Nestle, Icann, Yahoo!, ‘South Park’: Intellectual Property

U.S. Supreme Court justices grappled with the reach of federal patent law, touching on both fire- building techniques and Albert Einstein’s discoveries during arguments over diagnostic medical tests.

Yesterday’s one-hour session, which centered on a dispute between Nestle SA (NESN)’s Prometheus unit and the Mayo Clinic, produced few clear answers. The justices sought to draw what proved to be a fine line between natural phenomena, which can’t be patented, and applications of those principles, which can be.

The Prometheus case is the second at the Supreme Court since 2010 concerning what types of inventions are eligible for legal protection. Companies, trade groups and lawyers have filed more than two dozen legal briefs, many warning that the court’s ruling might have widespread, unintended ramifications, including stifling innovation.

Prometheus is suing two units of the Mayo Clinic, the not- for-profit medical practice based in Rochester, Minnesota.

Mayo says the patents would give Prometheus a monopoly over all uses of the natural relationship between the metabolites created by thiopurine and the drug’s impact on the human body. The patents are so broad they would bar doctors familiar with the Prometheus method from even thinking about the connection between metabolite levels and the proper dosage for a patient, Mayo’s lawyer, Stephen Shapiro, told the justices.

That argument drew skepticism from Justice Sonia Sotomayor. “It’s not as broad as you are stating,” she told Shapiro.

Prometheus’s lawyer, Richard Bress, countered that the patents concern concrete applications of scientific principles, which the Supreme Court has long said fall within the scope of the U.S. Patent Act.

Justice Elena Kagan questioned whether the Prometheus patents were specific enough.

“It’s not a treatment regimen,” she said. “All you have done is pointed out a set of facts that exist in the world.”

The Obama administration is urging the court to take a middle ground.

Chief Justice John Roberts questioned the government’s approach, saying it would make instructions for building a fire eligible for patent protection.

“It is easier to throw something out at the threshold level, isn’t it, than to move further down the line?” Roberts asked U.S. Solicitor General Donald Verrilli.

The case may have its greatest impact on the field of personalized medicine, an emerging practice that involves determining whether a patient is genetically susceptible to a particular disease or would be especially responsive to certain treatments. Two companies focusing on that field, Myriad Genetics Inc. (MYGN) and Novartis AG (NOVN), are backing Prometheus.

The case is Mayo Collaborative Services v. Prometheus Laboratories, 10-1150, U.S. Supreme Court (Washington).

EU-Wide Patent ‘Now or Never’ as Nations Clash on Court Process

The European Union’s first regionwide patent system may “never” happen unless governments bury their differences this month on a court process to handle disputes, an EU official said.

While governments from 25 of the 27 EU nations already agreed on the basic structure of the patent system, discord remains “on all points” concerning the creation of a court, said Pierre Delsaux, deputy director general in EU Internal Markets Commissioner Michel Barnier’s department.

“It’s difficult to get a compromise if EU member states are fighting for all their concerns,” Delsaux told a conference in Brussels yesterday. “If we don’t get an agreement by Dec. 22, I don’t believe there’ll be a unitary patent in a very long time. It’s now or never.”

The European Commission, the EU’s executive arm, proposed a compromise deal after governments last year failed to break a deadlock on which languages should be legally binding. Attempts to reach an agreement on an EU patent since 2000 have faltered over language issues. The EU has 23 official languages and numerous compromise proposals have failed to satisfy political demands or risked increasing translation costs for companies.

In March, 25 EU nations agreed to move forward with a common patent system. Italy and Spain opted out of the plans because they objected to the language system proposals. Italy, which now has a new government led by Prime Minister Mario Monti, is considering joining the system, said Delsaux.

The main sticking points include the seat of the main patent court, how the court system should be financed and the language system.

“It would be a pity if after more than 40 years of negotiations, the new system would not be used,” Juergen Koch, head of corporate intellectual property at Robert Bosch GmbH, the world’s largest automotive supplier, said at the event. If EU nations now “lose their energy and speed, which in my view will be absorbed by the financial crisis, it may take even longer.”

Companies can end up paying 18,000 euros ($24,100) for a patent valid in only 13 countries, including 10,000 euros for translation, according to the commission.

“We’re in the final furlongs” toward a final accord on the patent, Barnier told journalists in Brussels today. Europe “could compete with the level of protection that industrial inventions get in the U.S. without it costing 10 times as much as it does at the moment.”

For more patent news, click here.

Trademark

RIM Ordered in Basis Suit Not to Use BBX Mark at Conference

Research In Motion Ltd. (RIM) was barred by a federal judge from using Basis International Ltd.’s “BBX” trademark at an industry conference in Asia that began yesterday.

U.S. District Judge William P. Johnson in Albuquerque, New Mexico, ruled Dec. 6 that Research in Motion can’t use the BBX trademark at the DevCon conference in Singapore being held yesterday and today.

Basis is likely to win its trademark-infringement claims against Research In Motion, and consumers are “likely to be confused by RIM’s use of BBX in connection with RIM’s goods and services,” Johnson wrote in the ruling.

The conference will be attended by software developers who may be users of Basis’ BBX software, according to the ruling.

Jamie Ernst, a representative of Waterloo, Ontario-based Research In Motion, said the company doesn’t typically comment on pending litigation.

“However RIM has already unveiled a new brand name for its next generation mobile platform,” Ernst said in an e-mailed statement. “As announced at DevCon Asia, RIM plans to use the ‘BlackBerry 10’ brand name for its next generation mobile platform.”

The case is Basis International Ltd. v. Research in Motion, 11-00953, US. District Court, District of New Mexico (Albuquerque).

Web-Name Expansion Opposed by GE, J&J Faces U.S. Senate Scrutiny

A plan that may add hundreds of top-level Internet domains beyond .com and .net is drawing scrutiny from U.S. lawmakers and regulators as large companies intensify their opposition.

The Senate Commerce Committee is to hold a hearing today on the expansion of so-called generic top-level domains approved by the Internet Corporation for Assigned Names and Numbers, a nonprofit that manages the Web’s naming system under a contract with the U.S. government. The group, known as Icann, will accept applications for new Web suffixes, such as .apple and .zoo, starting next month.

General Electric Co. (GE), Johnson & Johnson (JNJ) and Coca-Cola Co. (KO) are among more than 40 companies that last month joined with the Association of National Advertisers to oppose the expansion, saying it will increase costs for companies, confuse customers and create risks of Internet fraud.

Icann’s proposal “would unduly burden a diverse range of public and private brand holders, as they would be forced to spend ever-greater amounts of time and resources simply to protect their brands,” the companies wrote in a Nov. 10 letter to the Commerce Department.

The group asked the department to persuade Icann to postpone the application period until it demonstrates the economic and other benefits of the program. Icann deliberated for six years before it board voted June 20 to allow new variations to the right of the “dot” in Web addresses to spur online innovation.

The planned addition of top-level domains may be a “disaster,” allowing con artists to set up fraudulent websites, Federal Trade Commission Chairman Jon Leibowitz said during a House Judiciary subcommittee hearing yesterday on antitrust enforcement. The FTC, which has no direct authority over Icann, can act when companies engage in deceptive trade practices.

Icann welcomes “the opportunity to inform the committee of the inclusive and transparent process” leading to the expansion program, Brad White, a spokesman in Washington for the Marina del Ray, California-based organization, said in an e-mail.

Manager of the Internet’s address system for the U.S. government since 1998, Icann now oversees 22 so-called generic top-level domains, including the commonly used .com, .org and .net.

The group will accept applications for as many as 1,000 new Web suffixes, including company and brand names, cities and words, from Jan. 12 to April 12. Applications will cost $185,000 for each domain.

Yahoo! Picks up $610 Million Award in Internet Spam Dispute

Yahoo! Inc., an Internet company based in Sunnyvale, California, was awarded $610 million in a case it filed against so-called spammers who set up a fake Yahoo lottery e-mail scheme.

In March 2009, Yahoo sued a number of unnamed companies and individuals for trademark infringement. The defendants were accused of setting up a fake lottery in order to acquire personal information from Yahoo users, including Social Security and credit card numbers and access to bank accounts.

In some cases the so-called winners of the lottery were persuaded to send the defendants money for processing and mailing charges, according to court papers.

On Dec. 5, U.S. District Judge Laura Taylor Swain ordered the defendants to pay Yahoo $610 million, comprised of damages for trademark infringement and for violation of the Can-Spam Act. That bill, passed in 2003, was aimed at protecting consumers against unwanted e-mail, including those that are fraudulent or unwanted sexually explicit messages. The company was also awarded attorney fees.

Defendants have until Jan. 23 to file opposition to the fee award, according to court papers.

Yahoo was represented by Robert S. Weisbein and John Britton Payne of Milwaukee’s Foley & Lardner LLP.

The case is Yahoo! Inc. (YHOO) v. XYZ Cos., 1:08-cv-04581-LTS-THK, U.S. District Court, Southern District of New York (Manhattan).

For more trademark news, click here.

Copyright

Attorney Fee Awarded in ‘What What (In the Butt)’ Case

A company that unsuccessfully sued the producers of the “South Park” television program for copyright infringement must pay the defendants’ attorney fees, a federal judge in Milwaukee ruled.

The makers of the “What What (In the Butt)” music video had claimed that a “South Park” parody of the song infringed the copyright. The court found that the parody fell into copyright law’s “fair use” provisions, and rejected all of the claims of Milwaukee’s Brownmark Films LLC.

In his attorney-fee award order, U.S. District Judge J.P. Stadmueller said he thought Brownmark’s motivation in filing the suit was “questionable” and demonstrated an attempt to use the threat of litigation to force a licensing agreement.

He said that awarding attorney fees to the defendants -- which included Viacom Inc. -- “would defer future action that is similar to Brownmark’s.”

The judge did cut almost $13,000 from the fee award, saying that some of the billed hours were duplicative of earlier work by the firm.

The case is Brownmark Films LLC. v. Comedy Partners, 2:10- cv-01013-JPS, U.S. District Court, Eastern District of Wisconsin (Milwaukee).

Vostu, Zynga Settle Copyright-Infringement Dispute

Vostu USA Inc. and Zynga Inc. settled their copyright suit, according to a Dec. 6 case filing.

Zynga sued Vostu in federal court in San Jose, California, on June 16, accusing the company of infringing its Cafe World, PetVille, Zynga Poker and FarmVille games. That complaint contained color images of many elements in Vostu’s games that Zynga claims infringed its copyrights.

In its July 20 response to the complaint, New York-based Vostu said Zynga’s allegations were “at their foundation a vicious effort to malign Vostu for competing.” Vostu’s games are popular in Latin America, particularly Brazil, where the company released a soccer-oriented social game in 2009.

Vostu claims Zynga’s suit was motivated by the San Francisco company’s entry into Brazil; Vostu’s arrival on Facebook Inc.’s social media site, “which Zynga claims as its exclusive turf;” and Zynga’s initial public offering. Zynga filed with the U.S. Securities and Exchange Commission July 1, seeking to raise as much as $1 billion in its initial public offering.

Zynga’s infringement claims against Vostu “are not just deeply cynical. They also mask a fatal flaw in Zynga’s case: Zynga cannot claim copyright protection over material that Zynga did not originally create,” Vostu said in its pleadings.

Many of the elements Zynga claimed were infringed by Vostu were in fact present in other companies’ games, Vostu said in court papers.

Vostu asked the court to declare it doesn’t infringe Zynga’s copyrights, and for awards of attorney fees and litigation costs.

Terms of the settlement weren’t disclosed.

The case is Zynga Inc., v. Vostu USA Inc., 5:11-cv-02959- EJD, U.S. District Court, Northern District of California (San Jose).

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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