Monday, April 30, 2012

Is anti-obesity contagious?

 28 April 2012 (NewScientist):
In 2006, biologists found that the types of bacteria in the guts of obese rats differed from those in non-obese rats. To find out more, Mihai Covasa and his colleagues at the French National Institute for Agricultural Research (INRA) in Paris swapped gut bacteria between obesity-prone and obesity-resistant rats.
The obesity-resistant rodents proceeded to eat more and pile on the pounds. They also developed gut hormone levels typical of obesity-prone rodents.
To treat obesity, it should possible to move the bacteria the other way around, from obesity-resistant individuals to obesity-prone ones.

(BN) Zynga Shares Decline on Report of Growth in Users Seen as Less Lucrative

Bloomberg News, sent from my iPhone.

Zynga Earnings Beat Estimates as Game Site Lures Users

April 27 (Bloomberg) -- Zynga Inc. had its biggest decline in two months after reporting that most of the growth in virtual goods sales is coming from mobile players -- who, according to analysts, tend to spend less on online games.

The majority of the growth in first-quarter bookings, or the total value of virtual goods sold, came from mobile games, San Francisco-based Zynga said in a statement yesterday. The company also reported a net loss, compared with profit a year earlier, amid rising expenses.

People who play Zynga's games on their handsets rather than traditional computers are less likely to splurge on so-called virtual goods, such as crops and tractor equipment in "FarmVille," said Arvind Bhatia, analyst at Sterne Agee & Leach Inc. in Dallas.

"Mobile is fine, but it doesn't monetize as well," Bhatia, who recommends selling Zynga shares and doesn't own them.

Mobile games generate about one-half to three-quarters as much revenue per daily user as Web-based social games, according to Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco, who rates Zynga "neutral."

Zynga fell 9.6 percent to $8.52 at the close in New York, for the largest decline since Feb. 15. The stock has dropped 15 percent since it began trading on Dec. 16.

Zynga, which raised $1 billion in a December initial public offering, has spent money expanding into new areas, such as mobile games, including its $180 million purchase of OMGPop Inc. in March. Operating costs almost doubled, surging 97 percent, to $406.6 million.

Swinging to Loss

That helps explain why the company swung to a net loss of $85.4 million, or 12 cents a share, from profit of $1.34 million, or break even, a year earlier.

Concerns over growth in mobile users outweighed evidence that the company is exceeding analysts' predictions in other areas. Sales rose 32 percent to $321 million, topping the average $315.9 million analyst estimate, according to data compiled by Bloomberg. Profit excluding some items was 6 cents a share, more than the 5-cent estimate.

Players who pay money increased 21 percent to 2.9 million from the fourth quarter, Zynga said.

"Only a small fraction of their user base pays them," said Rich Greenfield, analyst at BTIG LLC in New York, who recommends buying Zynga shares. This level of increase "in paying players is pretty significant."

Bookings were $329.2 million, up 15 percent from the first quarter of 2011.

Mobile's 'Early Days'

Zynga's mobile games, which include "Dream Heights" and "Words With Friends" were responsible for "the majority of bookings growth." Zynga said in the statement.

"I wouldn't say mobile is more difficult to monetize," Zynga Chief Operating Officer John Schappert said in an interview. "I would say that we're early days in mobile, and it's reminiscent of the early days of social gaming on the Web."

Six new games were offered in the first quarter, helping Zynga grow to 182 million monthly users, up 25 percent from the first quarter of last year.

Zynga raised its full-year 2012 bookings forecast to $1.43 billion to $1.5 billion, up from a February projection of $1.35 billion to $1.45 billion. Zynga also said it expects 2012 earnings, excluding some items of 23 cents to 29 cents a share, compared with a prior range of 24 cents to 28 cents.

Zynga said on a conference call that it increased the forecast because of the OMGPop acquisition.

Dependent on Facebook

Earlier this week, Facebook said 11 percent of its $1.06 billion in first-quarter revenue came from Zynga. Facebook, which takes a 30 percent cut from purchases of virtual goods within Zynga games, is expected to hold an IPO this year.

Zynga owns the six most popular games played on Facebook, according to AppData. CityVille, with 41.6 million monthly users and Texas HoldEm Poker, with 37.3 million users, top the social gaming charts. Draw Something, which Zynga acquired through its March purchase of OMGPop, is in third with 36 million users.

The company expects to spend hundreds of millions of dollars acquiring game developers over the next three to five years, Chief Executive Officer Mark Pincus told Bloomberg in an interview this month.

Zynga sold 49.5 million shares in a secondary offering of its shares on April 3. The terms of the share sale required the sellers, including Pincus, to agree to a longer lockup period that keeps them from unloading additional shares until as late as August, according to a filing.

To contact the reporter on this story: Douglas Macmillan in New York at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Eugene.

(BN) Military Secrets Leak From U.S. Universities With Rules Flouted

Bloomberg News, sent from my iPhone.

Military Secrets Leak From U.S. Universities With Rules Flouted

April 30 (Bloomberg) -- For 15 days in late 2009, Internet users in 36 countries, including China, Russia, Iran and Pakistan, viewed sensitive information about U.S. weapons technology that was supposed to be for American eyes only.

The disclosure, which prompted a rebuke from a U.S. State Department official, came from a Georgia Institute of Technology course for federal employees and contractors on infrared technology used in weapons-aiming systems for aircraft, ships and tanks. Asked by instructor David Schmieder to copy the course onto a DVD, Georgia Tech's media staff instead uploaded it to servers.

"I completely forgot the course's access was restricted," Media Quality Control Supervisor Edward Bailey told university investigators, according to documents obtained from Georgia Tech through a public-records request.

The lapse by Atlanta-based Georgia Tech illustrates how colleges and federal arms-control regulators are often lax in enforcing Americans-only limits intended to prevent theft of military technology from U.S. campuses. Even as they enroll more graduate students from countries such as China and Iran, universities are conducting more research that is restricted to American citizens and permanent residents because of its national-security implications. Foreign governments are targeting universities to "obtain restricted information or products," the FBI said in a 2011 report.

Culture of Openness

Eager to preserve their culture of openness and global collaboration, campuses are skirting -- and even flouting -- export-control laws that require foreigners to hold government licenses to work on sensitive projects.

Using unlicensed foreign students on export-controlled projects "happens all the time," said Michael Deal, an international trade lawyer in Arlington, Virginia, and a former official at the U.S. Commerce Department, which regulates technology that has both civilian and military applications. "The academic world is completely undisciplined about it. Its casual approach has undoubtedly led to the erosion of the U.S. competitive advantage."

Basic research is open to people of any nationality. Classified work, such as electronic counter-measures that jam enemy radar, requires all participants to have security clearances. Export controls -- over, for example, developing trucks with extra protection against mines and explosives -- occupy a middle ground. They exempt fundamental research that is ordinarily publishable or already in the public domain, as well as courses that are widely taught and in the academic catalog.

Cumbersome Controls

Universities, which blocked a 2004 proposal to expand export controls, are now backing an Obama administration initiative to streamline them. They say that outmoded, cumbersome controls damage America's economic competitiveness and discriminate against foreign students. Stanford University and the University of California don't accept restricted contracts.

"I don't think people consider how many brilliant people come to the U.S. as foreign students and stay here," said William Wulf, a professor at the University of Virginia, and former chairman of the Computer Science and Telecommunications Board of the National Research Council. "Roughly 30 percent of the startup companies in Silicon Valley are started by somebody who was a foreign student."

While export-control violators are subject to imprisonment or fines, the federal government rarely goes after universities. Rather than investigate violations, the government depends on universities to disclose them. Once they do, it usually lets them off with a warning.

'Voluntary Compliance'

Enforcement "is grounded in voluntary compliance, in essence an honor system, on the part of the academic community," according to a 2009 court filing by the U.S. Justice Department. "Neither any government agency nor any university has the ability, resources or manpower to audit and supervise every government-funded export-controlled project being conducted in an academic setting."

The number of voluntary disclosures by industry and academia is increasing 10 percent a year, said a State Department official, who asked not to be named. The State Department administers the International Traffic in Arms Regulations (ITAR), which govern export of military items and information.

"We respond to voluntary reports and other information," the official said. "We don't go out and knock on doors. We're not out here to burn people. We say, 'Go forth and sin no more.' Would you prefer me to go after an inadvertent disclosure to a U.K. student or arms shipping to a narco-trafficker?"

Must Have License

Before a foreign national can participate in export- controlled research, the university must first obtain a license from the government. If the student comes from any of about 20 countries, the State Department normally denies the license application. That list includes countries subject to an arms embargo, such as China, as well as five nations that the U.S. regards as sponsors of terrorism, such as Iran and Syria. Students from those five are generally ineligible for Commerce licenses too.

Licenses are usually granted for students from most other countries. Commerce approved 93 percent of applications in fiscal 2010 for "deemed export" licenses, of which almost 60 percent came from companies or universities wanting to release controlled technology to Chinese nationals.

Mistake Acknowledged

Georgia Tech didn't tell the State Department for almost six months about the Internet linking of the infrared-technology course. The university then sought to minimize the breach by citing an assurance from an Army official that much of the information had been approved for public release. When the official denied making this statement, Georgia Tech filed a corrected report acknowledging the mistake. Still, the State Department, which reproved Georgia Tech for "serious violations," didn't seek penalties.

Tensions between law enforcement and academia over balancing national security with the global pursuit of knowledge came into focus in the case of University of Tennessee professor J. Reece Roth, a 74-year-old plasma technology innovator and a graduate of the Massachusetts Institute of Technology, who began serving a four-year prison sentence in January for conspiracy and violating the Arms Export Control Act.

Working with Knoxville-based Atmospheric Glow Technologies Inc., Roth used a Chinese and an Iranian graduate student --both unlicensed -- on an export-controlled Air Force contract to develop plasma actuators to guide the flight of unmanned aircraft. Disregarding a warning by Robin Witherspoon, then the university's export-control officer, Roth took a laptop computer containing export-restricted files to China, and had the Chinese student e-mail him research information.

Tennessee Case

University officials contacted federal authorities. Atmospheric Glow Technologies pleaded guilty to 10 counts of export control violations and cooperated in the investigation. The university wasn't prosecuted because it didn't know of or condone Roth's actions and disclosed them to the FBI once they came to light, said Assistant U.S. Attorney Will Mackie.

When FBI investigators questioned Roth, he told them that the university's policy of non-discrimination against foreign students "would essentially trump" export controls, an FBI agent testified at Roth's 2008 trial.

"His opinion stated to us was in essence that perhaps we should not have export controls," the agent said.

While he doesn't "necessarily believe" that university policy takes precedence over government regulation, he does think that "academic freedom and research is going to be severely impacted" by his prosecution, Roth testified. He criticized FBI tactics such as having the Chinese student secretly record a conversation with him, and said Congress should re-examine export controls.

Doctoral Degrees

"This contention that any export-controlled information must not go out of the country is going to make it virtually impossible for scholars to take their laptops out of the United States," Roth said.

Roth testified that foreigners made up "probably about 60 percent to 70 percent" of graduate students in electrical engineering and computer science at the University of Tennessee. In 2010, 54 percent of U.S. doctoral degrees in engineering were awarded to non-resident aliens, according to the Washington- based American Society for Engineering Education. Foreigners on temporary visas made up 46 percent of science and engineering graduate students at Georgia Tech, according to a federal survey.

China sent 76,830 graduate students to U.S. universities in 2010-2011, more than any other country and up almost 16 percent from the prior year, according to the Institute of International Education in New York. Iran ranked sixth with 4,696 graduate students, a 24 percent increase.

103 Iranians

Even as their laboratories depend on foreign graduate students, universities are escalating U.S.-only research. The University of Illinois at Urbana-Champaign has 103 graduate students from Iran alone, including 21 in computer science. Foreigners on temporary visas made up almost 60 percent of Illinois graduate students in computer science in 2009, according to a federal survey.

At the same time, Illinois ramped up to between 90 and 100 export-controlled research projects this year, generating $50 million in revenue, a fivefold increase in five years, said Howard Guenther, associate vice chancellor for research. "We've had an explosion in the number of programs" requiring foreigners to be licensed, partly because the government is funding more ITAR-controlled projects, he said.

Illinois has beefed up export-control staff to review contracts, negotiate with funders, and train researchers, Guenther said. It hasn't had any violations, he said.

'A Challenge'

Export-controlled work has "very clearly" increased at Purdue University, said Peter Dunn, associate vice president for research. "It can be a challenge to find an American researcher."

The University of California and Stanford don't accept U.S.-only contracts. Research that "would restrict access on the part of certain students should not be conducted at universities where our mission is to educate students and disseminate knowledge," Stanford spokeswoman Lisa Lapin said in an e-mail.

Other schools profit from the University of California's principled stand, said Patrick Schlesinger, an assistant vice chancellor at the flagship Berkeley campus. "More and more schools are deciding, 'We love hearing that Berkeley won't take on a research project,'" he said. "'That means our school will get a chance at it.'"

U.S. Talent Pool

Seeking export-controlled revenue is shortsighted, said Edward Lee, a Berkeley professor of electrical engineering and computer sciences. "Organizations that do engage in these projects are giving up opportunities to work with some of the best and brightest students," Lee said. "The unfortunate reality in the U.S. is that the talent pool in technical fields is pretty spare."

If the government imposes conditions after the contract has been awarded, researchers shouldn't accept them, Berkeley administrators said in a 2005 university publication. Among their recommendations for "dodging the 'deemed-export' bullet": "Publish early and often to ensure that your research qualifies as 'publicly available,'" and "do not attend meetings from which foreign nationals are barred."

Most universities that take on export-controlled research construe the restrictions narrowly. Because rules can be ambiguous, acting as if a project is fundamental research often makes it so, said Ben Griffiths, senior legal counsel at the University of Wisconsin.

University of Texas

The University of Texas at Austin has disclosed four violations, said Susan Sedwick, associate vice president for research. Three were minor, she said. The other, "an existing situation that I discovered when I came here" six years ago, involved taking controlled equipment and software abroad. "Not that the university hadn't looked at it, they just looked at it in the wrong way," she said. "They thought they had an exemption that they didn't."

Sedwick's office monitors grants and contracts, advises faculty, and works closely with the university's information security staff and international office to ensure compliance, she said.

Mississippi State University is warier than most schools of invoking exemptions, said Ray Vaughn, associate vice president for research. It recently stopped a contract and sent it to the State Department for review even though the faculty member insisted it was fundamental research, he said.

"I would rather lose a contract than end up in that gray area," Vaughn said.

Revenue Before Security

Academia's failure to police export controls shows that it puts tuition revenue from foreign students ahead of national security, said U.S. Representative Dana Rohrabacher, a California Republican. "The universities are out to make money, and they are going to do it even if it puts American security at risk" by teaching students from hostile countries how to make technology, he said.

Universities have been waging a political battle against U.S.-only rules since 2004, when a series of reports by federal inspectors general criticized academia. "At least one university allowed foreign nationals access to export-controlled technologies without obtaining an export license," which "could allow foreign nations to counter or reproduce the technology," the Department of Defense inspector general found.

When the Commerce Department's inspector general called for more controls, universities stymied the proposal.

Crippling Effect

"The higher education community really pushed back and expressed very clearly our concern about the crippling effect on the open research environment," said Robert Hardy, director of contracts and intellectual property management for the Council on Governmental Relations, a Washington-based association of research universities.

In December 2007, an advisory committee of industry and university leaders suggested pruning Commerce's restricted list. It "is too all-encompassing, covering a vast spectrum of militarily less important items ranging from police handcuffs to hunting rifles, and from conventional radios to mass-market computers," the committee said.

The National Research Council, a nonprofit organization of prominent scientists, joined the chorus in 2009, attacking export controls as "unwieldy, slow" and "difficult to administer rationally."

Overhauling Controls

Responding to such criticisms, the Obama administration is overhauling the controls, in the face of opposition from some Republican members of Congress and hardliners within the State and Defense departments. It's working to move some items from the State Department's list of controlled military and satellite technology to Commerce's dual-use roster, which has fewer prohibited countries and a lower bar.

At Georgia Tech, export controls affect classes as well as research. As of November 2010, Georgia Tech Research Institute, the university's applied research arm, offered 69 professional- education courses for federal employees and contractors, of which eight were classified. Fifteen were restricted under State Department rules.

Schmieder, 67, a principal research scientist at Georgia Tech, is familiar with such distinctions. He testified as an expert witness for the government in the 2010 conviction of Noshir Gowadia in federal court in Hawaii for selling classified missile technology to China. (Gowadia's appeal is pending.)

Uploaded to Servers

Schmieder had his restricted September 2009 course, "Infrared Technology and Applications," videotaped because he planned to retire and wanted to train his successor. He asked the university's media specialists to place the video on a DVD.

After encountering technical problems copying the tape to a disc, Bailey, the media supervisor, suggested making it available by a link. Under the impression the sessions would only be available internally at Georgia Tech, Schmieder agreed.

The course, including 14 Power Point slides displaying technical data from export-controlled sources, was uploaded to Georgia Tech's servers on Nov. 19, 2009. It remained accessible until Dec. 4, when Schmieder noticed the mistake. He notified university staff and the material was immediately removed from servers.

Users in 36 countries viewed the slides 660 times, led by the U.S. with 278, the Netherlands with 68, and India with 52. There were 33 hits from China, 17 from Saudi Arabia, nine from Pakistan, two from Russia and one from Iran.

Difficult to Locate

While Georgia Tech subsequently traced most of the hits to IP addresses in the U.S., South America, Australia and Western Europe, it didn't identify users in the countries of greatest concern, such as China and Iran. Instead of specific addresses, such countries have a block of addresses all registered to their governments, university spokesman Matt Nagel said.

There were 16 hits to the video of the course instruction, all from the U.S., the university said. Because the slides and video were placed on separate servers, "it would have been difficult for someone to locate all the pieces and put them back together into a coherent whole," Schmieder said.

Following an internal investigation, Georgia Tech vice provost Steven McLaughlin disclosed the violation on May 24, 2010, to the State Department's Directorate of Defense Trade Controls. He wrote that the university had been assured by an Army export control officer for night-vision technology that many of the slides had since been approved for public release.

Georgia Tech retracted that statement three months later after the Army's Night Vision Lab contacted Schmieder to deny that it had approved the information's release.

'Serious Violations'

"It was my personal opinion that most of the images were to be approved," Schmieder said. "My comments were misinterpreted" to have come from the Army.

The State Department "determined that serious violations did occur," Daniel J. Buzby, deputy director of its Office of Defense Trade Controls Compliance, notified McLaughlin on Sept. 23, 2010. "This compilation of information is so comprehensive and so sensitive in its description of U.S. Government technology directions that DTCC is concerned over how it was allowed to be placed on a World Wide Web-accessible server."

In response, Georgia Tech prohibited video recording of restricted courses without prior written approval. It also discussed the incident with everyone involved and provided additional training for all research institute employees, McLaughlin said.

"In hindsight, I would do more to remind my co-workers of the sensitive nature of the material and the need for special handling," Schmieder said.

To contact the reporter on this story: Daniel Golden in Boston at dlgolden@bloomberg.net

To contact the editor responsible for this story: Jonathan Kaufman at jkaufman17@bloomberg.net

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Eugene.

(BN) Mobile Spam Texts Hit 4.5 Billion Raising Consumer Ire: Tech

Bloomberg News, sent from my iPhone.

Mobile Spam Texts Hit 4.5 Billion Raising Consumer Ire

April 30 (Bloomberg) -- Gillian Brockell got so fed up with unsolicited text messages from a single spammer on her mobile phone that in a fit of frustration she called the sender back -- 20 times.

Turning the tables on the spammer in early April felt "satisfying," she said. Still, it hasn't stanched the flood.

"I don't even get that much junk mail in my Gmail account," said Brockell, a 31-year-old journalist who lives in Washington, D.C. "This is my phone. It seems more personal."

The unwelcome messages that have been clogging e-mail inboxes for two decades have made the jump to handsets, as more people use smartphones in place of personal computers and texting becomes more popular. The number of U.S. spam text messages rose 45 percent last year to 4.5 billion messages, said Richi Jennings, an industry analyst. Spam phone calls also are proliferating. The surge is costing carriers money and frustrating users, who must pay for the messages and deal with potentially fraudulent texts.

Spammers can get phone numbers from the Internet, or use software or websites to randomly generate thousands or even millions of numbers in a particular area code. Often using prepaid phones that can't be traced back to the sender, they can then use auto-dialing technology to reach recipients.

Costs for spammers are extremely low. Unlimited texting for a prepaid phone costs about $20 per month and can be used to spam millions of people. Yet for wireless customers without a texting plan, the cost of receiving constant spams can add up quickly. The typical fee is 20 cents per received text.

'Volume of Abuse'

"Bad actors will go to the biggest installed base worldwide," Greg Goldfarb, a managing director at Summit Partners, which manages more than $10 billion in assets, said in an interview. "The volume of abuse that comes to people around me has increased 50 times in the last 18 months."

The spam messages can promise free Apple Inc. iPads, or claim the consumer won a $1,000 gift card at Wal-Mart Stores Inc. or Best Buy Co., according to SMSWatchDog.com, which lists spam reports. Clicking on links can install malware that collects information from the phone. Responding can also authorize charges to the subscriber's mobile bill.

For wireless-service providers such as AT&T Inc., Verizon Wireless and Sprint Nextel Corp., texting is an important source of profits. Still, they are concerned about the escalation of spam texts. As users contact customer-service lines to fight fraudulent text-related charges to their phone bills, carriers may be spending $5 to $50 per spam text complaint, Goldfarb said.

Federal Cases

In response, carriers and the U.S. Federal Trade Commission have brought suits against at least three large-scale spammers, including an FTC suit that was settled last year. The FTC charged the spammer with transmitting at least 5 million unsolicited text messages to promote products such as loan- modification programs and debt-relief services. According to the suit, the spammer sent out text messages at a rate of 85 per minute, 24 hours a day.

Last year, the Federal Trade Commission received 2,600 complaints about mobile texts, about the same number as in 2010, said Christine Todaro, an attorney with the agency. Recently, the FTC Bureau of Consumer Protection created a special team to conduct investigations related to mobile issues, she said. In a lawsuit filed in March, AT&T claimed that spammers using 14 phone numbers made more than 20 million illegal phone calls to its and other carriers' subscribers.

Anti-Spam Software

The carriers also are collaborating on a new anti-spam effort that will be unveiled this year, said David Diggs, a vice president at wireless-industry group CTIA. They're also likely to sink billions into anti-spam and mobile-security software, said Goldfarb, whose company is ramping up investments in mobile-security companies.

"I think the market is going to be much larger than traditional e-mail security or PC security," Goldfarb said in an interview. "The mobile-security threat is far more severe," because of the greater number of devices involved, he said.

Hackers in the past had more often sought out financial transaction information, account and credit-card numbers on personal computers. Now they're searching for the same information on smartphones, whose sales exceed those of PCs.

One in five Americans used a mobile phone for banking in the 12 months ended in January, according to a Federal Reserve Board survey of almost 2,000 consumers.

"You have to follow the money, where the most sensitive data is being used," said Melissa Siems, senior director of mobile marketing at Intel Corp.'s McAfee unit. McAfee Mobile Security software scans applications consumers download on their smartphones to flag fraudulent ones, which might access your contacts and send them spam text messages. Last year, Google Inc. removed a number of malicious programs from its mobile app store.

Acquisition Candidates

As carriers build their arsenals of anti-spam tools, it may offer a revenue opportunity for equipment suppliers including Cisco Systems Inc. and Juniper Networks Inc. The equipment makers may seek to acquire or invest in startups with mobile anti-spam technologies in the next few years, said Jeff Wilson, principal security analyst at consulting firm Infonetics Research.

One possible acquisition target is Cloudmark Inc., a San Francisco-based startup and an investment of Summit's, which already sells mobile anti-spam software to the top four U.S. wireless carriers.

"There's an opportunity for consolidation," Wilson said. "Many companies want to have the expertise in-house. Everyone is trying to get the mobile carrier money."

(This is the first of two stories on new types of spam.)

To contact the reporter on this story: Olga Kharif in Portland, Oregon, at okharif@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Eugene.

Friday, April 27, 2012

(BN) Intuit to Buy Closely Held E-mail Marketer Demandforce for $423.5 Million

Bloomberg News, sent from my iPhone.

Intuit to Acquire Demandforce for $423.5 Million

April 27 (Bloomberg) -- Intuit Inc., a provider of tax and finance software, agreed to buy Demandforce, a closely held e- mail marketing company, for $423.5 million in cash in its biggest acquisition in six years.

The deal, projected to close in May, would add one to two percentage points to Intuit's revenue growth next year and will be neutral or "modestly" reduce earnings this and next fiscal year, Mountain View, California-based Intuit said today in a statement. San Francisco-based Demandforce generated sales of $37.5 million last year, Patrick Barry, the company's chief marketing officer, said today in an e-mail.

Intuit Chief Executive Officer Brad Smith has been using deals to expand into new areas such as mobile payments and health care. The maker of tax preparation, small-business accounting and personal-finance software -- including Quicken and TurboTax -- this month acquired mobile-phone shopping company AisleBuyer LLC for an undisclosed amount.

Demandforce's product lets small businesses such as dental offices, auto repair shops and spas manage communication with customers and schedule appointments. The software also lets businesses talk with customers through Facebook and Twitter.

Demandforce's monthly subscription prices of $200 to $300 are "well above" Intuit's average selling price per small business customer, Peter Goldmacher, an analyst at Cowen & Co. in San Francisco, said in a research note to clients.

'Driver of Growth'

"The next decade of growth in software will come from small businesses who can now buy enterprise-class software at very compelling prices," said Goldmacher, who rates Intuit shares outperform, the equivalent of a buy. "Successful cross selling for Intuit is a material driver of growth and margins."

This is Intuit's second-largest transaction in at least 19 years and the biggest since 2006, according to Bloomberg data.

Intuit rose less than 1 percent to $57.98 at the close in New York. The shares have gained 10 percent this year.

Intuit is scheduled to report results on May 18 for its fiscal third quarter, the company's largest in sales and profit because it includes TurboTax sales ahead of the government's April filing deadline. Revenue will be "at or slightly below the low end" of its previous forecast, Intuit said April 20.

Yesterday, Intuit said Jeff Weiner, the CEO of online social networking company LinkedIn Corp., had joined its board.

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net Douglas Macmillan in New York at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Eugene.

(BN) Vivus Pill Promising Faster Erections Than Viagra Wins U.S. FDA Approval

Bloomberg News, sent from my iPhone.

Vivus Pill Promising Faster-Than Viagra Erection Approved

April 27 (Bloomberg) -- A Vivus Inc. pill that is supposed to provide erections within 15 minutes, about half the time or less than Pfizer Inc.'s Viagra, won U.S. regulatory approval.

The Food and Drug Administration today cleared the erectile dysfunction treatment, called Stendra, the agency said in a statement. Erectile dysfunction is the inability to get or keep an erection firm enough for sexual intercourse.

The drug, known chemically as avanafil, is the sole product on the market for Mountain View, California-based Vivus, which is seeking a partner to sell the medicine in the U.S. New York- based Pfizer's Viagra, the top-selling erectile dysfunction pill with $2 billion in sales last year, works in 30 minutes to an hour, according to the drug's website.

"I do think it's a differentiated product," said Michael King, an analyst with Rodman & Renshaw LLC in New York. Unlike competitors such as Eli Lilly & Co.'s Cialis, Vivus's drug features "rapid onset; rapid off."

Avanafil may have $68 million in sales next year, according to the average estimate of six analysts compiled by Bloomberg. Revenue may peak at $459 million in 2017, King said.

Sales may be slowed at first by Vivus's capacity to market the drug. The company is discussing deals with potential partners to sell the medicine, Vivus said today in a statement.

Obesity Drug

In addition to avanafil, Vivus is awaiting a July 17 FDA decision on Qnexa, which potentially would be the first obesity pill approved in 13 years.

The erectile dysfunction drug also will soon face generic competition. Patents for Cialis and Levitra expire in 2016 and 2018, respectively, and generic Viagra is expected to be available in 2019, King said.

Vivus "will be rolling a rock up a hill on the generic side," King said today in a telephone interview.

The National Institutes of Health estimates that erectile dysfunction affects as many as 30 million men in the U.S.

"This approval expands the available treatment options to men experiencing erectile dysfunction, and enables patients, in consultation with their doctor, to choose the most appropriate treatment for their needs," Victoria Kusiak, deputy director of the Office of Drug Evaluation III in the FDA's Center for Drug Evaluation and Research, said in the statement.

Vivus gained 3 percent to $25.15 at the close of New York trading. The shares have more than doubled this year.

Side Effects

Stendra in some rare cases may cause color vision changes and sudden loss of vision in one or both eyes, according to the FDA. The most common side effects are headache, redness of the face, nasal congestion, cold-like symptoms and back pain. The drug also shouldn't be used by men who take nitrates, which are used to treat chest pain, because the combination may cause a sudden drop in blood pressure, the agency said.

The pill's side effects are similar to other erectile dysfunction drugs on the market, Barbara Troupin, vice president of medical affairs for Vivus, said last month at a conference.

Vivus made the Muse penile suppository before selling the rights in November 2010 to Meda AB, a specialty pharmaceutical company in Solna, Sweden, for about $23.5 million.

Vivus is competing with Arena Pharmaceuticals Inc. and Orexigen Therapeutics Inc. to bring the first weight-loss drug to market since Roche Holding AG's Xenical in 1999. FDA advisers voted Feb. 22 in favor of Vivus's Qnexa, while raising concerns that the drug may potentially contribute to heart risks and birth defects.

The company submitted earlier this month a risk evaluation and mitigation strategy in an effort to win approval for the obesity drug.

To contact the reporters on this story: Anna Edney in Washington at aedney@bloomberg.net Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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Eugene.

Thursday, April 26, 2012

(BN) Cuomo to Invest $800 Million for New York Energy Efficiency

Bloomberg News, sent from my iPhone.

Cuomo to Invest $800 Million for New York Energy Efficiency

April 26 (Bloomberg) -- New York Governor Andrew Cuomo is investing $800 million to enhance the energy efficiency of state and local government buildings, with a goal of reducing consumption by 20 percent over the next four years.

The investment will be funded through debt issued by the New York Power Authority, which coordinates the distribution of renewable energy to businesses, nonprofit organizations and government entities, Gil Quiniones, its president, said today at a press conference in Albany.

"Accelerated and increased investment in energy-saving technologies will result in significant benefits for the environment," Quiniones said. "These measures will also create jobs, keep energy dollars in New York state and free up resources for the essential services of tax-supported public facilities."

About $450 million will be spent on updating state buildings, and $350 million on projects for local government, school district and public hospital facilities, he said. The power authority will issue as much as $800 million in debt to finance the projects, and repay the bonds from the resulting electric-bill savings, Quiniones said. The tax-exempt bonds will be sold as needed, he said.

The upgrades include automated energy-management systems, electric motors and new lighting fixtures. They are expected to cut greenhouse-gas emissions from public buildings by 8 metric tons and create thousands of jobs, Quiniones said.

Chicago Mayor Rahm Emanuel announced a similar plan last month for the Windy City to fund as much as $225 million in energy-efficiency upgrades using a mix of public and private investment.

To contact the reporter on this story: Freeman Klopott in Albany, New York, at fklopott@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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Eugene.

(BN) Samsung Overtakes Apple as No. 1 Smartphone Maker in 1st Quarter

Bloomberg News, sent from my iPhone.

Samsung Overtakes Apple as No. 1 Smartphone Maker in 1st Quarter

April 27 (Bloomberg) -- Samsung Electronics Co. regained the lead from Apple Inc. as the world's biggest vendor of smartphones in the first quarter.

Samsung shipped 44.5 million smartphones in the first quarter, giving it 30.6 percent of the market, market researcher Strategy Analytics said in an e-mailed statement today. Apple shipped 35.1 million units in the first quarter, giving it a 24.1 percent share, it said.

Nokia Oyj was the third biggest, according to the statement.

To contact the reporter on this story: Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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Eugene.

(BN) Google Needed License for Java, Sun’s McNealy Testifies

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Google Needed License for Java, Sun's McNealy Testifies

April 26 (Bloomberg) -- Former Sun Microsystems Inc. executives disagreed in court on whether Google Inc. needed a license when it used Sun's Java programming language to develop Android software for mobile phones.

Ex-Sun Chief Executive Officer Jonathan Schwartz, testifying today for the search engine company in its trial of a lawsuit filed by Oracle Corp., said Google needed a license only if it wanted to use the brand name Java for Android.

Sun founder Scott McNealy, testifying for Oracle, which owns Java through its 2010 buyout of Sun, said Java's specifications, used by Google in Android, had to be paid for with a license.

Oracle accused Google in a 2010 lawsuit of stealing Java intellectual property to make Android. Oracle claims Java copyrights and patents are infringed by Android and it's owed $1 billion in damages. A federal jury may deliver a verdict on the copyright claims as early as next week.

Google attorneys and witnesses told the jury that the parts of Java that Google used didn't require a license and Sun never asked for a license after its talks with Google to co-develop Android broke down.

"We wanted them to take a license for Java and call their phone a Java phone," the ponytailed Schwartz told the jury after being shown e-mail in which Google executives discussed taking a Java license.

Google's Decision

When Google chose not to license the Java brand and instead used parts of the Java platform to build the Android system for smartphones, "we didn't like it, but we weren't going to try to stop it," he said.

"Upon Oracle buying Sun, you were terminated as chief executive," Oracle's attorney Michael A. Jacobs said.

"I believe I resigned," Schwartz said. "They already had a CEO."

McNealy was then called to the stand, where he testified that while Sun didn't charge for Java, a free computer language, the company licensed Java application programming interfaces, or APIs, the parts of Java that Google ended up using. He compared the APIs to architectural drawings for a house. Oracle alleges Google infringed 37 Java APIs.

"This license would allow you to use the architectural drawings, but you could build your own house," said McNealy.

Google's attorney Robert Van Nest asked McNealy if he made a lot of money when Oracle purchased Sun in 2010.

Cashed Out

"I cashed out a couple of hundred million, $150 million, of stock," McNealy said.

Van Nest played a video of McNealy speaking at a 2010 conference in which he said "interfaces should all be published and open."

"Open doesn't mean throw it over the wall into the public domain," McNealy said.

The case is Oracle America Inc. v. Google Inc., 10-03561, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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Eugene.

(BN) Zynga Earnings Beat Estimates as Game Site Lures Users

Bloomberg News, sent from my iPhone.

Zynga Earnings Beat Estimates as Game Site Lures Users

April 27 (Bloomberg) -- Zynga Inc. slipped in late trading yesterday after reporting that most of the growth in virtual goods sales is coming from mobile players -- who, according to analysts, tend to spend less on online games.

The majority of the growth in first-quarter bookings, or the total value of virtual goods sold, came from mobile games, San Francisco-based Zynga said in a statement yesterday. The company also reported a net loss, compared with profit a year earlier, amid rising expenses.

People who play Zynga's games on their handsets, rather than traditional computers, are less likely to splurge on so- called virtual goods, such as crops and tractor equipment in "FarmVille," said Arvind Bhatia, analyst at Sterne Agee & Leach Inc. in Dallas.

"Mobile is fine, but it doesn't monetize as well," Bhatia, who recommends selling Zynga shares and doesn't own them.

Mobile games generate about one-half to three-quarters as much revenue per daily user as Web-based social games, according to Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco, who rates Zynga "neutral."

Zynga fell as much as 5.2 percent to $8.93 in extended trading yesterday, after climbing 3.4 percent to $9.42 at the close in New York. Before today, the stock had dropped 5.8 percent since it began trading on Dec. 16.

Zynga, which raised $1 billion in a December initial public offering, has spent money expanding into new areas, such as mobile games, including its $180 million purchase of OMGPop Inc. in March. Operating costs almost doubled, surging 97 percent, to $406.6 million.

Swinging to Loss

That helps explain why the company swung to a net loss of $85.4 million, or 12 cents a share, from profit of $1.34 million, or break even, a year earlier.

Concerns over growth in mobile users outweighed evidence that the company is exceeding analysts' predictions in other areas. Sales rose 32 percent to $321 million, topping the average $315.9 million analyst estimate, according to data compiled by Bloomberg. Profit excluding some items was 6 cents a share, more than the 5-cent estimate.

Players who pay money increased 21 percent to 2.9 million from the fourth quarter, Zynga said.

"Only a small fraction of their user base pays them," said Rich Greenfield, analyst at BTIG LLC in New York, who recommends buying Zynga shares. This level of increase "in paying players is pretty significant."

Bookings were $329.2 million, up 15 percent from the first quarter of 2011.

Mobile's 'Early Days'

Zynga's mobile games, which include "Dream Heights" and "Words With Friends" were responsible for "the majority of bookings growth." Zynga said in the statement.

"I wouldn't say mobile is more difficult to monetize," Zynga Chief Operating Officer John Schappert said in an interview. "I would say that we're early days in mobile, and it's reminiscent of the early days of social gaming on the Web."

Six new games were offered in the first quarter, helping Zynga grow to 182 million monthly users, up 25 percent from the first quarter of last year.

Zynga raised its full-year 2012 bookings forecast to $1.43 billion to $1.5 billion, up from a February projection of $1.35 billion to $1.45 billion. Zynga also said it expects 2012 earnings, excluding some items of 23 cents to 29 cents a share, compared with a prior range of 24 cents to 28 cents.

Zynga said on a conference call that it increased the forecast because of the OMGPop acquisition.

Dependent on Facebook

Earlier this week, Facebook said 11 percent of its $1.06 billion in first-quarter revenue came from Zynga. Facebook, which takes a 30 percent cut from purchases of virtual goods within Zynga games, is expected to hold an IPO this year.

Zynga owns the six most popular games played on Facebook, according to AppData. CityVille, with 41.6 million monthly users and Texas HoldEm Poker, with 37.3 million users, top the social gaming charts. Draw Something, which Zynga acquired through its March purchase of OMGPop, is in third with 36 million users.

The company expects to spend hundreds of millions of dollars acquiring game developers over the next three to five years, Chief Executive Officer Mark Pincus told Bloomberg in an interview this month.

Zynga sold 49.5 million shares in a secondary offering of its shares on April 3. The terms of the share sale required the sellers, including Pincus, to agree to a longer lockup period that keeps them from unloading additional shares until as late as August, according to a filing.

To contact the reporter on this story: Douglas Macmillan in New York at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Eugene.

(BN) Bagel Boutique Rises in the Bay Area Using Silicon Valley Startup Playbook

Bloomberg News, sent from my iPhone.

Bagel Boutique Rises in Bay Area Using Tech Playbook

April 26 (Bloomberg) -- Venture capitalists like to say they invest in entrepreneurs who are solving big problems. For foodies in San Francisco, there are few greater challenges than finding a good bagel.

Dan Scholnick, a partner at Trinity Ventures, is putting his money where his mouth is. After spending years complaining about the poor quality of local bagels, he joined his wife and another couple in starting Schmendricks to bring the taste of New York to the Bay Area.

The quartet is trying to build Schmendricks more like an Internet startup than a food company, keeping upfront costs to a minimum, reaching customers through services like Twitter Inc. and collecting data on consumer preferences. They don't have a physical store and are subleasing kitchen space at Asana, the startup led by Facebook Inc. co-founder Dustin Moskovitz. Bagels are sold through preordered pickups, deliveries and at weekend pop-ups, where the team sets up outside a local cafe or shop.

"We're using a lot of the tools and tricks of tech companies across our business," said Scholnick, who worked at two startups before becoming a venture capitalist in 2007. "It's all about getting to market as quickly as possible, being really efficient with capital and using all the latest technology that's available."

East Coast Transplants

More important than the Silicon Valley startup savvy is making bagels that East Coast transplants crave. In particular, Scholnick says there's demand from local Jewish residents who grew up in New York and Boston eating traditional bagels, which are boiled before they're baked. That process gives them a dense interior and crusty surface.

So Scholnick and company, who attended Dartmouth College in New Hampshire together in the late 1990s, spent two years working on an alternative recipe to the doughy bagels they found around town.

The most prominent of those Bay Area shops is Noah's New York Bagels, which has nine locations in San Francisco and another five in Oakland and Berkeley. Noah's is owned by Einstein Noah Restaurant Group Inc., a publicly traded company (ticker symbol: BAGL) based in Lakewood, Colorado.

Noah's bagels are steamed -- not boiled -- before they're baked. The company has been using that recipe since the late 1980s, and it's proven to work on the West Coast, said Richard Burjaw, chief marketing officer for Einstein Noah. The fluffy texture is also good for the sandwich menu, Burjaw said.

"Given its history in the Bay Area and the number of units we have, you have to conclude that it's quite popular," he said.

No Fruit Flavors

In addition to the softness of San Francisco bagels, they also come in a variety of untraditional flavors that include fruits, vegetables and cheeses baked in. Schmendricks is sticking with the classic New York toppings of Sesame Seed, Poppy Seed, Salt and Everything as well as plain.

"Blueberries belong in muffins, they don't belong in bagels," said co-founder David Kover, a school psychologist who grew up in Brooklyn, New York, and has gained the title of chief authenticity officer.

Blueberries do provide good fodder, though. On April 1, the company sent a Twitter post with a picture of a chalkboard promoting their flavors of the day as Blueberry, Chocolate Chip, Bacon-Asiago and Orange-Maple. It was an April Fool's Day joke.

It's no joke that finding any traditional Jewish food in the Bay Area is a challenge, providing the inspiration for Wise Sons Jewish Delicatessen to open last year in San Francisco, offering classics including matzo ball soup and chopped liver.

Pop-Up Sales

To promote weekend pop-ups and keep in touch with customers, Schmendricks uses Twitter, Facebook and its e-mail list. For arranging pickups, it utilizes software from startup Good Eggs Inc. For accepting credit cards on site, the company has experimented with technology from Square Inc. and EBay Inc.'s PayPal unit. Those products let them track preferences of specific customers.

"Even at a very early stage, we're able to drive a lot of foot traffic and customer traffic to wherever we're popping up," Scholnick said.

That's how Schmendricks, named after the Yiddish word for a stupid person, sold out its launch party, scheduled for May 10, at Four Barrel Coffee in San Francisco.

While it has a growing fan base, the bagels aren't cheap. The company charges $3 apiece, compared with $1 to $1.50 at most of the local stores. Cream cheese, which they buy in stores and then flavor themselves, is an extra dollar.

Ethan Kurzweil, a Boston-area native and vice president at Bessemer Venture Partners in Menlo Park, California, is willing to pay the premium. He compares it to buying an artisan chocolate versus a supermarket candy bar.

The One and Only

"They have to brand themselves as a different category -- they are a bagel and nothing else is a bagel," said Kurzweil, who became an early Schmendricks customer through his venture connection to Scholnick. "If I'm going to eat the carbs, it's not really about the money. It's about the food experience."

Schmendricks' bagels are modeled after The Bagel Hole in Brooklyn, Kover's childhood store. The baking is left to Scholnick's wife, Deepa Subramanian, who quit her job as a corporate lawyer last year to become the single full-time employee. A native of India, Subramanian had never tasted a bagel until coming to the U.S. for college. She jumped at the opportunity for a career change.

"Once we nailed down the product, I was really excited about a shot at being an entrepreneur," said Subramanian, who was a software developer at Salesforce.com Inc. before going to law school. "I've never produced anything in my life that is this tangible."

She now wakes at 4 a.m. to have bagels ready for breakfast delivery at nearby startups and law firms. She's making thousands of bagels a week, with evening help from the rest of the team. That includes the fourth founder, Dagny Dingman, who's married to Kover. They expect to hire someone soon to help meet rising demand and give Subramanian more time to work on social marketing, meeting cafe owners and trying to build the business.

"It's not the best use of my time spending eight or nine hours a day baking," she said. "I'm really intrigued to see how I'm going to manage people. I've never done that."

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net .

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net .

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Eugene.

(BN) Apple, Nokia, Nippon Steel, AIG: Intellectual Property (1)

Bloomberg News, sent from my iPhone.

Apple, Nokia, Nippon Steel, AIG: Intellectual Property (1)

April 26 (Bloomberg) -- As Apple Inc., Microsoft Corp. and Motorola Mobility Holdings Inc. keep trying to prove who violated each other's patents, the companies may be motivated to prevent a possible ban on imports of Xboxes and iPhones.

Apple Chief Executive Officer Tim Cook, in the wake of a preliminary finding April 24 that it infringed one of four Motorola Mobility smartphone patents, said the company would "highly prefer to settle versus battle" over patents.

Cook's comments follow remarks by Google Inc. CEO Larry Page, who called the spate of litigation over smartphones a "sad thing" in a Bloomberg Businessweek interview published April 4.

"It's getting to the point where it is now seriously in the way of business," Victor Siber, former chief intellectual property counsel for International Business Machines Corp. who's now with Baker & Hostetler LLP, said yesterday.

Lawsuits have spread across four continents as companies vie for a greater share of a market for smartphones that researcher Gartner Inc. said rose 47 percent in the fourth quarter.

A U.S. International Trade Commission judge said Apple products including the iPad and iPhone infringe a Motorola Mobility patent, while another said the Xbox infringed four patents. Both determinations announced this week are subject to review by the six-member commission, which can block the Asia- made products from entering the U.S.

Apple filed the first large-scale patent case over smartphone technology in March 2010 with a case against HTC Corp. Apple's first strike reflected a pledge by the late Steve Jobs, as told in his authorized biography last year, that he would "spend every penny" of the company's cash to prove that Android's features were copied from the iPhone and iPad.

In the interview with Google's Page published this month, he said the legal wrangling was taking its toll, with "a lot of money going to lawyers and things, instead of building great products for users."

After this week's rulings, the next step in both cases is for Microsoft and Apple to petition the commission with arguments they said will undermine Motorola Mobility's case. Microsoft and Apple have said they will challenge Motorola Mobility's right to seek import bans on the patents, as well as whether there was infringement and if the patents are valid.

The case against Apple is In the Matter of Wireless Communication Devices, Portable Music and Data Processing Devices, Computers and Components Thereof, 337-745, and the case against Microsoft is In the Matter of Gaming and Entertainment Consoles, 337-752, both U.S. International Trade Commission (Washington).

Nokia, HTC Win Ruling Revoking IPCom 3G Technology Patent

Nokia Oyj and HTC Corp. won a ruling revoking a patent that IPCom GmbH relied on to get injunctions in Germany against the sales of some third-generation wireless phones.

The European Patent Office revoked the intellectual property protection yesterday, the agency's spokesman Rainer Osterwalder said by telephone. IPCom said it will appeal.

A Dusseldorf court on April 24 banned Deutsche Telekom AG and Vodafone Group Plc from selling HTC and Nokia devices using the technology in a case brought by IPCom. The phone companies and manufacturers can appeal the ruling.

The patent, called "100A" by its owner, is a central piece of the portfolio IPCom used in its effort to make Nokia and HTC pay royalties for mobile technology it acquired from Robert Bosch GmbH in 2007. The companies are entangled in patent litigation across Europe. The patent was filed for methods used to connect devices to 3G wireless networks and prioritize them.

Thomas Empt, a spokesman for Pullach, Germany-based IPCom, said in an e-mail the patent remains valid during these proceedings and thus yesterday's ruling won't influence cases the company won in Germany and the U.K..

Nokia and HTC took the opposing view. The EPO's decision means that the Dusseldorf court's April 24 ruling isn't expected to stop the sales of their products in Germany, the two companies said in separate e-mailed statements.

"IPCom needs to recognize its position and end its unrealistic demands for what remains of this significantly diminished portfolio," said Paul Melin, vice president for intellectual property at Nokia.

HTC called the EPO decision a "grave setback" for IPCom and said it is hoping that the "cost driving" patent litigation will now end.

Imax Tests Laser Projector Prototype Built With Kodak Patents

Imax Corp., the pioneer of large-screen cinema, has begun testing a prototype laser-projection system, based on patents licensed from Eastman Kodak Co. that improves picture quality with brighter light.

The system, which uses two projectors and incorporates Mississauga, Ontario-based Imax's image-enhancing technology, will allow movies to be shown on screens 120 feet wide or more. It will be available in the fourth quarter of 2013, said Greg Foster, chairman and president of filmed entertainment. The company demonstrated the prototype to studios last week, using clips including Warner Bros.' "The Dark Knight Rises," the final Batman movie from director Christopher Nolan.

The new system gives Hollywood studios and cinema chains another potential tool to keep moviegoers in theaters as competition mounts from large-screen televisions and Web-based options. With the additional "horsepower" provided by laser's focused light, theaters can improve the picture quality, including in newer formats such as 3-D.

"We're very pleased with where we are at this point, and pleased with the reaction from our key partners," Foster said in an interview.

Nolan showed clips from "The Dark Knight Rises," at the exhibitors' trade show, Cinemacon, April 24 in Las Vegas. One- third of the movie was shot using Imax cameras, he said.

Warner Bros., owned by Time Warner Inc., also showed early clips of Peter Jackson's "The Hobbit: An Unexpected Journey," filmed at the faster rate of 48 frames per second, which makes the image clearer and easier on the eyes. The movie will be released in December with Metro-Goldwyn-Mayer Studios Inc.

For more patent news, click here.

For trademark news, click here.

Copyright

Bavaria to Publish German 'Mein Kampf' Before Copyright Expires

In efforts to demystify Adolf Hitler's "Mein Kampf" manifesto, the German state of Bavaria plans to publish a German-language edition of the book before the copyright expires in 2015, 70 years after Hitler's death, the BBC reported.

While publication of the book has never been specifically banned in Germany, because of its ownership of the copyright, Bavaria has managed to prevent others from publishing it, the BBC reported.

Markus Soeder, Bavaria's finance minister, told the BBC that by publishing the book "we want to make clear what nonsense is in there."

In March a court in Munich barred a British publisher from putting out without authorization a book containing German- language extracts from "Mein Kampf," according to the BBC.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Nippon Steel Sues Posco for $1.2 Billion for Using Secrets

Nippon Steel Corp., Japan's largest steelmaker, said it sued Posco in Tokyo's District Court seeking 100 billion yen (1.2 billion) in damages from the South Korean company for allegedly using trade secrets acquired illegally by a former employee.

Nippon Steel also sued its former employee, the Tokyo-based steelmaker said yesterday in a statement. It also sued Posco and a subsidiary in the U.S. for infringements of certain patents, it said, without providing further details of that lawsuit.

"Nippon Steel has given warnings and requests to Posco alleging misappropriation of Nippon Steel's property rights," the company said. It's asking the Tokyo Court for an injunction against Posco's manufacturing of certain high-end electrical steel products, according to the statement.

Japanese steel mills are battling a strong currency which is reducing their competitiveness against rivals in South Korea and China. Some customers, such as shipbuilders, are paying 30 percent less for steel from South Korean yards, one person familiar with the matter said in October.

Nippon Steel is taking every measure possible to boost earnings as it battles higher costs, Credit Suisse Securities Japan Ltd.'s Shinya Yamada said yesterday. Nippon Steel and Posco began a partnership in 2000 to collaborate on some research, technology and buying raw materials.

"Nippon Steel was aware that the move might worsen relations with Posco, its long-term alliance partner, but they made a decision," said Yamada.

Posco hasn't infringed Nippon Steel's steel sheet technology, and will respond to the suit, spokeswoman Kim Ji Young said yesterday. Nippon Steel said in the statement that its strategic alliance with Posco will continue, and won't harm its relationship with the Korean producer.

Nippon Steel last year won regulatory approval to buy Sumitomo Metal, Japan's third-largest steelmaker, to compete with international rivals, including Posco, China's Baoshan Iron & Steel Co. and ArcelorMittal.

AIG Claims Ex-International Lease Executives Stole Trade Secrets

American International Group Inc. sued the former chief executive officer of its International Lease Finance Corp. aircraft lending business, saying he misappropriated confidential information when he left the company and started Air Lease Corp.

AIG filed a complaint April 24 in Los Angeles Superior Court accusing Steven Udvar-Hazy and 10 other former International Lease Finance executives of breach of fiduciary duty and stealing trade secrets, among other claims, when they left the company in 2010.

"We regret having to file this suit, but the defendants' misconduct left us no choice but to go to court to protect our rights and the rights of our shareholders, including our largest shareholder, the American taxpayer," Mark Herr, a spokesman for New York-based AIG, said in an e-mailed statement.

AIG said Udvar-Hazy tried to buy all or part of International Lease Finance, the Los Angeles-based company he started in 1973 and sold to AIG in 1990 for $1.3 billion. AIG was soliciting bids for International Lease Finance in 2008 when the insurer needed to raise capital to repay an $85 billion U.S. government loan, according to the complaint.

Udvar-Hazy couldn't reach an agreement in January 2010 to buy a fleet of planes from International Lease Finance to start his business because he wouldn't be allowed to solicit other executives or use confidential data, according to AIG's complaint. He "resigned from ILFC, and then stole what ILFC refused to sell," according to the complaint.

Air Lease said in a statement that International Lease Finance resorted to filing a lawsuit because it hasn't been able to compete and perceives Air Lease as a growing threat. International Lease Finance has "struggled with an aging fleet, heavy debt load, and loss of talent," Air Lease said.

Herr said in a follow-up statement that Air Lease's allegations were "spurious" and a "smoke screen to distract attention from it illegal conduct."

The case is AIG v. Air Lease, BC483370, Superior Court of California (Los Angeles).

Penney Sued for Trade Secret Theft by Store-Fixture Manufacturer

J.C. Penney Co., the retail chain with roots that go back to 1902, was sued for trade-secret misappropriation by a New York-based maker of store fixtures.

The suit, filed yesterday in federal court in Manhattan, comes in the wake of Plano, Texas-based Penney's new "Fair and Square" ad campaign.

Hudson & Broad Inc. alleged that it was retained to design and manufacture a three-dimensional symbol that would give Penney brand identification akin to the star used by Macy's Inc. and Target Corp.'s target logo.

The store-fixture company said in court papers that it repeatedly told Penney officials that it wasn't a design firm, and didn't want a "design fee" for its work. Instead it planned to manufacture the LED-illuminated square device it designed.

Penney promised that if it accepted the design, it would order the product only from Hudson & Broad, according to the complaint. The office-fixture company said it sent a quote to Penney to deliver almost 2,000 devices to Penney for a total of $25.6 million.

Instead, it learned at a trade show that the sole U.S. supplier of a matte acrylic to be used to make the device had been approached by other vendors to fill a large order from Penney. When the office-fixture company approached Penney, it learned that another vendor had submitted a lower bid to make the devices and would receive the contract.

Hudson & Broad said Penney is making unauthorized use of its intellectual property, and is owed at least $19 million in damages. It also asked the court for extra damages to punish Penney for its actions and for awards of litigation costs and attorney fees.

Penney didn't respond immediately to an e-mailed request for comment.

The case is Hudson & Broad Inc., v. J.C. Penny Corp., 1:12- cv-03239, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Victoria Slind-Flor in Oakland, California, at vslindflor@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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Eugene.

Wednesday, April 25, 2012

(BN) Takeda’s Diabetes Successor Drug to Actos Fails to Win U.S. FDA’s Approval

Bloomberg News, sent from my iPhone.

Takeda's Successor Drug to Actos Fails to Win Approval

April 26 (Bloomberg) -- Takeda Pharmaceutical Co., Asia's biggest drugmaker, failed to win clearance to sell its new diabetes treatment in the U.S., with regulators asking for more information on the use of the medicine in other countries.

The request came in a so-called complete response letter from the Food and Drug Administration, Osaka, Japan-based Takeda said in a statement today. The necessary data can be supplied from information collected outside the U.S. and from patient studies under way, the company said.

The rejection of the drug, known chemically as alogliptin, to treat type-2 diabetes, derails Takeda President Yasuchika Hasegawa's plan for it to be a new revenue generator when its best-selling diabetes treatment Actos loses patent protection in four months. The application was initially rejected in 2009, when the FDA asked for more data on cardiovascular risks.

"We will immediately request a meeting with the FDA to determine the appropriate next steps and are committed to addressing outstanding issues," Thomas Harris, Takeda's vice president of regulatory affairs, said in the statement. "We remain confident in the benefit that alogliptin will bring to patients with type 2 diabetes in the U.S., if approved."

Takeda fell as much as 2 percent to 3,460 yen in Tokyo trading after the announcement. The shares fell 0.7 percent to 3,505 yen at 11:09 a.m. local time and have lost half of their value in the past five years, partly because of drug development failures.

Annual sales of alogliptin will probably reach 150 billion yen ($1.8 billion) in five years, according to SMBC Nikko Securities Inc. Actos generated $4.5 billion in sales for Osaka, Japan-based Takeda last fiscal year, accounting for 27 percent of revenue.

The drugmaker initially applied to the FDA in December 2007 for approval to sell alogliptin. In June 2009, Takeda was told its clinical data was insufficient based on new guidelines on diabetes treatments and cardiovascular risks released in December 2008. Takeda conducted additional studies for its resubmission.

In the U.S., 25.8 million children and adults, or 8.3 percent of the population, have diabetes, including 7 million people who are undiagnosed, according to the American Diabetes Association's Website. Cardiovascular disease and stroke are the complications patients can have as consequences of diabetes, the association said.

Diabetes is caused by the body's inability to use or produce the hormone insulin. It can lead to heart disease, kidney failure, blindness or amputations. Most people have the Type 2 form linked to being overweight or inactive.

Alogliptin is approved in Japan and sold under the brand name of Nesina.

To contact the reporter on this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net .

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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Eugene.

(BN) Caveman Diet, Barefoot Running Help Skinny Fat Man Improve Health: Books

Bloomberg News, sent from my iPhone.

Caveman Diet, Barefoot Running Help Man Get Healthy

April 25 (Bloomberg) -- "Eat right and exercise" doesn't sound so hard. In practice, though, it can be excruciating. That's the message of A.J. Jacobs's new memoir, "Drop Dead Healthy."

Jacobs, who describes himself as "skinny fat," had begun worrying that he might not be around for major milestones in his children's lives.

And so, since he's a pioneer in the field of doing extreme things and then writing books about them -- reading the entire Encyclopedia Britannica for "The Know-It-All," following every rule in the Bible for "The Year of Living Biblically" -- he decided to pursue health as far as he possibly could.

This is not a science book or a how-to guide. Although Jacobs talks with experts and notes some studies, his experiments frequently skew toward the faddish -- the ultra-low- carb caveman diet, barefoot running, a juice fast.

At first, this troubled me, though fads are more entertaining than solid science. But I soon realized that Jacobs was approaching "being healthy" the way most people do -- in fits and starts, trying to figure out what works for him.

To his credit, he's clear with the caveats to his more outlandish approaches. He's also a genial, amusing narrator who has the grace to give his wife all the best punch lines.

Ultimately, Jacobs's goal is to find sustainable habits. He isn't hawking one approach; he's trying to find out what he can stand to do every day, possibly for decades.

Taking the Plunge

And so we see him doing a triathlon and being freaked out by the icy water off New York's Staten Island, hating the Blueprint Cleanse, and worrying about what it means not to have been breast-fed. Unlike the guys on the covers of fitness magazines, Jacobs isn't trying to prove it's easy to stay on the healthy straight-and-narrow.

Most affecting are the sections of the book he devotes to his aging grandfather, which are considerably more open and less jokey. When his grandfather dies, Jacobs grieves -- and falls off the health wagon. Getting back on it is difficult, though he manages. These passages are a wonderful homage to a man Jacobs clearly admired.

His emotional honesty is echoed by another kind: the book opens with a photo of Jacobs's shirtless gut. The thought of taking a similar photo, much less publishing my weight every month, makes me break into a cold sweat.

In appendices, Jacobs rounds up sane tips for general well- being, many of which are supported by strong science: eat mindfully, reduce stress through meditation and self-massage, and give yourself motivation (perhaps by writing a check for a donation to an organization you find noxious -- he picks the Ku Klux Klan -- and having someone mail it if you don't make your goal).

But that's not the point of the book, really. Acquiring healthy habits isn't easy, but Jacobs makes it feel like something that's within reach of any Joe or Jill Couch Potato. That's an accomplishment worth admiring.

"Drop Dead Healthy: One Man's Humble Quest for Bodily Perfection" is published by Simon & Schuster (402 pages, $26). To buy this book in North America, click here.

(Elizabeth Lopatto is a reporter for Bloomberg News. The opinions expressed are her own.)

Muse highlights include James Pressley's business book reviews and Ryan Sutton on dining.

To contact the writer of this column: Elizabeth Lopatto in New York at elopatto@bloomberg.net .

To contact the editor responsible for this story: Manuela Hoelterhoff at mhoelterhoff@bloomberg.net .

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(BN) Marriott to Double Number of Hotels in China as Tourism Grows

Bloomberg News, sent from my iPhone.

Marriott to Double Number of Hotels in China as Tourism Grows

April 26 (Bloomberg) -- Marriott International Inc., the largest publicly traded U.S. hotel chain, plans to double the number of hotels in China by 2014 to meet growing demand in the world's third-largest tourism destination.

Marriott, whose brands include Ritz-Carlton and Courtyard, will open about 50 hotels in China, where it currently has 58 in its biggest market after the U.S., Asia-Pacific Chief Operations Officer Craig Smith said in an interview in Shanghai yesterday.

"China is big for us," Smith said. "This is a vibrant part of the world. Part of our job is to make sure that we develop our plans to capitalize on the growth here."

Marriott is expanding even as China's economic growth slowed to almost a three-year low of 8.1 percent in the first quarter. The number of internationally branded hotel rooms in China is expected to surge 52 percent by 2013 after rising 62 percent in the past five years, according to Jones Lang LaSalle Hotels, which tracks data in 30 Chinese cities.

"The economy of Asia is really led by the power house in China," Smith said. "It's going to continue to grow."

Marriott, based in Bethesda, Maryland, began operation in Asia in 1989 and manages about 134 hotels in the region. It plans to increase the number to 150 by the end of the year, led by openings in China and India, according to Smith.

Smaller Cities

The company, which opened a 342-room Renaissance hotel this week in Huizhou of southern Guangdong province, is not concerned about occupancy rates and over supply in China's less affluent second-and-third tier cities, Smith said.

"In those cities, it happens sometimes that people knock on our door and say I want a 600-room hotel or a Ritz-Carlton," he said. "We go back and say you don't need that. You'll tell the owners the truth at front and make sure they have the right brand."

Marriott, managing all their hotels in China, expects demand will outweigh the supply in the long run in the second- and-third tier cities, so long as they are in the right locations and have branding power, Smith said.

China is the world's third-largest tourism destination, according to the World Tourism Organization.

Starwood Hotels & Resorts Worldwide Inc. expects China resort business to provide growth in the next 10 to 15 years, Chief Executive Officer Frits van Paasschen said in an interview last week. InterContinental Hotels Group Plc, owner of the Holiday Inn brand, will begin opening locations as soon as next year under a new brand designed to appeal to Chinese travelers, Chief Executive Officer Richard Solomons said in an interview last month.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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Eugene.