Oct. 27 (Bloomberg) -- BorgWarner Inc., the world’s biggest maker of automatic-transmission parts for vehicles, filed a lawsuit accusing Cummins Inc. of infringing three patents for a titanium wheel used in engine turbochargers.
BorgWarner said it has “made considerable investments in improving turbocharger technologies,” and Cummins is using the inventions “with reckless disregard” of BorgWarner’s rights, according to the complaint filed yesterday in federal court in Asheville, North Carolina.
Turbochargers are used to improve the power and efficiency of smaller engines, and governments are pushing automakers to increase fuel economy in vehicles. BorgWarner in July said its second-quarter profit almost doubled, and the Auburn Hills, Michigan-based company boosted its forecast for revenue and profit for this year because of increased turbocharger sales.
BorgWarner previously sued Honeywell International Inc. over the same patents and settled the case in May for $32.5 million.
Cummins, based in Columbus, Indiana, said yesterday that sales in its components unit, which includes turbochargers, rose 32 percent to $1.02 billion. Janet Williams, a spokeswoman for the company, said in a telephone interview that Cummins doesn’t comment on pending litigation.
The compressor wheels at issue in the case direct air to an engine’s intake manifold. BorgWarner’s inventions related to a cost-effective cast titanium compressor wheel, the design of the wheel and a method for making turbochargers with the titanium wheel. The case is BorgWarner Inc. v. Cummins Inc., 1:11-cv-00283-MR, U.S. District Court for the Western District of North Carolina (Asheville).
Apple, Samsung Court Hearing on IPhone 4S to Resume Dec. 16
A Milan court hearing on Samsung Electronics Co.’s request to block Apple Inc.’s new smartphone on patent-infringement claims was adjourned to Dec. 16 by Judge Marina Tavassi, according to lawyers at the hearing.
Samsung is seeking to ban sales of Apple’s latest handset, the iPhone 4S, in Italy and France, saying the product infringed the Suwon, South Korea-based company’s patents related to wireless communications technology.
Adriano Vanzetti, a lawyer for Samsung, requested time to examine and respond to the “voluminous documentation” presented by Apple yesterday, Vanzetti and Apple lawyer Giuseppe Sena said after the hearing. Cupertino, California-based Apple will then have time to respond to Samsung’s filing. No decision was made yesterday, the lawyers said.
The iPhone 4S is set to go on sale in Italy on Oct. 28, Vodafone Group Plc’s Italian unit said in an Oct. 24 statement.
Kodak Lenders Send Letter on Fiduciary Duty in Asset Sale
Eastman Kodak Co.’s lenders sent a letter to the board of directors reminding the company of its fiduciary duty to sell its patent portfolio for fair market value.
Kodak takes its fiduciary duties “very seriously” and shares bondholders’ desire to obtain fair market value for the sale of its intellectual property, the company said in an e-mailed statement responding to the creditor letter.
The second-lien lenders, who are being advised by Akin Gump Strauss Hauer & Feld LLP, cautioned the company it could face lawsuits if it sells patents for less than market value, said people familiar with the matter, who declined to be named because the communication was private. The lender group, led by Avenue Capital Group and Brigade Capital Management LLC, hold some of the $750 million in second-lien debt backed by assets including the patent portfolio, the people said.
Kodak has approached companies including Google Inc., LG Electronics Inc. and HTC Corp. about its patent portfolio, the people said. Some potential bidders have raised concerns about creditors’ claims on the assets, making a sale more difficult outside of bankruptcy court, these people said. Kodak is seeking to sell the assets outside of bankruptcy, two other people said.
“Kodak will extract the most value from a sale of the portfolio in bankruptcy, and outside of that buyers will bid low as a contingency for future lawsuits,” said Amer Tiwana, an analyst at CRT Capital Group LLC in Stamford, Connecticut.
Kodak, which is being advised by Lazard Ltd. and Jones Day on the patent sale and restructuring options, has also contacted distressed debt funds over arranging as much as $1 billion in rescue financing, according to the people. No agreement on new financing has been reached, the people said. Potential lenders are pressing for a yield on the loan of as much as 15 percent, the people said.
“We are committed to optimizing our cash generation and, as a matter of course, we are always assessing the financing strategies available to us,” Kodak said in an e-mailed statement yesterday. Kodak said in September it has “no intention” of filing for bankruptcy.
The second-lien creditors may fight Kodak’s efforts to raise rescue financing, said the people. That’s because that rescue-financing debt would have priority over the second-lien lenders or be paid back first in a bankruptcy, the people said.
The group of lenders is likely to also hire a financial adviser in coming days to advise on Kodak, one person said. Lenders have spoken to bankers such as Moelis & Co. and Rothschild, the people said.
Separately, a group of Kodak’s unsecured lenders have hired law firm Andrews Kurth LLP in New York to explore their options and rights, said Paul Silverstein, co-chair of the law firm’s bankruptcy and restructuring practice.
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BT Must Use Porn-Filter System to Block U.K. Film-Piracy Site
BT Group Plc, Britain’s biggest Internet-service provider, was ordered by a U.K. judge to use pornography-blocking technology to prevent customers using a movie piracy website opposed by Hollywood film studios.
News Corp.’s Twentieth Century Fox and five other U.S. studios won a ruling in July forcing BT to block access to Newzbin, a site found to promote illegal sharing of films. BT must now use Cleanfeed, a content-blocking system currently used by the company to bar access to child-pornography websites, to block its customers from using Newzbin within 14 days, Judge Richard Arnold ruled today in London.
“Copyright owners can take a great deal of comfort” from yesterday’s decision, said Simon Baggs, a lawyer from Wiggin LLP in London, who argued for a film studio trade group in last year’s case. “The court has conclusively recognized the critical role that ISPs can be required to play in preventing infringement.”
The judgment in July was the first of its kind and the studios said at the time it could be used to win similar orders against other ISPs. Fox, Universal Studios, Warner Bros., Viacom Inc.’s Paramount Pictures and Sony Corp.’s Columbia Pictures were backed in the case by the Motion Picture Association of America.
Fox persuaded a U.K. court in March 2010 that Newzbin infringed its copyrights. The site shut to avoid damages only to resurface with more than 700,000 members as “Newzbin2,” the movie studios claimed. They argued London-based BT and other ISPs must block the site altogether to prevent infringement, while BT argued a court injunction would be inappropriate, because the website isn’t a customer of the company.
The court disregarded claims by a Newzbin2 “casual editor” that the website now contains more non-infringing material and could be used for legitimate purposes in the future, like Napster.
Arnold gave “limited weight” to enforcement concerns raised by other ISPs after the July ruling, saying he should have received letters earlier from Virgin Media Inc. General Counsel Scott Dresser, TalkTalk Telecom Group Plc and Everything Everywhere, the U.K. venture that operates France Telecom SA’s Orange brand and Deutsche Telekom AG T-Mobile unit, according to the ruling. TalkTalk said it doesn’t use Cleanfeed.
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Trade Secrets/Industrial Espionage
Two Ex-Diagon Employees Fined $15 Million in Trade Secret Case
Two former managers of the Hungarian company Diagon Kft were fined 4.4 billion Hungarian forints ($15 million) by Budapest Metropolitan Court for attempting to take trade secrets to a Russian competitor, the All Hungary Media Group reported.
They were accused of copying more than 11,000 items related to clinical diagnostic products, according to All Hungary Media Group.
One suspect was arrested at Budapest’s Liszt Ferenc airport with a laptop containing Diagon’s industrial secrets as he was leaving for Russia, All Hungary Media Group reported.
The two suspects, who denied all charges, can appeal the fines and the prison sentences of one to two years imposed by the court, according to All Hungary Media Group.
Gambling Control Board Says Ownership Percentage Not Protected
Maine’s Gambling Control Board has rejected a claim by applicants to operate a casino in that state’s Oxford County that their ownership percentages should be a protected trade secret, the Bangor Daily News reported.
Counsel for the applicant -- BB Development LLC -- told the board that if ownership percentages are revealed that information “could be used by other individuals to disadvantage them in negotiations or other competing enterprises,” according to the Bangor Daily News.
Although the board voted to adopt a finding that revealing these percentages wouldn’t violate applicants’ trade secrets, it delayed release of its findings so that BB Development could appeal its decision, the newspaper reported.
The casino was given voter approval in 2010 by a 1 percent margin, according to the newspaper.
Consultant Tells Court Audited Financial Statement Is Secret
A consulting firm working with the Columbia River Crossing project has filed a suit in Washington state court to block the release of its audited financial statements, the Vancouver, Washington, Columbian newspaper reported.
David Evans & Associates Inc. has told the court this information is a trade secret and the company could receive “actual and substantial injury” from release of the information, according to the Columbian.
The data from the consulting firm that received $30 million for its part in the project intended to improve traffic movement and safety on the crossing of the Columbia River between Portland, Oregon and Vancouver is part of the information sought by an opponent of the Columbia River Crossing, the newspaper reported.
Washington Department of Transportation spokesman Steve Pierce told the Columbian that after his agency received the public records request for the data, it gave notice to the consultant so that, if desired, David Evans & Associated could take legal action to prevent its release.
German Authorities Arrest Married Couple on Espionage Suspicion
German counterintelligence arrested a married couple on suspicion of industrial espionage on behalf of Russia’s Foreign Intelligence Service, Pravda reported.
The couple, whose names were not disclosed, held Austrian passports and were living in Marburg, Germany, according to Pravda.
The husband worked for the auto-parts manufacturer Faurecia and also owned an innovation center, Pravda reported.
The wife was arrested at home, while sitting in front of a transmitter, about to receive a coded telegram, according to Pravda.
Ward & Smith Hires Former Federal Judge, Father of Founder
Ward & Smith hired former U.S. District Judge T. John Ward to lead its mediation practice focused on IP disputes, the Longview, Texas-based firm said in a statement.
Before he was appointed to a seat on the bench of the U.S. District Court for the Eastern District of Texas in 1999 by President Bill Clinton, Ward was in private practice from 1968 to 1999, and served for one year as an assistant county attorney for Lubbock County, Texas.
The court Ward served on is a popular venue for patent cases with a docket that moves more rapidly than many other judicial districts. There is also a perception among litigants that jurors in this district were somewhat more hospitable to patent-owners’ claims.
The former judge is joining a firm founded by his son T. John “Johnny” Ward Jr.
He has an undergraduate degree in chemistry from Texas Tech University and a law degree from Baylor University.
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