Sirius, VirnetX, Hershey, Sauce: Intellectual Property

Sept. 24 (Bloomberg) -- In a ruling against Sirius XM Holdings Inc., a federal judge in Los Angeles said that a California law covering ownership of the copyrights to pre-1972 sound recordings didn’t limit the owners’ rights to control public performances of the works.

U.S. District Judge Philip Gutierrez made the ruling in a suit brought by the members of the Turtles, best known for their 1967 hit song “Happy Together.” The band objected to Sirius XM’s uncompensated use of their music and sought damages in excess of $100 million.

The suit, initially filed in state court, was moved to federal court in August 2013. In December, Gutierrez rejected Sirius XM’s request to have the case transferred to New York, saying the issues it raise could potentially “radically overturn decades of settled practice” with respect to pre-1972 sound recordings.

Gutierrez said in his Sept. 22 ruling that “at a minimum” the copyright owners were injured by Sirius XM’s conduct “in the form of foregone licensing or royalty payments” that should have been paid before the music was performed.

While he agreed that the copyright owners were damaged by the performances of the music on Sirius XM’s subscriber-based satellite broadcasts, he didn’t extend that ruling to cover the New York-based broadcaster’s use of the content on its servers and on-demand services.

The case is Flo & Eddie Inc. v. Sirius XM Radio Inc., 13-cv-05693, U.S. District Court, Central District of California (Los Angeles).

For more copyright news, click here.

Trade Secrets

Schlumberger Drops Suit Alleging Ex-Manager Stole Trade Secrets

Schlumberger Ltd., the oilfield services company, dropped a lawsuit accusing Humair Shaikh, a former Houston operations manager, of stealing trade secrets when he left this year to work for Baker Hughes Canada, an industry rival.

Shaikh said he unintentionally took company data while copying the documents folder from his laptop’s hard drive “to retain his personal and private information that had accumulated in numerous files” during 16 years with Schlumberger. The company had no alternative procedure for extracting an employee’s private information, and Shaikh said he gave his supervisor a copy of the hard drive “with everything on it, at his going away dinner,” according to documents filed in state court in Houston.

“This case is all smoke and no fire,” Mike Oberti, Shaikh’s lawyer, said in a court filing in June. “Schlumberger has its confidential information back; it has not suffered any harm, and by its own vice president’s admission, no potential harm is looming.”

Oberti declined yesterday to comment on the case, which was dismissed at Schlumberger’s request on Aug. 19.

“Schlumberger got everything they wanted through a settlement, and that’s why this was dismissed,” John R. Keville, one of oilfield service firm’s lawyers, said in a phone interview.

The case is Schlumberger Technology Corp. v. Shaikh, 2014-33251, 113th Judicial District of Harris County, Texas (Houston).


VirnetX CEO Gets Morgan Stanley Margin Call After Apple Case

For Kendall Larsen, the chief executive officer of VirnetX Holding Corp., a court decision in a patent dispute with Apple Inc. that erased 65 percent of his company’s market value last week also carried a personal cost.

Larsen, VirnetX’s largest stockholder, disclosed in a Sept. 22 regulatory filing that Morgan Stanley forced a sale of 1.75 million shares he had pledged to secure a personal loan.

The sale underscores the risks executives take when they use company shares as collateral to borrow money. VirnetX, which gets all its revenue from patent licensing, is subject to wide price swings of its stock, with some 280 occasions in the past five years in which the shares moved up or down by 4.5 percent or more in a single day, according to data compiled by Bloomberg.

VirnetX plunged 44 percent on Sept. 16, after a U.S. appeals court threw out a $368.2 million patent-infringement damage award the company won against Apple over virtual private networks. On the same day, Larsen pledged “additional shares” to Morgan Stanley “as additional security with respect to the credit line,” according to a Schedule 13D filed yesterday with the U.S. Securities and Exchange Commission.

Greg Wood, a spokesman for Zephyr Cove, Nevada-based VirnetX, didn’t immediately respond to an e-mail request for further information. A voice-mail greeting at his office said he doesn’t return phone calls and to only contact him by e-mail

VirnetX was founded almost a decade ago by former workers at Science Applications International Corp., a government contractor. VirnetX has said the technology was developed for the Central Intelligence Agency, which was seeking new ways to secure communications during the first Gulf War.

The appeal is VirnetX Inc. v. Cisco Systems Inc., 13-1489, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is VirnetX Inc. v. Cisco Systems Inc., 10cv417, U.S. District Court for the Eastern District of Texas (Tyler).

ServiceNow Is Sued for Patent Infringement by Texas Company

ServiceNow Inc., a provider of information-management software, was sued for patent infringement by BMC Software Inc., a Texas-based software company.

According to a complaint filed yesterday in federal court in Marshall, Texas, Houston-based BMC claims ServiceNow has infringed seven patents related to information management.

BMC in the complaint quotes a May 2013 interview with ServiceNow founder Fred Luddy, in which he allegedly said that the “secret sauce” behind his business model was stealing others’ intellectual property.

Santa Clara, California-based ServiceNow did not respond immediately to an e-mailed request for comment.

BMC asked the court to bar further infringement of its patents, and for monetary damages.

The case is BMC Software Inc. v. ServiceNow Inc., 2:14-cv-00903, U.S. District Court, Eastern District of Texas (Marshall).

For more patent news, click here.


Hershey Prevails in Philippines Case Over Copycat Name, Logo

A Hershey Co. unit prevailed in a trademark dispute in the Philippines, the Philippines Press reported.

The Bureau of Legal Affairs of the Intellectual Property Office of the Philippines ruled against an applicant who sought to register “Hershey” as a trademark and a logo similar to that used by the Pennsylvania-based candy company, according to the report.

Anhing’s Fish Sauce Label Not Infringed, Los Angeles Jury Says

Anhing Corp., a maker of Vietnamese food products, failed to persuade a Los Angeles federal jury that the label for a high-end fish sauce infringed its trademarks.

The company had accused Viet Phu Inc. of Milpitas, California, of trying to hitchhike on the fame of Anhing’s logo, which features a fishing boat. Both companies produce the pungent fish sauce that’s a staple of the Vietnamese cuisine. Viet Phu bills its sauce as “artisanal” on its website.

Anhing has annual revenue of more than $90 million and has used a red boat logo since its establishment in 1980, according to court papers. The company said it was harmed by Viet Phu’s use of the name “Red Boat” for its sauce and by the company’s use of a similar-looking boat on its label.

The jury was unpersuaded, finding no likelihood of confusion between the two companies’ marks and labels.

The case is Anhing Corp. v. Viet Phu Inc., 13-cv-04348, U.S. District Court, Central District of California (Los Angeles).

For more trademark news, click here.

To contact the reporter on this story: Victoria Slind-Flor in San Francisco at; Laurel Brubaker Calkins in Houston at

To contact the editors responsible for this story: Michael Hytha at Charles Carter, Andrew Dunn