April 24 (Bloomberg) -- Facebook Inc. is beefing up its intellectual property arsenal by paying $550 million for some of the patents Microsoft Corp. recently agreed to buy from AOL Inc.
Facebook, the world’s largest social network, will obtain about 650 AOL patents and applications, as well as a license to AOL patents and applications that Microsoft will purchase and own, the companies said in a statement yesterday.
Patent disputes are increasing in the technology industry as competitors fight over intellectual property rights to key breakthroughs in areas such as mobile technology
The Microsoft transaction would be Facebook’s second major patent acquisition since Yahoo sued. Facebook, based in Menlo Park, California, acquired 750 patents from International Business Machines Corp., a person with knowledge of the matter said on March 22.
Microsoft said earlier this month that it would pay $1.06 billion for a portfolio of AOL’s patents. Under the terms of the auction, companies couldn’t band together to bid jointly, and AOL didn’t permit offers for part of the portfolio, said a person familiar with the matter who declined to be named because the process was private.
“Anytime someone buys a huge amount of patents, there’s an opportunity to sell the ones you don’t need,” said Ron Laurie, managing director of Inflexion Point Strategy LLC in Palo Alto, California, which counsels companies on intellectual property purchases.
AOL, under shareholder pressure to make changes as revenue shrinks, sold and licensed more than 800 patents to Microsoft earlier this month.
Facebook made an offer for AOL’s patent portfolio before losing out to the Microsoft bid, two people with knowledge of the matter said last week. The proposal by Facebook was too low, those people said.
Even though Microsoft didn’t want to own the majority of the patents, it did want a license to all of them -- which it will get through this agreement. Microsoft also would have viewed a purchase by a rival like Google Inc. as negative, the person said.
Facebook has lined up $8 billion of available credit from its IPO underwriters. Like more established technology companies, such as Apple Inc. and Google, it is buying intellectual property to protect itself from patent-infringement litigation.
Facebook in February filed for an initial public offering, seeking to raise $5 billion in what could be the largest Internet IPO on record. The company may seek a valuation of $75 billion to $100 billion, people familiar with the matter have said.
Slovenia’s Krka Says Court Rules It Breached AstraZeneca Patent
Krka Group d.d., Slovenia’s biggest drug company, said an Oslo court ruled that its Swedish unit breached AstraZeneca Plc’s patent over the drug esomeprazole. The AstraZeneca product is used to treat acid-reflux disease and is sold under the brand name Nexium.
The Norwegian court ruled Krka infringed the patent because the drug contained an optical purity above 98 percent, the Novo mesto, Slovenia-based company said in a regulatory statement yesterday. Krka said it was ordered to pay AstraZeneca about 1.9 million euros ($2.5 million) to compensate for lost profit from the drug. Krka said it will appeal the decision.
Kandi Official Donates All His Patents to Electric Car Company
Kandi Technologies Corp., the maker of the Coco electric car, is receiving the donation of 11 patents related to electric vehicles, the Jinhua, China-based company said in a statement yesterday.
The patents were developed and previously were personally owned by Xiaoming Hu, Kandi’s chairman and chief executive officer. Transfer of the patents is being approved by the State Intellectual Property Office of China.
Two of the patents cover battery storage packs for electric vehicles, while others are related to charging systems and quick battery exchange technology.
Hu said in the statement that the patents that are being transferred represent all the patents he owned personally.
Kandi Coco cars, which fall into the category of neighborhood electric vehicles and sell for about $7,500 and up, can be driven for 60 miles on a single charge, with a top speed of 25 miles an hour, according to the website of one U.S. dealer.
Comments Sought on ‘Economically Significant’ Inventions Secrecy
The U.S. Patent and Trademark Office is seeking comments on the feasibility of placing “economically significant” patents under a secrecy order.
According to a statement from the patent office, it’s considering possible changes to existing policies for reviewing applications that are potentially detrimental to national security.
The office is responding to a request from Congress asking whether national-security screening of patent applications should be extended to cover economically significant patents from discovery by foreign entities.
A report from the Commerce, Justice, Science and Related Agencies Subcommittee issued in July 2011 said that the lag between publication of the application and the issuance of the patent enables competitors to design around U.S. technologies and “seize markets before the U.S. inventor is able to raise financing and secure a market.”
The subcommittee has told the patent office to develop criteria “to evaluate the national security applications of patentable technologies.”
The patent office said it’s seeking comments from “the innovation community” on whether an economic security screening procedure should be considered.
Presently all patent applications are screened to determine whether publication or disclosure of the application would be detrimental to national security. Those applications are forwarded to the Defense Department and other agencies designated by the president.
Foreign patent filings for applications under a secrecy order are prohibited without the concurrence of the reviewing agency that requested the secrecy order.
One of the 16 questions on which the patent office is seeking input is whether patent practitioners presently try to make an end run around possible secrecy orders by drafting patent applications in such a way as “not to raise national security implications of such an invention.”
Comments must be submitted by June 19, according to the statement.
AstraZeneca’s Ardea Deal May Be First of Several in Works
AstraZeneca Plc’s $1.26 billion purchase of Ardea Biosciences Inc., its biggest acquisition in five years, may be the first in a series of deals for the company as it tries to counter looming generic competition.
AstraZeneca is in talks with several companies about possible licensing accords and acquisitions, said Shaun Grady, head of business development, in a telephone interview yesterday. The company would consider acquiring late-stage assets outside its research and development focus on cancer, diabetes and gastrointestinal ailments, he said.
The U.K.’s second-biggest drugmaker is seeking new products as generic competitors challenge its top-selling medicines. “We’re building some momentum here in R&D,” Martin Mackay, head of research and development, said in a telephone interview yesterday. “I would be disappointed if we didn’t announce further deals by the end of this year. We’ve taken our hits but we’re turning a corner.”
AstraZeneca will pay $32 a share for Ardea, the London-based company said in a statement yesterday.
Ardea, based in San Diego, was incorporated in 1994. The U.S. company’s biggest shareholder is Baker Brothers Advisors LLC, an investment firm founded by Felix and Julian Baker. Felix Baker sits on Ardea’s board.
AstraZeneca joins U.K. rival GlaxoSmithKline Plc and Switzerland’s Roche Holding AG in pursuing purchases to fuel growth. Human Genome Sciences Inc. rejected a $2.6 billion offer from Glaxo, based in London.
Two of AstraZeneca’s biggest-selling drugs, Nexium for ulcers and antipsychotic medication Seroquel, lose patent protection by 2014. Nexium and Seroquel generated about $10.3 billion of sales last year and accounted for 30 percent of revenue. The drugmaker recently saw the failure or delay of experimental drugs for diabetes and ovarian cancer.
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Maker of Adult Films Claims File Sharers Infringe Trademark
John Stagliano Inc., an adult filmmaker doing business as Evil Angel Productions Inc., has filed two suits against unnamed defendants who allegedly used BitTorrent file-sharing protocol to distribute and view unauthorized copies of one of its films.
What makes the cases novel is that the suits are alleging trademark infringement rather than the more usual allegation of copyright infringement.
According to the complaints filed April 19 in federal court in Philadelphia, the unnamed defendants infringed the Evil Angel trademark, which is embedded in the film. They did so by distributing identical copies of the marked film using BitTorrent.
In one suit Stagliano lists 12 unnamed defendants, and another 17 in a second suit. The filmmaker says the defendants were located geographically within the court’s area of jurisdiction through the use of geotracker software.
The filmmaker asked the court to order the defendants to quit infringing the trademark through unauthorized distribution of the film, and for awards of money damages, attorney fees and litigation costs. Additionally, Stagliano seeks a court order for the removal of the file from each computer under the defendants’ control.
One case is John Stagliano Inc. v. John Does 1-12, 2:12-cv-02087-RBS, U.S. District Court, Eastern District of Pennsylvania (Philadelphia). The other case is John Stagliano Inc. v. John Does 1-17, 2:12-cv-02080-JD, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).
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Azerbaijan Parliament to Consider Changes to Copyright Law
A measure modifying existing intellectual-property law has been approved by the Azerbaijan Copyright Agency for consideration by that nation’s parliament, Trend Azerbaijan reported.
The new law covers such issues as the digitization of content, the illegal use of information technologies, and appropriate judicial and administrative proceedings related to IP issues, according to Trend Azerbaijan.
Courts will be given the authority, under the new law, to determine payment of damages by those who violate others’ IP rights and to order seizure and destruction of infringing materials, Trend Azerbaijan reported.
Additionally, the new law will give courts the power to seize equipment and materials used to manufacture infringing items, according to Trend Azerbaijan.
China to Crack Down on Art Counterfeiting This Year, Xinhua Says
China’s National Copyright Administration will crack down on the use of forged signatures of famous artists and calligraphers, Xinhua News Agency reported, citing a statement from the government agency.
The adding of forged signatures to prints and phony new works is “prevalent” and has developed into an “industrial chain,” Xinhua said. The counterfeit-art industry will be a focus of this year’s copyright protection campaign, it said.
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King & Spalding Hires Two Patent Litigators from Cadwalader Firm
King & Spalding LLP added two litigators to its IP practice, the Atlanta-based firm said in a statement yesterday.
Tony V. Pezzano and Michale P. Dougherty joined the firm from New York’s Cadwalader Wickersham & Taft LLP.
Pezzano has done patent litigation in federal courts and before the U.S. International Trade Commission. He’s represented clients in the consumer products, recreational products, pharmaceutical products, chemical and petroleum products and processes, wireless telecommunication equipment, computer systems, and printing engines and systems industries.
He has an undergraduate degree in engineering mechanics from Columbia University and a law degree from Hofstra University.
Dougherty has principally represented clients in the pharmaceutical and biotechnology industries. Among his areas of expertise is patent litigation arising from disputes under the Hatch-Waxman act.
He has an undergraduate degree from Case Western Reserve University and a law degree from the College of William & Mary.
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