Apple Wins Round in Patent War: Bottom Line (08/09)

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Aug. 9 (Bloomberg) -- On today's "Bottom Line," Mark Crumpton provides insight at the trading day's critical hour, with careful analysis of big events for investors. (Source: Bloomberg)

From bloomberg world headquarters, i'm mark crumpton.

This is "bottom line," the intersection of business and economics with a main street perspective.

Tonight apple wins the latest round in its patent war with samsung.

Then president obama says he will take steps to ensure that surveillance programs rentech civil liberties.

And we will get a taste of what the market for hummus is booming.

To our viewers around the u.s. and those joining us from around the world, welcome.

We have full coverage of the stocks and stories making headlines.

Su keenan has a friday market wrapup and updates on jcpenney and blackberry.

We begin in washington where yang yang has late details of today's apple samsung infringement rules.

Good evening.

Good evening.

The u.s. international trade commission has ruled in favor of apple in its patent infringement case against samsung.

Itc found some sun violated apple patents for its touchscreen and technology.

They have ordered a ban on any sums and products that violate these features.

A ruling that favored apple.

We do not know how broad the ruling would be.

We got this brought rule.

-- broad rule.

The decision could create an immediate shortage of millions of mobile devices.

There is a lot at stake for samsung if the ruling doesn't clarify how many samsung phones would be affected by the ban.

The ban goes to the president's office for review.

The white house has 60 days to overturn the decision.

Remember the president overturned a ban for some of that apple products.

What are the odds we could see the white house ordered a second veto> -- veto?

That is the thing.

These things are extremely rare.

The last time by white house overturned a ban was back in 1987. that was because it had to do with standard essential patents.

The circumstances are quite not the same here.

The u.s. has to worry about another player -- south korea.

They are watching this case carefully.

They worry the u.s. government will show favoritism for apple.

The white house has that to consider as well.

This was not the only apple- samsung battle.

That is right.

We saw the patent war on two fronts.

Apple was once again on the offensive and asking the court to overturn an order that it won but not to its liking.

The judge allowed sales of the products to continue.

Apple is trying to get those products off of the shelves as well.

The decision on that case is not expected for several months.

Thank you.

We will have more on the apple- samsung story.

We will find out d scott kessler's thoughts.

President obama held a news conference today outlining potential changes to the way the government conducts its intelligence surveillance programs.

Julianna goldman reports.

President obama said the decision for the next fed chair is as important as his choice for a lifetime supreme court appointment.

Janet yellin and larry summers are both outstanding candidates, but he tried to defuse the idea that it was a two person contest and indicated there are four that are outstanding candidates.

I think both larry summers and janet yellin are highly qualified candidates.

There are a couple of candidates that are all a fight as well.

I will make a decision in the fall.

The president has been defending summers to lawmakers.

He says it was not because he had the inside track, but rather that he worked hard.

He compared the defense to when he defended susan rice last year when she was being considered for secretary of state.

That is interesting because he also did not nominate her.

The president went on to say that the decision for the fed would come in the fall.

The president picked up his news conference by announcing a number of steps he is taking to enhance confidence in the national security agency surveillance program in the wake of the intelligence leak by edward snowden.

Obama was a little defensive.

There is a debate between civil liberties and national security.

But that episode sped up the process.

Americans need to have confidence.

He underestimated that if he thought they were checks and balances, americans would be ok as well.

This program is an important tool to disrupt terrorist plots.

It does not allow the government to listen to any phone calls without a warrant.

Given the scale of this program, i understand the concerns of those who would worry that it could be subject to of use.

The president outlined some of the steps that he is taking, including releasing the rationale for the section at patriots act that deals with phone records.

He will be working with congress to enhance privacy protection in the patriot act and having a civil liberties advocate to act as the stare at the foreign intelligence surveillance court.

You also have an outside board on how to balance national security and civil liberties.

They acknowledge this will not answer all of the questions, but it is the beginning of a discussion with the public.

The president talked about his relationship with the russian president putin.

This comes on the heels of the u.s. canceling a meeting in moscow between president obama and putin after russia decided to grant snowden temporary asylum.

They need to decide where to go.

The president is still going to the g-20 summit in st.

Petersburg, russia next month.

He said the best way to push back against some of russia's anti-gay legislation is to have gay and lesbian athletes represent the u.s. and bring home the gold and a silver and bronze.

He said russia might have better teams if they had gay and lesbian athletes.

We will have reaction to today's presidential news conference coming up.

A cheap political strategists will be joining us for analysis and looking into the crystal ball for what is ahead in washington.

That will be right here on "bottom line." the u.s. and russia are trying to locate -- had issues including missile defense and the case of edward snowden.

John kerry and his counterpart had a meeting today.

Cooperation could be found on international security.

Chuck hagel and the russian defense minister were also part of that meeting.

Staying with tensions in russia , be sure to watch "political capital with al hunt." they talk about the growing strain in u.s.-russia relations tom including president obama's decision to cancel bilateral meetings with president putin.

It seems it was on both parts.

There was not much progress.

There is understanding on both sides that obama did not want to go to moscow after the sn owden affair.

You can see the entire interview on "political capital with al hunt" tonight at 9 p.m. washington time on bloomberg television.

Coming up, more on the apple- samsung patent case.

I speak with scott kessler when "bottom line" continues.

? list so -- let's show you how the equities markets finished.

Oil and metals advanced.

Let's go to the numbers.

S&p 500 was down six points at 1691. the dow jones was off by 70 two points.

A little under half percent.

The nasdaq composite was down by nine points or a quarter of a percent at 3660. let's get you the stories behind the numbers.

Su keenan is standing by with details.

Good evening.

Putting money where its mouth is.

They were saying the markets were overbought in the recent rally.

That said, check out priceline's stock rice.

-- price.

It has rallied.

The online travel agencies sought european bookings jump year over year.

And the war of words at jcpenney continues.

Ackman wants to oust the ceo.

He says the actions are disruptive and counterproductive.

Ackman is getting extra power.

They own about a quarter of the retail chain shares which fell almost six percent today in the latest verbal volley.

Time warner cable says it is talking to cbs again after a week of a breakdown in negotiations.

An agreement to be reached before football season.

It has lost advertising.

The challenge for time warner cable is losing subscribers.

The number of subscribers leaving is probably small.

Wait until football season starts and it will not be small anymore.

We shall see.

Blackberry is considering going private.

Earnings are a big driver.

What were the highlights?

The announcement of lower sales sent stocks into a nosedive.

It plunged after reporting a wider than expected loss.

There appears to be new developments in the london whale trading loss.

The new york times is saying to former bank employees will be arrested next week in london in connection with the case.

Su keenan comment thank you.

The u.s. international trade commission has ruled in favor of apple in a case against them some.

The federal administrative panel faces an import ban on some samsung devices on grounds they violate apple patents.

Scott kessler is head of the technology sector equities research.

He joins me in the studio.

Welcome back to "bottom line." thank you.

What is your reaction to today's ruling?

We were kind of surprised.

We think it is a surprise for apple.

First, two patents were upheld.

One allows first finger swiping and the other is the notion of using a headset or something else to plug into a mobile device and how that interacts with the device itself.

What is important is that it seems like apple has additional leverage.

They have well over 15,000 patents and we think there is value and the fact that this body has indicated that samsung has infringed upon them means that they have negotiating power and that samsung might have to take action in terms of removing -- you mentioned the multitouch screen and the headphone jack.

The trade commission said samsung did not infringe patents for the design of the iphone.

How significant is that distinction?

I do not know if it is that important.

The design patents were not upheld.

I do not think people expected those to be perceived as strong as some of the utility patents.

Some of those were not upheld either.

The fact that apple got this indicates that they do have some momentum, especially after that decision with respect to this.

Today's ruling, how might it affect companies that own patent for features or components of complex products such as smart phones and computers?

The one hand, it in boldin's apple to be more aggressive in terms of protecting the day perceive to be their intellectual property.

Will probably cause competitors to think twice about using that type of solution within the confines of their products.

It tilts the balance were strongly toward apple.

There have been concerns expressed by using the threat of patent litigation as a weapon of intimidation and possible jurisprudence.

How would the ruling impact litigation.

We need to distinguish between different types of patents.

In this case, the reality is that apple created this intellectual property.

We think he have the ability and right to protect it through legal means if necessary.

There are other patents like the subject of last week's action when those were standard essential patents.

Essentially everyone is supposed to have fair and reasonable, nondiscriminatory access to those patents like for wi-fi or connectivity or what have you.

Today's ruling indicates that bodies will uphold rated intellectual operating if in fact they feel that others are unfairly and unlawfully infringing.

The president overturned an import ban on older iphone models.

He took the action of what was called public policy grounds.

The obama administration has 60 days to review today's order.

We'll be see similar action take place?

We do not expect that.

The nature of the patent at issue here -- the reality is samsung can enable a workaround or discontinue the use of that functionality.

In the case of last week , apple did not have any alternative because of the nature of those important standard patents.

Apple and samsung are sending millions -- spending millions in courts.

These fights have been spanning multiple continents.

They are seeking to block each other's contents.

What does that say that neither has been able to deliver a crippling blow?

And justin point.

The rear -- it is an interesting point.

The reality is it seems like whether that issuance or today's decision or the arguing we understand what went favorably for apple, the reality is it seems like apple has some momentum.

Scott kessler , good to have you back.

Thank you.

Up next, highlights of an interview on housing news on including president obama's proposal for fannie mae and freddie mac.

? welcome back.

This is "bottom line" on bloomberg television and streaming on bloomberg.com.

The president called to wind down fannie mae and freddie mac added a new urgency to the debate.

We have more on the timetable.

When president obama challenge congress to pass a housing overhaul bill by the end of the year, he gave new momentum to the effort.

Some say a legislative solution -- this week the president himself jumped into his speech and townhall.

He spelled out what he wants to see in the housing fix.

It looks like a bipartisan bill.

It can move quickly.

He called for shutting down fannie mae and freddie mac and having private capital take the lead and handling the nation mortgages.

Major players in the housing industry have a big stake.

The house will debate a bill.

It will go to the floor.

The onus is on the senate.

The senate can take up a multitude of the bills out there.

We could get this done this year.

Another disagrees with howard.

But he agrees on a town table -- timetable has been pushed up.

They could have a compromise perhaps by february.

You can catch the full interview on "capital gain " this sunday.

Up next, bloomberg university segment.

We look at the meaning of the nation's deficit as the u.s. gets ready to release its latest budget statement on monday.

A senior markets correspondent joins us when "bottom line" continues.

? . welcome back.

I am mark crumpton in new york.

Thank you for staying with us.

Let's check with the markets finished.

Not just a losing day, by losing week for the dow and s&p and nasdaq.

The broader s&p was down a third of a percent.

The dow jones falling nearly half a percent at 15,425. the nasdaq composite index falling a quarter of a percent.

As a mention, a losing week.

All of the indices finishing lower.

A 232 point weekly drop for the dow.

Let's check the top stories we are following.

Three people were killed by a suicide bomb attack in pakistan.

The state department is warning u.s. citizens to defer nonessential travel to the country.

Most american diplomats have been ordered to leave the conflict because of security threats.

President obama has signed the log restoring lower interest rates for student loans.

He praised democrats and republicans for a sensible and reasonable approach.

He says this is just a first step in a broader fight to rein in the cost of a college education.

Oprah says she is the victim of racism in switzerland.

A clerk refused to show her a $38,000 handbag, telling her she would not be will to afford it.

Opera is one of the richest woman in the world.

The officials have apologized.

They say it was simply a miscommunication.

That's a look at the top stories at this hour.

The commodities are poor, let's go to su keenan with the details.

Both oil and gold moving in the same direction.

Higher with a pick up in china's industrial output playing a big role.

Not expecting big moves in commodities right now.

For the last three years, monti's it been in a range.

You have not seen a breakout.

The most likely scenario is based in that range.

No breakup.

Focusing on energy, the surgeon refinery rates.

-- the surge in refinery rates.

Speaking to bloomberg from paris, his the on supply and demand.

The immediate problem is not north american supply, but the security issue and the turmoil associated with the transition taking place there.

A major decline in opec production.

Finding yourself on the wrong sign of the trade, hedge funds billing up the largest position in gasoline since april.

They're planning to leave -- leave the summer rally.

Gas futures fell for a sixth straight day.

A bit of a rebound today.

A wall street veteran says prices have come off so sharply wall street has guessed wrong.

The supply report shows the gas buildup or the summer.

Consumers get a price break at the pump.

It means hedge funds are feeling the pressure to break out of those traits.

-- trades.

There'll be focused on gasoline futures.

It was the best commodity performer in july.

It has been down six percent in august.

Data out this afternoon shows the funds are cutting back on those bullish bets.

Others are hanging tough.

The wildcard, hurricanes.

We are in the middle of the season.

The big one could shed 4 million barrels of capacity.

Right now, there aren't many black clouds.

Thank you.

It is now for -- time for our weekly feature, bloomberg university.

How it all came about, and what it means to you.

Let's go to julie hyman in the data center with tonight segment.

On monday be get the monthly budget statement from the federal government which will show the deficit or surplus that the government ran last month.

Let's take a look at what the deficit means.

There is talk about it.

Understanding the deficit , with the government collects.

We are talking about taxes by and large.

Mostly taxes minus what the government spends.

We're talking about medicare to social security.

That is all of the enormous outlays the federal government may read this minus that, you get either the deficit or a surplus depending on whether these things are in balance or not.

70 point out here, a lot of people conflate this at times, the deficit versus the debt.

You get the deficit, and you need to pay for that.

If your income is not as large as what you are spending, you have a deficit.

You need to fund medicare.

You need to fund social security in all the other things the government is spending on.

That is part that comes along.

The federal government is selling all kinds of things in order to borrow things.

Treasuries, bills, savings bonds.

A treasury inflation protected securities.

The things the government does to fund its operation.

This is a separate concept.

Finally, the trajectory that we have seen on a monthly basis.

It makes sense to compare year- over-year numbers because there is seasonality you get.

By and large, we have seen an improvement in 2013 over 2012 in terms of size of the deficit, and these are pluses we have not seen.

In january, we ran a deficit.

This year, we ran a surplus.

As the trend -- that has been the trend with a couple of exceptions in may of this year, a larger deficit than we did last year.

The projected deficit, the number we are going to get on monday protected at $92.5 million.

That is not improving.

I am large, tax receipt seven going up.

Government has been trying to reduce the rates of expenditures.

That is why we are seeing that trend.

That is this week's bloomberg university.

Next, there is an official dips sponsor for the national footbsall league.

? welcome back.

This is bottom line.

You may or member that last week my colleague alix steel brought us a story about the growth of chickpea farming in the united states.

We have another installment as alex tells us why it has to do with hummus.

Explosive is the word used to describe hummus demand in the u.s. some some revenue climb over 400% in the last five years.

80% of households -- 18% of households now he thomas.

The has doubled.

We're seeing demand.

They are able to grow 20% every year.

We double our business every 10 years.

$583 million last year.

Up 16%. beating the growth rate,, ceos are hoping to hit $1 billion in a few years.

Why can't it be like a trip -- catch up or peanut butter?

It is something around 60%. we are less than 20%. they are putting their money where their stomach is.

$86 million to expand the biggest hummus factory in the world.

140 new jobs, and 10,000 tons of hummus him off -- of hummus a month.

One way, free samples.

They have spent 24 million on food trucks to bring hummus to the masses.

It is an education.

We are looking for the opportunity to spread hummus as a solution.

The nfl official debt sponsor, this hummus moon can be felt in the aisles.

At $150 million a video -- a year business.

President obama holds a news conference where he discusses issues ranging from government surveillance to immigration reform.

When you return, i'll be joined by a research group.

? ? president obama took his last opportunity to present his economic agenda while congress is on break before he goes on vacation.

For a closer look at the potential pitfalls on what lies ahead, let's bring in greg, strategist at potomac research group from washington.

Welcome back.

Great to see you.

Congress is in recess.

The president has his vacation.

Do think this time away will help smooth over the toxic atmosphere?

No.

i think it is unlikely.

I thought the president hard and the battle lines in his news conference today.

He made it clear there is not going to be a deal to delay obama care.

He made it clear the republicans are out of bounds in talking about shutting down the government.

No, it is going to be a really confrontational fall.

Given that it is bloomberg, let's start with fed related news.

The president did again point out he is looking at a range of outstanding candidates to serve as the next fed chairman.

He explained what he defended larry summers, who was the mentioned as a possible candidate.

What you read into the defense of larry summers?

Summers is still in the mix.

The president resents the criticism of summers.

Sommers and him have been through the wars together.

The other thing is, the president made it clear that it is not necessarily generate yellen and larry summers.

There could be for people under consideration.

The president said the next fed chairman needs to keep an eye on inflation and promote growth.

He did note that inflation is not a challenge.

If the next fed chair is focused on reducing unemployment, while your clients telling you they need to do starting a day one?

Continue the policies of ben bernanke.

The tapering will begin in september.

I think they will taper slowly.

Maybe by the year from today, it'll be over.

Then the focus will shift to the feds forward guidance from when we get that first hike in the funds rate.

It is at least two years away.

The present address concerns about possible government shutdown in the fall.

You mentioned that.

He said he believes common sense will prevail.

We are talking washington.

Common sense didn't prevail when they regarded the sequester.

If the president overly optimistic?

Common sense is in short supply here.

My impression is that most republicans, the elders and leaders of the party are very leery of the government shutdown on october 1. they feel would backfire on republicans.

That is a hollow threat.

The bigger threat is the debt ceiling fight it will occur between thanksgiving and christmas.

How nasty is that going to be?

It is going to retire -- require more austerity.

The house will say either we get another year of sequester, or we get another package of spending cuts.

The house will have to see more fiscal restraint in order to get the debt ceiling raised.

The immigration reform debate came up.

The president said he is certain the copperheads a bill in the senate would pass the house if majority republicans bring it up for a vote.

Republicans say bring up a series of narrow bills instead.

What are the political implications for that?

The big political application in the last month has been the dramatic plunge in marco rubio's polling numbers.

Rubio has dropped half in new hampshire among republicans.

The message to him is the base , the public and base is not want immigration reform.

The president may be mistaken.

I'm not sure that the conservative house is compared to pass immigration reform.

Mr.

obama talked with the cancellation of his september summit.

That action was taken in large part because russia gave that asylum to edward snowden.

Housetrained a relation to the twin washington and moscow?

I do not think it is the end of the world.

John kerry and the secretary of state that with his counterpart in washington.

They seem to get along just fine.

The president feels he has to accuse putin of being homophobic.

He has to make an issue over snowden.

Beyond that, this is not a serious lecture.

For a few more months, things could be rocky.

It is not the end of the world.

A real quick point, the president took the olympics off the table.

He will not have u.s. fail to participate.

That was a big deal.

20 seconds left.

Did edward snowden push the president into this conversation?

It was u.s. allies around the world who are squawking.

Democrats squawking.

Threatening to take over the issue.

The president saw a lot of people forcing him to act.

Joining us from washington tonight, greg, a leisure to get your thoughts.

Up next, your guide to the biggest newsmakers of the week.

? to read the special interview issue of "bloomberg businessweek " on the go, download the app for free on your ipad.

Take a look ahead to monday.

The department of agriculture releases its latest supply and demand forecast for 2013. spring rains may mean a bigger domestic corn crop in the government predicted in july.

Cool weather probably delayed solely been development.

The u.s. budget statement for july at 2:00 washington time.

Summer is the ideal time for travel.

You have to find a place to stay.

Your ticket to some of the weirdest hotels around.

? ? the wilderness hotels.

The most noticeable newsmakers from this week.

Al qaeda was decimated.

I think that what this is showed us is that these affiliate groups, these franchises created to be autonomous can in 10 you to pose a threat to the united states.

This text has been automatically generated. It may not be 100% accurate.

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