Red Bull, Samsung, Pfizer, Google: Intellectual Property

Red Bull GmbH, the Austrian energy- drink maker, lost a court bid to stop a maker of Scalextric racing games from putting its brand name on toy cars.

A court in Alicante, Spain, that frequently rules on European Union trademark cases dismissed the complaint against Tecnitoys Juguetes SA, Tomas Fornesa, a lawyer for the Barcelona-based company, said by phone. Red Bull initially sought 9 percent of game sales, he said.

Red Bull’s sponsorships in car racing have included backing Volkswagen AG’s entry in the Dakar Rally. Tecnitoys replicates the advertising logos on the racing cars. The toymaker doesn’t make a version of the Formula One cars from Red Bull’s two Formula One teams, Fornesa said.

“Nobody buys our games for the Red Bull branding,” Fornesa said. “That would be like someone buying a Real Madrid soccer shirt because of the sponsor’s name.”

Tecnitoys and other Scalextric makers typically pay licensing fees of 4 percent to 10 percent of sales to carmakers including McLaren Group Ltd. and Daimler AG’s Mercedes Benz to replicate their racing cars, Fornesa said.

Red Bull’s deadline to appeal has expired, Fornesa said. Tina Deutner, a spokeswoman for Fuschl am See, Austria-based Red Bull, didn’t return two e-mails seeking comment.

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Patents

Samsung Wins Australia Round of Apple Fight Over Tablet Sales

Samsung Electronics Co., the world’s biggest smartphone maker, scored a victory in its global patent dispute with Apple Inc. (AAPL) as an Australian appeals court overturned a ban on the sale of its tablet computer rivaling the iPad.

Samsung can begin sales of its Galaxy Tab 10.1 in the country starting Dec. 2, a federal appeals judge ruled yesterday. A three-member appeal panel unanimously said a lower- court judge made a mistake in granting Cupertino, California- based Apple’s request for a ban.

Apple must file an emergency appeal against this verdict in the Canberra-based High Court, the nation’s apex legal body, to extend the ban. The Australia dispute is part of a conflict between the companies on at least four continents that began in April, when Apple sued Samsung in the U.S. and accused it of “slavishly” copying the designs of iPhones and iPads.

“The removal of the injunction is a win for consumer choice in the Australian tablet market,” Tim Renowden, an analyst at researcher Ovum Plc, said in an e-mailed statement. “Samsung is not out of the Australian scrub yet” because the removal of the ban still hinges on the High Court, he said.

The High Court must decide before the end of business tomorrow whether to grant Apple’s request to keep the ban in place beyond that date. If it grants the request, Apple will have 28 days from Nov. 30 to file a request to appeal the ruling.

“The ruling clearly affirms that Apple’s legal claims lack merit,” said Nam Ki Yung, a spokesman for Suwon, South Korea- based Samsung.

Apple said “it’s no coincidence that Samsung’s latest products look a lot like the iPhone and iPad.”

“This kind of blatant copying is wrong and, as we’ve said many times before, we need to protect Apple’s intellectual property when companies steal our ideas,” the company said in an e-mail after yesterday’s ruling.

Samsung is the second-largest component supplier for Apple. The Korean company gets about 7.6 percent of its total revenue from selling memory chips, displays and other components for the iPhone and iPad, according to Bloomberg data.

The case is Samsung Electronics Co. (005930) v. Apple Inc. NSD1792/2011. Full Court of the Federal Court of Australia (Sydney).

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After Lipitor, Pfizer Slims Down to Push Mini-Blockbusters

Pfizer Inc.’s (PFE) long dependence on the cholesterol pill Lipitor to produce almost one-fifth of its revenue began eroding yesterday when the drug’s patent protection ended in the U.S.

The next step will be rebuilding the world’s biggest drugmaker into a smaller, faster-moving company that focuses on development of biologic drugs and specialty medicines while expanding sales of existing products, such as Lipitor and the erection drug Viagra, in emerging countries such as China, executives said in interviews.

“We’re not going to be a one-product company,” said Geno Germano, Pfizer’s president of specialty care and oncology, interviewed at the company’s New York headquarters. “We’re poised to deliver significant new pipeline assets in the coming year, and in coming years.”

Pfizer rose 67 cents, or 3.5 percent, to $20.07 in New York Stock Exchange composite trading yesterday and has gained 15 percent this year.

The drugmaker is depending on four products to generate $4 billion in new revenue by 2014, Timothy Anderson, a Sanford C. Bernstein & Co. analyst in New York, said in a note to clients.

The drugs are Prevnar, a bacterial infection vaccine gained in Pfizer’s 2009 Wyeth purchase; the blood-thinner Eliquis, co- developed with Bristol-Myers Squibb Co. (BMY); the rheumatoid arthritis drug tofacitinib; and the cancer drug Xalkori for non- small-cell lung tumors. Pfizer is awaiting U.S. regulatory approval on Eliquis and tofacitinib.

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Cyber-Security

Obama Invokes Cold-War Law to Unmask Chinese Telecom Spyware

The U.S. is invoking Cold War-era national-security powers to force telecommunication companies including AT&T Inc. and Verizon Communications Inc. (VZ) to divulge confidential information about their networks in a hunt for Chinese cyber-spying.

In a survey distributed in April, the U.S. Commerce Department asked for a detailed accounting of foreign-made hardware and software on the companies’ networks. It also asked about security-related incidents such as the discovery of “unauthorized electronic hardware” or suspicious equipment that can duplicate or redirect data, according to a copy of the survey reviewed by Bloomberg News.

The survey represents “very high-level” concern that China and other countries may be using their growing export sectors to develop built-in spying capabilities in U.S. networks, said a senior U.S. intelligence official who asked not to be named because he wasn’t authorized to speak on the matter.

“This is beyond vague suspicions,” said Richard Falkenrath, a senior fellow in the Council on Foreign Relations Cyberconflict and Cybersecurity Initiative. “Congress is now looking at this as well, and they’re doing so based on very specific material provided them in a classified setting” by the National Security Agency, he said.

The survey went to dozens of telecommunications companies, software makers and information-security companies, including some foreign firms, according to James Lewis, a cyber-security expert at the Center for Strategic and International Studies, or CSIS, in Washington. Lewis said AT&T (T) and Verizon Communications were among the companies that received it.

Several of the companies were hesitant to cooperate because they had learned the Commerce Department unit handling the survey had itself been hacked by the Chinese in 2006, creating the possibility that company data provided might become known to the Chinese, according to a former government official familiar with the discussions.

Mark Siegel, a spokesman for Dallas-based AT&T, declined to comment on security issues. Edward McFadden, a spokesman for New York-based Verizon, said the company had received the survey and declined to comment further. Eugene Cottilli, a Commerce Department spokesman in Washington, had no immediate comment on the survey.

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Companies Urged to Share Cyber Threats With U.S. in House Bill

The U.S. government and companies would be encouraged to share information about cybersecurity threats and hacker attacks under legislation unveiled by House Intelligence Committee Chairman Mike Rogers.

The measure would shield companies from lawsuits and public disclosure requirements when they inform federal agencies about their security vulnerabilities and the type of cyber attacks they experienced, Rogers, a Michigan Republican, said yesterday.

U.S. lawmakers have increased scrutiny of network security in the wake of hacking incidents at companies including Sony Corp. (6758) and Citigroup Inc. (C) The National Counterintelligence Executive said last month that hackers and illicit programmers in China and Russia are pursuing American industrial secrets, jeopardizing an estimated $398 billion in U.S. research.

Rogers has accused the Chinese government of launching attacks, saying at a hearing last month that attacks from China have reached an “intolerable level.”

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Internet

Amazon Executive Says Congress Should Address Online Taxes

Paul Misener, Amazon.com Inc.’s vice president for global public policy, urged Congress to set standards for collecting state sales taxes from online merchants. Any exceptions to the tax should be kept “very low” for fairness reasons, Misener said.

Misener spoke yesterday at a House Judiciary Committee hearing. Seattle-based Amazon (AMZN), the largest online retailer, has long battled attempts by states to levy sales taxes on Internet transactions. Now it’s backing efforts to create a federal standard for states to collect sales tax on online purchases.

A 1992 U.S. Supreme Court decision exempted businesses from collecting sales taxes in states in which they don’t have a physical presence, or “nexus,” such as a store or warehouse.

That ruling has given Internet-based sellers an advantage in the marketplace over brick-and-mortar retailers, said Representative John Conyers of Michigan, the top Democrat on the Judiciary Committee.

“Online retailers have, let’s face it, an unfair advantage,” said Conyers, a co-sponsor of one of three pending bills that would give states the ability to collect taxes on sales by out-of-state vendors.

The issue has divided online retailers. Executives from San Jose, California-based EBay Inc. (EBAY) and Overstock.com (OSTK) of Salt Lake City cautioned lawmakers against passing a measure that would harm small businesses or saddle online retailers with added expenses.

Amazon’s Misener said technology has advanced enough so that all but the smallest sellers can manage sales tax collections.

Netflix Viewing Seen Swelling U.S. Cable Bills Next Year

Time Warner Cable Inc. (TWC) and U.S. pay-TV companies, weighing how to profit from surging Internet demand spurred by Netflix Inc. (NFLX) and Hulu, are on the verge of instituting new fees on Web- access customers who use the service most.

At least one major cable operator will institute so-called usage-based billing next year, predicts Craig Moffett, an analyst with Sanford C. Bernstein & Co. in New York. He said Cox Communications Inc., Charter Communications Inc. (CHTR) or Time Warner Cable may be first to charge Web-access customers for the amount of data they consume, not just transmission speed.

“As more video shifts to the Web, the cable operators will inevitably align their pricing models,” Moffett said in an interview. “With the right usage-based pricing plan, they can embrace the transition instead of resisting it.”

U.S. providers like Time Warner Cable have weighed usage- based plans for years as a way to squeeze more profit from Web access, and to counter slowing growth and rising program costs in the TV business. While customer complaints hampered earlier attempts, pay-TV companies are testing usage caps and price structures that point to the advent of permanent fees.

“We’re basically a broadband provider,” Peter Stern, chief strategy officer for New York-based Time Warner Cable, said Nov. 17 at the Future of Television conference in New York. “As a convenience for our customers, we package and distribute television and provide service around that.”

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Copyright

Harlan Ellison Drops Suit Against Makers of ‘In Time’ Movie

Harlan Ellison dropped a copyright suit against New Regency Productions Inc. and screenwriter and director Andrew Niccol that claimed the movie “In Time” was based on his story “‘Repent, Harlequin!’ Said the Ticktockman.”

According to the complaint filed Sept. 14 in federal court in Los Angeles, “Repent, Harlequin!” is “one of the most famous and widely published science fiction short stories ever written.”

Ellison claimed that the movie, which opened in October and stars Justin Timberlake and Amanda Seyfried, used his story without authorization.

On Nov. 28, Adam Thurston, a lawyer in the Los Angeles office of Drinker Biddle & Reath LLP, filed a motion withdrawing the case with prejudice, meaning that the suit can’t be refiled. Neither Thurston nor Vincent Cox, a lawyer from Leopold, Petrich & Smith PC who represents the defendants, would say why the suit was withdrawn.

“After seeing the film ‘In Time,’ Harlan Ellison decided to voluntarily dismiss the action,” the lawyers said in a joint statement. “No payment or screen credit was promised or given to Harlan Ellison. The parties wish each other well, and have no further comment on the matter.”

The case is Kilimanjaro Corp. v. New Regency Productions Inc., 2:11-cv-07575, U.S. District Court, Central District of California (Los Angeles).

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Privacy

Google to Begin Appeal of Italy Privacy Conviction in 2012

Google Inc. (GOOG) will begin an appeal as soon as January of a conviction by an Italian court of two managers and a former executive for violating privacy laws, said Peter Fleischer, the company’s global privacy counsel and a defendant in the case.

The three were convicted in February by a Milan court on charges related to a clip uploaded to Google Video in 2006 by a group of Turin school students, who filmed themselves bullying an autistic classmate.

Milan Judge Oscar Magi ruled that Fleischer, David Drummond, Google’s senior vice president of corporate development and a former chief financial officer, were guilty of privacy violations. They were sentenced to six-month terms, which were suspended.

IP Moves

Jill Pietrini, a trademark attorney and the chair of the intellectual property practice group of Manatt, Phelps & Phillips, is leaving the firm to join Sheppard Mullin Richter & Hampton as a partner in its Century City, California, office. Pietrini, 50, said she expects many of her clients -- including Metallica and the online retailer Café Press -- to follow her to her new firm.

Carlo Van den Bosch, co-chair of Sheppard Mullin’s intellectual property group, said Pietrini “will play an important role in the future growth of our trademark practice.” He added that the number of IP lawyers at the firm has grown to about 70 from 40 in the past five years.

In an e-mailed statement, Chad S. Hummel, chair of Manatt’s litigation division, said “Jill is a fine lawyer and we wish her well. Manatt has a vibrant and broad national IP practice, which complements our business, entertainment and media, and litigation practices. We will continue to grow this core practice area.”

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

To contact the editor responsible for this report: Michael Hytha at mhytha@bloomberg.net.

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