Qualcomm, Northwestern, YouTube: Intellectual Property

Qualcomm Inc. (QCOM) has given the Searle Center at Northwestern University School of Law $2 million to fund research that will investigate the role of patents in spurring innovation.

Matthew Spitzer, the director of the Searle Center and a law professor at Northwestern, said in a phone interview yesterday that “there is an anti-patent drift in the academic literature. People are skeptical about the value of patents, but I’m not one of them.”

Spitzer, along with Kellogg School of Management professor Daniel Spulber, had spoken with Qualcomm executives and “pitched the idea of a center that was not ideologically predisposed to dislike patents. They basically said ‘if you do this, we will fund it.’”

The center will create databases to “collate information regarding standards, licensing, litigation and markets for patents,” according to an Aug. 22 statement from the university announcing the gift.

The database, once created, will be available to all, Spitzer said. He said he hopes to “test empirically the interaction of patent law and technological advances. We’re not yet very good at understanding this.”

GAO Report Shows Patent Trolls Bring 20% of Patent Lawsuits

The number of lawsuits filed by so-called patent trolls increased more than fourfold from 2007 to 2011.

According to a report by the Government Accountability Office released Aug. 22, patent trolls, technically known as patent monetization entities, brought “about a fifth of all patent infringement lawsuits from 2007 to 2011.” Because these entities tend to name a greater swath of defendants than operating companies, which produce products, the study found that patent trolls sued “close to one-third of the overall defendants.”

The report found that the number of defendants sued by trolls increased from 834 in 2007 to 3,401 in 2011. The report also found that lawsuits involving software-related patents accounted for approximately 89 percent of the increase in defendants between 2007 and 2011 and that “most of the suits” brought by patent trolls involved software-related patents.

The America Invents Act included a provision mandating that the GAO study the consequences of such patent litigation. The GAO conducted this study, it said in its report, because many have “raised questions about patent infringement lawsuits by entities that own patents but do not make products.

To read the report, click here.

For more patent news, click here.

Copyright

Harvard’s Lessig Sues Music Company Over Copyright Question

Harvard Law School professor Lawrence Lessig is asking a federal court in Boston to clarify that a lecture posted to YouTube doesn’t violate copyright law.

Lessig, a well-known expert on copyright law, has posted more than 50 lectures to Google Inc. (GOOG)’s YouTube, according to the lawsuit filed Aug. 22. One of those lectures -- on innovation and copyright, given in Seoul in June 2010 -- incorporated amateur music video clips of people singing ‘‘Lisztomania,” a song originally performed by the band Phoenix.

Lessig posted a recording of the lecture in 2010. This June, more than two years after it was uploaded, he received notice from YouTube that Liberation Music Pty Ltd, the Australian record company representing Phoenix, complained that the lecture contained copyrighted material.

In a phone interview yesterday, Lessig said he “countered to YouTube that it was fair use under American law.” Two hours later, he said, “I received notice that Liberation Music planned to file a lawsuit within 72 hours if I didn’t take the content down.”

Lessig took the lecture down, but didn’t stand down. In filing what’s known as an action for declaratory relief, he sued seeking a judgment clarifying that no violation occurred.

Christopher Morrison of Jones Day and Electronic Frontier Foundation, the digital rights group, filed the complaint on Lessig’s behalf. Liberation didn’t respond to an e-mail seeking comment.

The case also seeks to establish that Liberation’s conduct is impermissible under the Digital Millennium Copyright Act, which prohibits parties from misrepresenting that copyright infringement has occurred.

This isn’t the first time someone complained that Lessig violated a copyright in a lecture, he said yesterday. It is, however, the first time he was threatened with a lawsuit.

“It’s a deep irony that a lecture about copyright law is being taken down by extremists in copyright law,” he said.

The case is Lessig v. Liberation Music Pty Ltd, 1:13-cv-12028, U.S. District Court, District of Massachusetts (Boston).

TV Networks Turn to Courts Outside N.Y. in Fight With Aereo

Broadcasters stymied by court losses in New York are turning to judges in California and Massachusetts in their campaign to shut down the Aereo Inc. online streaming TV service backed by Barry Diller.

Aereo, which relays broadcast television to subscribers over the Internet, continues to expand its service to more U.S. cities even as CBS Corp. (CBS), Comcast Corp. (CMCSA)’s NBC, Walt Disney Co. (DIS)’s ABC and Twentieth Century Fox Film Corp.’s Fox pursue copyright litigation that may wind up before the U.S. Supreme Court.

A federal court in Los Angeles granted Fox’s motion to close a similar service run by FilmOn.TV Networks Inc. and lawyers are set to argue today before the U.S. Court of Appeals in Pasadena, California, over that decision. A victory by Fox would create a split between federal appeals courts in California and New York, which could propel the case to the nation’s highest court.

“We’re going to ultimately win this,” Dennis Wharton, a spokesman for the National Association of Broadcasters, said in a phone interview. “They’re retransmitting content they don’t own and charging a fee for it without the permission of the content owners. This case has united the broadcast industry like no other.”

While broadcasters reaped $2.36 billion in retransmission fees in 2012 from services including Time Warner Cable Inc. (TWC) and DirecTV (DTV), the annual rate of increase in retransmission revenue declined to 34 percent last year from 42 percent in 2011, according to researcher SNL Kagan, which projects another decline this year.

The broadcasters say they’re fighting to preserve the business model that generates revenue to produce television programs. Cable and satellite services might balk at paying to carry their channels if Aereo can legally get the signal for nothing, they said.

Other streaming services, including Hulu LLC, Netflix Inc. (NFLX) and Amazon.com Inc. (AMZN), pay licensing fees to the broadcasters.

The only cable channel New York-based Aereo offers is Bloomberg TV, which, like Bloomberg News, is a unit of New York-based Bloomberg LP.

Aereo scored early victories against the networks in New York, where an appeals panel affirmed a lower-court ruling that its transmissions are private performances under copyright law and don’t require licenses. The broadcasters’ bid for a review by the full appeals court was rejected.

“We are pleased that the federal district court in New York looked in depth at our technology and rejected the broadcasters’ assertions that it violated copyright law,” Chet Kanojia, Aereo’s founder and chief executive officer, said yesterday in an e-mail.

In July, TV-station owner Hearst Corp. sued Aereo in Boston, the market Aereo targeted after New York. Aereo, expecting CBS to sue there, had already filed a complaint against that network in New York seeking a declaration that it wasn’t an infringer.

The cases in New York are American Broadcasting Cos. v. Aereo Inc., 12-01540, WNET v. Aereo Inc., 12-01543, and Aereo Inc. v. CBS Broadcasting Inc., 13-03013, U.S. District Court, Southern District of New York (Manhattan). The case in Boston is Hearst Stations Inc. v. Aereo Inc., 13-11649, U.S. District Court, District of Massachusetts (Boston). The California case is Fox Television Stations Inc. v. Aereokiller, 12-06921, U.S. District Court, Central District of California, and Fox Television Stations Inc. v. FilmOn X LLC, 13-55156, U.S. Court of Appeals for the Ninth Circuit (Pasadena).

For more, click here.

For more copyright news, click here.

For trademark news, click here.

Trade Secrets

Three Men Charged With Stealing Flow Traders Trading Software

Two men who were employed by Flow Traders were charged in New York with stealing the firm’s electronic trading software by e-mailing it to themselves from their work accounts.

Glen Cressman, a trader at the New York office of the Amsterdam-based company, sent e-mails to himself in December 2012 with trading strategies and valuation algorithms, according to the complaint in state Supreme Court in Manhattan. He is charged with two counts each of unlawful duplication of computer-related material and unauthorized use of secret scientific material, according to copies of a complaint brought by the Manhattan District Attorney’s office.

Jason Vuu, a Flow Traders employee until his resignation in March, was charged with 20 counts of the same offenses. His e-mails were sent from August 2011 to August 2012, and he sometimes changed the file format of the attachments to make it difficult to recognize their contents, according to the complaint.

Vuu is accused by prosecutors of sharing the software code with Simon Lu, who wasn’t a Flow Traders employee, to create their own trading company. Lu is charged with three counts each of unlawful duplication of computer-related material and unauthorized use of secret scientific material.

“I’m confident that when the DA’s office has completed their investigation they will find Flow Traders did not suffer any economic loss,” Jeremy Saland, a lawyer for Vuu, said in an e-mail yesterday. “Their algorithms and code weren’t taken or used in any malicious way that damaged or compromised their financial security.”

Charles Ross, a lawyer for Cressman, Paul Shechtman, a lawyer for Lu, and Joseph DeMarco, a lawyer for Flow Traders, didn’t immediately return phone and e-mail messages seeking comment on the charges.

The complaints were reported earlier by the Wall Street Journal.

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

Bloomberg reserves the right to edit or 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.