Saturday, October 26, 2013

(BN) Starbucks Links Coffee Makers to Web Fueling $27B Market

(Bloomberg ) Starbucks Corp. (SBUX), famous for giving away Wi-Fi that links customers to the Internet, now wants to apply Web technology to its own operations by networking coffee makers, refrigerators and other appliances.

Over the next year, Starbucks said it plans to double the number of its Clover coffee-brewing machines, which connect to the cloud and track customer preferences, allow recipes to be digitally updated and help staffers remotely monitor a coffee maker's performance. Also in the works: connected fridges that indicate when a carton of milk has spoiled.

"We are investing in different technologies to make it easier for our baristas," Marianne Marck, a senior vice president for the Seattle-based company, said in an interview.

Coffee shops, fast food joints and retailers are linking more of their operations to the Internet, aggregating information to help them better serve customers while also controlling everything from a store's temperature to the locks on its doors. The market for Web-connected devices, other than smartphones and computers, will triple to $27 billion by 2016, according to Cisco Systems Inc. (CSCO), which is heavily investing in the so-called Internet of Things.

Consumers have been onto this trend for years, snapping up Web-connected picture frames, thermostats and security systems in addition to televisions and stereos. Technology companies including Microsoft Corp. (MSFT), Intel Corp. and International Business Machines Corp. have been promoting the vision of the connected home since the late 1990s.

Early Users

Among the few industries to make the leap to date have been utilities, manufacturing companies and security providers, which have built entire operations around increased automation. In addition to the costs associated with installing and testing all new systems, the use of Web-connected machines requires job training and forces employees to change their working habits.

The rollout of smart meters used by utilities has faced some consumer complaints about compromised privacy and risks associated with electro-magnetic fields emitted by the wireless technology.

Starbucks is among those leading the charge for mass adoption, and the plunge in costs to run servers in the cloud is opening up the opportunity for businesses of all sizes. Additionally, the price of chips for connected devices has dropped by more than 80 percent in the past five years to 50 cents, according to Susan Eustis, president of WinterGreen Research Inc., which tracks connected devices.

Cisco, the world's largest maker of switches and routers, is preparing for the boom. Four months ago, the San Jose, California-based company formed a new Internet of Things Group, comprised of 450 engineers, said Guido Jouret, a vice president.

Technology Spreading

The group's projects include the development of software for wristwatch computers that soldiers can use to communicate, exchange video and track each other's location on a battlefield. Cisco is also working on a number of connected cities, including Lake Nona, Florida, to centrally link medical facilities, the education system and retailers.

"We realized this is much bigger than just utilities and manufacturing," Jouret said in an interview. "This is a broad revolution."

Intel, the biggest maker of semiconductors, is supplying chips for coffee-vending machines in Europe in areas where there's not enough space for full shops. The machines, used by Costa Coffee, have touch screens, offer cashless payment and collect data on customers.

Wiring Restaurants

The Red Fish Grill in New Orleans, a restaurant featuring menu items like alligator sausage and seafood gumbo, is using an oil-management system for its deep fryers. Since installing the technology earlier this year, the restaurant has cut its cooking oil consumption by 50 percent, for a savings of $15,000 a year, said Haley Bitterman, the corporate executive chef.

The system, which alerts Bitterman if too much oil is being used or it's not filtering correctly, is provided by Restaurant Technologies Inc. and costs $35 a month. The Ralph Brennan Restaurant Group Inc., owner of the Red Fish Grill, is using the technology in another restaurant and working to install it in two more, Bitterman said.

"Your margin in a restaurant is slim," Bitterman said. "The price of food never goes down and the price of labor never goes down. Everybody's trying to figure out how to help save some money."

The new technology is still in the early days of implementation, because even with the drop in costs, installation expenses can be prohibitive for low-margin businesses.

Restaurants are just starting to connect new gadgets to the Web and will increasingly see connectivity as a competitive advantage, said Hudson Riehle, senior vice president of research at the National Restaurant Association.

$11,000 Machines

"Technology is one more tool they can use to increase customer satisfaction and quality of service," Riehle said.

Jason Cocco, a vice president at Restaurant Technologies, said his company has more than 900 clients, including Burger King Worldwide Inc.

At Starbucks, the cloud technology called CloverNet can reduce maintenance costs and support sales of specialty roasts brewed on the Clover machines.

Since 2008, Starbucks has installed about 500 of the $11,000 Web-based brewers and plans to double that number in the next year, said Randy Hulett, director of the Starbucks Hardware Design Studio. Hulett's 10-person team also has plans to start linking other in-store equipment to CloverNet.

Remote Control

Networked equipment is gaining popularity at big-box stores and small businesses. In November, Staples Inc. (SPLS) will start selling a system from Zonoff Inc. that lets business owners turn off lights and lock doors via a mobile application. Apigy Inc. sells the Lockitron to property owners renting out their homes and buildings, allowing doors to be locked and unlocked with a smartphone.

Intel introduced new chips and software earlier this month for Daikin Industries Ltd., which will use the technology to enable remote monitoring of heating and ventilation systems.

Thursday, October 24, 2013

(BN) Wi-Lan, ITV, Motorola Mobility: Intellectual Property

Oct. 24 (Bloomberg) -- Apple Inc. won a patent-infringement trial in which Wi-Lan Inc. was seeking $248 million from the iPhone maker over an invention for wireless technology used in mobile devices.

Apple didn't infringe a patent for technology used in wireless networking, a federal jury in Marshall, Texas, decided yesterday. The jury, which deliberated for just over an hour, also said the two patent claims were invalid.

Wi-Lan said it was reviewing its options, and that it "does not believe previous license agreements signed related to the patents are negatively impacted by this decision." Kristin Huguet, a spokeswoman for Apple, didn't immediately return messages seeking comment on the verdict.

Wi-Lan relies on royalty payments for all of its sales. Justin Kew, an analyst with Cantor Fitzgerald, called the case "pivotal" because an agreement with Cupertino, California-based Apple might eliminate much of the company's litigation costs that have led to quarterly losses.

Wi-Lan reported a loss of $762,000 in the second quarter on revenue of $19.9 million, with litigation expenses accounting for much of its costs.

Apple argued that it uses chips made by Qualcomm Inc., which doesn't use the Wi-Lan technology. Mark Scarsi of Millbank Tweed in Los Angeles told the jury that Wi-Lan valued the patent at $4.3 million in 2006 and now wants a big payout by demanding a cut from every iPhone sold.

Apple is "slinging mud" because it needs the technology and knows it has to take a license to the patent, Sam Baxter of McKool Smith in Marshall, representing Wi-Lan, told the jury.

The Ottawa-based company reached agreements with HTC Corp., Hewlett-Packard Co. and Novatel Wireless Inc. in the days before the trial for undisclosed terms. That left Apple the sole defendant.

BlackBerry Ltd. settled its fight with Wi-Lan, as did Alcatel-Lucent.

The case is Wi-Lan Inc. v. HTC Corp., 11-cv-00068, U.S. District Court, Eastern District of Texas (Marshall).

Motorola Mobility Application Hints at New Android Phone Name

An application published in the database of the U.S. Patent and Trademark Office may give hints about the name under which an Android-powered mobile phone may be sold.

Motorola Trademark Holdings LLC filed an application Oct. 14 to register "Moto G" as a trademark. The company said in the application that it intends to use the mark for mobile phones, smartphones and such accessories as battery chargers, adapters and removable covers.

Mountain View, California-based Google Inc. acquired Motorola Mobility Holdings Inc. in 2012. At that time, Google said in a statement it would run the acquisition as a separate business, and that Motorola Mobility would remain an Android licensee.


TVCatchup Barred From Some Streaming, Ordered to Pay Damages

TVCatchup Ltd., a London-based television streaming service, will be barred from offering streaming content from some U.K. broadcasters' digital channels, the English High Court has ruled.

The ruling stems from a copyright-infringement suit brought by ITV Plc, owner of the U.K.'s most-watched commercial TV station, and the U.K.'s Channel 4 and Channel 5. In 2011, the U.K. court sought guidance from the European Union's top court, the EU Court of Justice, about whether content owners and broadcasters had the right to prevent unauthorized streaming of their content.

In March the EU court ruled that content owners and broadcasters do have that right under the copyright rules of the European Union.

The case then came back to the U.K., where the High Court of Justice then issued a ruling specifically banning some actions by TVCatchup.

The U.K. court said that while streaming of the digital channels was barred, a discrepancy between U.K. and EU law meant that TVCatchup could continue to stream the non-digital content from ITV, and Channels 4 and 5.

It was "not possible" to interpret sections of U.K. copyright law to make them compatible with EU copyright directives, the court said. It did order TVCatchup to pay damages for past acts of infringement, with that amount to be determined by the court.

The streaming service was ordered to present financial information to the court by Nov. 4, and must also publish the court's ruling on its websites. Other than publishing that order, TVCatchup is ordered to "avoid any further comment or discussion" of the ruling on its websites, according to the ruling.

The case is ITV Broadcasting LTD. V. TVCatchup Ltd., HC10C01057, High Court of Justice, Chancery Division.

Wild Games' Copyright Claim Brings Down Negative Review Video

Wild Games Studio, a Canadian developer of computer games, demanded that a review of its "Day One Garry's Incident" game be removed from Google Inc.'s YouTube video-sharing site on the grounds that its copyrights were infringed, according to the Raw Story news website.

John Bain's video review, which called the game "astonishingly bad," was taken down because Bain's YouTube Channel contains advertising, and Bain had no right to make money from the review that featured the game, a Wild Games spokesman told Raw Story.

The review was taken down and then Bain posted a second video claiming Wild Games was misusing copyright law to protect itself from a negative review, according to Raw Story.

Bain, who reviews games under the name "Raw Biscuit," said U.S. copyright law's fair use provision should protect him from copyright claims he says were aimed only at censoring him, Raw Story reported.

Wild Games didn't immediately respond to a request for comment on Bain's reported remarks.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Sea World's Killer Whale Protocols a Trade Secret, OSHA Says

Sea World Entertainment Inc.'s safety protocols for interaction between trainers and killer whales are a trade secret, the Occupational Safety and Health Review Commission told a federal judge, the Associated Press reported.

Under the Freedom of Information Act, the AP had filed sought details of the protocols that were adopted after a Sea World trainer was killed in February 2010 while interactive with Tilikum, a six-ton killer whale.

Commission officials told the court that they feared they would be held liable if they released the protocols, saying that under federal law, employees of a government agency could face as long as a year in prison for wrongful revelation of trade secrets, according to the AP.

Although in August a federal judge rejected Sea World's claims the protocols were a trade secret and had ordered the commission to release them, the commission has refused to comply, the AP reported.

Counsel for Idaho Hospitals Seek Protection for Documents

Lawyers representing two Boise, Idaho-based hospitals in an antitrust suit claim that hundreds of documents in the case are trade secrets and requested that they be shielded from public disclosure, the Idaho Statesman newspaper reported.

Included on this list are noncompetition agreements doctors signed with St. Luke's Health System, e-mails comparing fees charged at that hospital with those charged by St. Alphonsus Regional Medical Center, and financial terms related to the integration of several medical practice groups, according to the newspaper.

While U.S. District Judge B. Lynn Winmill has ruled that trade secrets need not be disclosed, he said that counsel for the parties must present compelling reasons to keep these secret, the Statesman reported.

The suit is related to St. Luke's purchase of the Saltzer Medical Group in Nampa, Idaho, with the Federal Trade Commission and St. Alphonsus alleging the purchase will give St. Luke's an unfair competitive advantage and raise the cost of health care, according to the Statesman.

Tuesday, October 22, 2013

(BN) Coller Capital, Goldman Sachs: Intellectual Property

(Bloomberg) Collet Capital, the private-equity firm founded by British financier Jeremy Coller, is in talks with multiple bidders to join in an offer for BlackBerry Ltd. (BBRY), a person familiar with the discussions said.

Coller will put up some financing as part of the bids, said the person, who asked not be identified because the talks are private. The firm, which buys and sells intellectual property, is seeking to acquire about 10 percent of BlackBerry's patents if it makes a deal, the person said.

The patents of interest to Coller cover technologies ranging from push notifications to messaging, according to the person. BlackBerry's intellectual property accounts for as much as 20 percent of the company's total value, the person said.

BlackBerry, which announced in August that it was entertaining bids, has drawn a number of interested parties, though little in the way of concrete offers. Fairfax Financial Holdings Ltd. (FFH), BlackBerry's largest investor, signed a tentative agreement to acquire the smartphone maker for $4.7 billion last month -- without naming its buyout partners or showing that it has lined up financing. Cerberus Capital Management LP is looking at BlackBerry's books, while Lenovo Group Ltd. (992) has also expressed interest in a BlackBerry deal, according to people familiar with the matter.

Coller, which has offices in London, New York and Hong Kong, is working with multiple parties to ensure that it's part of a successful deal, the person with knowledge of the talks said. In addition to offering upfront financing, Coller may also share royalties from licensing the patents with the winning bidder, the person said.

BlackBerry co-founders Mike Lazaridis and Douglas Fregin, who walked away from management positions in the company in recent years, are also contemplating a bid. They said on Oct. 10 that they're working with Goldman Sachs Group Inc. (GS) to explore the idea.

Shira Goldman, a spokeswoman for Coller in New York, said the company doesn't comment on speculation about its investments. Lisette Kwong, a spokeswoman for Waterloo, Ontario-based BlackBerry, also declined to comment, as did representatives of Fairfax and Lenovo. Mike Sitrick, a spokesman for Lazaridis and Fregin, said the two men had no comment.


Samsung's Trademark Application Points to Extended Warranty

Samsung Electronics Co. (005930) filed for a U.S. trademark that may indicate the Korean maker of mobile devices is planning to compete with rival Apple Inc. over extended warranties.

Both companies manufacture smart phones and are presently involved in a patent dispute in federal court in San Jose, California.

Samsung is seeking to register "Samsung Protection Plus" as a trademark for "providing extended warranties on consumer electronic products and appliances," according to database of the U.S. Patent and Trademark Office. The trademark application was filed Oct. 15.

Apple Inc. (AAPL)'s extended warranty is known as Applecare Protection Plan. The Cupertino, California-based company was sued by a Belgian consumer group in January over its extended warranty practices.

The lawsuit alleges that Apple misled consumers by advertising that its products had a one-year warranty and then selling a two-year extended warranty. European Union customers have an automatic two-year warranty on products they buy.

Facebook Tells Developer to Dismantle BreakYourFacebook site

Facebook Inc. (FB) sent a cease-and-desist e-mail to the developer of a tool that allows users to take scheduled breaks from the social media site.

The developer, Cody Romano, said on his blog that he received the e-mail from the Menlo Park, California-based company objecting to the web app he created, "Break Your Facebook." He said he created the tool in the wake of recent revelations about the National Security Administration's alleged snooping into users e-mail and social-media accounts, and the "frenetic pace" and "poor quality" of Facebook's News Feed feature.

In the e-mail, Facebook said that Romano's domain name infringes the social media company's trademarks, and demanded that he quit using the name "Break Your Facebook" and disable the website.

The company also warned him not to "sell, offer to sell, or transfer" the domain name to a third party, and told him he should let his Internet domain name registration expire.

Romano said on his website that he knows he has to "break my app and let the domain die" because he lacks the resources for a legal battle with Facebook. He did take issue with the tone of the cease-and-desist letter, saying that he was "turned off" by the e-mail's language.


Norwegian Director Plays Trick on Potential Infringers of Film

A Norwegian director is having the last laugh at those who are downloading a copy of his film through a website that uses the BitTorrent file-sharing protocol, according to the TorrentFreak anti-copyright news website.

Johan Kaos uploaded a copy of his film "Pornopung" to the Pirate Bay website, saying he thought the movie would end up there anyway and he wanted to have some fun with those who used the site to download and share it without authorization, according to TorrentFreak.

The film is a comedy about two men who give a third man advice about how to be attractive to women, with one of their tips involving removal of body hair from his genitals, TorrentFreak reported.

Kaos said the film he uploaded to PirateBay starts with 10 minutes of the film just as he made it, with the remaining two hours showing only an image of a shaven scrotum, according to TorrentFreak.

Trade Secrets/Industrial Espionage

Goldman Ordered to Advance Ex-Programmer Fees for N.Y. Case

Goldman Sachs Group Inc. must advance computer programmer Sergey Aleynikov the legal fees he needs to fight New York state charges that he stole confidential source code from the company, a federal judge ruled.

Goldman Sachs at this time doesn't have to pay the fees Aleynikov incurred defending federal charges that led to his conviction and imprisonment before the verdict was overturned, said U.S. District Judge Kevin McNulty in Newark, New Jersey. He said the two sides must engage in a pretrial exchange of evidence on that question.

"Immediate advancement of fees is required, subject only to an unsecured undertaking to repay them if the applicant is unsuccessful in the underlying litigation," McNulty said in an opinion made public yesterday.

Aleynikov was convicted in federal court in Manhattan in 2010 of stealing hundreds of thousands of lines of code and sentenced to 97 months in prison.

He was ordered freed in February 2012 when the U.S. Court of Appeals in New York reversed his conviction. In August of that year, he was arraigned in Manhattan on state charges of unlawful use of scientific material and duplication of computer-related material. He was the subject of a sympathetic profile in Vanity Fair magazine.

Goldman Sachs, which employed Aleynikov from May 2007 through June 2009, argued that it didn't have to pay his fees in a state prosecution because he wasn't an officer of the company, even though he was a vice president.

McNulty disagreed.

"It may be the case that Goldman (or the industry of which it is a part) has been profligate in conferring the title of vice president," the judge wrote. "If so, Goldman must bear the consequences of that profligacy. Goldman might easily have chosen to be more sparing with job titles, or to confer them in some other way."

Michael DuVally, a spokesman for New York-based Goldman Sachs, declined to comment on the ruling.

The case is Aleynikov v. Goldman Sachs Group Inc., 12-cv-05994, U.S. District Court, District of New Jersey (Newark).


Friday, October 18, 2013

Lunch Talk: Cognitive neuroscience of sleep and dreams. (UC Berkeley)

Two lectures from UC Berkeley Cognitive Science 102 podcast.

tags: lunchtalk, psychology, science, cognition, biology

Why Silicon Valley would be impossible in Europe.

Startup workaholic lifestyle is incompatible with European cultural values that emphasize the balance between work and personal time. Societies in Europe fought long and hard for an 8-hour workday, 40-hour workweek, overtime pay, 4-week paid vacations, and other labor benefits. In many developed European countries laws tax not only high incomes, but also high-intensity effort. For example, in sharp contrast with the US, overtime pay laws apply to engineers, not only "regular" workers. For a startup strapped for cash, paying its developers overtime premium, as required by law, would be a financial disaster.

The modern factory was invented in England in the 18th century. This method of production dominated the Industrial age. Laws and culture tied to this model helped create European and American economic successes. As it always happens, the recipe for success eventually turned into a recipe for disaster. Unfortunately for Europe, many developed countries did not adjust in time for the new type innovation: startup-based, hightech, 24/7 effort. As a result, in the foreseeable future we'll not see a big change in Europe, despite their governments' programs for stimulating Silicon Valley-style innovation.

P.S. Michel Foucault , a French social theorist, understood this issue the best. He called it Biopower. His books are very difficult to read, but they are worth your intellectual effort.

Friday, October 11, 2013

Lunch Talk: TEDx, the battle for power on the Internet.

Bruce Schneier talks about the problem of control over data on the Internet.

In chapter 22 ("Seeing the Invisible: The System behind the New Internet") of our favorite book, we discuss the mechanism of Control that Internet users delegated to private companies in return for subsidized devices and services. Essentially, the users traded their long-term digital futures for short-term economic and status gains. In economics, it is called Future Discounting. Paradoxically, the original idea that on the web everything is free AND there are no strings attached to the content turned into a familiar trade-off: "free stuff with lots of strings attached." As usual, a recipe for success became a recipe for disaster.

Creativity Quote of the Day: A Change in Perspective...

Yesterday, John Markoff, a Senior Science Writer for the New York Times, gave a guest lecture at our Stanford University CSP course "The Greatest Innovations of Silicon Valley" (BUS/SCI 117). He talked about cultural, scientific, and technological developments in the valley that lead to the creation of the modern Personal Computer (PC). Here's one of the fascinating insights from his talk:

A change in perspective is worth 80 IQ points.
- Alan Kay.

(BN) Toyota Introduces System That Uses Radio to Avoid Car Collisions

(Bloomberg ) Toyota Motor Corp. (7203), the world's largest automaker, will introduce systems in about two years enabling cars to communicate with each other to avoid collision.

The system will use radio waves to gather data on the speed of other vehicles to keep a safe distance, the Toyota City, Japan-based company said in a statement. It showed another system, consisting of cameras, radar and control software, that helps a car maintain position in a lane on its own.

Self-driving systems may be the next big trend for automakers. General Motors Co. (GM)'s autonomous vehicles, due out by 2020, are expected to drive themselves on controlled-access highways such as an interstate and Nissan Motor Co. last month said it would test a Leaf model car with an advanced driver assist system on Japanese roads. Separately, Google Inc. (GOOG) is developing technology for self-driving cars.

Toyota's research for developing automated driving systems is focused on reducing traffic fatalities, Moritaka Yoshida, managing officer and chief safety technology officer, said yesterday. With the real-time speed information shared via wireless communication, cars can eliminate unnecessary acceleration and deceleration which in turn can reduce traffic congestion and boost fuel efficiency, he said.

The system Toyota has developed incorporates technologies derived from its automated driving research and the carmaker has said it aims to create a virtual "co-pilot" in vehicles that helps drivers avert accidents.

Sales of driver assistance systems is estimated by Roland Berger Strategy Consultants to double to $5.4 billion in the five years through 2017.

Traffic Fatalities

Each day, an estimated 3,400 people are killed globally in road traffic crashes, according to the Atlanta-based Centers for Disease Control and Prevention. "Current trends show that by 2030, road traffic injuries will become the fifth leading cause of death globally."

Toyota also showcased a new pre-crash technology that can steer a vehicle moving at a high speed away from pedestrians when automatic braking alone can't avoid a collision. This new system will be available after 2015, the company said.

More than 4,000 pedestrians were killed in U.S. traffic crashes in 2011, the most recent year available from the National Highway Traffic Safety Administration. In Japan, pedestrian deaths are about a third of traffic fatalities.

First Step

"Currently, no product is launched in the market with these technologies and almost every global automaker is now researching and developing," said Takashi Morimoto, a consultant at Frost & Sullivan in Tokyo. "These would be the first steps toward autonomous driving technology."

Toyota and other Japanese carmakers have agreed to use a common frequency for vehicle communication in Japan so that they can share real-time information with cars from other manufacturers. Foreign carmakers may also use the same frequency in Japan, Yoshida said.

Toyota will initially introduce the system in some cars from around 2015 and then offer it in other models gradually, according to Masato Suzumura, a project manager of the advanced vehicle control system development division.

"The new features are enriching what they already have on some models to make driving safer and less stressful," said Satoshi Nagashima, Tokyo-based senior partner at Roland Berger. "The demand will be big for such advanced technologies."

Thursday, October 10, 2013

(BN) Aircraft Noise Tied to Heart Disease in Two Studies

(Bloomberg) Two studies linked aircraft noise to higher rates of cardiovascular disease in results that may fuel debate about the effect airports have on their neighbors.

The first study found rates of strokes and heart disease increased with people's proximity to London's Heathrow Airport, Europe's busiest hub. The second found that U.S. seniors on Medicare who were exposed to the most airplane noise were also more likely to have been hospitalized for heart disease. The British Medical Journal published both papers.

Today's research adds weight to the idea that where you put an airport doesn't just affect neighbors' quality of life, but also their health, Stephen Stansfeld, a psychiatry professor at Barts and the London School of Medicine, wrote in an editorial published alongside the two studies. Heathrow, in particular, has been mired in debate over how to add capacity to London's airports.

"The results imply that the siting of airports and consequent exposure to aircraft noise may have direct effects on the health of the surrounding population," Stansfeld wrote. "Planners need to take this into account when expanding airports in heavily populated areas or planning new airports."

Heathrow handled 70 million passengers last year. London Mayor Boris Johnson has said he'll block any expansion around the airport -- which is surrounded by densely populated neighborhoods -- in favor of a new hub in the River Thames estuary.

Noise Levels

The BMJ's Heathrow study looked at 3.6 million people who lived in 12 London boroughs and nine districts west of London, using Civil Aviation Authority aircraft noise models from 2001 and hospital admissions data from 2001 to 2005 to draw a comparison. Researchers said they took ethnicity, social deprivation and smoking into account, using lung cancer deaths as a proxy to help determine smoking rates.

About 2 percent of the population the London researchers studied lived in the area with the highest level of noise -- more than 63 decibels in the daytime or more than 55 decibels at night-time. By way of comparison, that's within the range of laughter or normal conversation, according to the National Institutes of Health.

Those living in the noisiest, 63-decibel-plus areas were 24 percent more likely than people living in areas with noise levels of 51 decibels or fewer to be hospitalized because of stroke and 14 percent more likely to be hospitalized because of cardiovascular disease, the researchers said.

Invention of the Day: DVR recording from a link on the Internet.

Yesterday, October 9, 2013, Twitter announced that it "will provide links that let pay–TV users record or view programs on Comcast's cable services." Bloomberg News reports about a Comcast executive explaining the new service,
“There are tons of conversation about live TV, but does that really lead to someone programming their DVR or picking up their remote?” Schwartz said. “This very clearly and in a measurable way links that conversation with consumption. If you’re a programmer, you monetize best if someone is watching that show live on a television set. It’s a win-win-win for Twitter, the programmers and the distributors.” 

More than 14 years ago when I worked at Philips Multimedia Center in Palo Alto, California, I invented (US Patent 6,611,654) a service that enabled users to accomplish scenarios now marketed by Twitter and Comcast. One of the scenarios covered by the patent involves a mobile user:
Alice got stuck in traffic on her way home. She is going to be late for the broadcast of a live piano concert. Fortunately, her palm-top Nino (or cell phone, or laptop) can access the TV programming network. With just a couple of clicks Alice sets her recording time-shifting device to cache the concert.
[Nino was a personal communications device developed and marketed — unsuccessfully— by Philips at the time. Tony Fadell, who later went to Apple to develop the original iPod and then created Nest, lead the effort.]

Even at that time, I could see that the Internet and mobile connectivity was going to bring new functionality to the users, including elements of social networking (because the nature of visual media is inherently social). Here's how it is described in the patent:
Alice loves talking about her favorite TV series. She watches the episodes frequently and enjoys every minute of it. In today's episode one of the characters behaves exactly as she predicted a couple of days ago. Alice needs to talk to her friend Jane about it. Jane is at work and cannot see the show. ...  One click and today's phone discussion (telecon) with Jane is going to be a real time experience.
The yesterday's announcement highlights the difference between Invention and Innovation that we emphasize in our book Scalable Innovation.
Source: Shteyn & Shtein, 2013. Figure P3.
Although we were able to make a first step toward innovation in 1999, e.g. by creating a prototype (first red dot on the chart), the innovation has become scalable when the connectivity infrastructure became ubiquitous. Today, phones, TVs, DVRs, thermostats, watches, and other devices are connected to the network and can be accessed by consumers in many contexts — personal, social, and business. As we show in the book, scalable innovation creates its own space. Right now, we enter a new phase (Chapters 15) when the entire system "flips" to accommodate connected devices; adding them to the network has become a "no-brainer."

Alan Kay once said, "The best way to predict the future is to invent it." I'm happy I was involved in inventing the right future.

(BN) Lilly, Starbucks, Cengage, The9: Intellectual Property

(Bloomberg ) Eli Lilly & Co. (LLY), the maker of Cialis and Evista, said in a statement yesterday it was "appalled and very disappointed" by trade secret thefts allegedly committed by two former employees.

The ex-employees were accused of stealing confidential information related to early stage clinical development of potential new drugs, Lilly said. The alleged theft doesn't significantly jeopardize its research and development pipeline, the company said.

The Indianapolis-based pharmaceutical company said it has worked with the U.S. Attorney's Office and the Federal Bureau of Investigation in the probe and wouldn't make any additional comments.

The Indianapolis Business Journal reported that the alleged thieves were scientists with doctoral degrees, who were accused of transferring confidential information valued at $55 million to a Chinese pharmaceutical company.


Starbucks' 'Duffin' Product Announcement Raises Bakery Fans' Ire

Starbucks Corp. (SBUX), the Seattle-based coffee chain, said on the company blog Oct. 4 that it was introducing a jam-filled muffin it dubbed the "duffin."

The posting garnered an immediate wave of negative comments from readers who said they had eaten duffins at a London-based establishment for years. Those who protested said that duffins were a "signature" offering of Bea's of Bloomsbury, and accused Starbucks of "having the nerve to steal their idea."

They said the recipe for duffins has even been published in the U.K. restaurant's cookbook, "Tea With Bea."

Bea's of Bloomsbury posted a notice on its website, thanking its customers for their support in the controversy, and offering them a 15 percent discount on a dozen of its duffins.

Although the U.K.'s Guardian reported that Starbucks supplier Rich Products Corp. of Buffalo, New York, had registered a "duffins" trademark, the database of the U.S. Patent and Trademark Office indicates only one registration.

The Pontiac Coffee House LLC of Springdale, Arkansas, registered "Duffin" in September 2011 as a U.S. trademark. According to the patent office listing, the mark is used with donuts, muffin mixes and muffins. That company's website lists several flavors of duffins on its menu for $1 apiece.

Annheuser-Busch Loses Right to Budweiser Trademark in Italy

Budejovicky Budvar NP, the Czech brewer, has succeeded in persuading an Italian court to bar Belgium's Annheuser-Busch InBev (ABI) from using the Budweiser name in Italy, Associated Press reported.

The two entities have been engaged in a century-long battle over rights to the name, with the Czech brewer arguing that only beer brewed in its home country is entitled to be called Budweiser, AP reported.

Budvar said the Italian court authorized the importation of its Budweiser Budvar lager, and the removal of the AB InBev's Budweiser mark from Italy's trademark registry, according to AP.


Cengage Learning Sues JPMorgan Chase Over Textbook Copyrights

Cengage Learning Inc. sued lenders, including JPMorgan Chase & Co. as the agent for the first-lien debt, to nullify their purported liens on thousands of textbook copyrights.

The textbook publisher also sued Bank of New York Mellon Corp., as the trustee and agent for first-lien notes, and CSC Trust Co. of Delaware, as the trustee and agent for second-lien notes, according to a complaint filed Oct. 5 in U.S. Bankruptcy Court in Brooklyn, New York.

Cengage claimed in the lawsuit that JPMorgan and the others recorded interest in the copyrights with the U.S. Copyright Office within 90 days before its July 2 bankruptcy filing, allowing Cengage to avoid the liens and security interest on the registered copyrights, according to court documents.

The publisher said in a footnote of the lawsuit that it believes there are "approximately 15,750 unique copyrights that are subject to avoidance."

Cengage, based in Stamford, Connecticut, develops teaching materials for colleges, schools, libraries and corporations, and provides print and electronic publishing.

The company, which bills itself as the second-biggest publisher of college-course material in the U.S., listed more than $1 billion in assets in a court filing. It owes the lenders and noteholders about $5.8 billion, court papers show.

The company negotiated a proposed restructuring with the first-lien holders to eliminate more than $4 billion in debt, according to a statement.

In 2007, private-equity group Apax Partners LLP led a $7.75 billion acquisition of Cengage from Thomson Reuters Corp.

The case is In re Cengage Learning Inc., 13-bk-44106, U.S. Bankruptcy Court, Eastern District of New York (Brooklyn). The lawsuit is In re Cengage Learning Inc. v. JPMorgan Chase Bank NA, 13-bk-01479, U.S. Bankruptcy Court, Eastern District of New York (Brooklyn).

The9 Ltd. (NCTY) Defeats Chinese Author's Copyright Infringement Claims

A Shanghai game developer has turned back a copyright infringement claim made by a Chinese author and history teacher, the Global Times reported.

The9 Ltd. was sued by Yuan Tengfei after he found his books listed on mobile phone software created by the company, according to the Global Times.

The author claimed The9's software was uploading his books to its server, according to the newspaper.

The court found that The9 link only directed users to another website rather than enabling the downloading of Yuan's books, the Global Times reported.

Safaricom Says Video Service Has No Connection to Doctor's Plan

Safaricom Ltd., the Kenyan provider of Internet and mobile phone services, has responded to a copyright claim from a Kenyan doctor over a medical video conferencing service, Nairobi's Business Daily reported.

Safaricom said the concept was already in the public domain and the partnership it developed with San Jose, California's Cisco Systems Inc. (CSCO) and others had no connection to a proposal by Dr. Dedan Warui, according to the newspaper.

Warui has claimed he brought the idea to Safaricom two years ago and had signed a non-disclosure agreement with the company at that time, Business Daily reported.

While Safaricom acknowledged it had been in contact with the doctor, it said the company decided to go with a different proposal, and, in court filings, claimed a similar service was up and running in India before its contacts with Warui, according to Business Daily.

Adobe Goes After Indian Photo Studios It Says Infringes

Adobe Systems Inc. (ADBE), the San Jose, California-based maker of Photoshop software, has filed an infringement claim against an Indian photo studio, India's Daily Bhaskar newspaper reported.

Police raided the studio and seized four computers, which Adobe was later able to verify were operating with unlicensed copies of the California company's software, according to the newspaper.

Sachin Gupta, who leads the Indian Photographers and Videographers Association told the newspaper that Adobe officials brought the police a 14-page list of names of photo studios in India's Indore and Bhopal regions the company claims are using pirated software.

Wednesday, October 09, 2013

Why New York is not Silicon Valley. is having trouble with NY authorities.

New York State Attorney General Eric Schneiderman has issued a wide-ranging subpoena to Airbnb, demanding information on the fifteen thousand or so city residents who have put their residences up for rent on the Web site.

The state found airbnb in violation of the local law regulating hotels, which the NY law enforcement officials are eager to apply to the new business model. As The New Yorker notices,

Airbnb is challenging entrenched economic interests (the hotel industry) and a system of regulation that’s designed to deal with corporate hoteliers, not individual landlords. Ride-sharing companies like Lyft and Uber have been wrestling with a similar problem, since they represent a serious economic challenge to taxi companies; I wrote about this in September. Regulators tend to be somewhat wed to the status quo, and, even if unconsciously, they often adopt the perspective of those they regulate.

One of the biggest advantages of Silicon Valley is that local authorities do not interfere with innovation, and established companies do not use their political muscle to maintain the status quo. As Acemoglu and Robinson showed in Why Nations Fail, a close alignment between political and business elites can harm innovation because it creates barriers to startups that try to disrupt old business models. The entrepreneurial culture of Silicon Valley abhors backward-looking business regulations; and for a good reason!

Source: Startup Ecosystem Report. 2012.

Silicon Valley majors back Angellist, a marketplace for startups.

According to Bloomberg (Sept 23, 2013),
[Angellist] raised $24 million from 116 investors, including Google Ventures, Kleiner Perkins Caufield & Byers and Draper Fisher Jurvetson, as well as prominent angels such as Yuri Milner, Mitch Kapor and Max Levchin.
There's a good chance that after over 50 years of evolution, the VC industry will go through a consolidation. Angellist can help streamline startup-related services, from hiring to financing,  reference checking,  etc. If they are successful, they'll have in their possession a business graph of Silicon Valley entrepreneurial community - an invaluable tool for investors, recruiters, corporate technology buyers, and social scientists. Theoretically, one could determine emerging innovation patterns based the flow of money and people into certain technology directions.

Saturday, October 05, 2013

(BN) Wi-Fi Patent Owner Gets Ruling Setting Patent Royalties

Oct. 4 (Bloomberg) -- A federal judge set 9.56 cents per chip as the value of contested patents used in wireless computer network technology in a case by patent-holder Innovatio IP Ventures LLC against electronic device makers Cisco Systems Inc., Netgear Inc. and Motorola Solutions Inc.

The ruling issued yesterday by U.S. District Judge James Holderman in Chicago stops short of fixing damages in the two-year-old litigation because the parties agreed to allow him to determine the royalty value before considering whether the patents were valid or infringed.

"The court hopes that by doing so, the possibility of settlement will be enhanced because the parties will be better able to evaluate the potential risks and benefits of expending additional resources in the litigation," Holderman said.

Innovatio IP, based in Chicago, accuses the defendants, which also include Hewlett-Packard Co., Dell Inc. unit SonicWALL, and businesses that bought Wi-Fi devices made by the manufacturers, of infringing its portfolio of patents.

Holderman, citing an April ruling by U.S. District Judge James Robart in Seattle in a patent dispute between Google Inc.'s Motorola Mobility Holdings unit and Microsoft Corp., said the payment rate was based in part on an agreement by the patents' original owner, Broadcom Corp., that they were essential to Wi-Fi technology and that license fees should be fixed at reasonable and non-discriminatory, or RAND, terms.

Attorneys for Innovatio IP and for Cisco said it was too soon to estimate potential damages.

Licensing Chips

"At a minimum, the court's determination that the Wi-Fi chip is the appropriate base to which the RAND rate applies opens the door for Innovatio to potentially license hundreds of millions of units sold by numerous Wi-Fi chip suppliers," Matthew McAndrews, an Innovatio IP attorney, said yesterday in an e-mailed statement.

Innovatio IP will be making licensing offers to the manufacturers based on Holderman's order, McAndrews said.

Innovatio IP "still has a number of hoops to jump through before they can get anything," Mark Chandler, general counsel for San Jose, California-based Cisco, said in a phone interview.

Chandler cited the open issues of validity and infringement, adding his company is also pursuing breach of contract claims against Innovatio IP.

"We would be shocked if we had to pay anything," he said.

Holderman presided over a non-jury trial last month, during which he heard evidence on the RAND rate to which Innovatio IP would be entitled, and limited, if it proved infringement, he said in his ruling.

The judge has set a follow-up status hearing for Oct. 10. "The parties shall file an agenda for the status hearing, including proposals for setting further dates to resolve this litigation" by Oct. 8, Holderman said.

The case is In re Innovatio IP Ventures LLC, 11-cv-09308, in the U.S. District Court, Northern District of Illinois (Chicago).

(BN) Microsoft, SmartMetric, USPTO, Amazon: Intellectual Property (1)

Oct. 4 (Bloomberg) -- Microsoft Corp. won't be able to seek another import ban against some handsets made by Google Inc.'s Motorola Mobility, though it can get damages under a ruling issued by a U.S. appeals court yesterday.

A U.S. trade agency was wrong to say some of Motorola Mobility's products didn't infringe one Microsoft patent, while there was no violation of three others, the U.S. Court of Appeals for the Federal Circuit in Washington said in an opinion posted on its website yesterday. The remaining patent expires in December, so there won't be enough time for a trade agency to block the devices from being imported into the U.S.

The ruling does give Microsoft ammunition to seek cash damages from Motorola Mobility in a U.S. district court. Both sides declared victory, with Redmond, Washington-based Microsoft saying it bolsters its efforts to get royalties from devices running on Google's Android, the world's most popular operating system. Motorola Mobility is one of the biggest holdouts of a program started three years ago, Microsoft has said.

"We're pleased the court determined Google unfairly uses Microsoft technology and once again call on Google to join the rest of the Android ecosystem in licensing our patents," Microsoft Deputy General Counsel David Howard said.

Motorola Mobility, which was bought by Mountain View, California-based Google after the case was filed in 2010, focused on the findings regarding the other three patents and the court finding that Motorola Mobility designed around the one that was infringed.

The favorable opinion "confirms our position that our products don't infringe the Microsoft patents," said Matt Kallman, a Motorola Mobility spokesman.

The court didn't rule on Google's appeal of a separate patent in the dispute before the U.S. International Trade Commission. In that case, the ITC issued an import ban against some Motorola Mobility phones. Microsoft has sued U.S. Customs and Border Protection, claiming it hasn't enforced the order.

The case that was ruled on is Microsoft Corp. v. ITC, 12-1445, while the pending case is Motorola Mobility LLC v. ITC, 12-1535, both U.S. Court of Appeals for the Federal Circuit (Washington). The ITC case is In the Matter of Certain Mobile Devices, Associated Software and Components Thereof, 337-744, U.S. International Trade Commission (Washington).

SmartMetric Loses Patent Ruling in Visa, MasterCard Case

Visa Inc. and MasterCard Inc. don't infringe a patent owned by SmartMetric Inc., a company that had sought as much as $13.4 billion for alleged use of its technology in "smart" debit and credit cards.

U.S. District Judge Michael W. Fitzgerald in Los Angeles, affirmed his earlier tentative decision from a Sept. 25 hearing.

"The parties here are comparing apples and oranges," the judge said in an Oct. 2 written ruling. "The piecemeal similarities that SmartMetric has identified in support of its claims do not change the fact that claims 1 and 14 of the '464 patent are simply not practiced by defendants, and no reasonable jury could conclude otherwise.''

SmartMetric sued Visa and MasterCard two years ago, claiming they infringed its patent for a system for automatic connection to a network. The company claimed it was entitled to a royalty of 25 percent of the anticipated savings Visa and MasterCard would receive from a drop in credit and debit-card fraud by the introduction of so-called EMV cards in the U.S.

The EMV cards, which are already used in Europe, include a microchip instead of a magnetic strip to access a payment system. The SmartMetric patent pertains to the process by which the payment system selects a network for a card transaction, Patrick Bright, the company's lawyer, said at the Sept. 25 hearing.

SmartMetric said in a statement yesterday it will appeal the non-infringement ruling.

The case is SmartMetric Inc. v. MasterCard International Inc., 11-cv-07126, U.S. District Court, Central District of California (Los Angeles).

Government Shutdown Forces Cancellation of Inventors' Meeting

The U.S. Patent and Trademark Office canceled its 18th annual Independent Inventors Conference set for Oct. 11-12 in Alexandria, Virginia.

According to a notice on the patent office website, the office will stay open notwithstanding the government shutdown that began Oct. 1.

The patent office said that it had to make ''difficult decisions to ensure core patent and trademark operations are maintained for as long as possible."

The office, which operates on user fees, said it is should be able to stay open for about four weeks using previous year's fee reserves.


Amazon Seeks 'Firetube' U.S. Trademarks for Variety of Uses Inc., the world's largest e-commerce company, applied to register the term "Firetube" as a trademark, according to the U.S. Patent and Trademark Office.

The application, filed Sept. 25, indicates that the Seattle-based company plans to use the mark for a wide range of services, including online social-networking, a mobile software application, and the dissemination of advertising via the Internet and other communications networks.

Other uses for the mark, Amazon says, are the provision of non-downloadable pre-recorded content via wireless networks, communication through portable electronic devices, electronic mail services and graphic design services.

Kentucky Restaurant Successful in Defense of 'Derby Pie' Mark

Kern's Kitchen Inc., a Kentucky restaurant that's been in business for more than 50 years, won a trademark battle against a restaurant that was started by the founder of the Kentucky Fried Chicken chain.

The dispute was over a pie that is associated with the Kentucky Derby horse race. According to the database of the U.S. Patent and Trademark Office, Louisville, Kentucky-based Kern's Kitchen began using the name "Derby Pie" in 1964, and registered it as a U.S. trademark in October 1969.

The company said on its website that the pie, which has chocolate chips and walnuts among its ingredients, is a secret recipe and "no one has ever been able to duplicate our special filling and delicate crust."

That hasn't stopped many people from trying. A Google search for the terms "Derby Pie" and "Recipe" yields more than 48,000 hits. Kern's Kitchen has successfully filed other trademark suits related to the pie's name.

Kern's Kitchen objected to the use of the term "derby pie" to describe a dessert served at Claudia Sanders Dinner Houses Inc., of Shelbyville, Kentucky, and filed an infringement suit in federal court in March.

According to the Dinner Houses website, the restaurant was founded in 1968 by Harland Sanders, and originally known as "The Colonel's Lady." Sanders sold his Kentucky Fried Chicken company to a group of investors in 1964, and the chain is now a unit of Yum! Brands Inc. He and his wife Claudia, inspired by their "knowledge of Southern Recipes and their natural leaning toward the restaurant," then opened The Colonel's Lady.

Sanders died in 1980 at the age of 94, and his widow died in 1996, at the same age.

In its complaint, Kern's Kitchen said that it renewed its trademark in 2009 and didn't authorize the mark's use by the defendant. It asked the court for an order barring further infringement and damages of $335,000 together with awards of attorney fees and litigation costs.

On Oct. 1 a federal court in Frankfort, Kentucky, issued an order permanently barring Dinner Houses' use of "Derby Pie," and dismissing all other claims. The court said each party must pay its own attorney fees and litigation costs.

Dinner Houses' menu lists a dessert containing chocolate chips and pecans that is now named "Claudia's Kentucky Pie."


Pennsylvania Theater Sued Again by Broadway Copyright Holders

Entertainment Theatre Group, which does business as American Music Theatre, was sued for the second time in two weeks for infringing copyrights of Broadway musicals.

The first suit was filed in Allentown, Pennsylvania, Sept. 25 by the Walt Disney Co., which objected to the allegedly unlicensed use of content from its "Mary Poppins," "The Lion King" and "Spider-Man" in American Music Theater's "Broadway: Now and Forever."

The second suit was filed by the Rodgers & Hammerstein Organization, Andrew Lloyd Weber's Really Useful Group Ltd., and the Music Theatre International licensing agency.

The content that is allegedly used without permission is drawn from "The Producers," "West Side Story," "Jesus Christ Superstar," "Annie," "Cats," "Joseph and the Amazing Technicolor Dreamcoat," "Music of the Night," "Evita," "Phantom of the Opera," and "Les Miserables," according to the complaint.

The music organizations asked the court to bar the unauthorized use of their content and for awards of money damages, attorney fees and litigation costs.

American Music Theatre didn't respond immediately to an e-mailed request for comment.

The new case is The Rogers and Hammerstein Organization v. Brubaker, U.S. District Court, Eastern District of Pennsylvania (Allentown).

The earlier case is Disney Enterprises Inc. v. Entertainment Theatre Group, 13-cv-05570, U.S. District Court, Eastern District of Pennsylvania (Allentown).

Trade Secrets/Industrial Espionage

Canada Defense Department Move May Be Security Risk

Canada's Department of National Defense is taking a second look at plans to move into facilities previously occupied by the now-defunct Nortel Networks Corp. after listening devices were discovered there, the Ottawa Citizen reported.

The Internet and communications provider was the target of industrial espionage beginning in 2000 and security analysts say bugs and other devices from the Nortel era may still be found at the site, according to the newspaper.

The Department of National Defense hasn't revealed whether the bugs found were new or dated from Nortel's occupancy, the newspaper reported.

Canada's federal government, which has dedicated almost $1 billion Canadian ($968 million) to the purchase and the renovation of the site, has said it may consider having other departments move there rather than the defense department, according to the Citizen.

Wednesday, October 02, 2013

(BN) Patent-Suit Abuse Targeted as Supreme Court Accepts Case

(Bloomberg ) The U.S. Supreme Court will hear two appeals that would make it easier for targets of patent suits to collect attorneys' fees, agreeing to consider steps that some companies say would deter groundless litigation.

The court today said it will hear arguments from Octane Fitness LLC, which is seeking $1.3 million in fees after defeating a patent suit over exercise equipment. The justices also accepted an appeal by Highmark Inc., a Pennsylvania insurer asking for $5 million from a company that unsuccessfully sued for patent infringement.

Companies targeted by patent suits, including Google Inc. (GOOG), say fee awards are needed to stem a costly trend of frivolous litigation. A White House report said more than 100,000 companies were threatened last year with infringement suits by businesses whose sole mission is to extract royalty revenue. Those entities, dubbed "patent trolls" by critics, filed 19 percent of all patent lawsuits from 2007 to 2011, according to the Government Accountability Office.

"With the average patent case costing millions of dollars to litigate, the threat of paying the prevailing party's attorney's fees is a powerful deterrent to frivolous claims and litigation mischief," the Blue Cross and Blue Shield Association, a Washington-based trade group, argued in court papers urging the high court to intervene in the Highmark case.

'Exceptional Cases'

The U.S. Patent Act says fees can be awarded "in exceptional cases." Octane contends the federal appeals court that handles patent cases, the U.S. Court of Appeals for the Federal Circuit in Washington, has developed a "rigid and virtually insurmountable test" for implementing that statutory language.

Under the Federal Circuit test, a suit must be "objectively baseless" and have been filed in bad faith. Octane says trial judges instead should be able to award fees when a patent holder "unreasonably pursues a case having an objectively low likelihood of success."

Octane was sued by Icon Health & Fitness Inc., a rival exercise equipment maker, over a component in elliptical machines. Icon urged the Supreme Court not to take up the case, saying Octane is seeking a standard that "is nowhere to be found in historical precedent or the legislative history" of the Patent Act.

Icon said its suit against Octane, while unsuccessful, was "not exceptional by any precedential measure."

Allcare Health

Highmark raises a related issue, saying the Federal Circuit should have deferred to a trial judge's conclusion that the suit was so frivolous that fees were warranted.

The Federal Circuit said it wouldn't accept U.S. District Judge Terry Means's assessment of the suit by Allcare Health Management Systems Inc. Voting 2-1, the panel reversed part of the judge's finding that the suit was objectively baseless. The appeals court ordered recalculation of the fee award.

Allcare's patent, which it acquired from an inventor for $75,000, covers a method of using a computer to generate a list of possible treatments based on symptom data entered by a doctor.

Allcare contended the patent also covers a method for determining whether a proposed treatment will require pre-approval from the insurer. In rejecting Means's conclusion, the Federal Circuit said Allcare's reading of the patent, while wrong, was "not unreasonable."

Icon, the company that makes NordicTrack machines, is based in Logan, Utah. Octane is based in Brooklyn Park, Minnesota.

Retail Federation

Google and its allies, including the National Retail Federation, are also pushing Congress to make it easier for penalties to be imposed. One proposal, by House Judiciary Committee Chairman Bob Goodlatte, a Virginia Republican, would force the losers of patent cases to pay the winners' expenses in most cases.

Judges rarely order patent owners who lose their cases to pay the other side, and the Federal Circuit has been grappling with the issue. In December, it ordered a federal judge in Texas to impose sanctions against a company for making unreasonable claims of what its patent covered.

Chief Judge Randall Rader, co-authoring an opinion piece published by the New York Times in June, urged courts to impose more penalties.

The high cost of litigation often prompts companies to pay the patent owner even if they think it is a spurious claim, the GAO found.