn, 2:11-cv-00050, U.S. District Court, District of Nevada (Las Vegas).

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Belgian Koi Farmers Fall Prey to Industrial Espionage, AFP Says

Farmers of Japanese koi carp in Belgium are falling prey to industrial espionage that has gone on for at least 20 years, Agence France Presse reported.

The ornamental fish, which can sell for as much as 350,000 Euros ($500,000), are considered moving works of art by collectors, according to AFP.

Recovery of a stolen fish is difficult, and the few insurance policies that cover the fish come with premiums as high as a third of the animal’s value, the news service said.

The industrial espionage, theft and occasional pond poisonings are believed to be the work of experienced, organized gangs knowledgeable about the fish and their avid collectors, according to AFP.

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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