Thursday, May 31, 2012

Microsoft Recruits Designers in Race for Windows Apps

Microsoft Recruits Designers in Race for Windows Apps

Microsoft Corp. (MSFT) is so eager to have a panoply of applications for the next version of its Windows operating system that it has lined up design firms, recruited interns and sent engineers on an around-the-world road show to help developers get them built.

Unlike Apple Inc. (AAPL) and Google Inc. (GOOG), which run the world's largest app stores, Microsoft doesn't have the luxury of waiting for programmers to come knocking when they want to create downloadable games, productivity tools or online magazines for its computer software.

As Microsoft struggles to keep up with a technology landscape that is moving beyond personal computers into a future defined by mobile devices, the company is under pressure to gain a toehold in tablets. Demand for these handheld machines is driven by apps, which Gartner Inc. predicts will generate $58 billion in sales in 2014.

"It's going to be very important to have a lot of apps," said Bill Predmore, president at Pop, a Seattle-based company that designs and develops apps, including a Windows 8 app for Major League Soccer. "You're competing with the iPad. You have to have some compelling alternative to that."

Microsoft will release Windows 8, a revamped version of its flagship software, by year-end, and will put out an almost complete iteration called a Release Preview today, people with knowledge of the matter said. Yet the machines that are most comparable to the iPad -- which boasts more than 200,000 apps -- won't be able to run older Windows apps, forcing Microsoft to start from scratch. The company is under pressure to fill the gap because consumers won't clamor for computers that lack a wide array of downloadable tools.

ARM Chips

Windows 8 is the first Microsoft operating system for computers that use chips based on ARM Holdings Plc (ARM) technology. These chips are widely used in mobile devices, including the iPad. The trouble is, Microsoft's ARM-based devices will run only apps designed specifically for Windows 8 -- and none of the millions of programs already available for Intel-based machines.

Hence the app-building drive. For much of February, app developers could come to Building 20 at Microsoft's Redmond, Washington campus and turn their app over to a Windows engineer who tries it out and provides feedback. Now Microsoft has taken that program on the road, visiting 87 cities, including New York, Paris and Guangzhou, China.

Developers who are earlier in the process -- those with an idea yet no app -- can attend a different program called an App Acceleration Lab to get advice on shaping their product.

Another Microsoft-led effort has been in place since September. The company has trained more than 80 design firms to aid or build apps for developers who aren't familiar with Windows' new design or design in general, said Catherine Brooker, a spokeswoman for Microsoft.

Moonlighting Staff

As with Windows Phone, Microsoft encouraged its own employees to write apps by waiving so-called moonlighting restrictions on workers, which keep staff from writing apps on their own time. Unlike with Windows Phone, Microsoft is not paying app developers to build for Windows 8.

The company is also running a 12-week paid internship program called the Foundry at its New England Research and Development Center, NERD for short. There, 22 college students in the program will build Windows 8 apps while getting training, product reviews and mentorship from Microsoft.

With traditional PCs, it wasn't hard to convince developers to build programs for Windows, the dominant operating system.

Microsoft's tablet challenge is steeper. It must win over app firms and developers that grew up building programs for smartphones and tablets, where Microsoft has little and no share, respectively.

Tablets Plus PCs

Microsoft's pitch: Unlike the old apps that don't work with some Windows 8 devices, the new ones will be available not only to buyers of tablets, but also to the more than 300 million buyers of Windows PCs. That won over SigFig Wealth Management LLC, a maker of a program that lets users track investments.

Some programmers remain unconvinced of the need to make games, magazines or other online tools for a software maker more than two years late to the tablet market.

Facebook Inc. (FB), the world's largest social network, has no plans to make a Windows 8 app even though it makes apps for the iOS and Android, according to a person with knowledge of the matter.

Flipboard, whose CEO is ex-Microsoft executive Mike McCue, isn't planning a Windows 8 version, said Marci McCue, head of marketing for the company, which is based in Palo Alto, California. Flipboard's app, which aggregates a user's social- networking feeds, has built apps for the iPad and tablets that run Android.

Other big app makers, including Zynga Inc. (ZNGA), PopCap Games, Twitter Inc., Pandora Media Inc. (P) and Inc. (AMZN), declined to comment on their plans for Windows 8.

Wait and See

Companies such as SigFig or graphic-design software maker Corel Corp., make apps that work well on both tablets and PCs. For them, writing for Windows 8 is a no-brainer.

Other developers of tablet-focused applications will wait to see whether enough consumers purchase Windows tablets, said Laurent Bugnion, a senior director for European operations at IdentityMine, one of the agencies in Microsoft's program that is working on Windows 8 apps for clients that declined to name.

"The Apple fanatics, who anyway won't touch a PC with chopsticks, they won't be interested," he said. "But the pragmatic people will probably wait for a while and suddenly when we see a few good devices come out they will start developing."

Netflix App

Netflix Inc. (NFLX) is another one of the companies working on apps for Windows 8, people with knowledge of the matter said. Some of the initial apps will be in the Windows store with the advent of the Release Preview.

Mobile games maker Digital Chocolate Inc. also plans to have games available for Windows 8 at launch, said Chief Executive Officer Trip Hawkins, while declining to specify further. Corel is working on several.

Before Pop started building its app for Major League Soccer, the team and employees of the professional soccer federation spent a day at Microsoft's campus getting guidance from the company, said Kaylynn Kelley, who oversees Pop's work with Microsoft. Pop had an engineer and a designer assigned to handle questions, which included nighttime calls that went on for two hours. The free app, which includes news, videos and standings, will probably be available in the next few days.

SigFig, whose app is already in the Windows Marketplace, received "concierge-like service" from Microsoft, said Patrick Cushing, the company's product manager for mobile. For example, Microsoft looked over SigFig's code and showed them ways to make use of Windows 8 features they hadn't thought of using.

'Handholding' From Microsoft

Corel, which made its first program for Windows in 1984, plans to have an app in the store in the next few days for finding graphics and a Windows 8 Metro version of WinZip is slated for availability when Windows 8 is released. Corel too benefited from a lot of "handholding" from Microsoft, said Patrick Nichols, a unit president at Corel.

Extra help isn't just for big companies. Microsoft is also assisting individual developers, such as 21-year-old music student Grant Kot, who graduated from the Julliard School last week. Kot had written a touch-controlled musical instrument simulation called Grantophone for Windows Phone and Microsoft wanted it for Windows 8. So a Microsoft developer who tries to promote Windows met Kot in New York. He hooked him up with a designer to advise him and got him a prototype Windows 8 tablet.

"I was pretty surprised with the amount of attention I got," said Kot, who plays cello. "They're putting in a lot of effort."

To contact the reporter on this story: Dina Bass in Seattle at

To contact the editor responsible for this story: Tom Giles at

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Acer, Toshiba to Take on IPads With Windows 8 Tablets

Acer, Toshiba to Take on IPads With Windows 8 Tablets

Acer Inc., Toshiba Corp. (6502) and Asustek Computer Inc. (2357) will unveil tablets running Microsoft Corp.'s Windows 8 operating system next week, people with knowledge of the matter said, challenging the dominance of Apple Inc. (AAPL)'s iPad.

Acer will display a tablet based on Microsoft's new software at the Computex show in Taipei, while Toshiba will show a tablet and a notebook-type device, said the people, who asked not to be identified because the plans haven't been made public. Asustek will present tablets with detachable keyboards similar to its current Transformer model, the people said.

The annual Computex show provides a forum for the computer industry to tout its wares before the typical increase in second-half demand. Computer makers allied with Microsoft (MSFT) will use this year's event to highlight a long-awaited response to the iPad and machines that run Google Inc.'s Android operating system, which together have 91 percent of the tablet market.

Windows 8 also will be the first version of the software that will work on processors using ARM Holdings Plc (ARM) technology, a type of chip made by Qualcomm Inc. (QCOM), Texas Instruments Inc. (TXN) and Nvidia Corp. that dominates the phone industry. ARM-based chips, manufactured by Samsung Electronics Co., power the iPad.

The use of ARM-based chips marks a snub for Intel Corp. (INTC), which along with Advanced Micro Devices Inc. (AMD) has been the exclusive provider of chips for Windows machines. Intel, which has more than 80 percent of the PC-chip market, hasn't been able to parlay that dominance into market share in phones or tablets.

Asustek will demonstrate tablets based on an Nvidia ARM- based chip called Tegra and another powered by an Intel chip, the people said. The Tegra-based device, which is similar to the one that will go on sale, will be displayed publicly, setting up an opportunity for direct comparisons between a Windows computer running on ARM and one using Intel technology.

Tablet Sales

The Acer (2353) tablet is built around an Intel chip, while Toshiba is using Texas Instruments for its processors.

Microsoft plans to show off Asustek devices in a presentation by Vice President Steven Guggenheimer at the show on June 6, said one person familiar with the company's plans.

The show provides the first airing of tablet hardware that Microsoft intends to use to narrow Apple's lead in the tablet market. Sales of Windows PCs to consumers have slumped as buyers opt for tablets, making it critical for Microsoft to offer a compelling option in that category.

The tablet market is poised to grow 70 percent a year on average through 2015, according to estimates from Evercore Group LLC. Traditional notebooks will have an average annual growth rate of 8 percent. Apple Chief Executive Officer Tim Cook predicted in January and reiterated this week that tablets will surpass PCs in terms of units sold.

Windows 8

The June 5-9 Taipei show will highlight a limited number of ARM-based devices as Microsoft seeks to ensure that when Windows 8 is released later this year, the products will stand up to comparisons with the iPad. The limited debut will be followed by a second wave of computer and phone makers lined up for next year, two of the people said.

Qualcomm, the world's largest maker of mobile-phone chips, will demonstrate a test device running Windows 8 based on its Snapdragon processor, said a person familiar with its plans. The company is committed to having customer devices in the market when the new version of the software goes on sale, the person said.

Spokesmen for Microsoft, Asustek, Acer, Nvidia (NVDA), Intel and Texas Instruments declined to comment on their plans before announcements and demonstrations planned for next week.

To contact the reporters on this story: Ian King in San Francisco at; Dina Bass in Seattle at

To contact the editor responsible for this story: Tom Giles at

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(BN) RIM’s Strategic Review Prompts Investor Demands for Sale

RIM's Strategic Review Prompts Investor Demands for Sale

Research In Motion Ltd. (RIMM) investors see an outright sale as the best choice for the BlackBerry maker after a series of failed turnaround efforts led management to explore strategic options.

RIM said this week it hired JPMorgan Chase & Co. (JPM) and RBC Capital Markets to help it find a partner or license its operating system. That won't be enough to reverse the company's stock decline and flagging sales, said RIM investor Vic Alboini, chairman of the Toronto-based investment firm Jaguar Financial Corp. (JFC) He'd rather attract a buyer, such as Microsoft Corp. (MSFT) or International Business Machines Corp. (IBM)

"We would like to see a sale of the company or a breakup, and if a breakup, the sale of each of the parts," said Alboini, who has urged RIM to sell itself since at least September. "We're pushing and cajoling RIM to get to the promised land of a sale or breakup."

RIM, beset by shrinking market share, executive turnover and product delays, tumbled 7.8 percent yesterday, bringing declines in the past year to more than 76 percent. The company said this week that it will probably report its first quarterly operating loss since 2004, and Chief Executive Officer Thorsten Heins has yet to give a release date for the next generation of BlackBerry phones aimed at reinvigorating sales.

Seeking Partnerships

The company's next steps may include forging partnerships, licensing its software and looking at "strategic business model alternatives," Waterloo, Ontario-based RIM said. It's also attempting to streamline operations by reducing spending and headcount. RIM's shares declined less than 1 percent to $10.29 at 11:10 a.m. in New York.

"It's a business model that's badly broken, but it's got assets that are worth something to somebody," said David Baskin, president of Toronto-based Baskin Financial Services Inc., which manages C$450 million ($437 million) in equities. While he doesn't own RIM shares, he's considering investing in the company because of the takeover prospects. "You don't hire a banker unless you're considering a sale," he said.

Heins, who took over from RIM co-founders Jim Balsillie and Mike Lazaridis in January, hasn't ruled out a sale of the company, though he said in March he's not focused on that scenario.

RIM declined to comment beyond reiterating previous statements made by Heins.

"As Thorsten said on the company's fourth-quarter earnings call, 'We believe the best way to drive value for our stakeholders is to execute on our plan to turn the company around.'" RIM said in an e-mail. "This remains true."

Saying the Opposite

Heins's stance may just be a smoke screen, said Tom Caldwell, CEO of Caldwell Securities Ltd. in Toronto, which manages more than $1 billion in assets. His firm sold its RIM stock about six months ago, while keeping a few thousand shares in retail accounts.

"The best way to say you're considering a sale is to say you're not for sale," Caldwell said. "I think they're looking for a buyer for the whole thing."

U.S. companies have plenty of cash to spend, and Microsoft has to be seen as a front-runner to buy the BlackBerry maker, Caldwell said. RIM would give Microsoft a bigger foothold in the smartphone market, where it's competing against Apple Inc. (AAPL) and Google Inc. (GOOG) Microsoft already has a partnership with Nokia Oyj (NOK1V) to build devices based on the Windows Phone software.

Private-Equity Interest

U.S. private-equity firms also may be attracted to RIM, Caldwell said. A restructured RIM focused on the corporate market might be the kind of business that a buyout firm would be interested in, particularly if RIM has already cut some of its fat, he said.

RIM said this week that it will be making "significant" reductions in spending and staffing as it looks to save $1 billion in operating costs this year.

Nokia, based in Espoo, Finland, also could be a bidder for RIM's phone business, said Jaguar's Alboini. Facebook Inc. (FB), the world's largest social-networking company, is another possibility, he said. That company is trying to bolster its mobile-phone services. Buying RIM would bring a captive audience for ads, which "could partially solve their mobile advertising gap in revenue," Alboini said.

IBM and Microsoft are the two most logical acquirers of RIM's network-services business if the company were broken up, Alboini said. That division operates encrypted e-mail servers and handles other functions for corporate customers.

Representatives of Microsoft, IBM, Nokia and Facebook declined to comment on whether they would consider buying RIM.

Canada's Government

As it restructures, RIM shouldn't expect to get aid from the federal government, Canadian Finance Minister Jim Flaherty said today.

"It has been a leading company for Canada in terms of research, development and innovation, but it does need to reorganize itself, and that's something that we expect the leaders in the company to do on their own," Flaherty told reporters in St. Martins, New Brunswick.

Flaherty wouldn't speculate on RIM being acquired by a foreign company. He said he wasn't aware of the government receiving requests to review a deal under the country's foreign- takeover law.

A takeover of RIM's size would trigger a review to determine whether an acquisition is in the national interest. In 2010, Prime Minister Stephen Harper's government rejected Melbourne-based BHP Billiton Ltd. (BHP)'s $40 billion hostile takeover of Potash Corp. (POT) over concerns that the sale would cut jobs and tax revenue.

BlackBerry 10 Release

Acquirers are unlikely to consider a deal before RIM introduces BlackBerry 10 later this year, Peter Misek, an analyst at Jefferies & Co., said in a report. Facebook is an unlikely buyer, and Microsoft will probably wait to see how its own Windows 8 software fares before acting, he said.

At the same time, RIM's falling valuation has made it an increasingly affordable target. The stock has dropped more than 90 percent from its mid-2008 high, when RIM's hold on business users was secure and the iPhone had only been on the market for a year.

"You've got a lot of cash, a lot of assets and a lot of patents," said Don Yacktman, founder of Yacktman Asset Management, RIM's seventh-largest investor. The firm held about 9.7 million shares of RIM at the end of the first quarter, giving it a stake of about $100 million in the company. "There's still a lot of value there."

Google spent about $12.5 billion for Motorola Mobility Holdings Inc. this month to boost its patent portfolio. RIM was part of a group that included Apple and Microsoft that paid $4.5 billion to buy bankrupt Nortel Networks Corp.'s 6,000 patents and patent applications.

Todd Johnson, a fund manager at BCV Investment Management in Winnipeg, Manitoba, said a buyer may step forward before the BlackBerry 10 rollout. While his firm doesn't own the stock, he bought shares himself a couple of weeks ago when they were trading around $11.

"You'd think someone would come in ahead of BlackBerry 10," Johnson said. "The user base, a network operating center, high-end security. Someone's got to want that."

To contact the reporter on this story: Hugo Miller in Toronto at

To contact the editor responsible for this story: Nick Turner at

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Startup Act Shows (BN) Silicon Valley Clout Growing in DC

Startup Act Shows Silicon Valley Clout Growing in DC

Campaign politics were already whipping Washington into frenzy. A split Congress shunned compromise on financial rules or fixes for the economy.

That made it all the more surprising to see President Barack Obama celebrating with top House Republicans at a Rose Garden ceremony last month. Together they lauded passage of a law making some of the biggest regulatory changes to U.S. capital markets in decades.

While the Jumpstart Our Business Startups Act -- JOBS for short -- was touted as a rare show of bipartisanship, it had more to do with the growing political sway of emerging technology companies and Silicon Valley venture capitalists, according to interviews with more than a dozen participants.

"This showed the next generation of entrepreneurs, start- ups and investors have found their voice in Washington," said Israel Klein, a lobbyist at the Podesta Group in Washington, who helped lead the charge for the law on behalf of his client SecondMarket Inc., an exchange for shares of private companies.

The coalition argued that expensive and outdated rules were keeping companies from going public and creating jobs. Obama agreed, backing the measure over the objections of his Securities and Exchange Commission chairman and some Democrats who said it would roll back investor protections dating to the Great Depression and the Enron accounting scandal.

For Republicans, whose support allowed the White House to claim political credit, the tradeoff was worth it. They saw the law as a major piece of deregulation that also fit with their campaign to convince California technology executives to contribute to Republicans as well as Democrats.

Capturing the Scene

Among those on hand at the April 5 bill-signing ceremony were two leaders from the technology coalition. Steve Case, a founder of America Online Inc. who now runs an investment fund, stood on the dais behind the president, his iPhone raised to capture the scene. Kate Mitchell, a venture capitalist who helped write proposals for the bill from her Northern California kitchen table, had a front-row seat in the audience.

Lawmakers who showed up included two House Republicans who've been among Obama's most persistent critics on financial matters, Majority Leader Eric Cantor of Virginia and Financial Services Chairman Spencer Bachus of Alabama. Still, the event had a Silicon Valley feel: Some guests "checked in" via Foursquare while others marked their arrival with Twitter posts.

The JOBS act consolidates ideas that had been floated for years without success on Capitol Hill.

Quadruple Shareholders

It speeds initial stock offerings of firms with less than $1 billion of annual revenue, removes restrictions on how Wall Street analysts cover smaller companies, allows hedge funds to advertise for investors and gives companies the ability to "crowd-fund" by selling stock on the Internet. It also quadruples -- from 500 to 2,000 -- the number of shareholders a company can have before it must publicly disclose its finances.

Before it passed, the legislation was attacked by consumer advocates as well as current and former SEC officials.

SEC Chairman Mary Schapiro asked that the bill be "modified to improve investor protections." Lynn Turner, a former SEC chief accountant, suggested it be renamed "the bucket-shop and penny-stock fraud reauthorization act of 2012." Barbara Roper, of the Consumer Federation of America, said, "it's frankly bewildering that the Democrats have been so willing to buy into the traditional Republican argument."

'Significant Failure'

Arthur Levitt, who served as SEC chairman under President Bill Clinton, said in an interview that the law "is a significant failure" of the Obama administration.

"If they truly believe in protecting the interests of the middle class and the small investor they should have never, ever signed on to such a bill," said Levitt, who is a director of Bloomberg LP, parent of Bloomberg News.

Critics of the law said their concerns center on its loosening of accounting and disclosure rules for emerging companies. Lack of such controls, they said, fed the penny-stock craze in the mid-1980s and the dot-com bubble of the late 1990s.

Under the new rules, companies with $1 billion in revenue or less are exempt for five years from an audit of internal financial controls that was required by the 2002 Sarbanes-Oxley accounting reform law. That means investors have less of a chance to learn about the kind of weaknesses that led some dot- coms to crash after going public, the critics say.

State regulators told Congress they worried that other changes in the law -- permitting crowd-funding and lifting the ban on hedge funds soliciting investors -- could leave unsophisticated share-buyers more vulnerable to fraud.

Proponents said the loosening wouldn't lead to more fraud. Most important, they said, the old rules were so costly and time-consuming that strong young firms were foregoing expansion.

Campaign Cash

That message resonated in both parties, which are also keen to raise cash from the technology industry. Democrats hope to retain their edge while Republicans are looking to make inroads.

In 2008, employees at technology and Internet firms donated $9.3 million to Obama and just $1.6 million to Senator John McCain of Arizona, his Republican opponent, according to the Center for Responsive Politics. In this election year, both the president and Republican opponent Mitt Romney have been making fund-raising trips to northern California.

These firms, "are creating jobs and bringing cool technologies to the marketplace" making them "appeal to both sides of the aisle," said Klein, of the Podesta Group.

While the largest technology companies weren't the prime movers behind the act, Facebook Inc. (FB)'s brush with some of the regulations helped propel the campaign. Lawmakers took notice in January 2011 when Goldman Sachs Group Inc. (GS), which planned to sell $1.5 billion in private Facebook shares to U.S. investors, dropped the idea after saying that publicity about the offering could violate SEC rules on marketing private securities.

Facebook Delay

Facebook, which went public May 18, had started the IPO process months earlier in part because it had been bumping up against the SEC's 500-shareholder limit for closely held firms. One top executive told Cantor that the company wouldn't have gone public so soon if the new law had been in place, the majority leader said in an interview.

Support from Silicon Valley wasn't the only reason the JOBS measure was approved. Another player was the Pennsylvania-based convenience store chain Wawa Inc., a closely held firm that also wanted the shareholder limit increased. In addition, Wall Street lobbyists got involved at the eleventh hour.

Still, Case and Mitchell were instrumental. They began working separately on the idea after Democrats lost control of the House and the White House, smarting from being labeled anti- business, moved to refocus on jobs by streamlining regulations and stoking entrepreneurship.

White House Councils

Case, whose Revolution LLC has backed start-ups including Zipcar and LivingSocial, joined Obama's new Council on Jobs and Competitiveness in early 2011. He also agreed to serve as chairman of the Startup America Partnership, an independent group that kicked off with a White House press conference.

Case was careful to keep contact with Republicans as well, advising Cantor, the House majority leader, on proposals aimed at reducing rules and taxes on technology and start-up firms.

The competitiveness council, headed by General Electric (GE) Co. Chief Executive Officer Jeffrey Immelt, gave recommendations to Obama last year that called for removing some regulations imposed by Sarbanes-Oxley and rescinding other securities rules for closely-held firms.

Case met with Cantor the next day. He said, "Why don't you just take what we're doing, since it already has the imprimatur of the White House behind it, and take it up?" Cantor recalled in an interview.

Geithner Conference

Mitchell, co-founder of investing firm Scale Venture Partners in Foster City, California was at work on her own plan.

She began developing recommendations during a March 2011 small-business conference convened by Treasury Secretary Timothy Geithner. During a break, Mitchell and other Silicon Valley attendees grabbed an empty conference room. Among them were Greg Becker, CEO of Santa Clara, California-based Silicon Valley Bank; Steven Bochner, a partner at the Wilson Sonsini Goodrich & Rosati law firm in Palo Alto, California; and Carter Mack, president of investment bank JMP Group Inc. (JMP) of San Francisco.

The ad-hoc group decided to gather entrepreneurs, bankers, accountants, academics and investors to research possible changes in federal policy. They also invited lobbyists for NYSE Euronext and the National Venture Capital Association to offer advice. The 17-member committee ultimately called for a "regulatory on-ramp" to encourage start-ups to go public. Among the proposals was the audit exemption later attacked by opponents of the bill.

Republican Outreach

In the House, Cantor was encouraging Republicans to strengthen their ties to technology firms. He and his top policy adviser, Mike Ference, contacted venture capital and private equity funds in Silicon Valley, Boston, the research triangle in North Carolina and in Cantor's home state of Virginia. They asked the companies for ideas and support.

"This is critical to how we're going to regain the growth prospects in the economy," Cantor said.

Silicon Valley, a Democratic stronghold, has been a challenge for Republicans because many of the industry's employees don't align with the party's stand on social issues such as gay marriage and abortion, Representative Kevin McCarthy, who represents a southern California district and is the third-ranked House Republican, said in an interview.

Republicans saw the sluggish economy as offering an opportunity to make inroads, McCarthy said.

'Ignore Us'

"When the times are good they ignore us," McCarthy said. "When the times are bad, they come to us because they like what we stand for."

Cantor, McCarthy and Republican Representative Paul Ryan of Wisconsin worked as a trio to make Silicon Valley connections. In September, they held an interactive town hall at Facebook's Menlo Park headquarters. Meetings with Google Inc. (GOOG), Apple Inc. (AAPL) and Microsoft Corp. (MSFT) dotted their calendars.

A joint campaign account set up by the three pulled in $248,000 exclusively from northern California, including $15,000 each from Mary Meeker and Floyd Kvamme of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm, and $7,500 from Kurt Wheeler, managing director at Clarus Ventures LLC in San Francisco.

Matt Lira, head of digital communications for Cantor, noticed a streaming Twitter feed mounted on a wall during a visit to Quora Inc. in Palo Alto, California. Cantor soon had a similar screen installed in his Capitol Hill office.

Joint Session

Obama went public with his de-regulatory stance in a speech to a joint session of Congress Sept. 8. He announced that the administration supported the removal of "red tape" for start- ups and businesses trying to raise capital.

Case attended, sitting a row behind Michelle Obama as a guest of the White House.

"I certainly recognized that the odds were long to get something actually turned into law, but at minimum we could create some momentum and visibility around the issue," Case said in an interview.

But within a month, the House's Republican-controlled Financial Services panel began voting on bills. By the beginning of November, with little attention from the news media, the House had passed four separate measures that would later be consolidated into the JOBS Act.

In the Senate, support had been gathering too, thanks in part to a decidedly low-tech business. Closely held Wawa, which runs more than 590 convenience stores in states including Pennsylvania, Delaware and Virginia, was bumping up against the 500-shareholder limit and wanted the ceiling raised.

Empty Room

Wawa found receptive ears on both sides of the aisle. Senator Pat Toomey, a Pennsylvania Republican, and Senator Tom Carper, a Delaware Democrat, agreed to take on the issue, according to two congressional aides. Toomey's top banking aide, Dina Ellis, began working with Jonah Crane, the legislative counsel for Senator Charles Schumer, a New York Democrat, to draft a bill modeled on the proposals from venture capitalist Mitchell's IPO task force.

When Schumer and Toomey held a press conference Dec. 1 to unveil their legislation, the room was nearly empty. In the House, though, Cantor was paying attention and Obama was about to provide the momentum for a final push.

"Most new jobs are created in start-ups and small businesses, so let's pass an agenda that helps them succeed," Obama told lawmakers in his State of the Union address Jan. 25. "Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow."

Shortly after, Cantor and Bachus, the financial services committee chairman, decided to take the bills the House had already passed, add some language from the Senate proposal and offer it as one piece of legislation.

White House Backing

They tapped Representative Stephen Fincher, a freshman Tennessee Republican who had introduced the Schumer-Toomey legislation in the House, to serve as the face of the measure. Representative John Carney, a Delaware Democrat who also had heard from Wawa, was a co-sponsor.

For emphasis, the White House put out a statement strongly backing the bill two days before the March 8 House vote. While some Democrats publicly and privately expressed misgivings about the loss of investor protections, Obama's support diluted the opposition. All but 23 Democrats voted in favor.

Next up was the Senate, where Democrats were still in control and opponents to the measure were waking up. Schapiro, the SEC chairman, sent a six-page letter to lawmakers March 13, criticizing the House bill and raising the Enron collapse as the kind of fraud that existing rules were meant to prevent. SEC spokesman John Nester didn't respond to requests for comment.

Democratic Alternative

The letter was wielded by the bill's opponents, led by Democrats Jack Reed of Rhode Island and Carl Levin of Michigan. The senators wanted a chance to craft their own version of the House bill -- one with a higher level of investor protection, they told Senate Majority Leader Harry Reid of Nevada, according to three people familiar with the conversations.

When the majority leader said no, Reed and Levin drafted an alternative bill anyway.

To beat back the opposition, the legislation's Silicon Valley backers resorted to their own social media tools. AngelList, a platform that connects investors with start-ups, initiated an online movement via Twitter asking supporters to sign a petition urging Reid and Senate Minority Leader Mitch McConnell of Kentucky to pass the House bill.

Within two days, more than 5,000 had signed, including Biz Stone, co-founder of Twitter Inc., Max Levchin, co-founder of PayPal Inc., Justin Waldron, co-founder of Zynga Inc. (ZNGA) and Mitch Kapor, the founder of Lotus Development Corp.

"We clearly recognized there was an opening and it was time to push hard," said Case, who also signed the petition.

Wall Street Lobby

The Senate defeated the Democrats' alternative bill. Reed made one last attempt to slow the train, introducing an amendment that would, in effect, have sent the bill to a House- Senate conference for more work.

For the first time, Wall Street lobbyists and major business groups including the U.S. Chamber of Commerce got involved. Goldman Sachs and JPMorgan Chase & Co. (JPM) saw the amendment, which would have required the SEC to use a broader method for counting shareholders in a fund, as a threat to much of their investment management work.

Lobbyists and lawyers from the banks flooded Senate offices with calls and analysis papers, according to two aides with knowledge of the efforts who spoke on condition of anonymity because the talks were private.

Small Victory

The Reed amendment failed. Opponents did have one small victory -- an amendment by Democratic Senators Michael Bennet of Colorado and Jeff Merkley of Oregon, and Scott Brown, a Massachusetts Republican, to increase SEC oversight of Internet crowd-funding.

On a sunny afternoon two weeks later, Obama signed the measure into law. One person was missing: Fincher, the Tennessee congressman who had been listed as the bill's prime sponsor. He was back home addressing his local chamber of commerce. The bipartisan spirit had already faded from his discussion as he spoke of Obama.

"Anything that creates division is what he's using to win," Fincher told his constituents. He didn't respond to requests for comment.

In the aftermath of its initial success in Washington, the technology coalition is looking to get its way on other issues including visas for high-tech workers and an exemption from capital gains taxes for investments in start-ups that are held for at least five years.

"There was a real sense in the entrepreneurial community that they had started a constructive dialogue with the policymakers," Mitchell said.

-- Editors: Lawrence Roberts, Maura Reynolds

To contact the reporters on this story: Phil Mattingly in Washington at; Robert Schmidt in Washington at

To contact the editor responsible for this story: Maura Reynolds at


Monday, May 28, 2012

(BN) Technicolor Dissects IPhones in Hunt for Patent Payoff

Technicolor Dissects IPhones in Hunt for Patent Payoff

When Apple Inc. (AAPL)'s next iPhone hits store shelves, Technicolor SA (TCH)'s engineers will rush to get the handset -- not to make calls or play games, but to rip it apart.

Technicolor, an unprofitable French company that invented the process for color movies used in "The Wizard of Oz" and countless other classics, plans to cash in on its 40,000 video, audio and optics patents to turn its fortunes around. The company has a team of 220 people dissecting every new smartphone and tablet from industry goliaths such as Apple, Samsung Electronics Co. (005930) and HTC Corp. (2498) for patent infringements.

"We usually send manufacturers a big file, with photos of the guts of their products, pointing to where they've been using our technology without paying for it," said Beatrix de Russe, a lawyer and executive vice president of intellectual property at Technicolor. "Once those images have sunk in, we can start negotiating."

Patents have become a technology industry battleground as mobile-phone, tablet and computer makers try to lure consumers with constant improvements to their video and sound. Technicolor, which made the first color movie 90 years ago, holds key patents in digital audio and video.

"Smartphones have become the focal point for lawsuits and licensing talks," said Yves Gassot, who heads consulting firm Idate Digiworld. "It's because the market is so huge and is growing so quickly. At the same time, the smartphone is where you'll find all the cutting-edge technology jammed into one place."

Motorola Deal

Google Inc. (GOOG), creator of the market-leading Android mobile- phone technology, this month completed the $12.5 billion takeover of Motorola Mobility Holdings Inc.'s mobile-phone business and its 17,000 patents. Equipment vendor Ericsson AB expects to increase revenue from its 27,000 patents, while rival Alcatel-Lucent SA (ALU) says it plans to generate several hundred million euros this year alone from its 29,000 rights.

Prompted by surging demand for patents that regulate functions such as sliding gestures on touchscreens or the rendering of graphics for games and applications, lawsuits over smartphone and tablet technology have been filed worldwide. Samsung and Apple have sued each other in the past year on four continents over patent-infringement claims related to mobile technology and design.

Waking Up

Though Technicolor signed its first licensing deal in the 1950's, de Russe said, 'it feels like the rest of the world has just woken up to why patents are interesting."

Technicolor has agreements with "all major manufacturers" and has also started talks with multiple vendors over new devices, she said, declining to give details on who the licensees are and who infringed patents in the past.

Patent licensing is the most profitable business of the company. The licensing division had a 76 percent operating profit margin last year, helped by 1,200 contracts with television, computer and handset makers. The company's overall operating profit margin, based on continuing operations, stood at 14 percent. Licensing sales totaled 451 million euros, about 13 percent of total revenue.

Technicolor, which has been shifting business from outdated film processes to digital techniques and software for movie- making, helped with special effects for the Harry Potter film series. The Paris-based company has refinanced its debt, sold assets in declining movie-equipment units, closed factories and cut jobs during the past two years. For 2011, it posted a net loss of 323 million euros on sales of 3.5 billion euros, its fifth consecutive annual loss.

'Dry Out'

Third Point LLC and Apollo Management Holdings, which together own 13.4 percent of Technicolor according to data compiled by Bloomberg, have been pushing for a sale of the company's patent portfolio, Le Figaro newspaper reported April 19. Third Point and Apollo representatives declined to comment.

"If we start selling our patents, revenues will dry out," de Russe said. "It's a very short-term vision."

In February, the company unveiled a three-year plan with a focus on expanding licensing programs to more devices and entering China, India and Brazil.

The market has started to react positively to Technicolor's revamp. While Technicolor shares are down 68 percent in Paris trading from a year ago, they have risen 31 percent since January.

JPMorgan Offer

The stock yesterday surged 8.9 percent after investor Vector Capital Corp. offered to boost its holding from currently 0.6 percent to as much as 30 percent through a capital increase, competing with a similar May 3 offer from JPMorgan Chase & Co. (JPM) Shareholders are scheduled to choose one of the two deals on the June 20 annual general meeting.

JPMorgan has said it supports management's patent strategy, which it calls "investing for growth." Vector Capital said it would be a "committed partner in helping Technicolor execute its strategy."

While the patent licensing business is lucrative, it often takes time before a company can cash in. Patent negotiations often last between one and four years, de Russe said.

The company is currently fighting in U.S. courts with Taiwanese manufacturers over patents used in LCD computer monitors, after it filed a complaint with the International Trade Commission. The process was started after several years of failed discussions.

"We've got a reputation for charging reasonable licensing fees and preferring friendly negotiations," de Russe said. "That doesn't mean we don't drag people to court from time to time."

To contact the reporter on this story: Marie Mawad in Paris at

To contact the editor responsible for this story: Kenneth Wong at

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(BN) Playboy Meets Elvis in U.S. Passion for Machines That Go Vroom

Playboy Meets Elvis in U.S. Passion for Machines That Go Vroom

It's rare that a car history offers both a Yeats parody and a non-poet named John Keats who spanks Detroit makers for putting "penial geegaws on the hoods."

Paul Ingrassia's "Engines of Change: A History of the American Dream in Fifteen Cars" ranges as widely and quirkily as the title suggests among the people, passions and foibles of the automotive industry.

As a journalist for the Wall Street Journal, Ingrassia shared a 1993 Pulitzer Prize for writing on General Motors Co. (GM) In this book he lets out the journalistic stays, enjoying the freedom to openly needle an industry and admire its pioneers without any loss of the good reporter's delight in detail and a fine tale.

Ingrassia's survey starts with Henry Ford's practical, black-only Model T, which monopolized the roads for 20 years until yielding in 1927 to the panache of the Roaring Twenties and GM's stylish LaSalle.

"One was dutiful and self-reliant; the other beautiful and self-indulgent," Ingrassia writes, deeming these "different philosophies that helped shape American culture."

Elvis the Pelvis

The book takes off, as the country does in the postwar boom, with the Chevrolet Corvette. Ingrassia weaves the car's 1953 debut with those of Playboy and Elvis the Pelvis that year, and the burgeoning hot rod culture. Flip to the book's first batch of color photographs to see the extraordinary evolution of car design -- it's like going from boom box to iPod.

From there it's quite a stretch to the long lines and crazy tailfins of the 1959 Cadillac Eldorado, but whether the style embodied rebellion or self-indulgence or just a convenient boost to the sticker price -- all points Ingrassia touches on -- is hard to say.

He spends as much time sketching the key players as he does on the machines, like the Corvette's champion, an immigrant engineer named Zora Arkus-Duntov, or Hal Sperlich, the man behind both the Mustang and the minivan. He "nailed the needs of the largest generation in American history twice, at critical junctures," Ingrassia writes, somewhat generously.

Nader's Raid

With the Chevrolet Corvair story, the main character is a young lawyer named Ralph Nader. A heralded response to the popular Volkswagen Beetle and the demand for compacts, the Corvair revealed stability problems soon after it went on sale in 1959-60.

Nader's 1965 book, "Unsafe at Any Speed," blasted the industry and ultimately changed liability law in ways that truly marked American culture. As an aside, Ingrassia notes that GM's extensive dirt-seeking investigation of Nader included an episode where "an attractive young woman asked him to come to her apartment to discuss 'foreign affairs."'

GTOs, BMWs, SUVs cruise by and then Ingrassia digs into the confluence of trends, like wilderness chic, that put the urban cowboy in off-road vehicles (when off-road probably meant "having a gravel driveway in the Hamptons," he says) and made the Ford (F) F-Series pickup the best-seller of all cars and trucks in America for more than 30 years.

He closes with the Toyota Prius hybrid, applauding "breakthroughs in technology deemed impossible for decades, even centuries." Ingrassia also has fun with the self- congratulatory owners, citing episodes of TV's "Curb Your Enthusiasm" and the animated show "South Park," where "Priuses have become so popular that the town develops a huge cloud of 'smug."'

I'm a big fan of potted histories and brief lives, both of which Ingrassia offers with the sure hand of a writer trained in one of the Fourth Estate's better finishing schools. How on- target he is with his defining-moment theme is a matter for much debate. But then that's partly the point and fun of any greatest-hits list.

"Engines of Change" is published by Simon & Schuster (CBS) (395 pages, $30). To order this book in North America, click here.

(Jeffrey Burke is an editor with Muse, the arts and leisure section of Bloomberg News. The opinions expressed are his own.)

Muse highlights include Richard Vines on dining and James Pressley on business books.

To contact the writer on the story: Jeffrey Burke in New York at

To contact the editor responsible for the story: Manuela Hoelterhoff at

(BN) Toyota Prius Escapes Niche to Surge Into Global Top Three

Toyota Prius Escapes Niche to Surge Into Global Top Three

Toyota Motor Corp. (7203)'s Prius, a niche oddity when it went on sale 15 years ago, jumped to the world's third best-selling car line in the first quarter as U.S. demand and incentives in Japan turned the hybrid into a mainstream hit.

Prius sales more than doubled as Toyota extended the name to a four-model "family" of vehicles at the same time that rebates and tax breaks in Japan are saving buyers the equivalent of $2,500 or more. In the quarter, sales soared to 247,230, trailing only Toyota's Corolla, at 300,800, and Ford Motor Co. (F)'s 277,000 Focus sales.

The Prius surge, after two years of recalls and production disruptions, propelled the Toyota City, Japan-based company back into the global sales lead for the first three months of the year. The hybrid line also gives the Toyota brand three of the top 10 models in the U.S. so far this year, including its midsize Camry.

"It proves Prius wasn't a fluke, that there's a long-term market for hybrids," said Eric Noble, president of the Car Lab, an automotive consultancy in Orange, California.

In the aftermath of last year's earthquake and tsunami that cut parts and auto production for Japanese carmakers, the government in December began encouraging purchases of fuel- efficient autos to reverse sagging domestic deliveries.

Rebates of as much as 100,000 yen ($1,258) are available from a 300 billion yen fund for qualified cars, including the Prius hatchback, wagon, plug-in and Aqua subcompact, sold in the U.S. and elsewhere as the Prius c. Tax savings further reduce the purchase price by another 100,000 yen or more. The average price for a Prius in Japan is about 2.5 million yen and around $25,000 in the U.S.

Hot Little Car

Aqua has become the car of the moment in Japan, helping more than triple Prius family sales in the country to 175,080 in the first quarter, from 52,507 last year. While funds for the rebates may run out in July if the government doesn't extend them, the tax reductions continue through 2015.

"It was good that introduction of Aqua and the start of government subsidies happened almost at the same time," said Koichi Sugimoto, senior analyst at BNP Paribas in Tokyo, who recommends that investors hold Toyota shares. He added that there's more to the success than the government incentives. "Toyota is introducing good vehicles and assuming it will maintain a certain volume even after the subsidies end," he said.

The Prius line topped other high-volume car models including Hyundai Motor Co. (005380)'s Elantra, Volkswagen AG's Golf, Ford's Fiesta, General Motor Co.'s Cruze and Honda Motor Co.'s Civic, according to the companies.

Global Lead

Toyota ranked as the world's largest automaker by sales from 2008 to 2010, before the natural disasters pared its global production and deliveries.

Sales of Toyota, Lexus, Scion, Hino and Daihatsu vehicles grew 18 percent to 2.49 million in the quarter, Toyota said in a U.S. regulatory filing this month. That put it ahead of Detroit- based GM (GM)'s 2.28 million and VW (VOW)'s 2.16 million, according to data compiled by Bloomberg.

Chief Executive Officer Akio Toyoda has said the company founded by his grandfather is "turning the corner" after a couple of difficult years. The company endured record recalls in 2010 in the U.S., its biggest single market, for floor-mat and gas-pedal flaws that caused unintended acceleration.

'Clearly Coming Back'

"You are seeing a company that is clearly coming back," said Efraim Levy, equity analyst with Standard & Poor's Capital IQ in New York, who rates Toyota's American depositary receipts a hold. "For Prius to sell in that kind of volume, something that's been a niche product, it's an achievement."

Since the start of Prius sales in Japan in 1997, Toyota has sold 4 million hybrid-electric vehicles worldwide, including 1.5 million in the U.S., the company said May 22.

In the U.S., typically Toyota's top market for Prius, sales jumped 42 percent in the first quarter, and 56 percent through April to a record 86,027. U.S. sales of the model since its 2000 introduction, including the new variations, total 1.18 million vehicles, according to data compiled by Bloomberg. Global sales increased 125 percent.

Prius sets a standard of success for alternatively powered cars, including Nissan Motor Co. (7201)'s all-electric Leaf and GM's Chevrolet Volt, which has a gas-burning generator on board to extend the range of the electric-drive car.

The sales pace for Prius isn't likely to be matched soon by any other hybrid models, said John Wolkonowicz, an independent analyst in Boston who specializes in automotive history.

Defines The Segment

"It's the phenomenon we saw with Chrysler and minivans: It brought out the first minivan and after all these years, Chrysler still is minivan sales leader," he said. "Prius was the first hybrid on the block."

The Prius line's current global popularity provides marketing benefits, Wolkonowicz said.

"Being No. 1 is important for advertising purposes; it provides a comfort factor that, for Prius, can be significant," he said. "It provides a 'why buy?' reason for customers who may be on the fence."

The top-selling vehicle line in the U.S. for the past 30 years has been Ford's F-Series pickup truck, which includes F- 150, F-250 and other models. Toyota's Camry has been the top- selling car in the U.S. for 10 years.

Toyota's decision to give the car a distinctive wedge shape that some car enthusiasts dislike has also been a long-term benefit, Wolkonowicz said.

"Even grandmas who don't know cars know what a Prius is," he said.

Everybody's Green Car

The appeal of Prius has as much to with how it's now a de facto brand within Toyota, positioned as the top "green" choice, as the car's actual fuel economy, Noble said.

"Prius is a Prius first and a Toyota second," he said. "The fact it's doing well this year is a reflection of the strength of the model line and the Prius brand."

While the current rate suggests U.S. drivers may want to buy 250,000 or more Prius models in 2012, the region may not get more than its planned 220,000 units.

"I've ordered additional production," Bob Carter, Toyota's group vice president of U.S. sales, said in a May 7 interview. "I'm confident we'll get additional production, but globally we're seeing high demand, particularly in Japan."

Gasoline prices in the U.S. averaged $3.68 a gallon on May 22, down 6.6 cents from $3.94 on April 5. A continued price decline doesn't favor hybrid sales, said Wolkonowicz.

"You're going to see hybrid sales drop again in U.S. as gas prices fall," he said. "Hybrid sales won't truly take off in the U.S. until we get to $5 gas and it stays."

Toyota's American depositary receipts slid 0.5 percent to $76.80 at the close May 25 in New York. They've risen 16 percent this year through May 25.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at; Yuki Hagiwara in Tokyo at

To contact the editor responsible for this story: Jamie Butters at; Young-Sam Cho at

Sunday, May 27, 2012

(BN) Facebook To Start Money Transfer System in Russia: Kommes

Facebook To Start Money Transfer System in Russia: Kommes

Facebook Inc. (FB) plans to start new services in Russia, including an on-line money transfer system, RBC Daily reported today, citing people familiar with the project.

Russian Standard Bank and may become the partners in the project, newspaper said.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at

To contact the editor responsible for this story: John Viljoen at


(BN) Indian Hospitals Lure Private Equity as Demand Surges

Indian Hospitals Lure Private Equity as Demand Surges

Indian hospitals are admitting more than just patients.

Private equity funds such as Sequoia Capital LLC and Advent International Corp. are buying stakes in hospitals in the South Asian nation, lured by a market that's forecast to reach more than $80 billion in revenue in 2015.

"If you want to deploy capital in India, health care is a nice area to be in," Abhay Pandey, a managing director at Sequoia's India unit, said in an interview. "It has lesser regulatory issues and usually no governance issues. Most of the investment is going after a very large, untapped market."

Private equity firms are set to invest the most in Indian hospitals in at least six years in 2012, according to Chennai- based Venture Intelligence. There were 12 investments in hospitals, clinics and drug makers totaling $527 million so far this year, almost double the $287 million in 2011, the researcher said. Sequoia, the fund that backed Google Inc., this month paid 1 billion rupees ($18 million) for a stake in Moolchand Healthcare Ltd., a New Delhi hospital operator which plans to add fertility clinics and medical centers.

Revenue for the hospital services industry was $37.4 billion last year and will more than double over four years, according to RNCOS, a researcher based in Noida near New Delhi. India, which has a population of 1.2 billion, still needs to add 3 million hospital beds to meet the global average of three for every 1,000 people.

Health Problems

With government-run hospitals suffering from shortages of doctors and equipment, the growing ranks of India's middle classes are increasingly turning to private health care. Prakash Gupta, head of Mumbai-based public-health researcher Healis, said private clinics are widely accepted as offering a "far better" service. India's gross domestic product per capita based on purchasing power parity surged to $3,425 in 2010 from $1,512 in 2000 and $872 in 1990, according to World Bank data compiled by Bloomberg.

Increasing wealth may also lead to health problems as people's work and dietary habits change, adding more pressure for hospitals to grow. The International Diabetes Federation estimates that the number of diabetics in India was 61.3 million in 2011 and may reach 101 million in 2030.

"Incomes are rising, and more people are getting lifestyle diseases like diabetes, but the pace of new hospitals coming up is very slow," Siddhant Khandekar, a Mumbai-based health-care analyst at ICICI Direct, said in an interview. "That's why private equity funds are ready to come to India to put money and wait for five to seven years."

Market Momentum

Hospitals are tapping private equity as the market for public share offers shrinks. Indian companies raised 198 billion rupees from 18 stock sales so far this year, less than half the amount in the same period in 2010 when issues peaked, according to data compiled by Bloomberg. Aside from private equity, there is a "lack of public markets momentum or other sources of capital" for hospitals, according to Avnish Mehra, a director at Advent International.

Investors are predicting the new entities will emulate the growth of operators such as Apollo Hospitals Enterprise Ltd., ICICI Direct's Khandekar said. Apollo (APHS), the biggest operator of hospitals by market value, surged 31 percent in the past year and more than tripled since 2009.

Advent, the Boston-based leveraged buyout firm founded by Peter Brooke, spent $105 million buying shares of Hyderabad- based Care Hospitals, it said in April. The deal was its third in India and follows investments in a provider of outsourced transaction processing and a corporate e-learning business. Care, which operates 1,700 beds in its 12 hospitals, plans to almost double capacity by end-2014, Chief Executive Officer Krishna Reddy said in a telephone interview.

Eye-Care Clinics

Vasan Healthcare Pvt., a Chennai-based operator of eye-care clinics, in March got $100 million from Government of Singapore Investment Corp. to fund new clinics and acquisitions. Sequoia is also an investor in the chain.

Olympus Capital Holdings Asia, a private-equity firm, in January bought a stake in DM Healthcare Pvt., which runs hospitals under its Aster brand in Kolhapur, in western state of Maharashtra, and Faridabad near New Delhi, for 5 billion rupees. DM, which operates hospitals in Qatar, Oman and Saudi Arabia, has more than 900 hospital beds in India and aims to reach about 3,000 beds by 2015, it has said.

Moolchand plans a network of in vitro fertilization, or IVF, clinics across India, either through acquisitions or opening new branches, Chief Executive Officer Shravan Talwar said in a telephone interview. It also expects to spend 5 billion rupees on acquisitions in the next five years, he said.

Doctor Shortage

Investing in the health care industry in India isn't without its drawbacks. The nation's hospitals face shortages of doctors, nurses, technicians and paramedics as they expand, putting services and expansion at risk. The country has 0.67 doctors for every 1,000 people, compared with a global average of 1.4, according to a report this month by Technopak Advisors Pvt., a Gurgaon-based consultant. India needs at least 800,000 additional doctors and 1.8 million more nurses, it said.

Interventions by private equity in the decisions of the management of a hospital sometimes leads to problems, according to Frost & Sullivan. Transition from an operation run by the founders, who are usually doctors, to one that's backed by private equity firms may lead to friction, the researcher said in an e-mailed response to questions.

Still, exposure to private equity brings some benefits for staff in India, according to Care Hospital's Reddy.

"It's like getting an executive MBA program in a management school for some of our senior managers," he said.


Investors in India could use some good news. The nation's economy is growing at the slowest pace in three years and the rupee, Asia's worst performer this year, tumbled to a record low against the dollar last week amid concern about the nation's finances.

Hospitals may offer a haven from the turmoil.

"The health care industry is relatively recession-proof,'' said V. KrishnaKumar, partner, mergers and acquisitions at Ernst & Young Pvt. in Mumbai. ''Rising disposable incomes are improving people's capacity to pay. Besides, there is severe shortage of good-quality health care facilities in India. Hence this sector will continue to grow in excess of 15 percent per annum and even average business-models will continue to work.''

To contact the reporter on this story: Adi Narayan in Mumbai at

To contact the editor responsible for this story: Jason Gale at


(BN)Australia Biggest Brothel Plan Poised to Defeat Council

Australia Biggest Brothel Plan Poised to Defeat Council

A plan to build Australia's largest brothel is poised to overcome local government opposition in a victory for Sydney's sex industry over creeping regulation.

The A$12 million ($11.7 million), three-story extension to the Stiletto brothel near the city center can be approved once client numbers are capped, Commissioner Susan O'Neill of the Land & Environment Court of New South Wales said in Sydney May 25. She asked for submissions from lawyers on how to limit customers before giving final approval.

Such a ruling would be a victory for Artazan Property Group, the Sydney firm overseeing the project, and the state's sex industry. Even after being decriminalized in 1995, New South Wales brothel owners are increasingly turning to courts to reverse rejections by councils opposed to the industry, said the Scarlet Alliance, which represents Australian sex workers.

"We're at risk because of the way local government is treating the industry: refusing applications in the name of politics," said Julie Bates, who prepares development applications for sex-services premises as head of Sydney-based firm Urban Realists Planning & Health Consultants. "Brothels are never going to be a vote winner."

The Stiletto proposal, rejected in September by City of Sydney council, included 40 working rooms, 21 waiting rooms and a 24-space basement parking lot.

"I am satisfied that the proposal can be approved," Commissioner O'Neill said last week.

'Police Corruption'

In the U.S., prostitution is illegal, except in Nevada, outside of Las Vegas. In Ontario, Canada's most populous province, the top court ruled on March 26 that prohibitions of bawdy houses were unconstitutional, increasing the dangers prostitutes face by being forced to work outside. The Conservative federal government has appealed.

Operating a brothel in Australia's most populous state stopped being a crime in 1995 after a Royal Commission in New South Wales found "a clear nexus between police corruption and the operation of brothels." Decriminalization handed oversight from police officers to planning authorities at local councils.

"Research usually shows brothels are not a problem in a community," said Wayne Morgan, a lecturer specializing in sexuality-related law at the Australian National University in Canberra. "Staff are usually very discreet, and clients, by their very nature, are very discreet. This was partly the point of legalizing brothels in the first place -- to take out the criminal aspect."

The state is home to as many as 10,000 female sex workers, and there are as many as 200 brothels within 20 kilometers of Sydney's central business district, according to a March report on the industry funded by the state's Ministry of Health.

'Most Erotic'

Stiletto, open 24 hours a day, lines Parramatta Road, the main road west from the city center. The brothel offers "the most erotic experience in Sydney," its website says. Rooms include 'The Library' and 'The Office,' while 'The Presidential Suite' demands a minimum four-hour fee of A$1,480.

Delecta Ltd. (DLC), an Australian publicly traded adult services company, in October scrapped a A$16 million takeover of Stiletto after Westpac Banking Corp. (WBC), the nation's second biggest lender, pulled funding for the deal.

Brothel operators in Sydney find it increasingly difficult to win approvals from councilors focused on re-election, which drives more to masquerade illegally as massage parlours, said Bates, of Urban Realists.

'Losing Ground'

"We're losing ground on what the intentions were in the first place," Bates said. "It's better to regulate and know they're there."

An inquiry in August 2007 by the state's Independent Commission Against Corruption found a council worker in Parramatta, west of Sydney, had received free sexual services for four years from at least five prostitutes in return for allowing them unauthorized use of buildings.

In Australia's parliament, former Labor lawmaker Craig Thomson, a union official before becoming a politician in 2007, this month denied claims he used his union credit card to pay for prostitutes. Thomson was kicked out of the Labor Party by Prime Minister Julia Gillard and sits as an Independent.

The New South Wales state government, a Liberal-National coalition which won power in March 2011, plans to introduce a Brothel Licensing Authority.

"Illegal operations need to be shut down," the office of the government's Special Minister of State, Chris Hartcher, said in an e-mail. "The government is currently working on delivering this election commitment."

Licensing Model

According to the Scarlet Alliance, a licensing model in neighboring Queensland state has led most sex workers to operate illegally as they ignored the new systems' requirements.

The emergence of an illegal sector makes it harder for health workers or police officers to reach sex workers and their clients, according to the website of the Sex Workers Outreach Project, a Sydney-based group that provides health information and support to people who engage in sex work.

"Licensing is a joke," said Basil Donovan, co-author of the March report for the New South Wales Ministry of Health and a medical doctor, who said the Stiletto brothel would be Australia's biggest. "It has never worked and never will. People don't want to go onto lists and police registers."

To contact the reporter on this story: Angus Whitley in Sydney at

To contact the editor responsible for this story: Philip Lagerkranser at

Friday, May 25, 2012

Winner-takes-all market in tablets (so far)

CNet reports on web traffic data originating from tablets. Because Apple is such a dominant force, the chart they refer to looks like this:

Note that Apple's iPad is not in the picture at all. When you add the iPad the chart looks like this:

Data Source: Chitika.

tags: market, domination, tool, synthesis, 4q diagram, business, model

Groupon Said to Test Card Reader Challenging EBay’s PayPal

(BN) Groupon Said to Test Card Reader Challenging EBay's PayPal

Groupon Inc., the largest daily coupon website, is testing a credit card-reader for merchants that could vie with similar devices offered by Square Inc. and EBay's PayPal Inc., a person with knowledge of the matter said.

The reader, manufactured by Infinite Peripherals Inc., is designed for the businesses that rely on Groupon (GRPN) to market their wares, said the person, who requested anonymity because the test hasn't been made public. The device plugs into the headphone jack of a smartphone, and it's being tested by dozens of merchants in the San Francisco Bay Area, this person said.

Groupon collects a fee of less than 3 percent on each transaction through the readers, the person said. The device is part of the company's efforts to increase revenue from the local shops and restaurants that use its online coupons. The company last year introduced Groupon Now, a service that lets users download coupons instantly to mobile phones.

"Groupon has a number of trials in markets that are designed to help merchants and small businesses," said Paul Taaffe, a spokesman for Chicago-based Groupon. He declined to comment specifically on a credit-card reader trial.

By entering the mobile-payment processing market, Groupon pits itself against Square, Intuit Inc. (INTU), VeriFone Systems Inc. (PAY) and PayPal, which introduced a credit-card reader in March.

Groupon climbed 1.5 percent to $12.07 at 9:39 a.m. in New York. It dropped 42 percent this year before today.

Grappling With Square

Groupon hasn't made a final decision on the fee it will charge merchants, the person said. Readers offered by Square Inc. charge 2.75 percent per transaction, while PayPal recently introduced a tool that carries a 2.7 percent fee.

The readers tested by Groupon work with Apple Inc. iPhones and iPod Touches and connect to software partly designed by FeeFighters, acquired by Groupon this year, the person said.

Representatives of Infinite Peripherals, which has offices in Arlington Heights, Illinois, and Irvine, California, didn't immediately respond to messages after regular business hours.

Groupon now generates most of its sales by selling discounts known as Groupons from businesses such as restaurants and nail salons. It splits the revenue with the businesses.

The technology blog VentureBeat reported yesterday that Groupon was testing a credit-card reader for merchants.

To contact the reporter on this story: Douglas MacMillan in San Francisco at

To contact the editor responsible for this story: Tom Giles at


(BN) Medtronic Hypertension Burning Seen as Spurring Industry

Medtronic Hypertension Burning Seen as Spurring Industry

For three decades Gael Lander fought for her life against the same high blood pressure that contributed to her father's fatal heart attack and caused a series of debilitating strokes in her mother.

Now Lander's hard-to-treat hypertension is under control, the result of an experimental 20-minute procedure that cauterized nerves near her kidneys that control blood pressure. The nerves were seared using a catheter made by Medtronic Inc. (MDT), the leader among dozens of companies developing similar products that may help re-energize the medical devices industry with a potentially multi-billion dollar new market.

Lander, a 68-year-old retired teacher from Melbourne, was the first person to undergo the operation in 2007. "I was a walking time bomb" before it, she said in a telephone interview. "I now have peace of mind."

Since Lander's operation, 4,000 more patients with hypertension that drugs failed to control have also had the surgery, the vast majority with positive results.

Though the surgery hasn't been approved for use in the U.S., its introduction in Europe and Asia is promising news for the more than 1 in 3 adults in the U.S., or 76.4 million people, and 1.2 billion worldwide, who suffer from hypertension. About one-third of those with the condition, like Lander, don't respond to drug therapy, putting them at risk of crippling ailments and early death. And even those who are helped by drug treatment may eventually benefit from the procedure.

Market Size

Medtronic, based in Minneapolis, and its rivals may generate $1.5 billion to $4.4 billion annually depending on the medical conditions the devices successfully treat, Ian Swanson, an analyst with the Millennium Research Group in Toronto, said.

"The treatment-resistant population alone is a lucrative one," Swanson said. "But the real excitement is in the fact that it's a much larger group if you can get to patients" with common hypertension.

The procedure could also pare down expenditures for hypertensions drugs, led by Novartis AG's Diovan, which totaled $13.9 billion globally in 2011, according to IMS Health, a Norwalk, Connecticut-based health-care information and services company. More than 42 million people take drugs to curb hypertension in the U.S. alone, underscoring the potential size of the market.

Medtronic is leading the way with its purchase of closely held Ardian Inc. for $800 million in January 2011. Competitors have also targeted the opportunity, with nearly every medical device company and numerous startups developing their own products.

Competitors' Efforts

Covidien Plc (COV), based in Dublin, St. Jude Medical Inc., based in St. Paul, Minnesota, and closely held Vessix Vascular Inc., based in Laguna Hills, California, announced European approvals of their entries in May. Raj Denhoy, a Jefferies & Co. analyst in New York, found 62 devices in development at a meeting in Paris, a "staggering" number that will crowd the small, emerging market for the therapy.

Still, Medtronic and a handful of others will probably end up as the dominant players based on their progress and the type of devices they are offering, Denhoy said.

In Lander's procedure, known as renal denervation, doctors slid Medtronic's catheter into an artery connected to the kidney, and then seared the nerves in the artery wall with radio-frequency energy. This quelled production of hormones that raise blood pressure by contracting blood vessels and promoting fluid retention.

Uncontrolled Response

In 10 percent of hypertension patients, including Lander, the response that can trigger high blood pressure is uncontrolled, leading to a condition that isn't easily treated using drugs, said Murray Esler, associate director of the Baker IDI Heart and Diabetes Institute of Melbourne.

Medtronic is studying its device in the U.S. market for people in this group, with approval expected in 2015. Additional studies will examine if the approach is viable for a wider segment of hypertension sufferers as well as whether it may lower blood sugar, control sleep apnea and ease heart failure and kidney disease, Esler said.

Success would be a welcome respite for the medical technology industry, which has struggled for the past four years with falling prices, troublesome equipment, allegations of device overuse and lawsuits. Medtronic has fallen 9.3 percent in the past 12 months, outpacing the 7 percent decline in the Standard & Poor's Health Care Equipment Index. (S5HCEP)

Key Study

Key to gaining entry to the U.S. will be the results of a study led by George Bakris, director of the hypertension center at the University of Chicago. It will look at the experiences of 532 patients, half of whom will undergo renal denervation while the others have a sham surgery that mimics it. The results are expected to be released next year, Bakris said.

Previous studies in Australia and Europe point to strong benefits. The initial Medtronic trial found 71 percent were helped by the treatment within six months. The first two dozen patients, including Lander, have been followed for three years, and all eventually responded to the treatment, gaining normal or near-normal blood pressure readings with less medication.

"The improvement was much more pronounced than we have seen with any anti-hypertensive drug so far, and these patients were already being treated," Felix Mahfoud, an interventional cardiologist at Saarland University Medical Center in Homburg, Germany, said by telephone. The hospital has treated more than 450 patients, making it one of the most experienced centers for the technique in the world.

Skeptical Insurers

Still, the surgery isn't risk free. Doctors don't know if the nerves will grow back with time. Blood pressure reductions are less dramatic when patients undergo 24-hour monitoring, rather than a single test in a doctor's office. Many insurers remain skeptical and don't regularly cover the procedure.

Researchers, moreover, are concerned about doctors touting a surgical and not fully proven "cure" for hypertension, particularly when drug therapy has been effective treating many forms of the illness.

The surgery "is not a panacea," Bakris said. "You don't have this done to get out of taking the drugs. You do this when no drug can control the hypertension and you don't want to have a stroke, kidney failure or heart failure."

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at

To contact the editor responsible for this story: Reg Gale at


(BN) SpaceX Becomes First Company to Dock Ship at Space Station

SpaceX Becomes First Company to Dock Ship at Space Station

Space Exploration Technologies Corp. docked a supply ship at the International Space Station in a breakthrough for commercial space travel.

Closely held SpaceX, controlled by billionaire Elon Musk, connected its unmanned Dragon capsule to the station at 12:02 p.m. New York time, according to Kyle Herring, a spokesman for the National Aeronautics and Space Administration. It is the first company to accomplish the feat.

"This is truly a momentous accomplishment for SpaceX and for the industry," Michael Lopez-Alegria, president of the Washington-based Commercial Spaceflight Federation, said in a statement. The country is on its way to having a cost-effective space transportation system, he said, and SpaceX should be thanked for "restoring U.S. access to the space station."

NASA retired its shuttle fleet last year and wants the private sector to take over the job of carrying supplies and eventually astronauts to the station. The U.S. currently relies on the governments of Europe, Japan and Russia for that work.

After almost three years of delays in the mission, SpaceX launched its Falcon 9 rocket, carrying the Dragon ship, on May 22 from Cape Canaveral, Florida. A previously scheduled attempt on May 19 was called off with a half-second left in the countdown because of a faulty engine valve.

'Historic Day'

Herring called it a "historic day," and said a press conference was scheduled for 1 p.m.

Astronaut Don Pettit, with help from colleague Andrew Kuipers, grabbed the craft with the 60-foot-long robotic arm at 9:56 a.m. New York time. Actual docking, or berthing, was completed at 12:02 p.m.

The Obama administration in 2010 canceled a program to develop a shuttle successor, betting the private sector would offer lower costs.

SpaceX is among several companies that have won a total of more than $1 billion in NASA contracts to develop the technology to transport cargo and crew into space.

The group includes Orbital Sciences Corp. (ORB), based in Dulles, Virginia; Blue Origin LLC, based in Kent, Washington; Boeing Co. (BA), based in Chicago; and Paragon Space Development Corp., based in Tucson, Arizona.

The others are Sierra Nevada Corp., based in Sparks, Nevada; and United Launch Alliance LLC, a joint venture of Boeing and Lockheed Martin Corp. (LMT), based in Bethesda, Maryland.

Alliant Techsystems Inc. (ATK), based in Arlington, Virginia, has teamed up with Lockheed and Astrium, part of Leiden, Netherlands-based European Aeronautic Defence and Space Co., in offering the Liberty rocket to compete for NASA business.

To contact the reporter on this story: Brendan McGarry in Washington at

To contact the editor responsible for this story: Stephanie Stoughton at

Benchmark Joins Twitter in San Francisco's Startup Zone

Benchmark Joins Twitter in San Francisco's Startup Zone

Twitter Inc. will be joined by one of its biggest investors soon after the company moves to San Francisco's gritty Mid-Market neighborhood next month.

Benchmark Capital, which bought a stake in the micro- blogging service three years ago, signed a lease this week for more than 10,000 square feet of space on Market Street, a half mile from Twitter's new headquarters. The office is just above the Warfield Theater, a 90-year-old entertainment hall that's featured everyone from Louis Armstrong to Bob Dylan.

While Benchmark is keeping its existing office in Menlo Park, California, the new urban outpost is the latest sign that the startup hub has moved north from Silicon Valley. In addition to Twitter, San Francisco is home to Zynga Inc. (ZNGA) and Yelp Inc. (YELP) as well as fast-growing Web companies Dropbox Inc., Square Inc. and Airbnb Inc. That's pushed down vacancy rates and raised rents.

"The business moved and we're all waking up to the fact that this is a monumental shift," Peter Fenton, a general partner at Benchmark and board member at Twitter and Yelp, said in an interview. "These forces are long-term and we're making a bet consistent with that." Two-thirds of Benchmark's deals since 2009 have been in San Francisco, he said.

Fenton and Matt Cohler are the only two of Benchmark's six investing partners who live in San Francisco, though all of them will be using the space starting in the second half of this year. They'll occupy the seventh and eighth floors at the top of the building on Market Street near the corner of 6th Street. Fenton declined to provide terms of the lease.

SoMa Startups

Most of the startups are concentrated in the nearby South of Market, or SoMa, district, where scores of social, mobile and cloud-computing companies are emerging. The vacancy rate in SoMa shrank by more than half in the first quarter to 3.8 percent, the lowest since 2000, according to brokerage firm Jones Lang LaSalle Inc. That helped boost San Francisco office rents by 24 percent to an average $46.66 a square foot from a year earlier, the brokerage said.

Twitter's six-year lease on Market between 9th and 10th streets gives the company three floors with 215,000 square feet at an average annual rental rate of $30 a square foot. The company opted to stay in San Francisco after Mayor Edwin M. Lee supported a six-year payroll tax exclusion last year aimed at keeping Twitter in town and building up Mid-Market.

Historically, it's been a rough area, replete with crime and homelessness. Fenton said the ground floor of their building has a strip club on the right and a drug paraphernalia store on the left. The firm wants to be part of the neighborhood revival as well as enjoy the "romantic appeal" of being on top of a music venue, Fenton said.

Vaudeville Hall

The Warfield opened on May 13, 1922, as a vaudeville and movie theater and became primarily a music hall in 1979, when Dylan played two weeks of concerts. The Jerry Garcia Band was a house favorite until Garcia's death in 1995.

"It speaks to a place that will be fun and appealing to young entrepreneurs, not a stuffy financial-services kind of presence," Fenton said. "There's always a risk. In three to five years, people may laugh at this decision or say, 'hey, there was some foresight."'

Lewis Cirne, founder of cloud-based business software maker New Relic Inc., is working on his second startup backed by Fenton. The first was on the Peninsula, south of San Francisco, and when he started New Relic in 2008, all the momentum was moving to the city, he said.

'Round Two'

"Round one for Peter and me was the Peninsula and round two for both of us in San Francisco," said Cirne. "Benchmark is capitalizing on a trend and it signifies them being ahead of the curve."

Until now, Benchmark's main office has been on Menlo Park's Sand Hill Road, surrounded by other high-profile firms such as Kleiner Perkins Caufield & Byers, Sequoia Capital and, more recently, Greylock Partners. Venture firms in San Francisco include Crosslink Capital and First Round Capital, and last year Europe's Index Ventures opened an office in the city, while Trinity Ventures started a co-working space for portfolio companies.

Benchmark was founded in 1995 and made its marquee investment in EBay Inc. (EBAY) two years later, reeling in billions of dollars after the auction site's 1998 initial public offering. More recently, Benchmark was the biggest outside investor in photo-sharing app developer Instagram Inc., which was bought by Facebook Inc. (FB) last month, and it backed five companies that sold shares to the public in the past 14 months.

To contact the reporter on this story: Ari Levy in San Francisco at

To contact the editor responsible for this story: Tom Giles at

Astellas, Huawei, Formula One: Intellectual Property

Astellas, Huawei, Formula One: Intellectual Property

A unit of Japan's Astellas Pharma Inc. (4503) sued Hospira Inc. (HSP), accusing the generic pharmaceutical company of infringing a patent for the drug adenosine, used to diagnose heart blockages.

Astellas contends Lake Forest, Illinois-based Hospira is planning to market its own version of the drug before patent 5,731,296 expires in 2015, according to a complaint filed May 23 in federal court in Wilmington, Delaware.

Astellas "will be substantially and irreparably damaged and harmed" if a judge doesn't stop the infringement, plaintiffs' lawyers said in court papers.

Full-year profit for Astellas, Japan's third-largest drugmaker, will rise by 25 percent because of lower taxes and an absence of costs related to last year's earthquake and tsunami, the company said May 10. Astellas reported about $12 billion in revenue for the most recent fiscal year.

"As the world leader in generic injectable drugs, we remain committed to bringing high-quality, low-price products to market as soon as possible," Daniel Rosenberg, a Hospira spokesman, said in an e-mailed statement commenting on the lawsuit.

Adenosine is injected to help diagnose coronary artery disease in patients who can't exercise adequately during cardiac stress tests.

The case is Astellas v. Hospira, 12cv652, U.S. District Court, District of Delaware (Wilmington).

Huawei Files Antitrust Complaint With EU Over InterDigital

Huawei Technologies Co., China's largest phone-equipment maker, filed an antitrust complaint with European Union regulators that accuses InterDigital Inc. (IDCC) of refusing to license key wireless patents.

Huawei alleges that InterDigital is abusing a dominant position for 3G technology patents agreed as industry standards and has made "unreasonable and discriminatory demands" on license fees, said Roland Sladek, a spokesman for Huawei in Shenzhen, China. Huawei filed the complaint May 23 because there was "no foreseeable resolution" to talks on the fees, it said in a statement.

"Such inflated demands from InterDigital could penalize European consumers" if they had to pay more for mobile phones and other products, Sladek said.

Google Inc.'s Motorola Mobility Holdings Inc. and Samsung Electronics Co. (005930) are being probed by the European Commission over whether they violated agreements to license standards-essential patents to other mobile-phone manufacturers on fair terms. The EU probe into Motorola Mobility followed complaints from Microsoft Corp. and Apple Inc. this year.

Antoine Colombani, a spokesman for the European Commission in Brussels, said regulators had received the complaint and "will examine it."

"InterDigital has not seen the complaint that was filed so we can offer no specific response to whatever issues might be raised," Lawrence Shay, the president of the company's digital holding units, said in a statement. "We have in the past licensed, and continue to license, technologies on the terms set forth in our commitments" to standards organizations.

The owner of about 1,300 U.S. patents related to mobile phones, InterDigital filed a case last year with the U.S. International Trade Commission in Washington, alleging that Huawei, Nokia Oyj, ZTE Corp. and LG Electronics Inc. infringed patents related to so-called third-generation wireless technology. It has also sued the companies in federal court in Wilmington, Delaware, making the same allegations.

In January, InterDigital said it concluded a review on a potential sale without finding a buyer for the company and has instead decided to focus on patent sales and licensing. The company has said its patents were deeper and stronger than those that Nortel Networks Corp. auctioned for $4.5 billion.

Apple Reaches Settlement With SimpleAir Ending Patent Litigation

Apple Inc. (AAPL) reached a patent-license agreement with SimpleAir Inc., ending a lawsuit brought against the world's biggest technology company in 2009, according to a May 24 court filing.

SimpleAir, based in Marshall, Texas, owns patents covering areas including wireless content delivery, mobile applications and so-called push-notification market spaces. Terms of the settlement weren't disclosed.

Apple, based in Cupertino, California, was the sole remaining defendant in a case that also accused Facebook Inc. (FB), Research In Motion Ltd. (RIM) and Walt Disney Co. (DIS) of patent infringement.

The case is SimpleAir Inc., v. AWS Convergence Technologies Inc., 2:09-cv-00289-MHS, U.S. District Court, Eastern District of Texas (Marshall).

For more patent news, click here.


Ford Raised to Investment Grade Means Regaining Blue Oval

Ford Motor Co. (F) was raised to investment grade by Moody's Investors Service, enabling Chief Executive Officer Alan Mulally to reclaim assets including its blue oval logo put up as collateral to obtain $23.4 billion in loans in late 2006.

"When we pledged the Ford blue oval as part of the loan package, we were not just pledging an asset, we pledged our heritage," Bill Ford, 55, the company's executive chairman, told reporters May 22 on a conference call. "To get that back feels wonderful and this is one of the best days I can remember."

Moody's boosted Ford's senior unsecured ratings to Baa3 from Ba2 and raised its finance arm, Ford Motor Credit, to Baa3 from Ba1. Moody's joined Fitch Ratings in assigning an investment-grade rating, and with two such ratings, Ford regains control of the logo and other assets, including factories, its Dearborn, Michigan, headquarters and vehicle trademarks.

Moody's had ranked the second-largest U.S. automaker's debt as junk since August 2005. Fitch returned Ford to investment grade in April after assigning it junk status in December 2005.

"The upgrade of Ford recognizes the strength of the company's position in North America, its robust liquidity position, and our expectation that the company will continue to embrace sound operating and financial disciplines," Moody's said in an e-mailed statement. "We believe that these strengths will enable Ford to maintain an investment-grade profile in the face of the sector's ongoing cyclicality and weakness in the European market."

Moody's said the outlook for Ford and Ford Credit is stable.

Formula One Wins Court Challenge Overturning 'F 1' Mark

Formula One Licensing BV won a challenge that sought to overturn another company's European Union-wide trademark for the term "F 1."

The European Court of Justice, the 27-nation EU's highest tribunal, rejected earlier decisions to award the EU trademark to Racing-Live, a motor sports website based in Montpellier, France.

The EU's trademark office and an EU appeals court "failed to acknowledge, in relation to trademarks, the distinctive character of the 'F1' sign" and shouldn't challenge the validity of trademarks awarded by the EU's member states, the Luxembourg-based tribunal said in a statement yesterday.

The group in charge of licensing for Formula One, the world's most-watched motor sport, in 2005 appealed the French company's application and had won the EU trademark agency's backing that such a trademark would be confused with the group's existing F1 trademarks. The agency overturned that ruling in 2008. Formula One lost an initial challenge to the EU's General Court last year.

Formula One Licensing didn't immediately respond to an e- mail seeking comment.

Yesterday's ruling asks the EU's General Court to re- examine the case.

The case is: C-196/11 P Formula One Licensing BV v Office for the Harmonisation of the Internal Market.

Lindt Can't Seek Trademark on Chocolate Bunnies, EU Court Says

Lindt & Spruengli AG (LISN), the world's largest maker of premium chocolate, can't seek a trademark for chocolate rabbits with a red ribbon, according to a ruling from the EU's top court.

The European Court of Justice backed an earlier refusal from the EU trademark office that stopped Lindt from winning trademark protection for a chocolate rabbit with a red band.

"The shape of a chocolate rabbit with a red ribbon cannot be registered as a community trade mark," according to a statement from the Luxembourg-based tribunal. "The Court of Justice confirms that this shape is devoid of any distinctive character."

Lindt, based in Kilchberg, Switzerland, has since 2004 failed to get EU-wide trademark protection for the shapes of a plain chocolate bunny and chocolate bunnies and reindeer wrapped in gold foil with red ribbon around their necks. It also failed to get protection for the ribbon and attached bell. The EU trademark agency based in Alicante, Spain, said in 2008 that the shapes were too common.

Lindt didn't immediately respond to an e-mail seeking comment.

The chocolate maker in 2001 gained a trademark valid across the 27-nation EU for a chocolate Easter bunny wrapped in gold foil emblazoned with the word "Lindt" and bearing a red ribbon. In yesterday's case, Lindt was seeking protection for the same bunny, minus the name, which would have given it wider rights.

Lindt already used its existing EU trademark to block an Austrian chocolate maker from selling products similar to its own Easter rabbit. This led to a dispute that resulted in a ruling by the EU's top court that the trademark can be challenged if the Austrian chocolate maker proves Lindt registered it in bad faith.

Yesterday's ruling from the Luxembourg-based tribunal is binding.

The case is: C-98/11 P Chocoladefabriken Lindt & Spruengli v OHIM

For more trademark news, click here.


Google Says Microsoft Leads Requests to Take Content Off Search

Google Inc. (GOOG), owner of the world's most popular Internet search engine, said a new report shows that Microsoft Corp. makes the most requests among copyright owners to remove content from Google's search service.

Microsoft, or others on its behalf, has requested more than 2.5 million Web pages, or URLs, be removed because of copyright infringement, while Comcast Corp. (CMCSA)'s NBCUniversal was No. 2 with almost 1 million, according to data released by Google that measured all requests going back to 2011. Member companies of the Recording Industry Association of America, including EMI Music North America, were No. 3 with more than 400,000 requests.

"We're providing information about who sends us copyright removal notices, how often, on behalf of which copyright owners and for which websites," Fred von Lohmann, Google's senior copyright counsel, said in a blog post. "As policy makers and Internet users around the world consider the pros and cons of different proposals to address the problem of online copyright infringement, we hope this data will contribute to the discussion."

Google is under scrutiny from companies and governments around the world over what type of content it shows on its services. The new data is a now part of Google's Transparency Report, which tracks traffic on its services, general user-data requests and removal queries.

While scrutinizing copyright requests, the company also is trying to improve the efficiency of the process. Last week, the average turnaround time for a request was less than 11 hours. Google said it has received 1.2 million requests on behalf of more than 1,000 copyright owners to remove search results in the past month.

The Mountain View, California-based company rejects some requests. For example, sometimes they're used for "anticompetitive purposes," or to remove content that is unfavorable toward a particular person or company yet doesn't infringe any copyrights, Google said.

Microsoft (MSFT), the world's largest software maker, competes with Google in the market for Web search with its Bing service.

For more copyright news, click here.

To contact the reporter on this story: Victoria Slind-Flor in Oakland, California, at

To contact the editor responsible for this story: Michael Hytha at