Universal Music, Counterfeit Coach: Intellectual Property

Universal Music Group agreed to settle a lawsuit brought by the Detroit producers who helped start rapper Eminem’s career over royalties from Apple Inc.’s iTunes and mobile-phone ringtones.

Lawyers for the Vivendi SA (VIV) unit and the producers filed a request to dismiss the case in federal court in Los Angeles on Oct. 29, saying “this action has been resolved to the satisfaction of all parties.” Terms of the settlement weren’t disclosed.

In 2009, a jury rejected arguments by FBT Productions LLC that Eminem is entitled to half the net receipts the record company gets for the downloads, rather than his standard royalties from record sales. The producers, who first signed Eminem in 1995, get 40 percent of the royalties.

A federal appeals court in 2010 reversed the verdict, saying the trial judge had incorrectly denied a request by the producers for a pretrial ruling that the “masters license” agreement for the recordings clearly applied to downloads and not the records-sold provision.

Peter Lofrumento, a spokesman for Universal Music, and Richard Busch, a lawyer for the producers, confirmed the settlement without providing additional comment.

Eminem, whose real name is Marshall B. Mathers III, wasn’t a party in the case.

FBT Productions, owned by brothers Jeff and Mark Bass, signed Eminem to an exclusive recording deal in 1995. In 1998, they made a deal with rapper Dr. Dre’s Aftermath Records, a unit of Universal Music, which released Eminem’s breakthrough album, “The Slim Shady LP.”

The case is FBT Productions v. Aftermath Records, 07-cv-3314, U.S. District Court, Central District of California (Los Angeles).

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Trademark

Coach Wins $257 Million Court Ruling Against Counterfeiters

Coach Inc. (COH), the largest U.S. luxury handbag maker, said it won a $257 million default judgment in a lawsuit filed against businesses that operate websites selling counterfeit merchandise.

The judgment also awards Coach ownership of 573 Internet domain names, the company said Nov. 2 in a statement. The docket in the case, filed in federal court in Chicago, shows that the decision was rendered Oct. 15.

“This judgment should serve as a warning to everyone involved in any aspect of trafficking in counterfeit goods that Coach will find you and will seek to impose the harshest penalties available against you,” Coach’s general counsel, Todd Kahn, said in the statement.

The judgment is the latest victory in Coach’s anti-counterfeiting campaign known as “Operation Turnlock,” the company said. Since the program’s inception in 2009, Coach has obtained monetary awards against manufacturers, wholesalers, flea market operators and other links in the counterfeit distribution chain, the New York-based company said.

The case is Coach Inc. v. Does 1-573, 12-cv-01514, U.S. District Court, Northern District of Illinois (Chicago).

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Patent

Enzo Awarded $49 Million in Trial Against Life’s Applera Unit

Enzo Biochem Inc. (ENZ) was awarded $48.6 million after a federal jury said Life Technologies Corp.’s Applera unit infringed a patent over a way to detect genetic sequences and diagnose human diseases such as cancer.

The federal jury in New Haven, Connecticut, rejected Applera’s claims that the patent was invalid. Enzo said it will ask for interest that could add tens of millions of dollars to the final damage award.

The suit was first filed in 2004 by New York-based Enzo and Yale University. They were demanding royalties on Life Technologies’s genetic research and screening. The trial focused on Applera’s dRhodamine and BigDye Terminator products used to sequence DNA. The patent, issued in 1995, has since expired.

Enzo said the verdict could help it resolve cases it filed against other companies.

Enzo Chief Executive Officer Elazar Rabbani said in a statement that “The case has taken eight years, but we have finally prevailed. It is a vindication of the investments we have made in developing and protecting our intellectual property.”

In its earnings release Nov. 1, Life Technologies said it “strongly disagrees with the verdict.” The release also noted that because the relevant patent expired in 2004, the verdict “does not have any effect” on the company’s business going forward.

The case is Enzo Biochem Inc. v. Applera Corp., 04-cv-929, U.S. District Court, District of Connecticut (New Haven).

Google Defends Hard-Nosed Patent Fees in Microsoft, Apple Trials

Google Inc. (GOOG), which spent $12.5 billion to buy handset manufacturer Motorola Mobility and its more than 17,000 patents, now has to defend what critics say is its acquisition’s hard-nosed licensing tactics.

Federal judges 2,000 miles apart will hear complaints from Apple Inc. and Microsoft Corp. (MSFT) that Motorola Mobility is demanding excessive royalties on patents deemed essential to standards for how electronic devices function. The trials are scheduled to start today in Madison, Wisconsin, and next week in Seattle, as regulators in the U.S. and Europe investigate whether Motorola Mobility is misusing those patents to curb competition in the $219 billion smartphone market.

Together, they mark the first time courts will seek to define licensing obligations of patent owners who help create technological specifications.

Apple and Microsoft raised breach-of-contract claims in federal court in response to separate patent-infringement cases Motorola Mobility filed at the U.S. International Trade Commission in Washington, which could ban on imports of Apple Inc. (AAPL)’s iPhone and Microsoft Corp.’s Xbox video-gaming system.

An ITC judge is considering whether Microsoft, based in Redmond, Washington, violated two patents for video decoding and a non-essential patent for a way to establish communication between the Xbox and accessories.

The agency in August said Cupertino, California-based Apple didn’t infringe Motorola Mobility patents for standard wireless technology, while ordering a trade judge to review a patent for a sensor that prevents accidental hang-ups.

The two trials probably won’t end the litigation among the companies. Still, the cases could alter the dynamics in Google’s effort to use the Motorola Mobility patents as a bulwark against Apple’s claims that Google’s Android operating system for wireless devices copied the iPhone. Apple’s largest smartphone competitor, Samsung Electronics Co., uses Android.

The cases are: Apple Inc. v. Motorola Mobility Inc., 11cv178, U.S. District Court for the Western District of Wisconsin (Madison); and Microsoft Corp. v. Motorola Mobility Inc., 10cv1823, U.S. District Court for the Western District of Washington.

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Internet

Google Android Apps Collect Too Much User Data, Researcher Says

More than 100,000 applications available for download from Google Inc.’s online marketplace may be collecting too much data from users, a research firm said.

About one-quarter of more than 400,000 applications studied are “suspicious” or “questionable” because of what they do in the background, such as location tracking, accessing contact lists or harvesting the contents of e-mail messages, according a report issued Nov. 1 by security firm Bit9 Inc. Those functions typically go far beyond the programs’ stated purpose, Bit9 said.

Android phones warn users when they download applications about what information the programs will access. Whether most people actually read those warnings is another matter. A Google representative didn’t immediately respond to a request for comment.

Some of the most aggressive apps are programs purporting to be affiliated with popular brands, such as Facebook Inc. (FB) and Zynga Inc. (ZNGA), Bit9 Chief Technology Officer Harry Sverdlove wrote in an e-mail interview with Bloomberg.com. The extra functions don’t necessarily make the programs malicious, he said, but may raise questions about the developers’ intentions.

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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