Myriad, Nestle, Kodak, Kim Dotcom: Intellectual Property

Myriad Genetics Inc. (MYGN), owner of patents related to genes linked to hereditary cancer risks, won an appeals court ruling that it can receive patents on isolated DNA, a case that has split the medical community.

The U.S. Court of Appeals for the Federal Circuit yesterday said that some specific patent claims related to comparing the DNA sequences are abstract ideas not worthy of a patent, although a claim related to a method of screening potential cancer therapeutics is eligible for legal protection. The same three-judge panel made a similar decision a year ago, before it was ordered by the Supreme Court to reconsider its findings.

The dispute centered on whether isolated DNA -- genetic coding that has been removed from the body and separated from other material -- is a product of nature and thus ineligible for patent protection.

Myriad owns patents for a test that can determine the hereditary risk of breast and ovarian cancers. Groups including the Association for Molecular Pathology and the American College of Medical Genetics argued Myriad was trying to get legal ownership of parts of the human body.

Myriad, which said it was pleased with the ruling, said gene-related patents haven’t hindered research.

The Federal Circuit was ordered to reconsider its July 2011 decision after the U.S. Supreme Court issued a ruling in a separate case that limited the ability to get patents on certain types of medical diagnostic tests.

The Federal Circuit said courts shouldn’t confuse the general issue of whether an idea is eligible for a patent with separate questions about whether a specific invention using that idea should get a patent.

The Myriad dispute has split the medical community. Some scientists argue they have been stymied in their quest for new medicine and treatments because they fear coming up against demands for royalties or letters demanding they stop using patented inventions.

Companies such as Genomic Health Inc. (GHDX) and Alnylam Pharmaceuticals Inc. (ALNY) argue they can’t attract investment dollars if they can’t protect their research from competitors.

The genetics groups, backed by the American Civil Liberties Union and the Public Patent Foundation, sued to challenge aspects of seven Myriad patents, and won at the trial court.

The case is Association for Molecular Pathology v. Myriad, 10-1406, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Association for Molecular Pathology v. U.S. Patent and Trademark Office, 09-cv-4515, U.S. District Court for the District of New York.

Nestle Loses Bid to Block Sales of Rival Nespresso Capsules

Nestle SA (NESN), the world’s biggest food company, lost court rulings over attempts to stop companies from selling rival capsules compatible with Nespresso machines in Germany.

Nestle’s patents for the coffee machine system don’t prevent consumers from using other capsules, the Dusseldorf Regional Court said in an e-mail statement yesterday. The capsules are neither the key component nor a “special feature” of the protected invention, the judges said.

Nespresso faces increased competition as food companies including DE Master Blenders 1753 (DE) seek to sell single-serve capsules that can be used with Nespresso machines. The German court’s decisions came from Vevey, Switzerland-based Nestle’s suits against Ethical Coffee Co. and Betron AG.

Nestle, which had asked for a preliminary injunction under fast-track proceedings, can ask the court to hear the case under full civil-trial process in an effort to get a different decision and can also appeal today’s judgment.

“We are convinced of the power of our legal arguments and will thus take further steps to defend our intellectual property,” Holger Feldmann, managing director of Nestle’s German Nespresso unit, said in an e-mail statement. “Competition must be fair and rules must be the same for all.”

Master Blenders markets its L’Or capsules in France, the Netherlands, Belgium and Spain, while Ethical Coffee’s rival capsules are available in at least 10 countries including Austria and Germany. Both Betron and Ethical Coffee are selling capsules that say they are “usable for Nespresso machines” at prices that are as much as a third cheaper than the Nestle capsules, according to the court.

“Since the buyer acquires the right to use the machine, there is no patent violation when he uses capsules of other producers,” the German court said.

Nespresso, which produced 3.5 billion Swiss francs ($3.6 billion) in revenue in 2011, or 4 percent of Nestle’s sales, has been one of the company’s fastest-growing brands. Sales are increasing about 20 percent annually and Nespresso continues to take market share even as new competitors arise, Ackerman said.

Yesterday’s cases are LG Dusseldorf, 4b O 81/12 and 4b O 82/12.

Kodak Says Digital Patent Sale Uncertain, Auction Continuing

Eastman Kodak Co. (EKDKQ), the bankrupt photography pioneer, said it’s continuing the extended auction of its digital-imaging patents and may not sell them.

Kodak continues to hold talks with potential buyers of the portfolios, the Rochester, New York-based company said yesterday in an e-mailed statement.

“The company reiterates that it has not reached a determination or agreement to sell the digital imaging patent portfolio, and may retain all or parts of it as a source of creditor recoveries in lieu of a sale if it concludes that doing so is in the best interests of the estate,” Kodak said in the statement.

The patents for sale relate to the capture, manipulation and sharing of digital images. Kodak is selling the patents to fund a turnaround after seeking Chapter 11 protection in January, pursuing a plan to shrink the company and focus on printing more than photography. Chief Executive Officer Antonio Perez is pushing ahead with the sale amid legal fights with device makers, including Apple Inc. (AAPL), over the ownership and validity of some of the patents.

The patents are collateral for a $950 million debtor-in- possession loan arranged by Citigroup Inc. to help Kodak operate during bankruptcy.

In court documents, Rochester, New York-based Kodak has said the patents may be worth $2.21 billion to $2.57 billion, based on an estimate by patent advisory firm 284 Partners LLC. Kodak said it has generated more than $3 billion in revenue by licensing some of the digital-imaging patents to users, including Samsung Electronics Co. (005930), LG Electronics Inc. (066570), Google Inc. (GOOG)’s Motorola Mobility unit and Nokia Oyj. (NOK1V)

Kodak said in June that 20 parties had signed agreements to view confidential information ahead of potential bids. The identities of unsuccessful bidders will be kept secret under auction rules.

The company and its creditors this week agreed to extend the auction deadline beyond Aug. 13, “in light of continuing discussions with bidders,” without providing a revised target date.

Kodak filed for bankruptcy after years of burning through cash while digital photography eroded its film business. The company had spent $3.4 billion on restructuring before bankruptcy, including payouts to shed 47,000 employees since 2003, closing 13 factories that produced film, paper and chemicals, and 130 photo laboratories.

The bankruptcy case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District of New York

For more patent news, click here.

Trademark

Use of Sturgis Bike Rally Trademarks Costs Vendors $1 per Item

All the T-shirts sold at this year’s South Dakota gathering of motorcycle fans bore an official product tag from Sturgis Motorcycle Rally Inc. for which vendors must pay $1 apiece, the Rapid City Journal reported.

Sturgis Motorcycle Rally Inc., holder of several trademarks associated with this month’s annual bike rally, did not let any unlicensed vendors sell at the rally, so Rushmore Photo & Gifts, which is the defendant in a rally-related trademark suit, was among the missing vendors, according to the newspaper.

Dean Kinny, who heads the non-profit SMRI, told the newspaper the idea of the licensing program is to “ensure quality control” and to audit the licensees to make sure appropriate fees are collected.

Frank Mortimer, a member of Concerned Citizens for Sturgis, said his group has anonymous support from some vendors in its effort to challenge the trademarks, according to the Rapid City Journal.

For more trademark news, click here.

Copyright

U.S. Loses Bid to Limit Disclosure in Kim Dotcom Extradition

The U.S. lost a bid to limit the amount of information it must turn over to Megaupload.com founder Kim Dotcom, accused of orchestrating the biggest copyright infringement in the country’s history, in his fight against extradition from New Zealand.

New Zealand High Court Justice Helen Winkelmann yesterday rejected a U.S. request to review a district court judge’s order to turn over evidence relating to Dotcom’s indictment, including all records obtained in connection with covert operations undertaken by agents involved in the investigation.

“The NZ High Court ruling in @KimDotcom case citing Bill of Rights protects Kim’s rights and the rights of all New Zealand residents,” Ira Rothken, a lawyer for Dotcom, wrote on Twitter following the ruling.

Dotcom, 38, was indicted in what U.S. prosecutors dubbed a “Mega Conspiracy,” accusing his file-sharing website of generating more than $175 million in criminal proceeds from the exchange of pirated film, music, book and software files. He faces as long as 20 years in prison for each of the racketeering and money-laundering charges in the indictment, with the U.S. seeking his extradition for a trial in Virginia.

The amount of documentation ordered to be turned over to Dotcom was unprecedented in the country or anywhere else for extradition cases, the U.S. had said.

“Disclosure in relation to extradition cases is extremely limited,” prosecutors had said, according to a summary of the arguments written by Winkelmann.

Extradition hearings are “essentially criminal in character” and the accused must be assured a fair hearing, according to New Zealand’s Bill of Rights, Winkelmann wrote.

“The more significant the rights affected, the more stringent the procedural rules designed to maintain the fairness of the process are likely to be,” the judge wrote.

The case is between United States of America and Kim Dotcom, 2012-404-3026, High Court of New Zealand (Auckland).

Maya Publishing Infringed Star’s Wedding Photos, Court Says

Maya Publishing Inc., a Miami Beach, Florida-based publisher of Spanish-language magazines, committed copyright infringement by publishing unauthorized wedding and wedding night photos of a pop singer and her manager, an appeals court ruled.

In its Aug. 14 opinion, the 9th U.S. Circuit Court of Appeals said the publication of the photos of singer Noelia Monge and Jorge Reynosa’s clandestine wedding didn’t fall into copyright law’s “fair use” provisions.

The couple wanted to keep the marriage a secret out of privacy concerns and their desire not to affect Monge’s image as “a young, single pop singer,” the court said. The couple took precautions, permitting only the minister and two chapel employees to witness the ceremony, and limiting photos to those taken with their own camera.

Saying the story behind the case “reads like a telanovela,” the appeals court said a third party claimed he found the photos on a memory chip left in the ashtray of a vehicle Reynosa had driven. According to court papers, the third party initially tried to get money from the couple in return for the memory chip.

When the plan failed, the court said, the photos were sold to the magazine for $1,500. The photos were sold without permission, the couple said at trial.

They filed suit in federal court in July 2009. The trial court ruled in October 2010 finding no infringement, and the couple filed an appeal.

The appeals court said that the magazine published virtually every photo and usurped any future commercial use of the photos.

Although the magazine had claimed its use of the photos was legitimate news reporting, the court said that “waving the news reporting flag is not a get out of jail free card in the copyright arena.”

The appeals court reversed the trial court and sent the case back for further proceedings.

The appeal is Noelia Monge v. Maya Magazines Inc., 10-56710, U.S. Court of Appeals for the 9th Circuit. The lower court case is Noelia Lorenzo Monge v. Maya Magazines Inc., 2:09- cv-05077-R-SS, U.S. District Court, Central District of California (Los Angeles).

For more copyright news, click here.

IP Moves

Pryor Cashman Hires Finguerra-DuCharme From White & Case

Pryor Cashman LLP hired Dyan Finguerra-DuCharme for its IP practice, the New York-based firm said in a statement.

Finguerra-DuCharme, who previously practiced at New York’s White & Case LLP and Washington’s Wilmer Cutler Pickering Hale & Dorr LLP, is a litigator. Among clients she has represented in trademark and copyright disputes are a luxury goods maker, a car manufacturer, a national financial services firm, a lifestyle community developer and homebuilder.

She has an undergraduate degree from Hamilton College and a law degree from Brooklyn Law School.

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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