Tuesday, April 23, 2013

A solution to the terrorism problem would be to make everybody wear Google Glass devices. If one sees or smells a bomb-making material, the device reports the incident to the authorities. With this setup everybody becomes a self-policing drone, with Google AI algorithms functioning as a giant external brain.

 Figure from: Intelligence: the eye, the brain, and the computer, by Fischler and Firschein. 1987. p. 18.

tags: problem, solution, detection, control, brain, mind

Monday, April 22, 2013

(BN) E-Books, Sony Music, Glaxo, IBM: Intellectual Property

(Bloomberg ) Pearson Plc (PSON)'s Penguin offered to overhaul pricing models for digital books to settle a European Union antitrust probe into whether they blocked competition.

Penguin won't "restrict, limit or impede" e-book retailers' discounts or their ability to "set, alter or reduce retail prices for e-books" for two years, according to details of the proposed changes as published in the EU's Official Journal April 19. Apple Inc. (AAPL), the world's biggest technology company, and four publishers previously offered similar remedies to allay European concerns.

The EU said Penguin, together with the four publishers and Apple, "may have breached EU antitrust rules that prohibit cartels and restrictive practices by jointly switching the sale of e-books from a wholesale model to agency contracts containing the same key terms," the Brussels-based European Commission said in a statement. The companies "may have engaged in a concerted practice with the object of raising retail prices of e-books" or blocking lower prices in Europe, it said.

The EU's antitrust regulator is giving competitors and customers until May 19 to comment on the proposed remedies, which could then become legally binding in a settlement that would end the investigation without imposing fines or determining that the companies violated competition rules. The commission said it will conduct another such market test "if substantial changes to the commitments are subsequently made."

Penguin said that "subject to the market test currently under way, it has reached an agreement with the European Commission to settle its investigation," according to an e- mailed statement on Friday.

"Penguin's position that it has done nothing wrong remains unchanged and the company continues to believe that the agency pricing model operates in the best interests of consumers and authors," the company said in the statement.


Glaxo Gets OFT Complaint for Paying to Delay Seroxat Copies

GlaxoSmithKline Plc (GSK) was sent an antitrust complaint by U.K. regulators who say the company may have colluded with generic- drug makers to keep copies of its Seroxat antidepressant off the market.

Glaxo, the U.K.'s biggest drugmaker, may have paid Alpharma Ltd., Generics (U.K.) Ltd. and a unit of Teva Pharmaceutical Industries Ltd. (TEVA) to delay the release of cheaper, copycat versions of the drug, the U.K. Office of Fair Trading said on its website. Seroxat was one of Glaxo's best-selling drugs from 2002 through 2004, when the agreements were in place, the OFT said.

"The introduction of generic medicines can lead to strong competition on price, which can drive savings for the NHS, to the benefit of patients and, ultimately, taxpayers," said Ann Pope, a director at the OFT, referring to the U.K.'s publicly funded National Health Service.

Antitrust regulators on both sides of the Atlantic are focusing on how settlements between companies that make branded medicines and generics producers might harm consumers. Les Laboratoires Servier, H. Lundbeck A/S (LUN) and Teva, the world's largest generic-drug maker, were sent statements of objections last year by the European Union's antitrust watchdog over possible delays for generic drugs.

The OFT probe covers matters already examined by the EU without subsequent sanctions, David Daley, a spokesman for the London-based company, said by e-mail.

Glaxo "supports fair competition and we very strongly believe that we acted within the law, as the holder of valid patents for paroxetine, in entering the agreements under investigation," Daley said in an e-mail, referring to the active ingredient in Seroxat.

Glaxo and the generic companies were sent so-called statements of objections, the OFT said. Daley said the company will need time to review the documents before considering any further action.


Songwriter Settles Suit Against Sony and Alicia Keys

Earl Shuman, who wrote the song "(Hey There) Lonely Girl" has settled a suit filed in December against Sony Music, Alicia Keys and several other defendants. He claimed that Keys' latest hit, "Girl on Fire," sampled several seconds of his song without authorization or payment. The song, which he co-wrote with Leon Carr, was a hit in 1969 and 1980.

The terms of the settlement weren't disclosed.

Los Angeles attorney Philip Kaplan, who represented Shuman, didn't return a call seeking comment. Sony Music, a division of Sony Corp. (6758), declined to comment.

The case is Shuman v. Sony Entertainment, 2:12-cv-10572, U.S. District Court for the Central District of California (Los Angeles).


Venture Capital Investments Drop in First Quarter of 2013

From January through March, according to the National Venture Capital Association, 863 companies received $5.867 billion in venture capital investments.

The amounts reflect a decline of 12 percent in dollar amounts and 15 percent in the number of deals from the fourth quarter of 2012, when $6.7 billion was invested in 1,013 deals.

The NVCA said that the life sciences and clean technology sectors faced the most severe decreases, while there were "notable" increases in the media and entertainment industry.

Lenovo Said to Be in Talks to Buy Parts of IBM Server Unit

Lenovo Group Ltd. (992), the Chinese personal-computer maker, is the most likely bidder for parts of International Business Machines Corp. (IBM)'s server division, a person familiar with the matter said.

The business, which sells servers running x86 processors, may fetch $2.5 billion to $4.5 billion depending on what assets and liabilities are included, said the person, who asked to not be named because the talks are private. An agreement may still be several weeks away, the person said.

Lenovo used the 2005 purchase of IBM's PC unit as a steppingstone to become the world's second-largest producer.

The talks were previously reported in CRN, a publication aimed at technology integrators. In response to the story, Lenovo said it was in "preliminary" discussions about a potential acquisition with a third party, which it didn't name.

Jeffrey Shafer, a Lenovo spokesman, said in an e-mail he had no additional comment beyond that statement.

IBM Chief Financial Officer Mark Loughridge said on his company's earnings call that he wouldn't comment on rumors. Ed Barbini, a spokesman for Armonk, New York-based IBM, also declined to comment on the Lenovo talks.

Saturday, April 20, 2013

(BN) Google Sees Renewable Energy Tariffs as New Utility Product

April 19 (Bloomberg) -- Google Inc., which has invested more than $1 billion in renewable energy projects and buys wind- generated electricity, said utilities should offer large customers more options for using clean power.

"What's needed is a new tariff structure that allows companies to request and purchase renewable energy directly from their utilities," the Mountain View, California-based company said in a statement today.

Google, the operator of the world's largest Internet search engine, is funding projects ranging from rooftop solar power at homes to desert solar-thermal systems and two of the world's largest wind farms. It also buys wind power from two facilities in Oklahoma and one in Iowa and has installed solar panels on its corporate headquarters.

Each of those investments has limitations and "can be cumbersome," particularly the power purchase agreements, because Google resells the electricity on the wholesale market after retiring the associated green-energy credits, according to the Google statement.

"While the renewable facility output is not being used directly to power a Google data center, the PPA arrangement assures that additional renewable generation sufficient to power the data center came on line in the area," Google said. "The downsides are that these PPAs require us to actively manage purchases and sales of power on the wholesale energy markets, which can be a complex process," it said.

Duke's Program

More than 60 percent of Global Fortune 500 companies have renewable energy or greenhouse gas reduction targets, though utilities aren't doing enough to satisfy demand, Google said. "Even though companies want renewable power and are willing to pay for it, the product is not being offered," it said.

Duke Energy Corp., the largest U.S. utility owner, is developing a program in North Carolina that would sell clean energy directly to large customers that opt into the service without raising prices for other ratepayers. The proposal will be filed with state regulators within 90 days, and Google plans to participate, the company said in an e-mailed statement announcing a $600 million expansion of its data center in Lenoir, North Carolina.

"We're really trying to expand ways to drive more investment in renewable power, and this is a mechanism for doing that," Michael Terrell, Google's senior policy counsel for energy and sustainability, said yesterday by telephone. "We're really hoping that this concept is something that catches on and is enacted in many states," he said.

Utilities owned by Dominion Resources Inc. and NV Energy Inc. have introduced similar proposals, according to Google.

Tuesday, April 16, 2013

(BN) Apple Brand Value at $153 Billion Overtakes Google for Top Spot

(Bloomberg ) Apple Inc. (AAPL), maker of the iPhone, iPad and iMac, overtook search-engine giant Google Inc. (GOOG) to become the world's most valuable brand, WPP Plc said in a report today.

Apple's brand value climbed 84 percent in the past year to $153.3 billion, WPP's Millward Brown unit said. Google's brand lost 2 percent to $111.5 billion, ending four years atop the rankings, while International Business Machines Corp. (IBM) climbed 17 percent to be the No. 3, ahead of McDonald's Corp. (MCD)

New versions of the iPhone and iMac, and the introduction of the iPad tablet, helped Cupertino, California-based Apple almost double sales and profit for the latest quarter. Apple, which overtook Redmond, Washington-based Microsoft Corp. (MSFT), as the most-valuable technology company by market value in May 2010, boosted its share of the global phone market and is the leading seller of tablet computers.

"It's clear that every single Apple employee, from Steve Jobs and Tim Cook to the summer interns, see protecting and nurturing that brand as a top priority," Millward Brown Chief Executive Officer Eileen Campbell wrote in the report. "Tablet computing also drove value growth not just for Apple, but also for the providers who support yet another networked device."

Facebook Inc., operator of the world's largest social- networking site, had a 246 percent climb in brand value, the fastest, to become the No. 35 brand at $19.1 billion, according to the report. Baidu Inc., Google's Chinese rival, posted the second-fastest climb at 141 percent, to be the No. 29 brand at $22.6 billion.

Twelve of the top 100 global brands were from China, led by China Mobile Ltd. (941) at No. 9 and Industrial & Commercial Bank of China Ltd. at No. 11. Amazon.com Inc. (AMZN), which ranked 14th, overtook Wal-Mart Stores Inc. (WMT), which ranked 15th, to become the most-valuable retail brand..

(BN) Genes, Fake Wine, Martha Stewart: Intellectual Property

(Bloomberg ) Inventors who want to emigrate from their native countries put the U.S. as their top destination, according to economists at the World Intellectual Property Organization in Geneva.

Canada and Australia are the next most popular among 17 countries studied from 1990 to 2010, while Germany, Italy and the U.K. are the least, said economists Carsten Fink, Ernest Miguelez and Julio Raffo in a report based on patent data and published at a migration conference in London last week.

The American advantage is even greater when only residents from countries outside the Organization for Economic Cooperation and Development are accounted for, reflecting sizeable inflows into America by skilled Indian and Chinese inventors, according to the report.

The pool of talent is probably growing too. Data from the United Nations show the estimated migrant population worldwide was 213 million in 2010, a 58 percent increase from 1990. The migration rate of inventors reached as much as 9 percent in the 2000s, the economists said.

That shows migration is a "critical pillar of the ongoing process of globalization," they said.


Hitachi Loses Bid for Royalties on TPV High-Definition TV Sales

Hitachi Ltd. (6501) lost a U.S. patent-infringement trial in which it sought as much as four years of royalty payments from TPV Technology Ltd. (903) on sales of high-definition televisions.

A federal jury in Marshall, Texas, last week said TPV, the world's fourth-largest maker of LCD televisions, didn't infringe four Hitachi patents and that two of them were invalid.

The dispute is over inventions related to an industry-wide standard for a process to transmit digital audio and visual signals, as well as program data, over the airwaves. Hitachi claimed that televisions made by TPV and its units infringed the company's patents.

TPV sells televisions under its own brands AOC and Envision, according to information on the company's website. It also took over Royal Philips Electronics NV's television operation last year. LCD televisions generated $3.7 billion in sales, about a third of TPV's total revenue, according to data compiled by Bloomberg.

TPV denied infringing the patents and claimed at least some of them were invalid. Hong Kong-based TPV also is the world's biggest contract maker of computer monitors.

Tokyo-based Hitachi ended 56 years of TV manufacturing last year as part of a turnaround from a record loss three years ago amid falling prices for the electronics. It outsources manufacturing while still selling Hitachi-branded TVs.

The case is Hitachi Consumer Electronics Co. v. Top Victory Electronics (Taiwan) Co., 10-cv-00260, U.S. District Court, Eastern District of Texas (Marshall).

Biotech Industry at Stake as U.S. Court Weighs Human Gene Patent

For 30 years, biotechnology innovators have secured thousands of U.S. patents on genes, defining the legal rights to medical and agricultural products worth hundreds of billions of dollars.

Now the U.S. Supreme Court is considering whether that was all a big mistake, Bloomberg's Greg Stohr and Susan Decker report. The court will today hear arguments over the patenting of human genes. A group of doctors, patients and scientists who say patents are stifling clinical testing and research. The group is challenging Myriad Genetics Inc. (MYGN)'s patents on genes linked to breast and ovarian cancer.

A decision against gene patenting would ripple across a host of industries -- including biotechnology, agriculture, industrial microbiology and pharmaceuticals. The case has implications for the growing field of personalized medicine and efforts to map the human brain and discover new uses for embryonic stem cells.

The case, which the court will decide by June, is splitting the medical community. Trade groups for the biotechnology, agriculture and drug industries are siding with Myriad. They say gene patents have led to valuable treatments, including Amgen Inc. (AMGN)'s Epogen anemia drug and synthetic insulin developed by Genentech Inc., now part of Roche Holding AG.

Doctor groups such as the American Medical Association are backing the challengers to the patents. They have partial support from the Obama administration, which is urging the court to uphold parts of Myriad's patents and void other aspects.

The dispute comes to the court in an emotionally charged package, with patient advocates accusing Myriad of standing in the way of breast cancer diagnosis and treatment. The company at one point demanded that the University of Pennsylvania stop clinical testing of cancer patients. Breast cancer patient advocates are planning a demonstration outside the court.

Critics say Myriad's patents effectively give the company ownership rights over a part of the human body.

The case is Association for Molecular Pathology v. Myriad Genetics, 12-398, U.S. Supreme Court (Washington).


Macy's Loses Bid to Broaden Ban on J.C. Penney Stewart Sales

J.C. Penney Co. (JCP) will be allowed to sell unbranded items designed by Martha Stewart's company in certain categories exclusive to Macy's Inc. after a New York state judge denied Macy's bid for an order blocking the sales.

New York State Supreme Court Justice Jeffrey Oing on April 12 declined to expand an earlier preliminary injunction to cover products designed by Martha Stewart Living Omnimedia Inc. (MSO) and sold at J.C. Penney that aren't branded with the Stewart name.

Oing said Macy's, the second-biggest U.S. department-store chain, hadn't shown that it would suffer irreparable harm if J.C. Penney was allowed to sell the unbranded goods. The judge said his earlier injunction issued in July only applied to goods branded with Martha Stewart's name in categories exclusive to Macy's, such as cookware and bedding.

Macy's is suing both Martha Stewart Living and J.C. Penney, alleging that the sale of products designed by Stewart's company in J.C. Penney stores violates an exclusivity deal between Martha Stewart and Macy's signed in 2006.

"We're going to appeal," Ted Grossman, an attorney with Jones Day representing Cincinnati-based Macy's, told reporters after the judge's ruling. "We're going to seek a stay and we're going to do it immediately."

The ruling means J.C. Penney can now start selling products designed by Martha Stewart Living in the categories exclusive to Macy's under the name of "JCP Everyday" at least until the end of the trial.

Oing warned lawyers for J.C. Penney to avoid any mention of Stewart's name in connection with the unbranded merchandise.

The three sides returned to court last week to resume a trial of Macy's lawsuits following a monthlong break, during which mediation efforts ordered by Oing were unsuccessful.

The parties are scheduled to return to Oing's courtroom tomorrow to determine the status of the case.

The cases are Macy's Inc. (M) v. Martha Stewart Living Omnimedia Inc., 650197/2012; Macy's Inc. v. J.C. Penney Corp., 652861/2012, New York State Supreme Court (Manhattan).

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Billionaire Koch Wins $12 Million Wine Trial Punitive Award

Billionaire William Koch, after winning a $379,000 verdict against a consigner who sold him 24 counterfeit bottles of wine from France's Bordeaux region, was awarded $12 million in punitive damages by the same jury April 12.

A federal jury in Manhattan on April 11 found against the consigner, Eric Greenberg, concluding he made fraudulent representations about the authenticity and provenance of the wine, including many purported grand crus that cost Koch tens of thousands of dollars. The award comprised the amount Koch paid for the wine at a 2005 auction and $1,000 in compensatory damages for each bottle.

The jury of six men and two women, who heard Koch and Greenberg testify during the three-week trial, returned to court on April 12 to consider punitive damages. Koch, the brother of conservative Tea Party funders David Koch and Charles Koch, is the founder of West Palm Beach, Florida-based Oxbow Carbon & Minerals LLC.

Koch sued Greenberg, the founder and chairman emeritus of Scient Corp., alleging he defrauded him and had falsely advertised the authenticity and quality of the wines. Koch said in his 2007 complaint that Greenberg falsely promoted the collection as "the Best of the Best," claiming that some dated back to the Belle Epoque.

The suit was one of several filed by Koch against wine consigners and auction houses that he says sold counterfeit wine. An earlier lawsuit against New York-based Zachys Wine & Liquor Inc., where he had bought the wine, was settled for an unspecified amount.

Arthur Shartsis, a lawyer for Greenberg, told jurors during the trial that his client hadn't misrepresented the wines and had instead relied on wine experts at Zachys to inspect and authenticate his bottles for the sale. Shartsis said that the auction catalog also included a provision that the wines were sold "as-is" and said Koch hadn't bothered to inspect the bottles before the sale or make any inquiries.

The case is Koch v. Greenberg, 07-cv-09600, U.S. District Court, Southern District of New York (Manhattan).

Detwiler Fenton & Co., a financial-services firm in Boston, said April 11 that U.S. retailers were seeing a significant increase in customers returning their Z10s because they found the interface unintuitive. The report contributed to a 7.8 percent plunge in BlackBerry shares the same day, marking the stock's worst one-day drop in almost two months.

BlackBerry, based in Waterloo, Ontario, responded that sales are meeting expectations and return rates are in line with the rest of the industry. It asked both the U.S. Securities and Exchange Commission and the Ontario Securities Commission to review the Detwiler report, saying it was either "a gross misreading of the data or a willful manipulation."

BlackBerry, formerly known as Research In Motion Ltd. (BB), is counting on the new Z10 phone -- and its pending companion device, the Q10 -- to fuel a turnaround after years of market- share losses. While its stock has more than doubled since September on optimism about the company's prospects, more short sellers are betting that the comeback will fail. Short positions by investors looking to profit from a drop in the shares are near a record high.

Netflix's Hastings Posts User Data on Facebook as SEC Shifts

Netflix Inc. (NFLX) Chief Executive Officer Reed Hastings posted quarterly viewer data on Facebook, a day after announcing he would take advantage of new rules that allow material information to be disclosed over social media.

"Over the last three months, you all watched over 4 billion hours on Netflix," Hastings wrote April 11 on his page on Facebook Inc. (FB)'s social-media service.

Hastings is staking out a lead role in the use of social media to communicate with investors. Netflix said on April 10 it may use Facebook and Twitter for material announcements, permissible under guidelines issued last week by the U.S. Securities and Exchange Commission, which ended a probe into Hastings' earlier Facebook posts on viewer usage.

The new SEC guidelines clear companies to use Facebook and Twitter as long as investors are notified first.

Netflix, based in Los Gatos, California, said it will continue to make financial announcements on its website, in filings and in press releases. The company said it may also release material information on its Facebook and Twitter accounts, Hastings's Facebook page or on the Netflix Blog and Netflix Tech Blog.

Monday, April 15, 2013

(BN) Innovation in Age of Crazy Cheesy Crust

 (Bloomberg ) "Over the last 12 to 18 months, you've seen a lot of innovation," Eric Hirschhorn, Burger King's vice president of global innovation, said in an interview. The Miami-based chain last year introduced 57 new items, the biggest menu overhaul in the company's history and more than twice as many as in 2011, he said. In March, the Whopper seller rolled out bacon-filled tater tots for $1.99.

The new foods and drinks, some permanent and some for a limited time, are partly the result of the nascent economic recovery. During the downturn, some chains pulled back on creating items and promoted the value of their $1 menus. McDonald's fiddled with the flavors of McCafe drinks at the expense of new food, while Burger King targeted young males. Now, both chains, and their rivals, are dishing up more creations.

Sales at the top 500 U.S. limited-service restaurant chains rose 5.6 percent to $184.9 billion last year, outpacing the 2.9 percent growth of sit-down eateries, according to Chicago-based researcher Technomic Inc.

Driving Traffic

"New product news in this space is what drives guest traffic," said Peter Saleh, a New York-based analyst at Telsey Advisory Group. "You can't just rely on the old faithful Big Mac and Whopper."

McDonald's recently began selling Fish McBites and sweet- chili chicken wraps and later this month will roll out a 250- calorie egg-white breakfast sandwich at its more than 14,100 U.S. locations.

Americans "want variety, and I think we're starting to see that willingness to give them the variety that they're looking for," Dan Coudreaut, executive chef and director of culinary innovation at McDonald's, said in an interview.

Coudreaut, who worked on the egg-white sandwich, has his own chefs' kitchen at the company's headquarters in Oak Brook, Illinois, while his team has six other test rooms. Prior to joining McDonald's in 2004, Coudreaut had been a sous chef at Quatorze Bis in New York City and Cafe Pacific in Dallas.

New Items

There have been 32 new and limited-time menu items so far this year at McDonald's, Burger King and Wendy's Co. (WEN), compared with 10 last year during the same time, according to Datassential, a food-industry researcher in Los Angeles. Along with its new products, McDonald's is testing a steak-and-egg burrito and chicken wings, while Wendy's is trying out fish wraps in some locations.

Restaurants also are putting lower-calorie options on their menus to prepare for federal legislation that would require chains to list nutritional information on their menus, Saleh said. Burger King introduced a turkey burger for $3.99 and last year the chain rolled out fruit smoothies as well as chicken, apple and cranberry salads.

"They don't want to be the one who doesn't have something for 300 or 400 calories," he said.

More Valuable

McDonald's and Burger King have become more valuable to investors recently. The Big Mac seller traded at a 21 percent premium to the Standard & Poor's 500 Index on a price-to- earnings basis yesterday, compared with 13 percent in November, as its shares gained 9.8 percent in the six months through yesterday. Burger King shares climbed 27 percent in the same period. Red Robin is also more valuable -- it traded at a 39 percent premium to the S&P 500, compared with 6.1 percent in October. McDonald's rose 0.5 percent to $101.96 at 9:44 a.m. in New York, while Burger King added 3.2 percent to $19.05 and Red Robin gained 0.2 percent to $44.74.

At Pizza Hut, Executive Chef Wiley Bates just introduced crazy cheesy crust pizza, a new pizza with pockets of melted cheese around the outer edge. Bates, who joined Pizza Hut in 2011, was previously a culinary arts professor and has been the director of food and beverage at Le Meridien (HOT) hotel in Dallas. The chain, owned by Yum! Brands Inc. (YUM), earlier this year started selling another Bates creation: pizza sliders -- 9 for $10.

Still, restaurant test kitchens should proceed with caution, said Bob Goldin, executive vice president at Technomic. Restaurants have introduced some notable flops over the years, such as McDonald's spaghetti and the Bell Beefer loose-meat sandwich at Taco Bell.

'Core Audience'

"You don't want to alienate your core audience, but you definitely want to expand," he said.

Red Robin (RRGB), a 470-store burger chain, also is investing in new food. Last year, it added three people to its culinary team and opened a 12,000-square-foot (1,115-square-meter) test kitchen, where the televisions are usually tuned to the Food Network, near its headquarters in Greenwood Village, Colorado. The burger and beer seller is also turning to schools, such as Johnson & Wales University and the Culinary Institute of America, to bolster its culinary staff, said Denny Marie Post, senior vice president and chief menu and marketing officer.

"We are starting to look at recent graduates," Post said. "They need not toil in the back of a kitchen."

Luciana Page, a hospitality management student at Florida International University in North Miami, will intern with Red Robin this year after her Korean Kalbi BBQ hamburger won the company's student burger recipe contest. While she started school with the goal of working at a Ritz Carlton hotel, she says she would consider employment at a large chain restaurant.

Appealing Job

Doing research in a test kitchen is appealing, Page, 35, said in an interview.

"Not just being a chef and making meals but sitting there and coming up with concepts," she said. Page's hamburger may be sold in Red Robin restaurants later this year.

Along with its signature burgers, Red Robin this year began selling an alcoholic shake made with Guinness beer, Jameson whiskey and chocolate ice cream.

There's been more interest in working in test kitchens.

"There are so many different restaurants that are coming up with innovative things," said Kianna Ramos, career services director at Le Cordon Bleu College of Culinary Arts in Minneapolis/St. Paul, which has its campus in Mendota Heights, Minnesota. "There have been more students that are wondering, 'Does that fit'" my career plans?

Culinary Students

The same thing is happening at the Culinary Institute of America's three U.S. campuses, said Wendy Higgins, career services director in Hyde Park, New York. Chipotle Mexican Grill Inc (CMG). recruits students at the school's quarterly job fairs and founder Steve Ells is a graduate, she said.

"You're seeing more and more students coming up that are attracted to this side of the business," said Marshall Scarborough, manager of global product development at Atlanta- based Popeyes Louisiana Kitchen, owned by AFC Enterprises Inc (AFCE)., and a student adviser at the Research Chefs Association in Atlanta. Scarborough, who used to cook at country clubs and at a Michelin-starred restaurant in Frisange, Luxembourg, started at Popeyes in 2006.

Scarborough helped with the creation of six chicken dipping sauces that were introduced at Popeyes last year. Among the new flavors: Bayou Buffalo, Sweet Heat and Blackened Ranch.

Besides the appeal of creating food for millions of people, culinary-school graduates like the 9 a.m. to 5 p.m. schedule at many test kitchens, Scarborough said.

"They see that they can have a life outside of a restaurant," he said.

(BN) Warehouses Win Investors as Unsung Internet-Trade Heroes

(Bloomberg ) The growth of Internet shopping in Europe is luring investors such as Axa Real Estate and Blackstone Group LP (BX) to the cinder-block world of warehouses, where yields are beating showy storefronts and sleek offices amid a space shortage.

"Net effective rents could grow by as much as 20 percent over the next four years," Philip Dunne, president for Europe at San Francisco-based Prologis Inc. (PLD), the world's largest warehouse owner, said of the company's portfolio in the region. "In wider Europe, with a population bigger than the U.S., we have four-and-a-half times less modern product. That gives you some sense of the scale and opportunity for growth."

Europe needs 25 million square meters (296 million square feet) of new distribution and storage warehouses in the next five years, about 11 percent of existing modern space, to keep up with Internet sales growth, Jones Lang LaSalle Inc. said last month. The assets generate annual income that's 2 percentage points higher than offices and shops in Europe relative to their value and a lack of space will lift prices, said Remy Vertupier, manager of the Logistis fund run by AEW Europe, a unit of Paris- based Natixis (KN) Global Asset Management SA.

Axa Real Estate, Europe's largest property manager, plans to add logistics centers even as it sells some of its malls. The company estimates that 90 percent of retail growth in the U.K., France and Germany will come from online shopping in the next four years. The unit of Paris-based Axa SA, Europe's second- largest insurer, managed 45 billion euros ($59 billion) of real estate at the end of 2012.

Retail Shift

"We will be reducing retail on a selective basis, keeping the core assets," Axa Real Estate Chief Executive Officer Pierre Vaquier said in a March interview. "It's due not only to the economic environment, but also to the structural change that is happening in retail" because of the Internet.

Internet retail sales in Europe are expected to grow about 50 percent to 191 billion euros from this year through 2017, according to a report last month by Forrester Research Inc.

Investment in European warehouses increased 13 percent last year to about 10 billion euros, BNP Paribas said in a report last month. Norges Bank Investment Management, the Norwegian company that runs the world's largest sovereign wealth fund, bought 50 percent of a European warehouse portfolio from Prologis last month for 1.2 billion euros. A joint venture formed to manage the 195 distribution and storage buildings said it may buy more portfolios or individual properties.

Construction Slowdown

Developers probably won't relieve the space shortage anytime soon because rents are still too low to justify speculative construction and banks in Europe are holding back on lending for projects, Prologis's Dunne said in an interview. A lack of construction in the U.S. has helped rents at "big box" assets of 250,000 square feet or more outperform the rest of the industrial market since the country's recession ended in 2009, Chicago-based Jones Lang said.

Rental returns from warehouses are beating other types of real estate and outpacing assets that typically attract pension funds and insurers. Annual rental income from U.K. logistics centers equaled about 6.8 percent of building values last year, according to Investment Property Databank. That compares with 5.8 percent for stores and 5.5 percent for offices. U.K. 10-year gilts have an annual return of about 2 percent.

European Acquisitions

The properties are attracting North American investors including Toronto-based Brookfield Asset Management Inc. (BAM/A) and Blackstone of New York. LogiCor, set up by funds managed by Blackstone, has spent about 1.5 billion euros acquiring 26 million square feet of warehouses in the U.K., France and Poland since starting up last year.

"Our goal is to at least double" the size of its portfolio "over the next couple of years", LogiCor President and Chief Executive OfficerMo Barzegar said in an interview.

LogiCor can buy properties with cash and then secure bank financing later which gives it an advantage over competitors, he said. For properties worth more than 100 million euros "we are very, very competitive because of our ability to move quickly and close" deals quickly, he said.

Warehouse tenants like Amazon.com Inc. (AMZN), the world's largest Internet retailer, typically want little more than "four walls and a roof with loads of doors and a deep truck court," said Dunne of Prologis. That means building warehouses costs about an eighth as much as offices and a fifth of the price of shopping malls, according to data compiled by London-based real estate consultants Davis Langdon.

Zalando, Docdata

"Amazon is the one everyone watches, but there are a number of other operators out there," he said. "You've got companies like Zalando in Germany, Docdata (DOCD), another e-commerce provider, and a number of grocery retailers operating e-commerce through their facilities."

Amazon.com wants to lease about 20 U.K. warehouses of 5,000 square meters to 10,000 square meters to allow same-day delivery, Jones Lang said in a March report. Goodman Group, the world's second-biggest industrial property manager by market value, has developed more than 580,000 square meters of warehouse space for Amazon in Europe and plans to construct a further 225,000 square meters across two logistics centers for the Internet retailer, the company said in its annual report in September. Amazon didn't respond to a request for a comment.

Goodman has gained about 21 percent in the last six months compared with an 11 percent increase in Australia's S&P/ASX 50 Index. Prologis advanced 15 percent in New York trading in the same period, beating a 9.5 percent rise for the S&P 500 Index.

Good Fit

Investors such as life insurers and pension funds are looking to buy infrastructure such as warehouses because the income generated by the properties fits well with obligations like paying out pensions, Prudential Plc Chief Executive Officer Tidjane Thiam said at the Economist Insurance Summit in February.

Growing online sales may lead to mergers and acquisitions in the warehousing industry, JPMorgan Chase & Co. said in a note to investors last month. Europe's retail-focused real estate investment trusts should buy logistics property companies so they can offer tenants both stores and warehouse space to supply Internet sales, the analysts said.

While rental income at logistics centers beats other types of properties, average selling prices haven't kept up. Europe's income-producing warehouses sold at yields of 7.5 percent at the end of 2012, up from 7.4 percent a year earlier, according to Jones Lang, indicating a decline in prices. Yields for office buildings fell to 5.2 percent from 5.3 percent and shops declined to 5 percent from 5.1 percent.

Supply Shortage

Values were held back last year as the euro region's economy shrunk by 0.5 percent and large transactions in Portugal, Spain and Italy became "almost non-existent," BNP Paribas said in the report. A lack of development caused by the economic uncertainty over the past three years has led to a supply shortage of prime assets that allowed landlords to reduce incentives to tenants significantly, it said.

LogiCor is looking at investing in Spain because "there's practically no debt available", Barzegar said, and "there might be some good opportunities in those markets to acquire assets at very attractive pricing."

Valad Europe Plc, owned by its management and funds operated by Blackstone, plans to buy German logistics buildings as the country's economy continues to grow, Chief Executive Officer Martyn McCarthy said in a March interview. The company remains interested in U.K. assets even as the economy struggles, he said.

German Strength

Online purchases and demand for modern facilities supported the German market in 2012, when new rentals were second only to the record level reached a year earlier, BNP Paribas said. Frankfurt and Hamburg accounted for the biggest increase for warehouses larger than 5,000 square meters.

LogiCor is also "keen to get a foothold" in Germany, Barzegar said.

Brookfield is in talks to buy London-based industrial developer Gazeley Ltd. from closely held Economic Zones Worldwide FZE, and may reach an agreement as early as May, according to a person with knowledge of the talks who declined to be identified because the discussions are private. A deal would give Brookfield an entry into the European warehouses market, where Gazeley owns properties and development sites, mostly in the U.K. and France.

Segro Plc (SGRO), the U.K.'s largest publicly traded owner of industrial properties, plans to sell an office park in England for more than 200 million pounds ($306 million) according to two people with knowledge of the talks. It will use the proceeds to buy logistics properties around major ports and airports in Europe, one of the people said.

Doubling Assets

AEW Europe is seeking to double its logistics assets to two billion euros and may achieve that by the end of 2017, Chief Investment Officer Rob Wilkinson said in an interview. The company's Logistis fund has 1 billion euros in assets.

"There is a core group of players that occupy much of the space," he said. "But to work with them you need a certain scale and critical mass."

Across Europe, rents are 10 percent to 15 percent lower than they need to be to justify speculative development, Dunne said. Some markets have virtually no modern buildings and that's a critical component for rental growth, he said. Those areas include the West Midlands and London in the U.K., German cities like Frankfurt, Munich and its Rhine-Ruhr region.

"It's not going to be a gold rush. It will be very selective," Dunne said. "It means the market isn't going to be flooded with product, it's going to be controlled."

(BN) Europe Wins the Google Battle That U.S. Couldn't

(Bloomberg ) The European Union's antitrust authority just accomplished what the U.S. Federal Trade Commission concluded in January it could not: It partially pried Google Inc.'s hands off the Internet steering wheel.

To settle an antitrust investigation, Google is agreeing to distinguish between its own services and those of competitors in search results, Bloomberg News reports. This will slow -- though not stop -- the digital economy's gatekeeper from leveraging its dominance in search into market power in other areas.

Currently, when a consumer looks for, say, flights on Google, the search engine provides a list of airfares offered by Google's advertisers. Next comes a box, dubbed a "Google flight search,'' listing the major carriers and their prices. Only after that do online travel services, including Expedia, Kayak and TripAdvisor, appear; they often provide less expensive fares yet can require more time to filter through the many options.

The same goes for shopping services. Google Shopping caught on slowly until the company began inserting the price-comparison site near the top of search results, pushing down competitors' listings and reducing the odds that a consumer would see or click on them.

Google also has created specialized search results that provide direct answers to queries before providing links to shopping search engines. The strategy has worked: Google Shopping ranks among the highest product sites, while traffic to rivals, including Nextag, Shopper.com and PriceGrabber, has plummeted.

Google says it's making life easier for us all by listing its specialized results and services first. Those wishing to use the discounters are free to keep clicking. The EU apparently disagrees and has "invited" Google to change its practices to avoid a lawsuit.

Google has proposed, and the EU appears willing to accept, a three-part approach, according to the Financial Times: For sites on which Google doesn't sell ads, such as news and weather, it will label its in-house services as Google-owned. In other words, the EU wants consumers to consider results that give priority to Google's own services as if they were paid advertisements. For sites on which Google sells ads, including travel and local company reviews, it will more prominently display links to at least three competitors, such as travel-service rivals Expedia, TripAdvisor and Kayak. And for areas in which search results consist of paid ads, such as shopping, Google will hold auctions for competitors who wish to have their links displayed.

The upshot is that, because of the FTC's hesitance, searches in the U.S. will produce less consumer-friendly results. The FTC, after a two-year investigation, closed its case after concluding that Google was motivated more by wanting to improve the user's experience than by a desire to stifle competition. The FTC was giving Google the benefit of the doubt.

EU Competition Commissioner Joaquin Almunia seems to have started from the opposite vantage point -- that Google is an aggressive competitor and will try to cement its Internet dominance whichever way it can. Google's market share for search is about 90 percent in the EU and more than 80 percent in the U.S.

Competitors who instigated the EU investigation can claim a partial victory, though they aren't pleased that Google won't have to change its algorithms. The company can keep giving preferred placement in results to in-house services so long as they're clearly labeled. The EU settlement also contains no finding that the company broke antitrust rules.

Still, the agreement is legally binding for five years, with a third party monitoring compliance. Google could face a fine of as much as 10 percent of annual sales for failing to keep its promises. The FTC's decision, on the other hand, isn't binding. In the U.S., Google voluntarily agreed to small changes having to do with advertising without signing a consent decree.

If the EU-imposed changes fail to help rivals whose Internet traffic has been decimated because of Google's algorithms -- or if the labeling backfires and confers a special status on Google's services -- EU antitrust authorities could strike again. State attorneys general, consumer advocates and members of Congress will also be watching the EU's upcoming market test of Google's proposed changes.

The FairSearch Coalition, a group of technology companies including Microsoft, Expedia and Nokia, will make sure of that. They are among the companies that claimed Google gave itself preferential treatment in search results. FairSearch already has filed a separate complaint against Google over its Android operating system on mobile phones. And Google's Motorola Mobility unit is the subject of another EU probe related to patent licensing. This war -- Google versus everyone else -- is just warming up.

Monday, April 08, 2013

(BN) Waistline Index Grows as Emerging Markets Eat Fast Food

April 4 (Bloomberg) -- Fast food and expanding waistlines are not just an American health concern.

Even as McDonald's Corp., Yum! Brands Inc. and Domino's Pizza Inc. work to placate anti-obesity advocates at home, they're taking high-calorie offerings to other parts of the globe and hooking a new generation in emerging markets. Their target customers, often part of a rising middle class with a more sedentary lifestyle, are in turn putting on the pounds.

Eating less home cooking, and consuming more processed snacks and sugary drinks, the average man is gaining weight in Mexico, Brazil and Chile faster than the worldwide average, according to the Waistline Index compiled by Bloomberg. The women are too, except in Brazil, where they are holding to the global average. In all three countries, fast food is a relatively new option.

The foreign influx is in some ways similar to the one 300 years ago, when the conquistadors brought smallpox and measles to native civilizations in Central and South America, said Tim Lobstein, director of policy and programs at the International Association for the Study of Obesity in London.

"The parallel now is the big transnational corporations also setting foot in these remote areas and bringing non- communicable diseases," such as obesity, diabetes and heart disease, Lobstein said in an interview.

Increases in these diseases, the rising cost of medical care and worries about childhood obesity may force the food companies to change some practices abroad and push them into new markets to achieve their desired growth. Already, legislators in Brazil are considering restrictions on marketing by fast-food companies.

Weight Gains

Men in Mexico gained an average of more than 15 pounds (6.8 kilograms) from the opening of the first U.S. fast-food outlet in 1985 through 2010, while the nation's women added more than 19 pounds, according to the research conducted by Bloomberg. In Chile, men have gained 14 pounds on average since the first American chain opened in 1989, while women's weight has increased 18 pounds.

Those figures top the global average. Around the world, men gained about 11 pounds in the 30 years through 2010 and women about 10 pounds, according to the data.

Health problems related to changes in diet and lifestyle have been well documented. Death rates in Brazil and Mexico from cardiovascular disease and diabetes surpassed those in the U.S. in 2008, the most recent data available from the World Health Organization. Chile trails those two with a death rate from the diseases close to that of the U.S.

Diabetes Rates

The diseases are also affecting Asian nations, though obesity rates are lower there. In China, where Yum has more than 5,200 locations, the rate of diabetes will surpass that of the U.S. by 2030, according to the International Diabetes Federation in Brussels. KFC, which sells a fried sausage burger and popcorn chicken in China, is expanding to smaller cities in the Asian nation.

"The science clearly links eating out with obesity," said Margo Wootan, nutrition policy director at the Center for Science in the Public Interest, a Washington-based advocacy group. "Restaurants need to realize that eating out is a big part of people's diets and they have an important role to play."

It's not just fast-food companies that are responsible, said Michael Schaefer, the Chicago-based head of global consumer foodservice research at Euromonitor International. People also are consuming more processed and packaged foods from grocery stores and moving to cities, where they lead hectic lives and don't have time to exercise, he said.

"Fast-food chains, because they're so heavily branded, are not surprisingly going to come to be identified with that," Schaefer said. "But it's not the sole driving factor."

McDonald's Visits

The companies point to other influences on diet.

"The average McDonald's customer visits us two to three times per month, therefore the vast majority of meals are eaten elsewhere," Becca Hary, a McDonald's spokeswoman, said in an e- mail.

McDonald's rose 1.4 percent to $100.63 at the close in New York. The shares have gained 14 percent this year, compared with a 9.4 percent gain for the Standard & Poor's 500 Index.

U.S. fast-food chains accelerated their overseas expansion in the 1980s and 1990s as their home market grew saturated. The recession that ended in 2009 spurred more store openings abroad, especially in emerging markets with growing middle classes. Yum gets about three-quarters of its revenue from outside the U.S., while McDonald's gets more than 60 percent from its international business.

Lifelong Customers

The cheap, high-calorie fare and advertising strategies aimed at creating lifelong customers that worked so well in the U.S. have proved effective abroad as well. In Chile, the McDonald's menu includes a 949-calorie, two-patty Angus burger, three cheese empanadas with 357 calories and an Oreo-cookie frappe.

Andrea Xavier's six-year-old son is among the new Brazilian devotees of American fast food.

"He'd eat here every day if he were allowed; he asks all week," Xavier, a 34-year-old maid, said during an interview at a McDonald's in Rio De Janeiro. "He always sees the television ads, sees all the boys there getting Happy Meals: 'Let's go there!'"

The restaurant in Rio de Janeiro was decorated with balloon animals, cut-out butterflies and bunny masks. A poster advertising a live show by Ronald McDonald hung on the wall.

Yum Brazil

Yum recently hired a general manager to open a Sao Paulo office and accelerate growth beyond its 100 restaurants in the most-populous South American nation, where the company's KFC chain sells black beans, double-decker chicken sandwiches and chocolate mousse sundaes. Muktesh Pant, head of Louisville, Kentucky-based Yum's international business, said the company sees Brazil as a "huge opportunity."

Pizza chains also are expanding their presence in Central and South America. Domino's, which has more international than domestic locations, is Mexico's biggest U.S. brand, with 19 percent of the market, according to the data compiled by Bloomberg. The Ann Arbor, Michigan-based chain sells pizza, chicken wings and baked ham baguette sandwiches and offers canelazo bites -- biscuits baked with cinnamon -- for dessert.

Domino's, which had 5,327 international shops and 4,928 in the U.S. at the end of last year, could "easily" add 2,700 stores in its 10 most developed international markets, Chief Executive Officer J. Patrick Doyle said at an investor conference last month.

"It's going to be a long time before we're going to hit any kind of a cap on our ability to grow in international," Doyle said.

African Market

Along with South and Central America, fast-food chains have been heavily focused on Southeast Asia and India. Africa may be next. KFC, with 700 locations in South Africa, is expanding in Lesotho, Namibia and Zambia. Domino's is opening in Nigeria and Macedonia, and Yum has said it plans to accelerate growth with its Pizza Hut and Taco Bell chains in South Africa.

Still, the food chains may face resistance from health authorities. Brazil, where men gained almost 19 pounds from 1980 to 2010, is considering a law that would prohibit toys from being given away with kids' meals at restaurants.

"We need to have the law approved," Fabio da Silva Gomes, an officer for the Brazilian Ministry of Health's National Cancer Institute in Rio de Janeiro, said in a telephone interview. Children go to fast-food chains for the toys and are "hooked by the hyper-palatable food," he said.

Menu Changes

The companies have already been forced to make changes in menus and tactics in the U.S. McDonald's, the world's largest dining chain by sales, will later this month start selling an egg-white breakfast sandwich with just 250 calories. Burger King Worldwide Inc. began selling a veggie burger in March.

In 2011, McDonald's began putting apple slices and smaller packets of fries in its kids' Happy Meals, reducing the calorie count by 20 percent. The chain also was forced by a city ordinance to stop giving away toys with its Happy Meals in San Francisco.

In Latin America, McDonald's has cut the sodium in its kids' meals, which have less than 600 calories a meal, by 10 percent, said Hary, the company's spokeswoman.

"We believe that all food can be part of a balanced diet with appropriate exercise," Virginia Ferguson, a Yum spokeswoman, said in an e-mail. KFC uses trans-fat free cooking oil and has lower-calorie and lower-fat items in Latin America, she said.

'A Treat'

"Pizza is not an everyday meal, it is a treat," Tim McIntyre, a Domino's spokesman, said during an interview. "Consumers have full control of determining how indulgent that treat is" because they can customize crusts and toppings, including the amount of cheese, he said.

American consumers will have to do a lot more to undo the damage of the last few decades. American men have gained about 19 pounds, on average, from 1980 to 2010 and women are about 18 pounds heavier, among the fastest weight gains in the world.

(BN) Apple, Ford, Chilling Effects: Intellectual Property

April 8 (Bloomberg) -- Apple Inc., the maker of the iPhone and iPad, is seeking a patent on a technology that will make it possible to present street-level imaging in a mobile device.

Application 20130083055, published in the database of the U.S. Patent and Trademark Office April 4, is for position- tracking subsystems and onboard sensors that enable a mobile device's virtual navigation of a location in panoramic imagery.

When the device is moved through space, translation data can be used to move up or down a street, or even into a commercial establishment, or navigate a turn at an intersection.

Cupertino, California-based Apple filed its patent application in September 2011.

Google Seeks U.S. Probe of Patent Privateering Defended by Nokia

Google Inc., joined by BlackBerry, urged U.S. regulators to investigate whether some competitors violate antitrust laws by hiring companies to file patent-infringement suits for them.

There's been a rise of so-called privateers, which obtain patents from technology companies and then file infringement lawsuits against the sellers' competitors, Google and BlackBerry said in an April 5 filing with the U.S. Federal Trade Commission and Department of Justice. Internet service provider EarthLink Inc. and Red Hat Inc., the largest seller of Linux operating- system software, also joined the submission.

The filing was part of broader comments by the companies on so-called patent assertion entities, which obtain patents for the sole purpose of extracting royalties. Such companies "impose an ever-rising tax on innovative industries," Google, owner of the most widely used search engine, said in the filing.

"We are also concerned with, and suggest that the agencies should seriously examine, the outsourcing of patent enforcement by operating companies -- companies that develop technology and sell products -- to PAEs and the competitive implications of such activities," Google and BlackBerry wrote. "So-called privateering amplifies the threat to innovation and competition already posed by PAEs."

Nokia Oyj, Microsoft Corp., BT Group Plc's British Telecom and Alcatel-Lucent are among companies connected with these licensing firms. Companies that would, in the past, assert their patents in lawsuits to protect their property now say they work with privateers to make money from past research.

In a typical lawsuit, competing companies accuse each other of infringing patents and then reach a cross-licensing agreement, which lowers the amount of money that has to change hands. That type of resolution isn't possible when one side doesn't make any products, and therefore doesn't have to fear a retaliatory lawsuit.

By transferring patents to such a firm, for a cut of any revenue from a settlement or fees, a manufacturer can get a financial reward while insulating itself and its products from infringement claims and limiting its legal costs, Google and BlackBerry said.

Google said assertion entities can increase the cost of licensing because a portfolio can be split among multiple privateers, each demanding a royalty. That's especially true when the larger company has patents that relate to technology used across the industry.

"These arrangements (and others) between operating companies and PAEs can, depending on the facts, transgress the antitrust laws," Google and BlackBerry wrote.


Ford Seeks to Register 'Inflatable Light Urban Vehicle' Mark

Ford Motor Co., the 110-year-old U.S. automaker, has filed an application to register the term "inflatable light urban vehicle (iLuv)" as a trademark, according to the database of the U.S. Patent and Trademark Office.

There is also a separate "iLuv" application filed on the same date in mid-March. The company said both will be used with autos.

Ford, based in Dearborn, Michigan, may be considering making a foldable car or a small three-wheeled electric vehicle for crowded cities, the Ford Inside News blog suggested.

Harare Dynamos Soccer Team's Trademark Awarded to Creditor

A soccer club in Zimbabwe lost its trademark name and logo to a Cypriot financial company to which it owes money, the Harare Herald reported.

A civil court in Zimbabwe granted Qotho Finance a default judgment against the Harare Dynamos, according to the newspaper.

The debt is only $4,900, and club officials told the newspaper that the debt issue "is being attended to" and should be resolved within a week.

The order giving Qotho the trademark was handed down in mid-March, according to the Herald.

Bar Owner Drops 'Husker' Moniker After Complaint From University

The owner of Barry's, a sports bar in the University of Nebraska's home town of Lincoln, was told he had to drop the use of the university's "Husker" nickname in the bar's name, the Lincoln JournalStar reported.

Kevin Fitzpatrick told the JournalStar that while he is removing all references to "Husker," he wonders why other businesses in the state -- including a crematorium, a steakhouse and a law firm -- are permitted the use of the term.

Michael Drucker of Atlanta-based Collegiate Licensing Co., which licenses the school's trademark, told the newspaper the issue with permitted use is whether customers might mistakenly think a 'Husker' business has a relationship to the university.

Because the bar is two blocks from campus, its use of the school colors and the "Husker" mark were more likely to give people the impression the school endorsed the bar, the JournalStar reported. 


Chilling Effects Clearinghouse Targeted in Takedown Requests

The Chilling Effects Clearinghouse, a project of San Francisco's Electronic Frontier Foundation and several law schools, is the target of a number of takedown requests filed by Microsoft Corp. and other content owners.

Function of Chilling Effects is the reporting of takedown requests made under the Digital Millennium Copyright Act. Those who have received cease-and-desist requests from content owners have been forwarding those notices for posting on the Chilling Effects blog.

According to Google Inc.'s Transparency Report, the search- engine company receives an average of two requests per week to take down content from the Chilling Effects website.

Google statistics indicate that Chilling-Effects takedown request have been received from Microsoft Corp., NBCUniversal, Warner Brothers Entertainment Inc., and the brand-protection company Marketly LLC.

Prometheus, Penske Media Settle Source-Code Copyright Dispute

Prometheus Global Media LLC, a content company operated by Guggenheim Partners LLC, has settled a copyright-infringement suit brought by Penske Media Corp., according to a court filing.

The case was filed in federal court in Los Angeles in September 2011. Penske, which does business as PMC and is the published of Variety, accused Prometheus of copying the computer source code used on PMV's TVLine.com website.

In the complaint, PMC alleged that Prometheus -- publisher of the Hollywood Reporter -- not only misappropriated the source code. The company also filed to remove the "digital fingerprints that identified the content as PMC's.

In settlement of the case, Prometheus agreed to pay Penske $162,5000. Additionally, Prometheus was given the option of releasing a statement acknowledging that it had copied the source code, apologized, compensated PMC, and the dispute has been resolved. Each party was to pay its own attorney fees and litigation costs.

The case is Penske Media Corp. v. Prometheus Global Media LLC, 2:11-cv-07560-FMO-MRW, U.S. District Court, Central District of California (Los Angeles).

Vkontakte to Appeal Infringement Damages Award to Singer Maksim

Vkontakte, Russia's largest social network, said it will appeal an order requiring it to pay damages to the Russian singer Maksim for unauthorized use of her music on the Vkontakte website, the Russia Beyond the Headlines news website reported.

Vkontakte has been the target of copyright-enforcement activities by Recording Industry Association of America, a music-industry trade group that has called the social media site one of the world's worst pirates, according to the news website

The social media site blocks unauthorized file-sharing only after receiving a complaint from the owner of the content, Beyond the Headlines reported.

Saturday, April 06, 2013

(BN) SEC Approves Using Facebook, Twitter for Company Disclosures (1)

April 3 (Bloomberg) -- U.S. companies will now be able to post their earnings on Twitter or update their status on Facebook as long as investors have been told in advance where to look.

The U.S. Securities and Exchange Commission issued guidance yesterday permitting companies to use social media sites including Facebook Inc. and Twitter Inc. to communicate company announcements. The guidance came as part of a report detailing its investigation into Netflix Inc. Chief Executive Officer Reed Hastings, who in July posted monthly viewership results on his Facebook page rather than in an SEC filing or news release.

The SEC refrained from bringing an enforcement action against Hastings or Netflix, which runs a subscription service for watching television programs and movies, because rules around using social media for company disclosures had been unclear, the agency said.

"Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don't know that's where they need to turn to get the latest news," George Canellos, acting director of the SEC's enforcement division, said in a statement.

The SEC confirmed that a regulation prohibiting companies from disclosing material information to select investors applies to social media and other emerging means of communication the same way it applies to company websites. Company communications made through social media channels could constitute a violation of the fair disclosure rule known as Regulation FD if investors had not been told in advance where the information would be posted, the SEC said.

'A Good Thing'

Social media "has tremendous potential to level the playing field for participants in the markets," said Stephen Diamond, a securities law professor at Santa Clara University's School of Law. The report "shows a commission that's being flexible and responsive, and it shows a government agency that actually thinks innovation is a good thing."

Some investor advocates are less sanguine about the policy change. Lynn Turner, a former chief accountant at the SEC, called it "bad policy" because it will disadvantage investors who don't use Facebook and Twitter.

'Dumber' Idea

"Many investors, especially those over 50, who in the aggregate have the most invested, still do not use social media," Turner said in an e-mail. "Telling someone who does not use Twitter to go to Twitter for significant investment information is one of the dumber ideas I have heard."

Jim Prosser, a spokesman for San Francisco-based Twitter, declined to comment.

"We welcome, and certainly agree with, the SEC's finding that Facebook is an established means for companies and individuals to share and disseminate information broadly," Menlo Park, California-based Facebook said in a statement.

While the agency didn't explain exactly how a company should inform investors about social media use, the new guidance will give companies greater comfort in communicating with investors via Facebook and Twitter, said David Katz, a partner at law firm Wachtell, Lipton, Rosen & Katz.

"Do I see it as a sea change? No," Katz said in a telephone interview. "But investor relations has moved into the 21st century and the SEC has caught up."

Facebook Post

Hastings stirred controversy over SEC disclosure guidelines when he wrote in a July 3 post on Facebook's website that viewing on Netflix's video-streaming service had "exceeded 1 billion hours for the first time" in June. The incident led to calls for the SEC to broaden its rules to allow social media to be used to communicate to investors.

In December, Hastings and Netflix each received a Wells Notice, indicating SEC staff intended to pursue enforcement action in the matter. That same month, Hastings said that posting to his Facebook contingent of 200,000 followers "is very public."

Netflix said it welcomed the SEC's guidance. "We appreciate the SEC's careful consideration and resolution of this matter," spokesman Joris Evers said in a statement.

Gene Goldman, a partner at law firm McDermott Will & Emery LLP, said the report provides companies a road map for staying out of trouble.

"But the next time material information is disclosed on an executive's Facebook page without the company alerting all shareholders to look there for information, the matter will likely be met with an SEC lawsuit instead of a report," Goldman said.

(BN) Cyberattacks Abound Yet Companies Tell SEC Losses Are Few

April 4 (Bloomberg) -- The 27 largest U.S. companies reporting cyber attacks say they sustained no major financial losses, exposing a disconnect with federal officials who say billions of dollars in corporate secrets are being stolen.

MetLife Inc., Coca-Cola Co., and Honeywell International Inc. were among the 100 largest U.S. companies by revenue to disclose online attacks in recent filings with the Securities and Exchange Commission, according to data compiled by Bloomberg. Citigroup Inc. reported "limited losses" while the others said there was no material impact.

Those mixed messages have triggered a debate over whether Washington is overstating the damage from cyber attacks or whether companies are understating its impact -- or not disclosing the attacks at all. It also raises questions about whether some companies are painting more alarming scenarios for politicians than for their investors.

"There is a clear discrepancy between what companies are reporting to their stockholders and what they're declaring to policy makers," said Sascha Meinrath, vice president of the New America Foundation, a Washington-based policy group. The confusion harms the ability of legislators and agency officials to understand cybersecurity, Meinrath said.

Representative Mike Rogers, a Michigan Republican who leads the House Intelligence Committee, has said foreign intruders "are stealing literally billions" of dollars from companies. Army General Keith Alexander, head of U.S. Cyber Command and the National Security Agency, called cybercrime "the greatest transfer of wealth in history."

SEC Guidance

After a wave of cyber attacks hit a Federal Reserve website, the New York Times and other news outlets, and U.S. banks, President Barack Obama issued an executive order in February to better protect businesses and critical assets, such as pipelines and power grids.

The challenge for companies is that regulators want more information about cyber attacks yet businesses don't want to provide hackers with a road map to their networks.

The SEC issued guidance in October 2011 telling companies to disclose cyber attacks or risks if that information is material, meaning it would affect an investor's willingness to buy, hold, or sell the company's stock. The business may have to describe the financial fallout of an attack if it's "reasonably likely" to lead to reduced revenue or higher costs, the guidance states.

'Appropriate Disclosure'

Decisions about material impact are made by companies, though SEC staffers may ask how they made those calls. Agency officials say the guidance is working. "We don't think there is a need for a rule requirement at this time," James Daly, SEC associate director, said in a phone interview.

More than 70 percent of investors are interested in reviewing company cybersecurity practices, according to a survey of 405 investors released in February by the security firm HBGary Inc.

"For the sake of investors, the SEC needs to figure out a way of enforcing the appropriate disclosure of material cyber attacks," said Jacob Olcott, who led a congressional review as counsel to Senator Jay Rockefeller, a West Virginia Democrat, that resulted in the SEC guidance.

Olcott is now a principal at Good Harbor Security Risk Management, a Washington-based consulting firm.

Cyber attacks are more likely to be material for some companies than others, Brian Lane, a former SEC corporation finance director, said in an interview. "Ask yourself which company's stock would plummet if investors learned a hacker had access to company files?" said Lane, a partner at Gibson, Dunn & Crutcher LLP.

Disrupted Operations

Almost all of the top 100 U.S. companies by revenue said they rely on technology that may be vulnerable to security breaches, theft of proprietary data and disrupted operations, according to a review of their most recent annual reports.

"I would bet some are just not being forthcoming," Lance Hoffman, director of George Washington University's Cyber Security Policy and Research Institute, said in an interview.

Companies including Amazon.com Inc., Comcast Corp. and Verizon Communications Inc. have been asked by the SEC over the past year to disclose more about cyber attacks than they volunteered in 2011 annual reports.

H. Roger Schwall, SEC assistant director for corporation finance, wrote to ConocoPhillips Chief Financial Officer Jeff Sheets on Sept. 26 asking the company to disclose "actual and attempted breaches" and provide a cyber risk section.

Attack Targets

ConocoPhillips, one of at least six major U.S. and European energy companies reported by Bloomberg to have been breached by China-based hackers beginning in 2009, said in its 2012 annual report no cyber breaches "had a material effect."

Daren Beaudo, a spokesman for ConocoPhillips, declined to comment beyond the filings.

Coca-Cola acknowledged its "information systems are a target of attacks," in its 10-K and said the disruptions "to date have not had a material effect on our business, financial condition or results of operations."

The company was told by the FBI that hackers broke into its computers to steal files about its aborted $2.4 billion bid for China Huiyan Juice Group in 2009, Bloomberg reported in November. Coca-Cola didn't mention the incident in SEC filings.

Coca-Cola doesn't comment on security matters, said Petro Kacur, a company spokesman.

Material Analysis

If a company doesn't disclose an attack in an SEC filing that was reported in the news media, "don't be surprised if we ask you to provide us with a materiality analysis," Jim Lopez, an SEC branch chief for disclosure operations, said at a Washington conference in February.

David Kepler, an executive vice president for Dow Chemical Co., said in prepared testimony for a March 7 Senate hearing the company is "regularly" attacked "from sources that are advanced, persistent and targeting our intellectual property."

Dow only made passing reference to cyber threats in its annual report Feb. 15, putting the risks on par with severe weather events.

"There is a disconnect," Stewart Baker, a former Homeland Security Department official and now a Washington-based partner at Steptoe & Johnson LLP, said in an interview. "All that intellectual property that the government sees leaving the country is coming from somewhere."

Dow's annual report documents principal risks in keeping with the SEC guidance, Rebecca Bentley, a spokeswoman, said in an e-mail. "Our 10K information is structured to provide the appropriate balance and level of detail regarding Dow's most significant risk drivers," she said.

Expensive Fixes

While Verizon said in its 2012 10-K the cyber attacks it experienced haven't been material, the company said the potential costs of a major assault include "expensive incentives" to keep customers, a jump in security spending, lost revenue and damage to the company's reputation.

Spokesmen Ed McFadden of Verizon, Mark Costiglio of Citigroup; Victoria Streitfeld of Honeywell International and John Calagna of MetLife declined to comment.

Marty Mosby III, a bank analyst and managing director at Guggenheim Securities LLC, said the SEC disclosures show cyber attacks are no greater threat than hurricanes or natural disasters. Bank management teams say strikes are disruptive to customers without being a financial drain, Mosby said in a phone interview.

Larry Ponemon, chairman of the Ponemon Institute, a data protection research firm in Traverse City, Michigan, has been reviewing the SEC filings. "A majority of companies are taking a minimalist approach and they're disclosing a bare minimum so they don't get in trouble," he said.

(BN) VirnetX, Reuters, DreamWorks: Intellectual Property

April 4 (Bloomberg) -- VirnetX Holding Corp. said it filed a request for a new trial after losing a patent-infringement lawsuit against Cisco Systems Inc.

In a statement yesterday, VirnetX Chief Executive Officer Kendall Larson said the company hopes that "with a new trial, a jury can decide the issues of infringement and damages based on the judge's instructions and the merits of our claim."

In March, a jury in Tyler, Texas, cleared the networking- equipment maker of allegations it infringed inventions related to virtual private networks. VirnetX was seeking $258 million in damages.

Doug Cawley of McKool Smith PC, a lawyer representing VirnetX, argued Cisco used the technology to improve security in its own networks. A virtual private network allows a website owner to interact securely with a customer or give an employee working remotely protected access to a company's electronic files.

VirnetX won a $368.2 million verdict against Apple Inc. in November over the same technology, including two of the same patents, before a different Tyler jury. In 2010, Zephyr Cove, Nevada-based VirnetX reached a $200 million settlement with Microsoft Corp. over the same inventions.

The case against Cisco focused on the San Jose, California- based company's routers, software and phones that have virtual- private networking functions including its Unified Communications Manager product, Telepresence or AnyConnect.

VirnetX relies on patent licensing for its revenue. The company is testing its Gabriel Connection Technology to create secure communications links, according to its annual report.

The case is VirnetX Inc. v. Cisco Systems Inc., 10- cv-00417, U.S. District Court, Eastern District of Texas (Tyler).

Thomson Reuters Patents System to Rank Lawyers, Professionals

Thomson Reuters Corp., the New York-based specialty publishing house, received a patent on a method of rating lawyers and other professionals.

Patent 8,412,564, was issued April 2, according to the database of the U.S. Patent and Trademark Office. It covers a "system and method of identifying excellence within a profession."

The patented technology depends on peer nomination and the peer evaluation of the top-ranking candidates scored in an independent research and objective evaluation process.

Thomson Reuters applied for this patent in April 2008, with the assistance of Boston's Edwards Wildman Palmer LLP.


Danish Games Company Can Use 'Opus Dei' Trademark, Court Says

Opus Dei, the organization of Catholic clergy and laity that was heavily featured in "The DaVinci Code," failed in its attempt to stop a Danish games company from using "Opus Dei" for the name of one of its games, the Copenhagen Post reported.

A Danish court said Dema Games Asp's "Opus Dei --Existence After Religion" game doesn't fall into any categories that would conflict with the religious group's trademark, according to the newspaper.

Initially the Danish patent office rejected Opus Dei's challenge to the games company's mark. When that was unsuccessful, took it the issue to the Danish court that specializes in IP disputes, the Post reported.

In addition to losing the case, Opus Dei was ordered to pay the games company's 45,000 Danish kroner ($7,756) legal fees, according to the Post.

Suffolk County Raid Nets $10 Million in Counterfeit Goods

Authorities in Suffolk County, New York, charged five people with trademark counterfeiting, racketeering, conspiracy and money laundering in connection with a haul of fake goods so big a tractor trailer and seven box trucks were needed to cart the goods away, the Suffolk County District Attorney said.

The seized goods included fake handbags, sunglasses, shoes, and machinery used to create fake counterfeit designs, according to a statement by prosecutors.

District Attorney Thomas J. Spota said the accused defendants were buying fake made-in-China handbags for $2 each and selling them for as much as $25. If the handbags were sold on the street or at an at-home handbag party, they would have fetched as much as $100, according to the statement.

Among the brands featured on the fake products was LVMH Moet Hennessy Louis Vuitton SA's Louis Vuitton. Spota said a genuine Louis Vuitton bag costs from $1,000 to $4,000.

Among the other brands that showed up on the counterfeit goods were Coach, Tory Burch, Michael Kors, Jimmy Choo, Nike, Oakley, Prada, Chanel and Kate Spade. The retail value of the seized merchandise is in excess of $10 million, prosecutors said.

The defendants laundered their profits by buying jade and other jewels, and real estate, with some of the rest of the money sent to banks in China and to pay for real estate investments there and in Manhattan, Florida and California.

Estee Lauder Sued by Texas Cosmetics Company Over 'Shy' Mark

Estee Lauder Cos.' Clinique Laboratories unit was sued for trademark infringement by a Texas-based cosmetics company.

Sara Cosmetics Inc., of Richardson, Texas, objects to Clinique's use of "Shy" in connection with some of its lipstick and blush products. Sara Cosmetics registered the term as a U.S. trademark in February 2011, according to the complaint filed April 2 in federal court in Dallas.

Clinique is also accused of using look-alike packaging that includes "adornments of green aloe leaves" that are allegedly substantially similar to the packaging used by Sara Cosmetics. Packaging design is protected under U.S. trademark law.

The Texas company said customers are likely to be confused and that it is harmed by Clinique's actions.

Sara Cosmetics asked the court to bar further infringement of its mark and packaging, and for awards of money damages, including lost profits. Additionally, the Texas company asked the court for extra damages for what it claims is "oppression, fraud, malice and gross negligence" on Clinique's part, and also seeks awards of attorney fees and litigation costs.

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

The case is Sarah Cosmetics Inc. v. Clinique Laboratories LLC, 3:13-cv-01362-M, U.S. District Court, Northern District of Texas (Dallas).


DreamWorks Fails to Win Dismissal of 'Kung Fu Panda' Suit

DreamWorks Animation SKG Inc. has to face a copyright infringement suit over its "Kung Fu Panda" film, a federal judge in Boston ruled.

U.S. District Judge Joseph L. Tauro, rejecting the Glendale, California-based film studio's bid to have the suit dismissed, ruled that Boston artist Jayme Gordon raised enough genuine issues of material fact in the February 2011 case to bar an early end to the litigation.

Gordon contends he first created his Kung Fu-fighting panda in "the early 1990s" and registered his copyright in 2000. He began selling clothing items featuring his characters through a retail store in the 1990s and had costumes made depicting some of them. The characters appeared at promotional events in and around Boston and were displayed on his website, luckylizard.com, he said.

Gordon said he sent his illustrations and stories to the animation division of DreamWorks in the 1990s. He received a rejection letter in October 1999 acknowledging receipt of the work, according to his complaint.

Gordon claimed that DreamWorks' "King Fu Panda" films and other products feature "characters, character depictions, character personality traits, illustrations, expression, settings, story elements, plot and sequences of events that are unlawful copies and derivatives" of his "Kung Fu Panda Power" work.

He asked the court to order DreamWorks to pay him money damages, attorney fees and litigation costs and to acknowledge he is an author and creator of the "Kung Fu Panda" products.

The judge said in his March 28 ruling that DreamWorks Chief Executive Officer Jeffrey Katzenberg provided "conflicting testimony" about his procedure for handling unsolicited submissions made to the studio. He also said it was unusual that Gordon never got back his submitted material.

These discrepancies need to be addressed by the court, the Tauro said. A court must decide whether DreamWorks independently developed the film or was influences by Gordon's submissions, he said.

The case is Jayme Gordon v. DreamWorks Animation SKG Inc., 1:11-cv-010255-JLT, U.S. District Court, District OF Massachusetts (Boston).

St. Louis University May Sue Professors for Infringement

The American Association of University Professors' St. Louis University chapter may face copyright-infringement allegations if it releases a survey aimed at measuring the mood on campus, the St. Louis Post-Dispatch reported.

The professors group had taken exception with a survey released by SLU administrators that contained only one question about the school's president, about whom they claimed there was much campus discontent, according to the newspaper.

General counsel for the school sent an e-mail to the president of the faculty organization warning that its survey is too similar to the administration's, and that the school may file an infringement suit, and have to pay money damages and the school's attorney fees, the Post-Dispatch reported.

In response, the president of the faculty group has filed a complaint with the American Civil Liberties Union, saying its free-speech rights are being violated, the newspaper reported.

(BN) Google Seeks Probe of Patent Privateers Defended by Nokia

April 5 (Bloomberg) -- Google Inc., joined by BlackBerry, today urged U.S. regulators to investigate whether some competitors violate antitrust laws by hiring companies to file patent-infringement suits for them.

There's been a rise of so-called privateers, which obtain patents from technology companies and then file infringement lawsuits against the sellers' competitors, Google and BlackBerry said in a filing with the U.S. Federal Trade Commission and Department of Justice. Internet service provider EarthLink Inc. and Red Hat Inc., the largest seller of Linux operating-system software, also joined the submission.

The filing was part of broader comments by the companies on so-called patent assertion entities, which obtain patents for the sole purpose of extracting royalties. Such companies "impose an ever-rising tax on innovative industries," Google, owner of the most widely used search engine, said in the filing.

"We are also concerned with, and suggest that the agencies should seriously examine, the outsourcing of patent enforcement by operating companies - companies that develop technology and sell products - to PAEs and the competitive implications of such activities," Google and BlackBerry wrote. "So-called 'privateering' amplifies the threat to innovation and competition already posed by PAEs."

Nokia Oyj, Microsoft Corp., BT Group Plc's British Telecom and Alcatel-Lucent are among companies connected with these licensing firms. Companies that would, in the past, assert their patents in lawsuits to protect their property now say they work with privateers to make money from past research.

Privateer Arrangements

In a typical lawsuit, competing companies accuse each other of infringing patents and then reach a cross-licensing agreement, which lowers the amount of money that has to change hands. That type of resolution isn't possible when one side doesn't make any products, and therefore doesn't have to fear a retaliatory lawsuit.

By transferring patents to such a firm, for a cut of any revenue from a settlement or fees, a manufacturer can get a financial reward while insulating itself and its products from infringement claims and limiting its legal costs, Google and BlackBerry said.

Google said assertion entities can increase the cost of licensing because a portfolio can be split among multiple privateers, each demanding a royalty. That's especially true when the larger company has patents that relate to technology used across the industry.

"These arrangements (and others) between operating companies and PAEs can, depending on the facts, transgress the antitrust laws," Google and BlackBerry wrote.

Google, FTC

Mountain View, California-based Google has been the target of an FTC investigation over the patent-licensing practices of its Motorola Mobility unit, which was accused of demanding unfairly high royalties for patents on industry standards. Google reached a settlement with the FTC on the issue in January.

In the filing, Google and BlackBerry singled out a pledge Nokia made to license all of its patents for mobile-phone standards at a 2 percent royalty. Were a company like Nokia to split some of its standard patents among three different entities, it would increase the total cost to 8 percent, Google said.

An investigation into the privateering model "would provide a foundation for the antitrust agencies to assess whether the solutions to the competitive concerns patent outsourcing arrangements pose lie in antitrust enforcement, in changes in the patent laws (where the antitrust enforcement agencies might play an important advocacy role), or elsewhere."

'Important Channel'

In a Dec. 10 hearing held by the FTC and DOJ, Espoo, Finland-based Nokia defended the practice.

"Often we do not have the resources or otherwise are not best positioned ourselves to exploit those inventions, either through our own products or through our own licensing activities," Paul Melin, Nokia's chief intellectual property officer, said on a panel. "Divestments of patents have become a very important channel for us to monetize and realize the value of our research and development."

Waterloo, Ontario-based BlackBerry and Nokia signed a patent-licensing deal in December to resolve disputes between the two companies. That agreement didn't end a suit against BlackBerry by MobileMedia Ideas LLC, a licensing company that holds former Nokia and Sony Corp. patents. MobileMedia also won a December trial against Apple Inc., which has a patent agreement with Nokia, too.

It can be difficult to identify who is profiting from a patent suit. One lawsuit against Google is by Suffolk Technologies, whose owners include Goldman Sachs Group Inc., General Atlantic Partners LP and Boston Consulting Group Inc., according to a Dec. 7 court ruling on the ownership question.

The patents originated with BT's British Telecom, which transferred them with an agreement it would get at least half the proceeds from the patent, the judge said.

Google retaliated by suing British Telecom in February, accusing it of infringing four patents. Google had bought three of the patents from International Business Machines Corp. and the fourth from Fujitsu Ltd. It marked the first time Google had sued any company for patent-infringement.