Apple, Merck, Syms, Haka, Nortel: Intellectual Property

Apple Inc. (AAPL) filed an enforcement action at the U.S. International Trade Commission in Washington, seeking an emergency order that would block imports of HTC Corp.’s (2498) newest phones and tablet computers.

HTC had been ordered by the commission to remove a function patented by Apple for data-detection technology if it wanted to continue selling its mobile phones in the U.S. Apple contends HTC products continue to infringe its patent even after an exclusion order was issued in December.

HTC, Asia’s second-largest smartphone maker, is counting on its One series of phones to improve its share of a market that reached $312 billion last year, according to Bloomberg Industries data.

Some HTC products were stopped at the U.S. border last month, delaying plans by Sprint Nextel Corp. (S) to sell the HTC EVO 4G. U.S. Customs and Border Protection allowed the products, made in Taiwan, to enter the U.S. after assurances by HTC that the devices weren’t infringing the Apple patent.

“HTC has completed the review process with U.S. Customs and HTC devices have been released, as they are in compliance with the ITC’s ruling,” the Taoyuan, Taiwan-based company said yesterday in an e-mailed statement.

Apple wants the commission to have all HTC products that run on Google Inc.’s Android operating service blocked from the U.S. until the enforcement case is resolved. It also asks the agency to force HTC to remove any products from store shelves that it imported in violation of the exclusion order.

Cupertino, California-based Apple said that if such an order isn’t imposed, HTC otherwise should be required to post a bond equal to the value of each imported product, or at least $290 for each device, Apple said in the filing dated June 4.

Apple filed its initial complaint against HTC in March 2010, the first salvo in the iPhone maker’s legal battle against devices that run on Android. It has since become embroiled in litigation with Samsung and Motorola Mobility Holdings Inc., which became a Google unit last month, over their Android products.

The newest case is In the Matter of Personal Data and Mobile Communications Devices and Related Software, Complaint No. 2900. The earlier case is In the Matter of Certain Personal Data and Mobile Communications Devices and Related Software, 337-710. Both were filed at the U.S. International Trade Commission (Washington).

Merck KGaA to Cooperate With Dr. Reddy’s on Biosimilar Drugs

Merck KGaA (MRK) agreed to develop lower-cost copies of biotechnology cancer treatments with Indian partner Dr. Reddy’s Laboratories Ltd. (DRRD) as the German drugmaker seeks to add a product line to propel growth.

The companies will share research and development costs, with Darmstadt-based Merck marketing the drugs outside the U.S. and paying Dr. Reddy’s a royalty, they said in a joint statement yesterday. The drugmakers will share marketing rights in the U.S., and Hyderabad-based Dr. Reddy’s will have them in certain emerging markets. Other terms weren’t disclosed.

Biosimilars are lower-cost versions of complex drugs made from living organisms. About $80 billion worth of branded biologic drugs will lose patent protection by 2013 and face competition from biosimilars that may earn $5.6 billion worldwide, according to a 2009 report from Research & Markets, a market data company in Dublin. Competitors to the Merck and Dr. Reddy’s project will include Novartis AG (NOVN)’s Sandoz unit.

Merck is reorganizing after setbacks in developing medicines for cancer and multiple sclerosis. The company said in April that it plans to close the Geneva headquarters of its Serono drug unit. It ended seven drug development programs last year and hired a new finance chief and head of pharmaceuticals.

“Our experience in developing, manufacturing and commercializing biopharmaceuticals gives us a clear advantage in the biosimilars field,” Stefan Oschmann, the head of Serono, said in the statement. “Dr Reddy’s will bring their first-in- market experience in biosimilars, as well as their expertise in generics and emerging markets to the table.”

Serono set up a biosimilars division in the Swiss canton of Vaud earlier this year, it said yesterday

Microsoft Case Against Motorola Mobility Headed to Trial

Microsoft Corp. (MSFT) and Google Inc. (GOOG)’s Motorola Mobility unit are headed to a trial in a dispute over royalty rates on the Xbox gaming system and Windows products, after a judge refused to end the case in Microsoft’s favor.

The dispute revolves around patents owned by Libertyville, Illinois-based Motorola Mobility that are used in standards that all electronics, including the Microsoft products, follow for WiFi and video coding technology.

U.S. District Judge James Robart in Seattle declined yesterday to find that Motorola Mobility breached obligations to license those patents to Microsoft on fair terms, saying the issue must be resolved at a November trial. Microsoft is also seeking to prevent Motorola Mobility from winning a ban on sales or U.S. imports of the Xbox.

“While the court will not at this time set forth a legal standard with respect to Motorola’s duty to offer its patents in good faith, it is likely that any analysis of Motorola’s duty will involve, at least in part, an examination of the intent behind Motorola’s offers,” the judge ruled.

Robart rejected the handset maker’s claim that Microsoft lost the right to complain by filing suit instead of responding to early royalty demands. At this stage in the case, he said, Microsoft hasn’t proven Motorola Mobility acted dishonestly in making its demands.

Motorola Mobility sent letters to Microsoft with what it said was a standard demand for a 2.25 percent royalty on the end price of products that use the inventions, including the Xbox and Windows products. Microsoft contends that would add as much as $4 billion in annual royalties, a figure Motorola Mobility disputes.

“Motorola Mobility has acted in good faith and we will prove that at trial,” spokeswoman Jennifer Erickson said in an e-mail. “We are pleased that the court is holding Microsoft to its word -- to license our essential patents just as the vast majority of the industry has done.”

Microsoft’s entertainment unit that includes Xbox sales generated $8.9 billion in revenue last year, and the Windows unit garnered $19 billion, according to Bloomberg data.

The Redmond, Washington-based company is trying to prevent the U.S. International Trade Commission from blocking imports of the Xbox from Asia, where it is built.

An ITC judge in April said the Xbox infringed four Motorola Mobility patents, including three related to industry standards. The commission is scheduled to announce June 25 whether it will review the infringement finding, and any exclusion order would be announced in August.

“This case is about Motorola breaking its promise to make its standard essential patents available on reasonable terms and putting the price and availability of consumer technology in jeopardy,” Microsoft Deputy General Counsel David Howard said in a statement. “Today’s decision underscores that Motorola made a promise to the industry which it now must keep, and we look forward to the November trial to determine the appropriate licensing royalty.”

Motorola Mobility, which became a Google unit last month, said that Microsoft refuses to pay royalties on the standard patents. Motorola Mobility has sued the software maker in the U.S. and Europe.

Robart has prevented Motorola Mobility from taking action to ban sales of Microsoft products in Germany. Motorola Mobility officials had no immediate comment on today’s decision.

The European Union is investigating complaints by Microsoft and Apple that Motorola Mobility is unfairly using standard- essential patents to block competition.

The U.S. case is Microsoft Corp. v. Motorola Inc., 10-cv- 1823, U.S. District Court for the District of Washington (Seattle). The ITC case is In the Matter of Gaming and Entertainment Consoles, 337-752, U.S. International Trade Commission (Washington).

For more patent news, click here.

Trademark

‘Filene’s Basement’ Mark May Be Withheld From Syms Corp. (SYMSQ) Auction

At today’s scheduled auction of Syms Corp.’s intellectual property assets, the “Filene’s Basement” trademark won’t be included, the Boston Herald reported.

Macy’s Inc. (M), the Cincinnati-based owner of the Basement mark, had licensed it to Syms, according to the newspaper, and contended it could be assigned only to an entity that acquired the Basement’s assets and kept the business intact.

Jack Hazan, executive vice president of auction company Hilco Streambank, told the Herald the Basement trademark “has several issues” that hadn’t been resolved.

He said the “Running of the Brides” mark may also not be put up for sale “because it’s so connected to Filene’s Basement,” according to the Herald.

Michigan Attorney General Says Trademark for Road Invalid

Michigan’s attorney general issued an opinion that roadways in the state can’t be registered as a trademark, Interlochen Public Radio reported.

M-22, a company based in Traverse City, Michigan, holds several federal trademarks for M-22, a highway name, and has warned that it will sue potential infringers, according to IPR.

Enrico Schaefer, the lawyer who represented M-22, told Interlochen Public Radio that the attorney general’s opinion is trumped by federal trademark law.

He said that although other companies have wanted to “copy and ride the coat tails” of his client because of its success, only M-22 actually gets to use it as a brand, IPR reported.

Maori Tribe Told Haka Phrases Can’t Be Registered as Trademark,

The Ngati Toa Maori tribe from New Zealand’s North Island failed in its attempt to register four phrases from its most- famous haka war dance, the Brisbane Times reported.

New Zealand’s trademarks commissioner said that although the tribe owned the haka, it didn’t have a monopoly over its commonly used words, according to the newspaper.

ProKiwi, a souvenir company in Christchurch, New Zealand, had opposed the registration attempts after the tribe tried to halt the company’s production of a tea towel using the phrases from the haka, the newspaper reported.

Taku Parai, chairman of the tribe’s governing body, told the Times he was disappointed registration was denied because “there has been no other mechanism that we could use to protect this work.”

For more trademark news, click here.

For copyright news, click here.

Trade Secrets/Industrial Espionage

Secret Memo Warns of Canada Cyber Threat After Nortel Attack

Cyber attacks pose a greater risk to Canada’s economic prosperity than the government previously believed and the country lacks the tools to fight hackers, officials warn in internal documents obtained by Bloomberg News.

“All new knowledge obtained indicates the problem is more widespread than previously thought,” said a “secret”-stamped memo to Public Safety Minister Vic Toews from his deputy minister, obtained under Canada’s freedom-of-information law.

Canada is trying to bolster its defenses as countries deploy increasingly advanced technology to disrupt their enemies’ networks and gain access to trade secrets. Some of Canada’s biggest companies, such as Potash Corp. (POT) of Saskatchewan Inc. and Nortel (NRTLQ) Networks Corp., have been targeted.

A software virus discovered last month called Flame, which targeted Iran’s energy sector, is more complex and resourceful than “all other cyber menaces known to date,” according to Moscow-based security company Kaspersky Lab. Flame’s discovery comes after Iran’s nuclear facilities were attacked by the Stuxnet virus, which was created by the Israeli and the U.S. governments, the New York Times reported June 1.

Nortel, once North America’s largest phone-equipment maker, was under steady attack by Chinese hackers from about 2000 until 2009, according to Brian Shields, who advised the Mississauga, Ontario-based company on cyber security for almost 20 years.

When Shields reported the attacks to the Royal Canadian Mounted Police in 2004, they didn’t take it seriously, he said.

It was not until January 2009 that the Canadian Security Intelligence Service, Canada’s spy agency, got involved -- the same month Nortel filed for bankruptcy, Shields said.

The RCMP didn’t immediately respond to a request for a comment on the Nortel allegations.

More recent attacks in Canada have been linked to commodities like potash, a natural fertilizer sought after in Asia to help improve crop yields. China-based hackers looking to derail BHP Billiton Ltd. (BHP)’s $40 billion bid in 2010 to acquire Potash Corp. zeroed in on the Canadian law firms connected with the transaction.

The Public Safety department established the Canadian Cyber Incident Response Centre to coordinate the federal response to “cyber security incidents” outside government networks, with a focus on guarding key infrastructure such as energy pipelines and power plants.

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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