Verizon, Facebook, Apple, JPMorgan, Sprint in Court News

Verizon Communications Inc. (VZ), the second-biggest U.S. phone company, and Cablevision Systems Corp. settled a lawsuit over ads that Cablevision claimed misrepresented its Internet speeds.

Cablevision, the fifth-largest U.S. cable-television provider by subscribers, sued Dec. 6 claiming Verizon was using outdated information. The ads ran their course Dec. 17 and Verizon will have new ads sometime in the future, company spokesman William Kula said.

“Cablevision and Verizon have reached an agreement to resolve the dispute without further need for litigation,” Kula and James Maiella, a Cablevision spokesman, said in separate phone interviews yesterday. They declined to disclose terms of the settlement.

A hearing had been scheduled for yesterday before U.S. District Judge Joanna Seybert in Central Islip, New York, on Cablevision’s request to force New York-based Verizon to pull the ads. The TV, radio, direct-mail and Internet spots running in the New York area claimed that a “just released” Federal Communications Commission study shows Bethpage, New York-based Cablevision delivers at most 59 percent of its advertised speeds during peak hours, according to the complaint.

The FCC report from August referred to tests performed in March, and Cablevision said it has upgraded its system since then. On Dec. 5, the FCC said in a blog post that Cablevision’s results in the report were outdated and its performance had improved, Cablevision said.

Verizon is Cablevision’s primary competitor for Internet service in the New York metropolitan area, according to court papers.

Verizon said in court papers that Cablevision’s request was unnecessary because it planned to stop saying that the FCC report was “recent” and that Cablevision “currently” delivers only 59 percent of advertised speeds.

The case is Cablevision Systems Corp. (CVC) v. Verizon Communications Inc., 11-cv-5934, U.S. District Court, Eastern District of New York (Central Islip).

Facebook Lawsuit Against Ads Given Go-Ahead by U.S. Judge

Facebook Inc., the world’s most used social-networking service, can be sued by people who claim showing advertisements that their friends “like” violates a California law regarding commercial endorsements.

U.S. District Judge Lucy Koh in San Jose rejected Facebook’s bid to dismiss the lawsuit on Dec. 16, ruling the plaintiffs may pursue claims that the company’s sponsored ads violate state law and are fraudulent. Koh granted Facebook’s request to dismiss a claim that it unjustly enriched itself with the sponsored ads.

Facebook earns revenue primarily through the sale of targeted advertising that appears on members’ pages, including so-called sponsored stories, which the Palo Alto, California- based company started Jan. 25. A sponsored story is a paid ad consisting of another friend’s name and profile picture and claiming the person likes the advertiser. The plaintiffs claim it’s an unauthorized use of their names and likenesses and that they deserve compensation.

The “plaintiffs have articulated a coherent theory of how they were economically injured by the misappropriation of their names, photographs and likeness,” Koh wrote.

“We are reviewing the decision and continue to believe that the case is without merit,” Andrew Noyes, a Facebook spokesman, said in an e-mailed statement.

The case is Fraley v. Facebook Inc., 11-cv-01726, U.S. District Court, Northern District of California (San Jose)

Lawsuits/Pretrial

JPMorgan Funds Claim $700 Million in Losses From Lehman

JPMorgan Chase & Co. (JPM), fighting Lehman Brothers Holdings Inc. (LEHMQ) over billions of dollars in claims and damages, is seeking to recoup $700 million in losses suffered by fund affiliates on investments in the defunct firm.

The affiliates, ranging from pension trusts to Highbridge funds, lost the money on bonds and other investments with Lehman entities, and have valid claims on the defunct firm, the bank said in a Dec. 16 court filing. It asked a judge to overrule Lehman’s objection to the claims and allow the funds to recoup the losses by using some of the $8.6 billion in collateral that Lehman deposited with the bank before it failed.

Lehman says the funds aren’t affiliates, “merely investment vehicles” for JPMorgan clients who bore the losses, and can’t use the collateral to repay themselves.

Separately, New York-based JPMorgan, the biggest U.S. bank, is fighting a lawsuit by Lehman that alleges the lender helped cause its 2008 collapse by demanding the $8.6 billion in collateral. The bank also is defending $6 billion in claims that Lehman objects to and arguing it acted properly in seeking security for loans made during the credit crisis.

Kimberly Macleod, a Lehman spokeswoman, declined to comment on JPMorgan’s filing.

Lehman filed the biggest bankruptcy in U.S. history in 2008, listing $613 billion in debt.

JPMorgan sued Lehman back after the $8.6 billion suit, alleging Lehman defrauded its lender into making the loan.

The main case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The lawsuit is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 10-03266, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Formosa Plastics’ Wang’s Estate Disputed in Hong Kong Suit

Winston Wong, son of Formosa Plastics Group’s late founder Wang Yung-ching, sued in Hong Kong to recover more than $4 billion in assets for the estate of his father, once Taiwan’s richest man.

Defendants named in the suit include three of Wang’s half- sisters -- Susan, Sandy and Diana Wang -- as well as former employees of Formosa Plastics -- Hung Wen Hsiung and Jao Chien Fang, “who were entrusted to manage YC Wang’s personal finances,” according to a press statement issued by Wong yesterday.

The suit alleges that the defendants used a Hong Kong- registered company called Hua Yang Investment (H.K.) Ltd. to “wrongly siphon off” assets, including an interest in a coal power plant and a hotel in mainland China, from Wang’s estate. Wang’s Taiwan assets were valued at $1.7 billion, Wong said in the statement.

An independent global investigation has identified total assets worth more than $17 billion, according to the statement.

Two calls to the office of Susan Wang, Formosa Plastics Group executive board vice chairman, weren’t answered.

Wang died in the U.S. in 2008 at the age of 91.

The case is Dr. Wong, Wen-Young also known as Winston Wong and Wang Ruey Hwa Susan, HCA2154/2011, Court of First Instance, Hong Kong.

Sprint Sues Time Warner, Comcast Over Digital Phone Technology

Sprint Nextel Corp. (S), the third-largest U.S. wireless operator, accused Time Warner Cable Inc. (TWC), Comcast Corp. (CMCSA) and two other cable-TV companies of infringing patents related to transmitting phone calls over digital lines.

Sprint filed separate lawsuits yesterday in federal court in Kansas City, Kansas, against Time Warner Cable, Comcast, Cable One Inc. and Cox Communications Inc. Overland Park, Kansas-based Sprint claims the companies are using technology it patented in the 1990s for transmission of voice data packets.

The companies “have realized the great value in this technology and have misappropriated it without Sprint’s permission,” Sprint said in each complaint.

The 12 patents include some that were asserted against Vonage Holdings Corp. (VG), which agreed to pay $80 million to license the technology after losing a 2007 trial.

Alex Dudley, a spokesman for New York-based Time Warner Cable, said the company doesn’t comment on pending litigation. John Demming, a spokesman for Philadelphia-based Comcast, also declined to comment.

Rima Calderon, a spokeswoman for Cable One parent Washington Post Co. (WPO), said the Washington-based company doesn’t comment on litigation. Todd Smith, a spokesman for Atlanta-based Cox, declined to comment, citing the pending lawsuit.

The cases are Sprint Communications Co. v. Time Warner Cable Inc., 11cv2686; Sprint v. Cable One Inc., 11cv2685; Sprint v. Comcast Cable Communications LLC, 11cv2684; and Sprint v. Cox Communications Inc., 11cv2683, all U.S. District Court, District of Kansas (Kansas City).

Google Sued by British Telecom Over Mobile-System Patents

British Telecommunications Plc sued Google Inc., owner of the world’s most popular Internet search engine, for allegedly infringing six U.S. patents for mobile-device technology.

BT, based in London, is seeking a jury trial and unspecified damages against Mountain View, California-based Google, according to a complaint filed Dec. 15 in federal court in Wilmington, Delaware.

“BT has invested heavily over the last 20 years,” generating “numerous patents,” and Google’s products including the Android operating system, maps, search, music and book services wrongly “incorporate BT’s patented technologies,” according to the complaint.

Last year, BT sued U.S. cable company Cox Communications Inc. in the same court over four patents for transmitting data over cable networks. A trial in that case is tentatively scheduled for 2014, according to court papers.

“We believe these claims are groundless,” Jim Prosser, a Google spokesman, said in an e-mailed message. He said the company would defend against them.

The case is British Telecommunications Plc v. Google Inc. (GOOG), 11-CV-1249, U.S. District Court, District of Delaware (Wilmington).

MF Global Judge Considering Nine Lawsuits Against Corzine

Jon Corzine, MF Global Holdings Ltd.’s former chief executive officer, is the defendant in nine lawsuits before a federal judge in Manhattan that are seeking compensation for losses from the company’s collapse.

The plaintiffs, including an electricians’ union, allege that Corzine and other company officials made misleading statements about MF Global’s financial condition before its Oct. 31 collapse. U.S. District Judge Victor Marrero has been combining the cases into one, saying they make similar claims about similar facts and events, and he now has consolidated nine of them, according to a court filing yesterday.

Andrew Levander, a lawyer for Corzine, didn’t immediately respond to an e-mail seeking comment on the suits, which are seeking class-action, or group, status.

Corzine, the former governor of New Jersey, and senior MF Global officers touted the company’s internal financial controls and liquidity levels in statements that were “materially misleading or untrue,” according to a Nov. 3 complaint filed in Manhattan federal court by Joseph DeAngelis on behalf of himself and other MF Global shareholders.

DeAngelis also named Henri Steenkamp, the New York-based company’s chief financial officer, and Bradley Abelow, its president.

Corzine and MF Global also have been sued by former employees and commodity customers. A trustee liquidating the MF Global Inc. brokerage is looking for $1.2 billion or more in money missing from commodity customers’ accounts. Corzine has said he doesn’t know where the missing money is.

The main case is DeAngelis v. Corzine, 11-cv-7866, U.S. District Court, Southern District of New York (Manhattan).

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Trials and Appeals

Health-Care Hearing at U.S. High Court Set for March 26-28

The U.S. Supreme Court said it will hear arguments on President Barack Obama’s health-care law over three days, from March 26 to March 28.

Releasing a schedule yesterday that has few, if any, precedents in modern court history, the justices left room to expand the 5 1/2 hours they already allotted for argument. The high court generally hears arguments for a single hour in each case.

The first day will center on the Anti-Injunction Act, a law that one federal appeals court concluded prevents judges from ruling until 2015 on the requirement -- also known as the individual mandate -- that Americans either buy insurance or pay a penalty.

The justices will use the second day of the hearings to consider the central issue: the constitutionality of the individual mandate. A group of 26 states, led by Florida, is among those challenging the provision.

On day three, the court will hear arguments on whether other parts of the law should be invalidated along with the individual mandate. The justices also will consider the states’ challenge to a provision expanding the Medicaid program for the poor.

The cases are National Federation of Independent Business v. Sebelius, 11-393; Department of Health and Human Services v. Florida, 11-398; and Florida v. Department of Health and Human Services, 11-400, U.S. Supreme Court (Washington).

Occupy London Wins UBS Court Appeal, Fights St. Paul’s Eviction

Occupy London protesters who took over a vacant UBS AG (UBSN) office building in London’s financial district won court permission to appeal their eviction after a judge ruled they weren’t given proper notice of a trial.

The bank’s notice to the protesters, in the form of a document posted on the building and a text message sent to a leader 45 minutes before a 10 p.m. hearing, was insufficient to give the group time to prepare or determine how to participate in the case, Court of Appeal Judge Timothy Lloyd ruled yesterday.

There was “really no effective notice of the hearing at all -- especially in circumstances like this, where a hearing took place late at night,” Lloyd said. “There is at least a compelling reason why permission to appeal should be granted.”

The court victory against Zurich-based UBS comes as the protesters, who seek global economic-equality and claim the bank behaves unethically, are in a separate trial to avoid being evicted from their primary encampment outside St. Paul’s Cathedral. More than 200 tents have clustered around the building since the middle of October, inspired by the Occupy Wall Street protest that has since been broken up by police.

“This ruling is a vindication of the right of everyone in this country to due process,” Naomi Colvin, a spokeswoman for Occupy London, said after the ruling. “These people labor under the misconception that they can throw money at a problem; it’s emblematic of what the Occupy movement is trying to combat.”

UBS’s press office in London didn’t immediately respond to a request for comment.

Court Rejects Tool for U.S. Companies Battling Chinese Imports

Companies from steel to paper makers may lose a tool they’ve used to fight undervalued Chinese imports after a U.S. appeals court rejected the imposition of duties to offset some foreign government subsidies.

U.S. law doesn’t let the Commerce Department levy duties on goods from nations, such as China, that lack a market to set prices, a U.S. Court of Appeals in Washington said yesterday in a unanimous ruling. Congressional action is needed to give the agency that power, the judges ruled.

The decision rejected arguments by Titan International Inc. (TWI), the top U.S. maker of off-road tires, Bridgestone Americas Inc., a unit of Tokyo-based Bridgestone Corp., and the AFL-CIO labor federation. It may take years for the companies to appeal or press for legislation, said George Thompson, a lawyer at Neville Peterson LLP in Washington.

The U.S. uses more than 300 anti-dumping and countervailing duty orders to shield American-made goods, from honey to bedroom furniture, against global competition it deems unfair and damaging to U.S. companies. About half the orders target iron and steel products.

The three-judge panel upheld a U.S. Court of International Trade decision that found the Commerce Department action on Chinese tires was illegal.

Charles Miller, a spokesman for the Justice Department, which presented the U.S. case, declined to comment on the ruling. A phone message for Joe Dorn, an attorney with King & Spalding LLP representing Bridgestone Americas, wasn’t returned. A spokeswoman for Representative Kevin Brady, who heads the House Ways and Means Committee’s trade panel, said the Texas Republican is reviewing the decision.

The case is GPX International Tire Corp. v. U.S., 2011-1107, U.S. Court of Appeals for the Federal Circuit (Washington).

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Verdicts, Settlements and Pleas

Apple Wins Patent Case with U.S. Ruling Banning Some HTC Phones

Apple Inc. (AAPL) won a patent-infringement ruling that bans some HTC Corp. (2498) smartphones from the U.S. starting next year, bolstering efforts to prove that devices running Google Inc.’s Android operating system copy the iPhone.

The U.S. International Trade Commission, in a review of a judge’s findings in July, said yesterday that HTC is violating one Apple patent related to data-detection technology and issued a limited import exclusion order that takes effect April 19.

“HTC will completely remove it from all of our phones soon,” Grace Lei, general counsel for Taoyuan, Taiwan-based HTC, said in an e-mail. The six-member commission determined that three other patents in the case weren’t infringed.

While less than what Apple sought, the ruling gives the company its first victory in patent cases designed to slow the growth of Android, which former Chief Executive Officer Steve Jobs claimed “ripped off the iPhone.” Apple has one other case against HTC, as well as complaints against Samsung Electronics Co. and Motorola Mobility Holdings Inc., and is involved in more than a dozen other cases before the trade commission.

“The battle between Apple and Android is going to continue,” said Peter Toren, a patent lawyer with Shulman Rogers in Potomac, Maryland, who has been watching the cases. “I’m not sure this decision, the way it is, is enough to push the parties to settlement. Apple doesn’t have the leverage of a total exclusionary order.”

The list of affected products and a full reason for the commission’s decision, which is subject to appeal and a presidential review, wasn’t immediately made public. Apple’s original complaint named HTC’s Nexus One, Touch Pro, Diamond, Tilt II, Dream, myTouch, Hero and Droid Eris.

Kristin Huguet, a spokeswoman for Cupertino, California- based Apple, declined to discuss the possibility of a settlement. She repeated the company’s position that “competition is healthy, but competitors should create their own original technology.”

Representatives from Google had no immediate comment.

The ruling is the first definitive decision in the dozens of patent cases that began to proliferate in 2010 as smartphone makers battle over a market that Strategy Analytics Inc. said increased 44 percent last quarter from a year earlier to 117 million phones worldwide. HTC, the second-largest maker of Android phones, used its partnership with Google to help transform itself from a contract manufacturer founded in 1997 to the biggest U.S. smartphone seller in the third quarter.

The case is In the Matter of Certain Personal Data and Mobile Communications Devices and Related Software, 337-710, U.S. International Trade Commission (Washington).

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Ex-Deutsche Bank CEO Pays $456,000 to End Trial Over Kirch

Former Deutsche Bank AG Chief Executive Officer Rolf Breuer agreed to pay 350,000 euros ($456,000) to settle an attempted fraud case over testimony he gave in 2003 in a suit brought by Leo Kirch.

The Munich Regional Court ended the criminal trial yesterday after lawyers for both sides told the judges they had reached a deal. The presiding judge in the case, Anton Winkler, called for a settlement last week.

“We were permanently rotating between ‘maybe he did know more’ and a potential acquittal, so it’s reasonable to end the case now,” Winkler said when announcing the ruling. “Even if we would have found guilt in this case, it would have been at the very lowest level required for a conviction.”

Kirch, who died in July, was once one of Germany’s biggest media tycoons and pursued civil lawsuits against Breuer, 74, and Deutsche Bank seeking at least 3.3 billion euros. The lawsuits, which continue after his death, claim Kirch’s company failed after Breuer questioned its creditworthiness in a 2002 Bloomberg TV interview.

The Kirch litigation has spawned a separate criminal probe this year by Munich prosecutors over testimony Breuer gave in February in another Kirch case. Current Deutsche Bank CEO Josef Ackermann, chairman Clemens Boersig and former board member Tessen von Heydebreck are also under investigation. Deutsche Bank has denied wrongdoing by any of its executives.

The former executive didn’t admit any liability under the settlement, which ends one of the numerous cases the Kirch litigation prompted. Prosecutor Christiane Serini said the trial developed in a way that made predicting the outcome difficult, prompting her office to agree to settle. Breuer’s attorney, who had sought an acquittal, said the agreement spares his client the burden of additional months of trial. Breuer himself declined to comment.

Clay Capital’s James Turner Pleads Guilty in Insider Case

James F. Turner II, the chief investment officer of hedge fund Clay Capital Management LLC, pleaded guilty to his role in an insider-trading scheme that prosecutors said made more than $2.5 million in illicit profits.

Turner, 44, admitted yesterday in federal court in Newark, New Jersey, that he illegally traded in shares of Autodesk Inc. (ADSK), Moldflow Corp. and Salesforce.com Inc. (CRM) Turner said he got tips from Scott Vollmar, his brother-in-law and a director of business development at Autodesk, and from Scott Robarge, a manager at Salesforce.com.

Turner pleaded guilty to one count of securities fraud before U.S. District Judge Dennis Cavanaugh. Vollmar and Robarge previously pleaded guilty to conspiracy to commit securities fraud, according to Assistant U.S. Attorney Christopher Kelly.

Joseph Bush, Turner’s attorney, declined to comment after the plea hearing. Turner was released on $300,000 bail. Cavanaugh set sentencing for April 16.

The case is U.S. v. Turner, U.S. District Court, District of New Jersey (Newark).

Fraud Settlements in U.S. Government Cases Exceed $3 Billion

The amount the U.S. obtained in cases involving fraud against the government held steady at about $3 billion in fiscal year 2011, which ended Sept. 30.

The recoveries under the False Claims Act included $2.4 billion in fraud involving federal health care programs, Assistant Attorney General Tony West, who heads the Justice Department’s civil division, said at a briefing yesterday in Washington.

Most of the cases resulting in recovered funds were brought to the government by whistle-blowers, according to the Justice Department. Whistle-blowers can pursue fraud claims under the act on behalf of the federal government and then share in any recovery.

The Justice Department has recovered $8.7 billion under the False Claims Act since January 2009, the largest-ever three-year total, West said.

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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: Michael Hytha at mhytha@bloomberg.net

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