Aug. 16 (Bloomberg) -- Google Inc., the biggest maker of smartphone software, agreed to buy Motorola Mobility Holdings Inc. for $12.5 billion in its largest acquisition, gaining mobile patents and expanding in the hardware business.
Motorola Mobility, under pressure from activist investor Carl Icahn to shift strategy, gives Google more than 17,000 patents it can leverage in negotiations with competitors such as Apple.
Larry Page, the Google co-founder who took over as chief executive officer in April, is pushing the Web company into smartphones to take on Apple Inc.’s iPhone and gain more clout for its Android software in the wireless business.
Motorola shareholders will get $40 a share in cash, the companies said in a statement yesterday. That’s 63 percent more than Motorola Mobility’s closing price on the New York Stock Exchange on Aug. 12. Both boards have approved the takeover.
T-Mobile USA Inc. introduced the first phone powered by Google’s Android software, made by HTC, in October 2008. Android, which Google offers for free, will remain available to other manufacturers, the company said. Winston Yung, chief financial officer of HTC, gave his support to the deal, saying it will strengthen “the whole Android ecosystem.”
Google said Samsung and Android-phone manufacturers Sony Ericsson Mobile Communications AB and LG Electronics Inc. also support the transaction. In a blog posting Aug. 3, Google accused Apple, Microsoft and Oracle Corp. of using patents to wage a “hostile, organized campaign” against Android.
“There is an intellectual property arms race between Apple, Google and Microsoft,” said Kevin Smithen, a telecommunications analyst at Macquarie Securities Group in New York.
Google had a total of 754 patents assigned to it as of last week, according to the U.S. Patent and Trademark Office database, not including patents Google bought last month from International Business Machines Corp. Apple received 563 new patents just last year, the agency said.
The deal marks the end of independence for a company that helped pioneer mobile phones and introduced its first consumer handset in the early 1980s.
Motorola announced a plan to spin off its mobile-phone business in March 2008 amid market share losses and pressure from billionaire Icahn. The company completed the split in January, after the global recession delayed the deal. Motorola Inc. became Motorola Solutions Inc., which makes radio equipment for emergency workers and scanning devices for retailers.
The Google acquisition is likely to attract the attention of regulators, said Mark Mahaney, an analyst at Citigroup Global Markets, who rates Google a “hold.” The company, which owns the world’s most popular search engine, is already under review by the U.S. Federal Trade Commission over its business practices.
“Regulatory scrutiny will likely be material,” Mahaney said in a report yesterday. It’s “very hard to see this deal closing by year-end,” he wrote.
Still, the scrutiny may be tempered by the fact that Google doesn’t currently make handsets, and that Apple and Microsoft have already gained approval for the purchase of Nortel’s patents, said Macquarie’s Smithen.
“We’re quite confident that this will be approved,” said David Drummond, Google’s chief legal officer.
Pfizer Wins Viagra Patent-Infringement Case Against Teva
Pfizer Inc. won a patent-infringement case that prevents Teva Pharmaceutical Industries Ltd. from marketing a generic version of the impotence drug Viagra until 2019.
U.S. District Judge Rebecca Beach Smith in Norfolk, Virginia, ruled Aug. 12 against Petach Tikva, Israel-based Teva, which claimed patent 6,469,012 wasn’t valid and couldn’t be enforced.
“Teva has not shown by clear and convincing evidence that the patent is invalid,” Smith said in a 110-page opinion. In addition, “there is utterly no evidence” to support Teva’s claim that that Pfizer intentionally withheld documents from the U.S. Patent and Trademark Office, Smith wrote.
Viagra sales increased 5.5 percent in the first quarter to $479 million, Pfizer said in May. New York-based Pfizer, the world’s biggest drugmaker, posted net income of $8.26 billion last year on sales of $67.8 billion.
“Protecting the intellectual property rights of our innovative core is critical,” Amy Schulman, Pfizer’s general counsel, said in a statement. “Friday’s court decision acknowledges Teva’s clear violation of our patent rights.”
The ruling was “a surprise,” Bloomberg Industries analyst Asthika Goonewardene said in an interview.
“The patent was a method-of-use patent, and usually these don’t hold up that well in court for small molecular drugs,” Goonewardene said. “The court’s decision to uphold this patent means other filers wanting to enter in 2012 are not likely to do so then.”
Denise Bradley, a Teva spokeswoman, declined to comment on the ruling.
The case is Pfizer v. Teva, 10-cv-128, U.S. District Court, Eastern District of Virginia (Norfolk).
Renesas Patent Complaint Seeks to Bar U.S. Imports of Vizio TVs
Renesas Electronics Corp., the world’s biggest maker of microcontrollers used in cars and appliances, filed patent-infringement complaints seeking to block Vizio Inc. televisions from the U.S.
Renesas accused Vizio of violating rights on two patents in an Aug. 12 filing with the U.S. International Trade Commission in Washington. The Japanese company also sued closely held Vizio in a federal court in Marshall, Texas.
Patent 7,199,432 covers an arrangement of connections on the surface of the circuit. Patent 6,531,400 is for a manufacturing process that reduces corrosion, according to the ITC complaint. Kawasaki, Japan-based Renesas contends that circuits in Vizio’s digital televisions are made using these patented inventions.
Vizio, based in Irvine, California, has its own patent-infringement case pending against Renesas at the ITC that was instituted last month. A trial in that case, which also involves digital TVs, is scheduled for next June, according to information on the agency’s website.
Renesas, formed in 2003 from the semiconductor divisions of Hitachi Ltd. and Mitsubishi Electric Corp., is owned by those two companies and NEC Corp., according to the ITC complaint.
The civil case is Renesas Electronics Corp. v. Vizio Inc., 2:11-cv-00356, U.S. District Court for the Eastern District of Texas (Marshall). The ITC case is In the Matter of Digital Televisions Containing Integrated Circuit Devices, Complaint No. 2840, U.S. International Trade Commission (Washington).
The Vizio case against Renesas is In the Matter of Digital Televisions and Components Thereof, 337-789, U.S. International Trade Commission (Washington).
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Zynga Has Company in Quest for ‘With Friends’ Trademarks
Zynga Inc., the online game developer that is planning an initial public offering, applied to register “With Friends” in March 2011, according to the database of the U.S. Patent and Trademark Office.
The San Francisco-based company said it planned to use the term for computer games, according to the pending application. It also applied in January 2011 to register “words with friends” for computer games. Zynga is best known for its Farmville and Mafia Wars games played through Facebook Inc.’s social media site.
Some of the other “with friends” possibilities may be forestalled by a group of 12 applications filed earlier this month by Roxy Friday LLC of Newport Beach, California. According to the applications, marks such as “canasta with friends,” “cribbage with friends,” “dominos with friends,” and “farkle with friends” are all to be used for computer games.
Two applications have been filed this month for the use of “crosswords with friends” for computer games. One application is from Roxy Friday and the other is from Montie Jacobson of Irvine, California.
According to the fusible.com website, one of the officers of Roxy Friday is Brian Fargo, the chief executive officer of inXile Entertainment of Newport Beach California. Closely held InXile is also a game company.
City Officials Shut Down 22 Fake Apple Stores in Kumming, China
All 22 fake versions of Apple Inc.’s stores have been shut down in Kumming, China, Tech World reported.
The city itself took action closing the stores upon receipt of a complaint Apple sent Aug. 2, according to Tech World.
Apple is one of the most popular brands in China, with huge lines forming outside its authorized stores in China every time the Cupertino, California-based company releases a new product in that country, Tech World reported.
The company, best known for its iPhone and iPad, has only four official stores in China, two in Shanghai and two in Beijing, according to Tech World.
Sturgis Trademark Enforcement Causes Decline in Event Vendors
The number of vendors at the annual gathering of motorcycle fans Aug. 8-14 in Sturgis, South Dakota, declined this year in the wake of the rally’s sponsor’s attempt to enforce its trademark, the Rapid City Journal reported.
The non-profit Sturgis Motorcycle Rally Inc. registered trademarks earlier this year and sent letters to potential vendors demanding they not sell merchandise bearing the marks without permission, the newspaper reported.
Property owners in downtown Sturgis who ordinarily rented space to rally vendors lost money “because their main guys didn’t come back” over the trademark dispute, David Wilson of Sturgis Real Estate Promotions told the Rapid City Journal.
Dean Kenney, chairman of Sturgis Motorcycle Rally Inc. said after his group sent out cease-and-desist letters, some vendors did sign licensing deals and he saw little evidence of boycotts of the licensed products by rally attendees, the newspaper reported.
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Stephen King’s ‘Duma Key’ Doesn’t Infringe Copyright, Court Says
A federal judge in Atlanta has dismissed a copyright infringement suit against best-selling author Stephen King and his publishing house CBS Corp.’s Simon & Schuster.
Rod Marquardt, a South Carolina resident, sued King in December 2010, claiming that King’s “Duma Key” infringed the copyright to his novel “Keller’s Den.”
The South Carolina writer claimed King’s book too closely resembled his in terms of “plot, plot devices, structure, sequence of events, setting, characters, characterizations, character function and relationships.”
King’s publisher responded in February, saying in a court filing that the only common elements in the two works are “abstract ideas, stock elements and random similarities isolated from the expressive context in which they appear, none of which are protected by copyright.”
Marquardt, who by the end of the case was no longer represented by counsel, filed a motion July 7 opposing the publisher’s request that the case be dismissed. In that filing he said that the defendants’ “downplaying similarities is a tactic that is expected but should not be construed as accurate.”
In a July 9 order, U.S. District Judge Julie E. Carnes said that Marquardt’s book failed to meet copyright law’s standards for infringement due to “substantial similarity,” and dismissed the case.
The case is Marquardt V. King, 1:10-cv-03946-JEC, U.S. District Court, Northern District of Georgia (Atlanta).
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Trade Secrets/Industrial Espionage
DoubleLine’s Gundlach Says He Offered to Buy TCW in 2009
DoubleLine Capital LP’s Jeffrey Gundlach testified that in September 2009 he offered to buy TCW Group Inc., the asset-management company that fired him three months later.
Gundlach, who started DoubleLine weeks after TCW fired him in December 2009, told a Los Angeles jury yesterday that he offered about $350 million for 51 percent of the firm. TCW claims that Gundlach and three other former TCW employees stole its trade secrets to open a rival business. Gundlach says TCW fired him to avoid paying hundreds of millions of dollars in fees.
TCW, the Los Angeles-based unit of Societe Generale SA, sued Gundlach, 51, in January 2010, a month after more than half of TCW’s fixed-income professionals had joined his new firm. TCW seeks $375 million in damages, claiming Gundlach stole its trade secrets, including client portfolio data, to start DoubleLine.
Gundlach, who had worked at TCW for 25 years and who was named Morningstar’s Fixed Income Manager of the Year in 2006, countersued, saying that TCW fired him to avoid having to pay management and performance fees for the distressed-asset funds his group managed and that went “through the roof.” Gundlach seeks about $500 million.
TCW argues that Gundlach wouldn’t have been able to get DoubleLine started so quickly if he hadn’t had access to the trade secrets and confidential information.
TCW claims Gundlach instructed subordinates to download confidential and proprietary information, including client data, around the time of the September meeting to be used at his own firm. Gundlach today disputed testimony by Cris Santa Ana, a co-defendant and counter-claimant, detailing the kind of TCW information he wanted collected.
Gundlach also said he spoke with Western Asset Management Co. earlier in 2009 about moving the funds he managed at TCW to the rival company. The talks were prompted by Paris-based Societe General’s announced intention to get out of the asset-management business and the arrangement he contemplated would have been beneficial to TCW as well, Gundlach said.
A proposed June 12, 2009, compensation arrangement by Western Asset Management, based on an estimated $150 million in revenue from his business, was a non-starter and he didn’t read a follow-up proposal, Gundlach said.
The case is Trust Co. of the West v. Gundlach, BC429385, California Superior Court, Los Angeles County.
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