Ultramercial, Apple, Google, Kodak: Intellectual Property

The U.S. Supreme Court told a lower court to reconsider whether some types of ideas can be patented, in a sign that further limits may be set on infringement lawsuits against technology companies.

The court’s action yesterday marks the second time this year it ordered the federal appeals court that specializes in patent cases to revisit a decision under the Supreme Court’s March 20 decision limiting the ability to obtain legal protection for some diagnostic medical tests.

In yesterday’s case, the justices set aside a decision by the U.S. Court of Appeals for the Federal Circuit that allowed a patent for a way to make consumers watch advertisements before they can view copyrighted material on the Web. The appeals court had said patent owner Ultramercial LLC, which offers online advertising services, could pursue a lawsuit against WildTangent Inc., which lets consumers play online games after first watching a commercial.

“It’s kind of a bad omen for these business-method patents,” said Brad Wright, a patent lawyer with Banner & Witcoff in Washington who isn’t involved in the cases.

The Supreme Court ruled March 20 that a medical diagnostic test owned by Nestle SA (NESN)’s Prometheus unit covered little more than an abstract idea and law of nature. Six days later, the justices ordered the Federal Circuit to revisit a decision allowing human genes to be patented.

WildTangent’s appeal to the Supreme Court was supported by Google Inc. and Verizon Communications Inc. (VZ)

The appeals court ruling exposes “high-tech companies to increased litigation risk by sanctioning sketchy, high-level claims that lack the specifics that transform abstract ideas into patentable processes,” Google and Verizon said in their filing with the court.

Ultramercial, based Rancho Palos Verdes, California, had sued Google’s YouTube unit in the same case. That claim was settled in 2010.

A trial judge ruled that Ultramercial’s concept was an abstract idea and not entitled to patent protection. The Federal Circuit revived the case after deciding the patent covered a practical application of an old idea.

A trial is scheduled for October to determine whether the Ultramercial patent is invalid based on earlier inventions, and if not, whether WildTangent infringed the patent.

WildTangent, which filed its appeal before the Prometheus decision was issued, said the Federal Circuit misinterpreted a 2010 Supreme Court decision, named after patent owner Bernard L. Bilski, that limits what types of business methods can receive patents.

Ultramercial’s lawyers said the appeals court properly ruled that the patent covers specific steps that can be implemented only through complex computer programming. They said the court fell in line with the Bilski and Prometheus decisions.

The case is WildTangent Inc. v. Ultramercial LLC, 11-962.

Kodak Loses Trade Decision in Patent Case Against RIM, Apple

Eastman Kodak Co. (EKDKQ) lost a ruling in a two-year legal fight against Apple Inc. and Research In Motion Ltd. (RIM) over a patent for digital image-preview technology, a decision that may hurt the value of assets Kodak is selling.

RIM and Apple didn’t violate Kodak’s rights because the patent is invalid, U.S. International Trade Commission Judge Thomas Pender said in a notice posted on the agency’s website.

Kodak, which filed for Chapter 11 bankruptcy protection in January, contends Apple already owes it more than $1 billion in damages for infringement of this and other digital capture patents, according to a bankruptcy court filing this month.

The company’s two digital patent portfolios may be its most valuable assets. The patent in yesterday’s ruling is part of a portfolio of more than 1,100 related to digital capture that the Rochester, New York-based Kodak is selling.

The judge’s recommendation “represents a preliminary step in a process that we are confident will conclude in Kodak’s favor,” Timothy Lynch, Kodak’s chief intellectual property officer, said in a statement.

The disputed patent, 6,292,218, which Kodak claims is used in all modern cameras, covers a feature that previews low- resolution versions of a moving image while recording still images at a high resolution. Higher resolution requires more processing power and storage space. Samsung Electronics Co. and LG Electronics Inc. (066570) have already paid $964 million in settlements to Kodak for using the technology.

The patent is the subject of a suit pending between RIM and Kodak in federal court in Dallas. The company filed notice with the judge in Dallas about yesterday’s findings.

Kristin Huguet, a spokeswoman for Apple, said the company had no comment.

Kodak has been trying to charge for the use of its digital- imaging patents, and suing in instances where that strategy failed. The company sought Chapter 11 protection in January after years of burning through cash as digital technology hurt its film business.

The commission is scheduled to complete the investigation by Sept. 21. The case targets Apple’s iPhone and BlackBerry devices including the Tour, Storm, Bold, Curve and Pearl. Kodak had lost its fight before another ITC judge, only to have the commission revive the case last year.

The patent case is In the Matter of Certain Mobile Telephones and Wireless Communication Devices Featuring Digital Cameras, and Components Thereof, 337-703, U.S. International Trade Commission (Washington).

For more patent news, click here.

Trademark

Apple Wins Bid to Bar Proview Evidence in Hong Kong IPad Trial

Apple Inc. (AAPL) won a bid in a Hong Kong court to exclude some evidence that was previously filed by Proview International Holdings Ltd. (334), its opponent in a lawsuit over the iPad trademark in China.

Two expert reports filed by Proview in October 2011 failed to comply with Hong Kong court instructions, making the evidence inadmissible in an upcoming trial between the company and Apple, according to a ruling today by Judge Justin Ko. Proview hasn’t decided whether to appeal the ruling, Chairman Sun Min said by phone yesterday. Carolyn Wu, a spokeswoman at Apple in Beijing, didn’t immediately reply to messages sent by phone and e-mail seeking comment.

Apple is suing Proview and the Chinese company’s founder Rowell Yang in Hong Kong, claiming they conspired to breach an agreement in 2009 over the iPad trademark. The Cupertino, California-based maker of the iPad tablet computer is also in parallel litigation with Proview in mainland China, where a court has urged the two sides to settle the dispute.

In November, a court in Shenzhen ruled that Proview’s unit in the city owned the iPad trademark in China, as Apple’s contract in 2009 to acquire the rights to the name was invalid. In February, the U.S. company appealed the decision to the Higher People’s Court of Guangdong.

Last month, the Guangdong court said it’s mediating talks between Apple and Proview. Apple offered compensation to resolve the dispute, though a “big gap” remains between the two sides, Proview lawyer Roger Xie said this month.

Apple previously said the company acquired the rights to the iPad trademark in China, its biggest market outside the U.S. Revenue in China tripled to $7.9 billion last quarter, helped by surging demand for products such as the iPad tablet computer and the iPhone smartphone.

Proview, a failed display maker whose shares have been suspended from trading in Hong Kong since 2010, has filed separate lawsuits in Chinese courts, and complaints to the Administration for Industry and Commerce, alleging Apple’s sales of iPad tablets in China infringed intellectual-property law.

Google Given Weeks to Submit Remedies in EU Antitrust Probe

Google Inc. (GOOG) was told by the European Union’s antitrust chief it has a “matter of weeks” to resolve a probe and avoid possible fines over allegations that the operator of the world’s largest search engine discriminates against rivals.

EU Competition Commissioner Joaquin Almunia asked Google Chairman Eric Schmidt for proposals to address concerns that it promotes its own specialist search services, copies rivals’ travel and restaurant reviews, and that its agreements with websites and software developers stifle competition in the advertising industry.

Google, based in Mountain View, California, is under growing pressure from global regulators probing whether the company is thwarting competition in the market for Web searches. The U.S. Federal Trade Commission and antitrust agencies in Argentina and South Korea are also scrutinizing the company.

Google disagrees with the commission’s conclusions and is “happy to discuss any concerns they might have,” said Al Verney, a Brussels-based spokesman for the company, in an e- mailed statement.

Complaints over Google’s Android operating system and the way the search engine deals with travel agencies are among “other issues” that will continue to be investigated, Almunia said.

Any settlement proposals from Google would be reviewed by the company’s competitors and rivals prior to being accepted by the EU authority.

“Will Google step up to the plate with serious effective remedies or will it put something on the table which is not truly serious?” said Thomas Vinje, a lawyer for FairSearch, an industry group that includes online travel companies Expedia Inc. (EXPE) and TripAdvisor Inc. (TRIP), which filed complaints about Google with the EU. Google’s offer “needs to genuinely resolve the concerns and re-establish competition,” Vinje said.

Foundem, a U.K. shopping website, said it was crucial to devise “pragmatic and robust measures that restore a healthy competitive Internet” without harming Google’s ability to innovate, company Chief Executive Officer Shivaun Raff said in an e-mailed statement.

Microsoft Corp. (MSFT), the largest software maker, whose Bing search engine filed a complaint in the case, declined to comment on Almunia’s statement.

EU regulators are increasingly using settlements to end antitrust probes. Almunia last year invited Thomson Reuters to settle with regulators for a “speedy resolution” of a probe. Apple Inc. and four publishers recently offered to settle another case, the commission said last month.

Microsoft ended more than a decade of antitrust disputes with the EU in 2010 by agreeing to allow users choose web browsers. International Business Machines Corp. (IBM), the biggest computer-services provider, last year settled an EU antitrust probe into conduct that may have hindered rival mainframe- software makers.

For more trademark news, click here.

Copyright

Music Downloading Damages Left Intact by U.S. Supreme Court

The U.S. Supreme Court left intact a $675,000 jury verdict against a college student who downloaded and redistributed thousands of songs from the Internet without paying.

The court, without comment, refused to hear Boston University student Joel Tenenbaum’s challenge to a law that let the recording industry collect thousands of dollars from individuals for such downloading. The jury was told to impose damages, set by U.S. copyright law, of between $750 and $150,000 per violation.

Tenenbaum said individual downloaders who don’t make money from sharing songs shouldn’t be treated the same as companies whose business is to steal copyrighted content. A U.S. appeals court rejected that argument, ruling that all illegal downloaders, regardless of their motives, are subject to the same range of penalties.

The Recording Industry Association of America, acting on behalf of major record labels, sued more than 12,000 people and sent notices to thousands of others it claimed were illegally sharing music.

Tenenbaum and a woman from Minnesota took their cases to trial, and both lost. An appeals court plans to hear arguments in the Minnesota case in June.

The trial judge in Tenenbaum’s case reduced the jury award to $67,500, saying the larger amount was unconstitutionally excessive. The 1st U.S. Circuit Court of Appeals in Boston reinstated the award and said the record companies would be entitled to a new trial if the judge cut the award again.

Suing Tenenbaum were Sony Corp. (6758) and its Arista Records, Warner Music Group’s Warner Bros. and Atlantic labels and Vivendi SA’s (VIV) Universal Music Group. They said he made songs available on various sites including Napster, Morpheus, Kazaa and LimeWire, distributing songs to millions of other people.

The Supreme Court had ruled in 2005 that Internet file- sharing networks may bear responsibility when users illegally download music and movies, giving the recording industry new power to shut down such sites.

Tenenbaum’s lawyers said a 2008 study estimated that the average teenager illegally downloaded 800 songs, which would expose that person to damages of as much as $120 million.

The Obama administration defended the statute, saying Tenenbaum’s argument that the recording industry should have to show how much it was harmed by his actions would defeat the law’s purpose of deterring copyright infringement.

The government urged the court not to take the case, saying some issues remained unresolved, including what the judge might do to the $675,000 damage award.

The case is Tenenbaum v. Sony BMG Music Entertainment Inc., 11-1019.

For more copyright news, click here.

IP Moves

Wick Phillips Hires Genband’s Shauna Martin for IP/Tech Practice

Wick Phillips Gould & Martin LLP hired Shauna Martin to open an office in Austin, Texas, the Dallas-based firm said in a statement.

Martin, who does transactional work in the IP and technology areas, was previously executive vice president and general counsel, strategic transactions, for Genband Inc. of Frisco, Texas. She has previously practiced law with Lancaster, Helling, Martin & Grable LLP of Austin. She has also served as general counsel for Hotels.com and Tristar Aerospace Co.

She has an undergraduate degree from the University of Central Arkansas, a law degree from the University of Arkansas and a master’s degree in law from the University of Missouri, Kansas City.

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.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.