LG, DuPont, Bank of America, GM: Intellectual Property

Three LG Electronics Inc. (066570) patents for front-end-loading washing machines were infringed by Daewoo Electronics Corp., a U.S. jury found.

Jurors in federal court in Wilmington, Delaware, also decided Nov. 30 that the three LG patents were valid, after hearing evidence in a week-long trial during which lawyers rolled out washing machines and displayed gears and metal moldings.

“People like LG try to make a better mousetrap,” Richard Stroup, a lawyer for LG, told jurors during the trial. Daewoo infringed those efforts, he said.

LG sued Daewoo in 2008, alleging infringement of its patent-protected inventions for washer drum-drive components. Daewoo claimed that LG’s patents weren’t valid and were therefore unenforceable. Both LG and Daewoo are based in Seoul.

“Daewoo independently developed its washing-machine technology,” attorney Mark Whitaker, representing Daewoo, said at trial.

A possible trial on damages wasn’t immediately scheduled by U.S. District Judge Richard G. Andrews, who presided over the case.

John I. Taylor, a spokesman for LG Electronics USA Inc., and Daewoo attorney Rodger D. Smith II, didn’t immediately return calls seeking comment on the verdict.

In dispute were patents 6,460,382, 6,914,363, and 7,418,843.

The case is LG Electronics Inc. v. Daewoo, 08-CV-828, U.S. District Court, District of Delaware (Wilmington).

DuPont ‘Fraud’ in Monsanto Seed Case Unsealed by U.S. Judge

DuPont Co., the most valuable U.S. chemical maker, lied to a federal court and investors about its right to use Monsanto Co. (MON) seed technology as a central part of its defense in a patent lawsuit, a judge ruled.

DuPont “knowingly perpetrated a fraud against the court,” according to a Nov. 16 order by U.S. District Judge Richard Webber unsealing sanctions he levied last December that limited the company’s defenses in the lawsuit brought by Monsanto.

E-mails from DuPont executives and lawyers show they knew the company didn’t have an agreement allowing it to combine Monsanto’s Roundup Ready soybeans with a second trait, while telling the court and public for years that it had such a right, Webber ruled. Because the sanction order was sealed, DuPont has “been able to continue their public relations spin,” the judge wrote.

Webber will decide whether to uphold or increase the $1 billion award to Monsanto made in the patent case by a federal jury on Aug. 1 after 40 minutes of deliberations.

DuPont today asked Webber to unseal more documents that show “we told the truth,” Thomas L. Sager, DuPont general counsel, said in a statement. “The sanctions ruling is dead wrong,” he said.

Monsanto sued DuPont in 2009, claiming the company was infringing a patent for seeds that are genetically modified to tolerate application of the herbicide Roundup. Monsanto argued that DuPont wasn’t allowed to combine its own seed trait with Monsanto’s Roundup Ready trait.

DuPont in turn accused Monsanto of trying to monopolize the seed market. Webber split the dispute, with the patent issue tried first and the antitrust case scheduled for trial next year.

After ruling in December that DuPont had misled the court, Webber prevented the company from arguing to the jury that it acted within the terms of a 2002 licensing contract. The judge also ordered DuPont to pay some of Monsanto’s legal bills.

Webber, in his November order, said he provided the Department of Justice’s antitrust division with a copy of his fraud findings in February. The department announced last month it dropped its investigation into possible anti-competitive practices in the seed industry.

“DuPont, its employees, and its counsel throughout this litigation have adhered to the highest ethical standards,” DuPont said in an earlier statement. “All of the company’s representations to the court or the public regarding its claims and defenses in this case have been accurate.”

Webber’s orders “speak for themselves,” said Kelli Powers, a Monsanto spokeswoman, who declined to comment further.

The case is Monsanto Co. v. E.I. du Pont de Nemours & Co., 09cv686, U.S. District Court, Eastern District of Missouri (St. Louis).

Gene Patents Draw U.S. High Court Review in Biotechnology Test

The U.S. Supreme Court agreed to consider whether human genes can be patented, taking up an issue that has split the medical community and will shape the future of personalized health care and the biotechnology industry.

The justices said Nov. 30 they will hear a challenge to Myriad Genetics Inc. (MYGN)’s patents on genetic material used in tests for breast and ovarian cancer. Doctors, researchers and patients are opposing the patents, arguing that Myriad’s monopoly over the genes is blocking clinical testing and research.

The nation’s highest court will hear arguments, probably in March, and rule by the end of June.

Biotechnology companies say they have been getting patents on genes for 30 years -- and can’t attract investment dollars unless they can protect their research from competitors. A study published in 2005 by Science magazine found that 20 percent of human genes had some level of patent protection.

Any move to change that system, “particularly with the deeply settled reliance interests of the technology and investing communities at stake, should be addressed to Congress, not the courts,” Salt Lake City-based Myriad argued in court papers that urged rejection of the appeal.

Those supporting the challenge to Myriad’s patents include the American Society of Human Genetics, the American Medical Association and AARP, which represents older Americans.

Myriad’s supporters in the litigation have included the Biotechnology Industry Organization and the U.S. unit of Novartis AG, Europe’s biggest drugmaker.

The case is Association for Molecular Pathology v. Myriad Genetics, 12-398.

For more patent news, click here.

Trademarks

Bank of America Application Points to Social-Impact Bonds

Bank of America Corp. is seeking a U.S. trademark on a phrase to be used to describe social-impact bonds, according to a filing with the U.S. Patent and Trademark Office.

The Charlotte, North Carolina-based bank said in its application that it plans to use the mark with “financing services; project financing; funds investment; capital investment services; project financing for socially beneficial programs.” The phrase is “Anything a Society Truly Wants Can Be Financed and Achieved.”

In the U.K., frustrated by the difficulty of finding money to fund social programs, a group called Social Finance created a way to tap into private capital.

The idea is that nonprofit organization wanting to fund a project issues a “bond” that investors buy. The money raised funds the program, the results are measured and then, if certain metrics are met, the government refunds the investor -- with a return.

That group raised 5 million pounds ($8.1 million) to fund a pilot program at the prison in Peterborough. Inmates are offered an array of support services when they leave the prison, and their ability to stay out of prison is measured against the general U.K. prison population. If the recidivism rate falls by 7.5 percent, the government is to repay the investors a share of the long-term savings.

In a January opinion article in the Washington Post, James Q. Wilson, the late Ronald Reagan professor of public policy at Pepperdine University in California, cited social-impact financing as a better way to reduce income inequality than taxing the wealthy.

For more trademark news, click here.

Copyright

Networks Ask Appeals Court to Shut Down Aereo Online Service

Television networks including Walt Disney Co. (DIS)’s ABC and Comcast Corp. (CMCSA)’s NBC asked an appeals court to shut down Aereo Inc., the online TV service backed by Barry Diller, claiming it violates their copyrights.

The broadcasters, which also include News Corp.’s Fox Television and CBS Corp. (CBS), made oral arguments today in federal appeals court in Manhattan, seeking to overturn a lower-court judge’s refusal to put New York-based Aereo out of business. They said the judge erred in relying on an appeals court ruling in a case involving a Cablevision Systems Corp. (CVC) video recorder.

The networks sued in March, claiming Aereo infringed their copyrights by capturing over-the-air signals and retransmitting them without a license to subscriber smartphones and computers.

“Cablevision was a storage service, not a retransmission service,” Bruce Keller, a lawyer for the networks, told the three-judge appeals panel Nov. 30. “Aereo is a retransmission service by its own design. Without a license, it violates copyrights. It sells our broadcasts, our performances, to its customers.”

Aereo said in court papers that its service gives individual subscribers access to broadcast programming and lets them record it using remotely located individual antennas and digital video recorders. That constitutes a private performance under the law, according to Aereo.

U.S. District Judge Alison Nathan in Manhattan in July denied the networks’ motion for an injunction, ruling that Aereo’s retransmissions weren’t public performances requiring a license under copyright law.

Aereo has argued that providing a copy of a program through an individual antenna that transmits to one subscriber and no others constitutes a private performance. Using one antenna to gather a signal before redistributing it to many subscribers would constitute a public performance requiring a license.

Before the service began, Aereo received support from Diller’s digital media company IAC/InterActive Corp. (IACI), which led a $20.5 million round of financing. Diller, who is on Aereo’s board, once ran News Corp. (NWSA)’s Fox Broadcasting. Chet Kanojia is the founder and chief executive officer of Aereo.

The appeals are American Broadcasting Cos. v Aereo, 12-2807, and WNET v. Aereo, 12-2786, U.S. Court of Appeals for the Second Circuit (Manhattan). The lower-court cases are American Broadcasting Cos. v. Aereo, 12-1540, and WNET v. Aereo, 12-1543, U.S. District Court, Southern District of New York (Manhattan).

‘Monty Python’ Producer Seeks More Royalties for ‘Spamalot’

The producer of “Monty Python and The Holy Grail” is looking for more than a shrubbery from the 1975 film’s six stars in a London lawsuit over a profit-sharing agreement tied to the hit musical “Spamalot.”

Mark Forstater is entitled to a larger share of the royalties from the musical based on the film, which has been “a huge international commercial success,” with runs on Broadway and in London’s West End, his lawyers said at a London hearing.

Forstater, who was declared bankrupt in June, should be treated as the “seventh Python” for financial purposes, Tom Weisselberg, his attorney said in court Nov. 30. Three of the founders of the comedy troupe, Michael Palin, Eric Idle and Terry Jones, are scheduled to testify at the trial, which is expected to last five days.

“Spamalot” grossed $168 million before it closed at New York’s Shubert Theater in January 2009, according to the Broadway League, a trade association of landlords and producers. The six Pythons each earn between $500,000 and $800,000 in royalties per year, according to a 2009 interview with Roger Saunders, the London manager of Python (Monty) Pictures Ltd.

Saunders couldn’t be immediately reached for comment.

In the film, King Arthur gathers his knights for a quest to find the Holy Grail. Along the way, they encounter blood-thirsty villagers looking for witches to burn, French soldiers who toss cows and insults at them over battlements, and a huge knight who demands a shrubbery in order to let them pass.

Between 1975 and 2005 Forstater received one-seventh of half the merchandising and spinoff income from “Grail,” his lawyers said in documents filed at the U.K. court. Lawyers for the Pythons argued he should get a smaller proportion.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Ex-GM Engineer, Husband Found Guilty of Trade Secrets Theft

An ex-General Motors Co. (GM) engineer and her husband were found guilty of stealing trade secrets on hybrid-car technology from the automaker to help develop such vehicles in China.

A federal court jury in Detroit reached the verdicts Nov. 30 after a trial that started Nov. 5. Jurors began deliberating yesterday.

The U.S. claimed Shanshan Du, the ex-GM employee, copied the Detroit-based company’s private information on the motor control of hybrids and provided documents to her husband, Yu Qin. Prosecutors accused Qin of using the data to seek business ventures or employment with GM’s competitors, including the Chinese automaker Chery Automobile Co.

Qin was convicted of all seven counts. Du was convicted on three counts, including conspiracy to possess trade secrets without authorization. She was acquitted on wire fraud charges.

General Motors contended that the secrets are worth more than $40 million, prosecutors said. Lawyers for both defendants, who pleaded not guilty, argued that the information didn’t consist of trade secrets, wasn’t stolen and was useless for other companies.

The U.S. alleged that Du, an electrical engineer who worked at GM from 2000 to March 2005, sought assignment to the company’s hybrid work project to gain access to information on the motor control of such vehicles.

The U.S. claims that Du began providing GM documents to her husband for use in a company they had started, Millennium Technology International. Du copied material and Qin developed a plan to sell hybrid vehicle technology through a joint venture in China, the U.S. said.

The process accelerated after GM sought Du’s resignation in late January 2005, according to the indictment. Prosecutors said at the beginning of the trial that 16,262 GM files were found on Du’s computer.

After Du left the company, the couple uploaded GM documents containing secret information onto a computer at their home, the U.S. claimed. In July or August 2005, Qin “communicated with others, by e-mail and in person, about collaboration on a new business venture which would provide hybrid vehicle technology to Chery,” the U.S. said in court papers.

The U.S. also alleged that Qin destroyed evidence during the government’s initial investigation. In May 2006, the U.S. said, the defendants dumped bags of shredded documents in a Dumpster behind a grocery store.

The case is U.S. v. Qin, 10-cr-20454, U.S. District Court, Eastern District of Michigan (Detroit).

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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