Thursday, May 29, 2014

(BN) Musk Says SpaceX Reusable Capsule Could Ferry Astronauts by 2016

(Bloomberg )  Musk's Space Exploration Technologies Corp., the first private rocket maker to deliver cargo to the International Space Station, said its reusable capsule will be ready to take astronauts there within two years.

The closely held company's Dragon V2 spaceship can carry as many as seven people and as much as four tons of cargo, Musk said late yesterday at the SpaceX factory and headquarters in Hawthorne, California. It's also being designed with legs and re-entry rockets to let it land anywhere back on Earth, he said.

"We actually expect to be able to transport crew by 2016, a year before NASA needs it," said Musk, a 42-year-old billionaire who also leads electric-car maker Tesla Motors Inc. (TSLA) "We feel fairly confident we'll be ready."

The event comes as Musk fights to expand SpaceX's business with the U.S. beyond NASA missions and get a piece of the $67.6 billion Defense Department budget for satellite launches. SpaceX sued the Air Force last month, accusing the service of creating an illegal monopoly for that business.

United Launch Alliance, a joint venture of Bethesda, Maryland-based Lockheed Martin Corp. (LMT) and Chicago-based Boeing Co. (BA), has a lock on that work.

Since the retirement of the National Aeronautics and Space Administration's space shuttle fleet, Russia's Soyuz rockets are the sole method of getting astronauts into space. While Russia is currently charging as much as $76 million per mission, SpaceX intends to be able to deliver passengers for less than $20 million, Musk said.

"It's not only that the Russians are taunting us. They are massively overcharging," he said.

NASA Funding

SpaceX is one of four companies receiving NASA funding to develop rockets and capsules to take astronauts to and from the International Space Station. The others are Boeing, Jeff Bezos's Blue Origin LLC and Sierra Nevada Corp.

SpaceX has received more than $2.5 billion in NASA funding since 2008 for commercial crew and other ventures, including cargo supply flights to the space station, according to agency figures.

SpaceX won $440 million from NASA in August 2012 to develop a version of the Dragon capsule to carry passengers. Development costs for the company's first capsule and the futuristic V2 version displayed yesterday will run to as much as $1 billion to get NASA certification, Musk said.

Tests by the U.S. space agency to certify the V2 for astronaut missions begin this year, SpaceX said.

The California company sent its first Dragon craft to the International Space Station in May 2012 and its latest cargo mission was completed May 18 when a Dragon capsule returned to Earth carrying 3,500 pounds of cargo and scientific samples.

(BN) Technarians at the Gate: How Google Could Become Your Next Power Company

(Bloomberg ) The corporate campus of Vivint Inc., among North America's largest home-automation companies, rises up on the outskirts of Provo, Utah, a handsome sprawl of glass and gleaming white metal set against the snow-capped Wasatch Mountains.

On a recent day in a conference room of funk-modern furniture and floor-to-ceiling windows, Todd Pedersen, Vivint's founder, chief executive officer and seer-in-chief, had come to explain how he's steered what had been a burglar-alarm company into the electricity business, by plugging into the rooftop solar and digital energy-management revolutions.

The 45-year-old Pedersen could be in a commercial for the anti-CEO: the Lululemon workout shirt, the calculated stubble, piercing blue eyes and hair that looks like it's trying to escape from beneath the hip-hop-brimmed ball caps he often wears to work.

If you're a utility industry executive, you might want to take a good look at him. His company, bought by private equity giant Blackstone Group LP (BX) in 2012 for about $2 billion, is already stealing away some of your business -- and plans to steal a lot more. And Vivint isn't alone.

With more than 800,000 North American customers, Vivint is in the vanguard of what might be called Technarians at the Gate -- tech, cable, even phone companies -- that have begun to cast a covetous eye on the utility industry's customers and revenue by exploiting the portals that they already have into tens of millions of American homes.

Nest Acquisition

Google Inc. (GOOG) with its recent purchase of Nest Labs Inc.; Comcast Corp. with a pilot project to sell electricity with its cable packages; AT&T Inc. entering the smart thermostat business -- they and others are moving into positions that portend a challenge from companies with deep balance sheets to the 100-year-old regulated utility model.

In Silicon Valley, hotbed of startups that have upended entire industries, Peter Hebert, co-founder and managing partner of venture capital firm Lux Capital, sees "a proliferation of smaller startups all targeting this market."

"It helps," said Pedersen, sipping cold-pressed fruit juice, "that we're competing against an industry that isn't particularly evolving."

Vivint isn't the only one ready to pounce. "The battleground over the next five years in electricity will be at the house," said David Crane, CEO of NRG Energy Inc. (NRG), the nation's largest independent power producer, which competes against its conventional power customers with large investments in solar.

Inside the Meter

"When we think of who our competitors or partners will be, it will be the Googles, Comcasts, AT&Ts who are already inside the meter. We aren't worried about the utilities because they have no clue how to get beyond the meter, to be inside the house," said Crane, who has voiced ambitions to turn NRG into the of the U.S. energy industry.

While the financial impact to date of this incursion on utility industry revenues is negligible, the long-term implications are anything but. At stake is a chunk of the nearly $400 billion a year retail power market and the future shape of an industry already under pressure from deregulation, green politics, the rooftop solar revolution and growing competition from independently owned, small-scale clones of the electric grid called microgrids.

Technology is the driver. These interlopers now have the ability or potential to install, generate and harvest cheap rooftop solar, selling to both consumers and the utilities themselves. They are also learning how to deploy smart technology that can track and aggregate energy conservation from millions of homes and businesses.

Demand Response

Known as demand response, these savings are essentially a commodity that can be sold into the wholesale power market for a profit or sold back to the utilities themselves because it take the pressure off during peak-generating periods. It can also spare power companies the costs of building expensive new plants and transmission lines -- even as it steals utility revenue and curbs growth opportunities.

This isn't a small piece of pie. Though the idea of demand response has been around for decades, the ability to measure and harvest it digitally has given it new currency. Demand response has the potential to cut 10 percent off total U.S. peak demand by 2030 -- creating a market worth $3.5 billion, said Mike Gordon, CEO of Joule Assets Inc., a financier of energy efficiency and demand response projects based in Bedford Hills, New York.

Utility Threat

This won't happen overnight and "it will take both successful policy and gadgets to do it," according to Gordon, but the competitive threat to utilities from these interlopers is real.

The problem, from the utility viewpoint, is that profits are tied to a century-old model: A regulated monopoly that undertakes a steady expansion of power plants and distribution lines to serve an ever-expanding customer base. In exchange, it gets a guaranteed rate of return from regulators. Competition and disruptive technology do not fit well into that arrangement.

For consumers, the allure of the Technarians isn't simply lower electricity bills and a choice of greener energy but the ability, through digitally controlled interfaces and gadgets offered for a fee by these vendors, to intricately control electricity use in ways impossible before.

Vivint, for example, offers a home-automation module with computerized energy-saving features -- the ability to set thermostats, control appliances and remotely adjustment temperatures -- even as it doubles as a security system.

Comcast Electricity

Meanwhile, Comcast, the cable giant, is in a pilot project with NRG in Pennsylvania that adds electricity to its cable, phone and Internet packages. AT&T last year entered the home automation and security business in 15 markets; while not yet planning power sales, it has introduced a smart thermostat that puts it solidly in the home energy-management business. It could do what Comcast and Vivint are doing.

Google's $3.2 billion acquisition of smart-home startup Nest in February "ought to give utility officials a sinking feeling in the pit of their stomachs" since it makes clear the Technarians have begun to seriously eye at least the periphery of utility business if not its core, said Adrian Tuck, CEO of Tendril Networks Inc. a Boulder, Colorado-based energy-services management company.

Google Energy

While coy about its ultimate energy ambitions, Google is already a power generator through more than $1.4 billion in clean energy investments and holds a wholesale power license. Last month it contributed $100 million to a program to promote rooftop solar power with SunPower Corp.

Nest, maker of the Learning Thermostat that memorizes and adjusts to users' preferences, gives Google a leap-ahead presence in the burgeoning smart-home market at the precise time that power in the U.S. has begun to flow both ways with the rise of rooftop solar and other forms of decentralized, home-grown energy, collectively called distributed generation.

Though Tuck said he has no special insight into Google's thinking, he believes that its Nest acquisition may well be a "Trojan horse" that gives Google a back door into the utility industry with the ability to leverage its smart thermostats into massive quantities of salable demand response even as it begins to compete directly with utilities with its own green-power projects.

Google spokesman Tim Drinan declined to comment on Tuck's speculation.

Tuck's company Tendril is also doing a brisk business in advising regional cable, home-security and home-automation companies how to exploit this opening. He said the utilities he talks to feel constrained by tradition, phobia or regulatory uncertainties from wading in -- a mistake he likens to Eastman Kodak Co. being slow to join the digital camera revolution.

Airlines, Telecom

That utilities are under pressure from unprecedented forces is unquestionable. Last year, the Edison Electric Institute, a trade group representing the investor-owned utilities that accounted for 46 percent of U.S. power generated in 2012, warned in a report that the utility industry is in for a drubbing similar to what befell the airline and telecom industries in the 1970s unless it restructures its model for a greener, more digitally-and choice-driven age.

EEI said its utility members understand the dynamic and are working to address the competitive threat. "Customers today want more information about their electricity usage and how they can manage it better," said Lisa Wood, executive director of the Edison Foundation Institute for Electric Innovation. Many utilities are working to smarten the grid in ways that encourage efficiency and empower their customers. "In fact, utilities see these new technologies as an opportunity to really engage customers and provide benefits on both sides of the meter," Wood said.

'Ma Bell'

The problem for the utility industry, said James Marston, vice president for U.S. climate and energy for the Environmental Defense Fund, is that "these days technology is far outpacing the utility industry's movement toward change even though some progressive utilities are trying."

"Look what happened to Ma Bell," said Marston. "The appeal of technology plus control for the consumer is just too strong. I tell a lot of utility execs, 'you can embrace this or get run over by it.' We may not have flying cars yet but the Jetsons are here."

Smart Home

Pedersen's strategy for Vivint shows how this is already playing out even as he concedes it's a path far from his original business plan. A one-time Mormon missionary and Brigham Young University dropout, he founded Vivint as APX Alarm in 1999, hiring other past Mormon missionaries to go door-to-door peddling home burglar-alarm systems. These are people good at ringing doorbells -- as the $2 billion sale to Blackstone would attest. (Pedersen, according to a U.S. Securities and Exchange Commission filing, still owns 12 percent of Vivint.)

The price tag makes clear that he had steered the company beyond home-security systems. Pedersen early on recognized how the convergence of the Internet, broadband and digital smart gadgets was starting to make the smart home look like a profitably smart idea and thus Vivint bloomed into a provider of home-automation services.

Vivint was also hitting its stride as the rooftop solar revolution began to catch hold and –- ding -- a bell went off. For the first time, power was now moving two ways in America, not just from the power plant to the home or office. If you already have a digital entry into a customer's home, why not include electricity and energy management in your packet of services? After all, digital-age consumers have grown accustomed to a multitude of choices in gadgets and services. "We saw an opportunity in innovation," said Pedersen.

Vivint Solar

Thus was born Vivint Solar in October 2011. Vivint will send workers in bright orange trucks to your home to install a rooftop solar system for free. You sign a 20-year contract, agreeing to buy back the electricity your system generates at rates 20 percent to 30 percent below the local utility rates.

Vivint is able to make money because ever-cheapening solar-panel prices plus economies of scale allow it to take a markup between what you pay for electricity and what it costs them to generate it. One example of these efficiencies: Vivint can install a typical 6 kilowatt rooftop solar system in four hours, a job that just a few years ago took three days.

Because Vivint's customers are still tied to the grid, Vivint is able to also sell any excess power they generate back to the utilities under so-called net-metering programs by which state regulators mandate such purchases.

Monthly Services

Oh, and while Vivint has your attention, how about a smart energy-management system for $57.99 a month? With this, consumers can intricately control every conceivable facet of their home energy life. About 400,000 customers have so far signed up for this service, Pedersen said.

To date, Vivint Solar has customers in six states and the District of Columbia and in just two years accounts for nine percent of all rooftop solar installations, the company said.

"We want to do for the home what Apple did for the phone," said David Bywater, Vivint's chief operating officer. "Energy is a big part of that. The idea is to convince consumers that we can revolutionize the way we generate electricity yet do it for less than what you pay your local utility which, by the way, you hate and treats you horribly."

The problem is "the utility doesn't know how to sell anything," said Pedersen.

If you wander into the spacious Nest Labs offices in Palo Alto, California, you can at least get a hint at what prompted Google to pay billions for a company started in a garage about four years ago and what gets people like Tuck to speculate that Google has larger plans than simply the smart-home market. On a recent overcast morning, engineers were arriving on Google-themed bicycles, joining a bustling parade of jeans and t-shirt-wearing employees heading into the Nest skunk works.

Ex-Apple Designers

Google's view seems to be that Nest's founders, Apple iPod and iPhone designers Tony Fadell and Matt Rogers, have figured out how to do something that has baffled regulators and giant energy companies for decades: Make energy conservation cool, sexy and fun. "We finally built the object of desire," said Ben Bixby, director of energy products at Nest, of the Nest Learning Thermostat.

Nest already has hundreds of thousands of customers for its slick, colorful control module that learns consumers' heating and cooling patterns over time and makes automatic temperature adjustments based on that history. By buying Nest, Google overnight gains an impressive position behind the power meter -- while getting data on the growing number of customers whose energy use is tracked online.

While Google owns Nest, the thermostat maker doesn't co-mingle its data with its parent company and operates with an independent management team, Fadell said yesterday at Re/code's Code Conference in Rancho Palos Verdes, California.

Demand Response

This is where the ability to aggregate demand response -- and turn it into a business -- starts to get interesting. The company can profit on both sides of the meter. Demand response is utility jargon for conservation programs in which the electricity market relies on people, not power plants, to meet electricity demand.

Essentially, these programs pay consumers to use less power during peak periods instead of paying utilities to generate more power -- what some call negawatts instead of megawatts. Typically, utilities contract with third parties -- like Nest -- whose smart, in-home technology allows them to aggregate the collective energy savings of their customers.

Court Ruling

Although a U.S. appeals court ruled last week that utilities aren't required to pay industrial customers a rate for demand response equal to the cost of power generation, the ruling doesn't kill the demand-response market or prevent aggregators from selling their energy savings. More likely, it will shift the issue of how much this aggregated conservation is worth to state utility regulators.

As EEI points out, many utilities have demand response programs on their own but the Technarians say they tend to be blunt instruments -- programs pushed on consumers based upon generic premises such as turning off air conditioners in the hottest part of the day or turning down a thermostat before leaving for work.

Nest's approach has been to "pull" residents to conserve by making it technically effortless, Bixby said. When marketing its thermostats, you don't hear phrases like "home-energy management" and "demand response," he said. Instead, Nest talks about "delivering delightful experiences" and "maximizing comfort" and "minimizing bills."

Consumer Control

Rebates to customers are instant and participation in energy-savings programs is optional, said Nest's Bixby. The idea is give the consumer more control and cut down on the complexity of having to manage their utility bills.

"There are very few of our customers who think about what we are doing as energy management or energy management on behalf of the utility," Bixby said. "They think 'I want it to be 72 degrees here now and I don't want my air conditioner to be running when I'm not there.'"

Nest sees utilities as partners, not competitors, he said.

What Nest has that many rivals don't is "a good understanding of consumer psychology," said Rob Coneybeer, a managing director of Shasta Ventures and a Nest early investor. Managing energy in the home looked "like it was a market that had products that were sorely in need of innovation," Coneybeer said. "As a venture capitalist, you love it when technology is at a tipping point where you can disrupt a market where consumers have been massively underserved."

Looming Change

Yet Nest's revenue stream also comes from the utilities themselves. It has touted the ability to reduce energy demand of its users by more than 50 percent during the hottest days of the year, when power reserves start to dwindle and electricity becomes more expensive, Bixby said.

To date, utilities, including Edison International's Southern California Edison and Exelon Corp. (EXC)'s Commonwealth Edison now pay Nest for this service although the company declines to say how much money it makes from these contracts.

No one can say for certain how this will ultimately play out. The allure of the Technarians so far has been strongest in tech-savvy, solar-friendly, high-cost power states and less so in places where cheap power prevails and consumers have little interest yet in power choice or energy management.

Still, change is coming. "The next 10 years are going to change the electricity industry more than the past 100," said Patty Durand, executive director of the Smart Grid Consumer Collaborative, which counts utilities and Technarians among its members. "Consumers will be the recipient of attention instead of the way utilities have treated them for the past 100 years, which is as 'load.'"

(BN) BMW Sees China as Biggest Electric Car Market by 2019

(Bloomberg ) Bayerische Motoren Werke AG (BMW) predicts China will become the world's largest market for electric vehicles as more charging infrastructure is built and the government promotes cleaner cars to cut pollution.

China will reach that target in at most five years, said Karsten Engel, BMW's China head, at an event in Shanghai yesterday marking the automaker's collaboration with the city's municipal power company. As part of the partnership, the State Grid will build public charging points at the former World Expo site, one of 46 such areas the city is targeting by the end of the year where EV owners can power their cars, according to Fan Ye, general manager of electric vehicles at State Grid Shanghai.

"We expect that the Chinese car market for electro-mobility will become the largest markets for those cars in a few years," Engel told reporters after a ceremony in Shanghai yesterday. "Because you have supply now, there are cars coming on the market. We are coming with ours, others are coming as well."

BMW joins Volkswagen AG (VOW) among automakers betting on alternative-energy vehicles to fuel future growth in the world's largest auto market. VW plans to unveil more than 15 electrified models in China by 2018, Daimler AG (DAI) is building electric vehicles with Chinese automaker BYD Co. (1211) and Tesla Motors Inc. delivered its first Model S cars in the country last month.

The public charging points at the former Expo site in Shanghai will be compatible with EVs made by BMW and other brands, including BYD and SAIC Motor Corp., though not for Tesla's cars, according to Fan. Tesla has said it plans to install a large supercharger network in China.

China Sales

BMW expects to start selling its i3 in China in September, offering the model and the i8 in seven dealerships, Engel said. BMW will probably sell fewer than 1,000 units of the i3 this year in China because of a lack of supply, he said.

The Munich-based company will be "happy" to sell more than 400,000 cars in total in China this year, he said. The market will slow for the rest of the year after expanding faster than anticipated in the first four months, he said.

Five years after China began promoting new-energy vehicles, fewer than 70,000 are on its roads, lagging behind the central government's target of reaching 500,000 by 2015.

(BN) Fracking Sucks Money From Wind While China Eclipses U.S.

(Bloomberg ) U.S. President Barack Obama says natural gas can be a bridge from coal to a cleaner energy future.

Investors are showing it's more likely a bridge to nowhere.

The country's embrace of natural gas means less love for wind and solar. New investments in renewable energy sources declined 5 percent in North America last year to $56 billion, the lowest since 2010, according to Bloomberg New Energy Finance. By comparison, North American oil and gas companies spent $168.2 billion on exploration and production last year, more than double 2009, data compiled by Bloomberg show.

Fracking -- the process of blasting water, sand and chemicals into miles-deep shale rock to extract fuels -- has helped push U.S. natural gas production to new highs in each of the past seven years, according to the Energy Information Administration. It's also more expensive than traditional drilling and contributes to global warming, according to the U.S. Environmental Protection Agency. Renewables, which are getting cheaper, have lost support even as the United Nations warns that time is running out to stem climate change and China forges ahead with sustainable power.

"Everyone in Washington thinks gas is a savior, so Washington has been oblivious to the renewables revolution, but China hasn't been oblivious," said Hal Harvey, the chief executive officer of San Francisco-based Energy Innovation: Policy and Technology LLC, who has been appointed to energy panels by Presidents George H.W. Bush and Bill Clinton.

Money Tap

The shale revolution has brought the country closer to energy self-sufficiency than at any time in the last three decades, according to the EIA. It's also changed the way Americans invest, said James McDermott, managing director of the U.S. Renewables Group. He said his Los Angeles-based investment firm, which manages more than $750 million, is currently raising money only overseas.

Hydraulic fracturing, the technical name for fracking, has helped open the money tap for gas and oil. Since 2012, investors added more than $2.3 billion to the Energy Select Sector SPDR Fund, which tracks oil and gas companies. In the same period, investors withdrew $32.5 million from the Powershares Wilderhill Clean Energy Portfolio, the biggest exchange-traded fund tied to renewable-energy equities, according to data compiled by Bloomberg.

"There's absolutely no question that investors' dollars have moved from one to the other," said Bruce Jenkyn-Jones, a managing director at London-based Impax Asset Management Group Plc, which oversees about $4.2 billion.

White House

Even as investors have embraced fracking, more Americans tell pollsters they oppose the practice than support it, according to a September survey by the Washington-based Pew Research Center. It's true that windmills as tall as 40-story buildings are still sprouting in the Great Plains, and more solar panels are appearing on Americans' roofs, including at the White House. The U.S. is generating more power from these sources than ever before.

Yet the pace is slowing. Combined capacity for solar and wind power expanded 9 percent to 76,326 megawatts in 2013, down from a 30 percent increase in 2012, according to data compiled by Bloomberg.

And the use of fossil fuels still dwarfs that of renewables. Half of new power-plant capacity in the U.S. last year was natural gas -- 6,861 megawatts, according to the Energy Department. That's enough to provide electricity to the state of Massachusetts. It's also 25 percent more than the combined capacity additions for solar, wind, biomass and water power.

Solar Capacity

In China, it's a different story. Though the country burns more coal than any other, darkening the sky over its biggest cities, wind capacity expanded 21 percent to 91,412.9 megawatts in 2013, on top of 21 percent growth the year before, according to the Global Wind Energy Council. The country's solar capacity more than doubled in each of the past five years, according to Bloomberg New Energy Finance. Its capacity overtook the U.S. in 2013 and is now second in the world only to Germany, data show.

China is also turning to shale gas to lessen its dependency on coal. The country holds the world's largest potential reserves yet its technology is a decade behind the U.S., BNEF said in a report today. So China is spending as much as four times more than the U.S. to develop shale gas fields, according to the report.

Clean Energy

Chinese clean-energy companies already raised $1 billion in equity so far this year, 46 percent more than last year and 2 percent more than their U.S. rivals, data compiled by Bloomberg show.

U.S. clean-energy companies did raise an unprecedented $2.9 billion in equity last year. Yet fossil-fuels companies sold shares valued at more than 14 times as much, also a record, data compiled by Bloomberg show.

The country's oil and gas output are rebounding after decades of decline. Hydraulic fracturing and horizontal drilling helped the U.S. overtake Russia and Saudi Arabia to become the world's biggest combined producer of oil and gas last year, according to the Energy Department.

"Today, America is closer to energy independence than we've been in decades," Obama said in his State of the Union address in January. "One of the reasons why is natural gas -- if extracted safely, it's the bridge fuel that can power our economy with less of the carbon pollution that causes climate change."

Shale Supporters

Shale has its enthusiastic supporters in the oil patch, on Wall Street and in Washington.

The shale revolution is part of the never-ending American revolution, according to James Volker, the chairman and chief executive officer of Denver-based Whiting Petroleum Corp. That revolution is "here to stay," Ed Morse, Citigroup Inc.'s head of commodities research, wrote in the May issue of Foreign Affairs. And Senator Mary Landrieu, a Democrat from Louisiana, home of the Tuscaloosa Marine Shale formation, said at a March hearing that new discoveries in oil and gas, such as the one in the state where she faces a re-election battle this fall, rescued the country from an even deeper economic downturn and "fortified our national economy."

'Incredibly Competitive'

Renewables had their own, less widely celebrated breakthrough. The cost of photovoltaic solar energy dropped 56 percent in the past four years, according to calculations by Bloomberg New Energy Finance.

"Renewables got incredibly competitive," said Ted Brandt, chief executive officer of Marathon Capital LLC, a Chicago-based energy and infrastructure investment bank. "What the oil and gas business has done is pretty spectacular. It's not a well-told story but the renewables business is pretty amazing as well."

The success of shale drilling undermined political support for tax credits for renewable energy, Brandt said. Federal incentives expired in 2013, and wind farm construction plunged 92 percent, according to data from the Global Wind Energy Council.

Dwindling investment isn't the only obstacle to wind and solar power. The Audubon Society wants stronger rules to reduce wind farms' dangers to birds. States such as California regulate large-scale solar parks' effects on wildlife habitats.

And even as the gap narrows, wind and solar are still more expensive than natural gas. A megawatt-hour of solar power cost $139.25 last quarter, compared with $84.81 for wind energy and $84.21 for gas, according to Bloomberg New Energy Finance.

More Expensive

Cheap gas blunted the appeal of renewable energy, yet shale resources haven't stayed as inexpensive as they were. Natural gas fell to a 10-year low in 2012 because drillers looking for oil came up with gas, too, and created a glut. Since then, gas futures have risen 140 percent to $4.588 per million British thermal units; traders anticipate even higher prices next winter. In January, frigid weather and a temporary shortage caused spot prices in New York to spike as high as $99.66 per million British thermal units, data compiled by Bloomberg show.

Fracking is more expensive than traditional extraction methods. Shale gas costs between $3 and $10 per million British thermal units to get out of the ground, compared with as little as 20 cents to extract some conventional supplies outside the U.S., according to the International Energy Agency. One shale well, which bores horizontally through rock, can cost as much as $13 million, compared with as little as $1.5 million for traditional vertical drilling, according to data from Goodrich Petroleum Corp. and Hart Energy LLC.

Declines Faster

Shale production also declines faster than conventional supplies. When new drilling stops, gas output drops by about 50 percent in about three years, according to the IEA. That means production only grows by constantly drilling new wells.

There have been "several cases" of water contamination from faulty wells or improper disposal, the National Ground Water Association said in April. And leaks of methane, which traps 21 times more heat in the atmosphere than carbon dioxide, while extracting and transporting gas are as much as 75 percent higher than the U.S. Environmental Protection Agency estimates, according to a February study in the journal Science.

"There's a not very appealing scenario where we in the next decade feel very content with what is happening with shale gas in North America, while other countries, particularly the Chinese, are building up leading technology in renewables," said Wal van Lierop, CEO of Chrysalix Energy Venture Capital in Vancouver. "And suddenly, in the early 2020s, we in North America may realize that they own the technologies of the future."

Wednesday, May 28, 2014

Lunch Talk: (MIT) Problem Solving Process

This short video from an MIT engineering course provides a good example of a structured problem solving process when a problem situation is relatively simple.

tags: lunchtalk, problem, solution, process

Scalability Problem of the Day: Neural Networks

Deep Learning is the next frontier in computer science. After some initial breakthroughs, scientists and engineers are running into a major scalability problem: increasing the number of neurons doesn't improve a neural network's performance.

(MTR, 5/21/14) We found that if you put a lot of GPUs [specialized graphics processors] together we could make a much bigger neural network—10 billion nodes, with 16 machines instead of 1,000.

We used that same benchmark [images from YouTube videos] that the Google team did. But even though we could train a much larger neural net, we didn’t necessarily get a better cat detector. Right now we can run neural networks that are larger than we know what to do with.

This is a typical situation in Silicon Valley (I described in an earlier post). We are at a point where Machine 1 (exponential growth in computing power) is ahead of Machine 2 (Applications). Most likely, the next S-curve, i.e. a new growth cycle, will begin within the next 5-7 years.

tags: problem, scalability, constraint, machine1, machine2, silicon valley,

Tuesday, May 27, 2014

Invention of the Day: Teleprompter

The teleprompter made live TV programs possible because it allowed news anchors and performers to deliver long speeches without spending days and weeks memorizing them.

According to a Smithsonian article:
“For those that had been either in theater or the movies, the transition to television was difficult, because there was a much greater need for memorizing lines,” says Christopher Sterling, a media historian at George Washington University. “At the time, there was a lot more live television, which many people today tend to forget.” Instead of memorizing the same batch of lines over the course of months, Barton was now expected to memorize new lines on a weekly or even daily basis. Cue cards were sometimes used, but relying on unsteady stagehands to flip between them could sometimes cause catastrophic delays.

Here, we can see how a new media technology — "the TV world" — lead to a 10X increase in demand for live content. During radio broadcasts, announcers could read long texts from a written or typed page. By contrast, live television required direct eye contact with the audience. In short, a successful TV program required the best of both worlds: lots of fresh content to compete with the radio, and direct contact with the audience like in the traditional theater. The invention of the teleprompter solved this problem.

As usually the case with major innovation, teleprompter was rejected by the convention professional thinking:
Although Schlafly, Barton and Kahn pitched the device to 20th Century Fox, the company was not interested. They promptly quit the company and started their own, founding the TelePrompTer Corporation.

A major refinement of the original invention came from Jess Oppenheimer, who invented an in-camera teleprompter.

Since then, the teleprompter's been a fixture in television, movies and political speeches. It'll be with us until, probably, somebody invents a brain-machine interface suitable for imitating direct human speech.

tags: invention, innovation, 10X, trade-off, dilemma, problem, solution

Friday, May 23, 2014

(BN) Oculus, India, Sanrio, NFL, Vimeo: Intellectual Property

(BN) Oculus VR Inc., the maker of virtual-reality goggles that Facebook Inc. (FB) is acquiring for $2 billion, was accused by ZeniMax Media Inc. of misappropriating intellectual property it claims is worth billions of dollars.

Oculus wrongfully took copyrighted computer code, trade secrets and technical know-how and exploited it, according to a complaint filed May 21 by ZeniMax, a video-game maker, in federal court in Dallas.

"The lawsuit filed by ZeniMax has no merit whatsoever," Oculus said in an e-mailed statement. "As we have previously said, ZeniMax did not contribute to any Oculus technology."

The case is ZeniMax Media Inc. v. Oculus VR Inc., 14-cv-01849, U.S. District Court, Northern District of Texas (Dallas).


India Patent Lawyer Group Says Process Biased Toward Foreigners

India's Intellectual Property Rights Attorneys Association filed a public-interest case in the Madras High Court, claiming that foreign companies receive preferential processing of their patent applications compared with Indian applicants, the Times of India reported.


Hello Kitty Maker Sanrio's Targets Cut by Goldman Sachs

Sanrio Co. (8136), the maker and licensor of Hello Kitty goods, had its profit and share-price targets cut by analysts including Sho Kawano at Goldman Sachs Group Inc. because of a waning outlook for U.S. sales.

Kawano reduced the estimate for operating profit in the year ending March by 7 percent, citing costs related to a shift back to merchandise sales from a focus on licensing. Sanrio founder Shintaro Tsuji previously sought to reduce the reliance on marketing Hello Kitty goods by licensing character rights to companies that make items based on them.

"The changes are part of our effort to supplement the licensing business, which is our profit driver," said Hideo Yamaguchi, a spokesman for the company.

"We see little prospect of a rapid turnaround given that this is a transition period," Kawano wrote in a note to clients dated May 21. Kawano cut the price target for the Tokyo-based company to 3,200 yen ($31) from 3,800 yen.

Senator Tells NFL Trademark Cease-and-Desist Letter Is Laughable

U.S. Senator David Vitter, a Republican from Louisiana, has weighed in on the trademark dispute between a New Orleans restaurant and the National Football League, the Times-Picayune reported.

The senator sent NFL Commissioner Roger Goodell a letter in which he said the league's cease-and-desist letter to the owner of Phil's Grill over its Lom-Burger Trophy and "Burger Bowl" charity fundraisers didn't pass "the laugh test," according to the Picayune.

Vitter said he will begin offering T-shirts on his campaign website with an image of the Lom-Burger Trophy and the message "Who Dat Says we can't have fun for charity," according to the newspaper. "Who dat?" is a slogan chanted by fans of the NFL's New Orleans Saints.


Vimeo to Begin Screening User-Loaded Videos for Copyrights

Vimeo LLC, the video-streaming site owned by billionaire Barry Diller's IAC/InterActiveCorp (IACI), said it's putting a copyright-detecting system in place.

In a May 21 staff blog posting, the company said it will start monitoring what users post "to help us ensure that the videos on our platform follow our community guidelines when it comes to respecting the copyrights of other artists and creators."

Users who are informed that the copyright-detection system has found a match to protected content will have the option of removing the video, swapping its soundtrack with a track from Vimeo's music store or informing Vimeo that the work is used with permission or that the use comes under copyright law's "fair use" provision, according to the blog posting.

Vimeo said it's working with Audible Magic content-detection systems.

(BN) China’s Taste for Norwegian Salmon Boosts Air Shipments: Freight

(Bloomberg ) China's burgeoning middle class is eating more Western food and drinking more imported wine than ever, boosting shippers of salmon from Norway and Beaujolais Nouveau from France.

Finnair Oyj (FIA1S), Finland's biggest airline, could double shipments of salmon to China and Japan to 600 tons a week by 2020, from 300 tons currently, Juha Jarvinen, managing director at the cargo division, said in an interview in Tokyo. The fish are trucked in from Norway, which doesn't have direct flights with Japan or China, and flown to Asia, he said.

China, poised to overtake the U.S. as the world's biggest economy on a purchasing power parity level as soon as this year, is consuming more Western food and produce as the country's per-capita income is poised to double by 2020. The growing middle class is eating more Kentucky Fried Chicken, McDonald's Corp. burgers, and snapping up everything from Beaujolais to Dutch flowers.

"Demand for European goods is growing in Asia and for some categories fast air cargo is the only viable option," Mikko Ervasti, an analyst at Evli Bank Oyj in Helsinki, said by e-mail on May 16. China "is where they have volume growth and inflation, so it is definitely important for Finnair's operations and finances."

Growing Affluence

In absolute terms, China already has the world's largest middle class, defined by the World Bank as consuming between $10 and $100 a day. About 11 percent of China's population falls in that category, which still lags well behind Brazil and South Korea at similar stages of economic development.

China's urban middle class is forecast to grow to more than 75 percent of the population by 2022, compared with 4 percent in 2000, according to a June 2013 report by McKinsey & Co. By that time urban consumers will earn between 60,000 yuan and 229,000 yuan ($9,600 to $37,000) a year, the report said.

That growing affluence is spurring more imports of Western brands to China, the world's biggest buyer of luxury goods in 2012, employing sommeliers in wine shops and prompting the opening of more Carrefour supermarkets.

China is also increasing imports of flowers. The country imported 6,581 tons of cut flowers last year, an increase of 17 percent from the year before, according to Geneva-based International Trade Centre data.

Shipments of cut flowers to China from the Netherlands, the world's biggest exporter, rose 56 percent to 238 tons as it shipped roses and orchids, while Thailand was the biggest supplier to the world's most populous nation.

Shortest Link

Finnair, offering the shortest flights between Europe and northeast Asia, has said it aims to double flights to Asia by 2020. The airline currently flies to four cities in mainland China -- Beijing, Chongqing, Shanghai and Xi'an -- as well as Hong Kong and three cities in Japan -- Tokyo, Osaka and Nagoya, according to its website.

Finnair posted a net loss of 28 million euros ($39 million) in the quarter ended March 31 amid high fuel costs and a weaker yen, it said this month.

"Salmon is our biggest growing cargo," Jarvinen said on March 18. "We could double that with the increase in the middle-class in China."

Salmon costs more than twice as much as pork in Wal-Mart Stores Inc. (WMT)'s Beijing store, according to a company website.

Finnair, based in Vantaa, Finland, rose 0.7 percent to 2.96 euros at the end of trading in Helsinki yesterday. The stock has gained 6.9 percent this year.

China's economy was 87 percent of the size of the U.S. in 2011 based on a purchasing power, according to a statement last month from the Washington-based International Comparison Program, which involves organizations including the World Bank and United Nations.

Beaujolais Nouveau

Projecting growth rates from 2011 onward suggests China's size when measured in PPP may surpass the U.S. in 2014, according to Arvind Subramanian, a senior fellow at the Washington-based Peterson Institute for International Economics.

While fish is also the biggest food export to China by Air France-KLM Group, France also ships crates of Beaujolais Nouveau annually to coincide with the release of the new vintage, Jean-Claude Raynaud, a spokesman for the company, said by e-mail on May 20.

China, the world's second-largest economy, bought more than 200,000 bottles of Beaujolais Nouveau in 2012, making it the world's sixth-biggest market, ahead of Switzerland, Italy and the U.K., according to figures from Ubifrance, based in Boulevard Saint-Jacques, France, the nation's export promotion agency.

The wine is flown to Asia from France ahead of the release date at midnight on the third Thursday of November, when shops and restaurants are allowed to start selling it.

'Brand Conscious'

Total consumption of wine has also jumped recently, increasing 59 percent between 2008 and 2011, according to figures from the Wine Institute, based in San Francisco, which is an advocacy association for California wineries.

Carrefour SA, France's largest retailer, is focusing on growth in China as well as Latin America and Europe. The Boulogne-Billancourt, France-based company opened three hypermarkets in China in November and announced another five in January.

"It's not a secret that the Chinese are quite brand conscious, especially the more affluent parts of the demographic," Andrew Orchard, a Hong Kong-based analyst at CIMB Group Holdings Ltd. said by telephone on May 20. "Food itself is a big thing. You can look at any type of luxury or expensive food and you will be seeing a pick up."

(BN) Google, UNLV, Geller, David Bowie: Intellectual Property

(Bloomberg ) A future version of the Google Inc. (GOOG)'s wearable Glass device will look a lot more like conventional eyeglasses, according to diagrams accompanying a patent issued to the Mountain View, California-based search engine company.

Patent 8,705,177, issued in April, covers what Google called an "Integrated near-to-eye display module."

This device features two cube-shaped display modules mounted on glass frames at the top center of each lens. They project images directly into the user's eye.

Google says the modules provide computer-generated images with lower power consumption, lighter weight, reduced cost and greater ease of manufacturing than conventional head-mounted displays.

The company applied for the patent in December 2011.

Student Inventors Hope to Patent Casino Games Developed in Class

Students enrolled in a gaming innovation class at the University of Nevada at Las Vegas are filing patent applications for some of the casino games they invented in the course, the Associated Press reported.

The class was offered for the first time last autumn. More than a dozen student inventions are working their way through the patent process, the news service reported.

One aim of the program is the sale of successful games to casino companies, according to AP.

Patent Office Seeks Dismissal of Disgruntled Inventor's Suit

The U.S. Patent and Trademark Office asked a federal court in Nevada to dismiss a lawsuit brought by an inventor whose applications have been with the office for 35 years.

The patent office said in a May 12 filing that Gilbert P. Hyatt's claims "were not ripe." The inventor "has alleged agency inaction when he has in fact received action," according to court filings. The office also said the court doesn't have jurisdiction over the issues Hyatt raised.

The Nevada-based inventor sued Jan. 3 claiming the patent office "unreasonably delayed" final action on applications he filed in the 1970s. He asked the court to place a strict deadline on the office for decisions on the two applications.

"Several years ago the PTO apparently determined that it would refuse to grant Mr. Hyatt any further patents, irrespective of the merits of his patent applications," according to Hyatt, who has more than 70 issued patents.

In its filing, the patent office said Hyatt had known that it considered one of the applications abandoned in 1963 and he never filed appropriate documents to undo that abandonment and resume examination.

The office also said the appropriate forum for cases such as his is a federal district court in Virginia or the U.S. Court of Appeals for the Federal Circuit, which specializes in patent matters.

The case is Hyatt v. U.S. Patent and Trademark Office, 14-cv-00011, U.S. District Court, District of Nevada (Las Vegas).


N.Y. Mosque Opponent Loses Appeal of Anti-Islam Trademark Denial

Pamela Geller, one of the leaders of a campaign to bar the construction of a mosque near the site of the former World Trade Center, lost her appeal of a patent office ruling denying her registration of "Stop the Islamisation of America" as a trademark.

A federal appeals court said May 13 that it agreed with the patent office's Trademark Trial and Appeal Board that the phrase could not be registered because it was disparaging to Muslims.

In a posting on her "Atlas Shrugged" blog, Geller characterized the court's ruling as "ongoing evidence" of how "the courts bend over backward to kowtow and placate Muslim sensitivities."

The case is In re Geller, 2013-1412, U.S. Court of Appeals for the Federal Circuit (Washington).


License for Astronaut's Cover of Bowie's 'Space Oddity' Expires

The license for a cover version of David Bowie's "Space Oddity," which was performed in outer space and beamed back to earth by Canadian astronaut Christ Hadfield and seen by more than 22 million views on Google Inc.'s YouTube, expired May 13 and was to be taken down, the Washington Post reported.

Hadfield filmed it during his six months in the International Space Station last year and, after negotiations, received a one-year license for the song, according to the Post.

Trade Secrets/Industrial Espionage

OSU Mum About Details of Contracts With Nationwide, Hat World

Elements of Ohio State University's contracts with Nationwide Mutual Insurance Co. and Genesco Inc. (GCO)'s Hat World unit have been withheld from public release on the grounds that they are trade secrets, the school's student newspaper, the Lantern, reported.

This information, including signing royalties and guaranteed annual royalty, was redacted in contracts released to the Lantern under public-records requests.

These contracts are different from contracts the school has with Coca-Cola Co. (KO) and Nike Inc. (NKE) that disclose such information, the Lantern reported.

A school spokesman, Gary Lewis, told the newspaper that each contract is different and that each is reviewed for trade-secret exemptions before it is release to the public.

Thursday, May 22, 2014

(BN) The Musk Show in Washington Roils Rivals as Fans Applaud

(Bloomberg ) It's been quite a show since Elon Musk arrived in Washington, picking fights with competitors, suing the world's largest military and jumping into a U.S.- Russia dispute that may risk international space cooperation.

The chief executive officer of Space Exploration Technologies Corp., which is seeking to break into a roughly $70 billion Pentagon satellite launch market, operates outside the traditional ways of seeking influence and building relationships in the nation's capital.

While Musk might be in danger of alienating federal contractors and agencies, the 42-year-old billionaire's efforts to spur competition and cut government costs have won support among lawmakers and an advocacy group.

"A lot of people would look at that and say, 'You're biting the hand that feeds you,'" said Scott Amey, general counsel at the Project on Government Oversight, a Washington-based nonprofit group. "But he's been shut out of the launch business. I applaud them for thinking out of the box and taking any advantage possible to break into the government's launch business.

SpaceX, based in Hawthorne, California, became the first to dock a private, unmanned supply ship at the International Space Station in 2012. It is one of several companies developing vehicles capable of transporting astronauts, which is designed to end the U.S.'s reliance on Russia for those rides.

'Wrong Time'

Musk's push into the military launch market helped ignite one of the biggest public feuds between contractors in years.

In March, Musk, who's also the CEO of Tesla Motors Inc. (TSLA), told members of Congress that military satellite launches may be at risk because a joint venture of Lockheed Martin Corp. (LMT) and Boeing Co. (BA), the top two federal contractors, relies on Russian rocket engines.

Musk criticized both the venture, United Launch Alliance LLC, and the Air Force. "In light of international events, this seems like the wrong time to send hundreds of millions of dollars to the Kremlin," he told reporters April 25 at the National Press Club.

At the same time, he announced that SpaceX would sue the Air Force. The lawsuit, filed three days later, accused the service of creating an illegal monopoly.

Rocket Engines

The Air Force's top uniformed acquisition official said the service is spending about $60 million and using as many as 100 people to certify SpaceX for the launches. "We've got folks busting their butt to get SpaceX certified despite what everything in the media seems to say," Lieutenant General Charles Davis said in a May 8 interview.

Matthew Stines, an Air Force spokesman, declined to comment on Musk, citing the lawsuit.

Russia said last week it will no longer export rocket engines to the U.S. for military launches. Russian Deputy Prime Minister Dmitry Rogozin also said the country will withdraw cooperation from the space station after 2020.

Rogozin was among the Russian officials singled out for U.S. economic sanctions over his country's takeover of Crimea from Ukraine.

United Launch Alliance, which has spent the past several months defending itself, went on the offensive after Rogozin's comments were reported May 13.

'Big Boys'

"If recent news reports are accurate, it affirms that SpaceX's irresponsible actions have created unnecessary distractions, threatened U.S. military satellite operations, and undermined our future relationship with the International Space Station," its spokeswoman, Jessica Rye, said in an e-mail last week.

Musk's actions may hurt SpaceX's relationships with big contractors, the Defense Department and the National Aeronautics and Space Administration, said James Thurber, director of the Center for Congressional and Presidential Studies at American University in Washington.

"When you start pushing big boys around, people may not get mad, but they'll get even," Thurber said. "Doors will close, and it will make it much more difficult for him in the advocacy world."

In federal contracting, though, SpaceX may be able to afford to make a few enemies. It builds its own rockets, engines and spacecraft -- and doesn't need to partner with big contractors, said Jeff Foust, a senior analyst at Futron Corp., a Bethesda, Maryland-based consulting firm specializing in aerospace and technology.

Business Relations

"Among the big aerospace companies, the company you're competing against today you might be partnering with tomorrow," he said. "SpaceX isn't like that. They're not jeopardizing any conceivable business relationship that they might have."

Musk has a history of needling those who stand in his way.

In a blog post, Musk criticized New Jersey Governor Chris Christie after the state said in March it wouldn't allow Tesla to sell electric cars directly to the public.

"The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures 'consumer protection,'" Musk wrote. "If you believe this, Gov. Christie has a bridge closure he wants to sell you!"

Musk has suggested that Orbital Sciences Corp. (ORB) deserves fewer missions to supply the space station. Unlike SpaceX, Dulles, Virginia-based Orbital delivers cargo to the station using a one-way spacecraft that burns up on its return.

"They take up less than we do and they take nothing down, and they get paid twice as much per mission as we do," Musk said in an April presentation at the U.S. Export-Import Bank's annual conference in Washington.

'Discover Unicorns'

As for Blue Origin LLC, founded by Inc. (AMZN) CEO Jeff Bezos, Musk said last year he didn't believe the company would develop a spacecraft capable of carrying astronauts within five years. "Frankly, I think we are more likely to discover unicorns dancing in the flame duct," he told the Space News website in a September 2013 e-mail.

When asked about Musk's comments, Orbital CEO David Thompson said in an April interview that his company would be competitive with SpaceX, especially after its pending merger with Alliant Techsystems Inc. (ATK)

Brooke Crawford, an account director for Griffin Communications Group, which coordinates Blue Origin's media relations, declined to comment. A NASA spokesman also declined to comment for this article.

'Certainly Entertaining'

Most big contractors aren't accustomed to fighting battles publicly, said Jim Maser, a former SpaceX president and former vice president of Rancho Cordova, California-based GenCorp Inc. (GY), which owns Aerojet Rocketdyne, a maker of rocket engines.

"The traditional organizations are trying to learn quickly and trying to adapt," Maser said. "I don't know how it's going to play out, but it's certainly entertaining."

SpaceX is spending more for Washington influence, with its lobbying almost doubling to $1.1 million last year from 2010, according to the Center for Responsive Politics, a Washington-based research group.

In his fight for the military launches, Musk has found allies among U.S. lawmakers who want competition in the market.

"It's very clear they made a commitment to increase competition, and then the Air Force reversed itself," Arizona Senator John McCain, the top Republican on the Homeland Security and Governmental Affairs investigations subcommittee, said in an interview. "It just doesn't seem right to me."

Asked whether Air Force officials might retaliate against Musk following SpaceX's lawsuit, McCain said that one of his jobs is "to make sure they don't."

Tuesday, May 20, 2014

(BN) Apple, Google Shaped by Silicon Valley Judge Koh’s Gavel

(Bloomberg ) Lucy H. Koh's fingerprints are on your Gmail account, your smartphone, and, if you're a Silicon Valley engineer, possibly your prospects for changing jobs.

Koh, the California federal judge overseeing the three-year patent battle between Apple Inc. (AAPL) and Samsung Electronics Co. (005930), has so far thwarted the iPhone maker's bid to keep Galaxy phones off the market. Now, after a jury found early this month that both companies infringed patents, the firms are poised to take new runs at persuading Koh to order sales bans on the other.

Koh also has made a mark presiding over privacy suits against Google Inc. (GOOGL), LinkedIn Corp. (LNKD) and Yahoo! Inc. (YHOO) In March, she blasted Google's privacy policy as vague and possibly misleading. Not long after, Google changed its terms.

Koh's ascent to influence in Silicon Valley has been swift. The 45-year-old daughter of Korean immigrants was nominated to the federal bench by President Barack Obama in 2010, making her one of the youngest appointees among more than 600 active federal judges and the first Korean-American U.S. district court judge.

Decades after the dawn of the Internet -- and 20 years into the age of the Web and ecommerce -- Koh is attempting to reconcile wiretap laws written in the landline-phone era with users' concerns about how companies use the troves of data generated when people send e-mails and surf online. No other judge has broken so much ground, lawyers and scholars say.

"Hot Seat"

"She's more on the hot seat on questions of Internet technology and business models, and their impact on consumer privacy, than any other judge in the U.S. today," said Tracy Beth Mitrano, director of the Internet Culture, Policy and Law Program at Cornell University.

It is Koh's seat on the federal bench in San Jose, with jurisdiction over Silicon Valley, that positions her to hear such cases. In federal courts, cases are generally assigned at random, so it was largely by chance that so many closely watched suits were assigned to her from among San Jose's handful of federal judges.

If luck is the residue of design, there is little accidental about Koh's journey to the bench.

Koh progressed quickly from Vicksburg, the Mississippi town where she worked in her father's wig shop, to undergraduate and law-school degrees at Harvard University. In 2000, at the technology boom's peak, she left Los Angeles -- where she had served for three years as a federal prosecutor -- and relocated to Silicon Valley.

Technology Cradle

The move brought her closer to her grandparents, and to a cradle of technology. Working at two law firms, she represented local companies and focused on intellectual property.

With more than 350 civil and criminal cases on her docket at times, Koh has shown little patience for lawyers who pile on paperwork. Amid a smartphone technology trial in 2012, she toldBill Lee, a lawyer representing Apple, that he should know better than to submit 75 pages about witnesses who weren't testifying -- "unless you're smoking crack."

"We're wasting the jury's time because you all are being unreasonable," she said.

The crack comment, which she and Lee joked about in court the next day, leavened a proceeding in which Koh has been watched for how she has applied legal theories to a patent battle with big implications for sales.

Patent Battles

In Apple's first U.S. patent-infringement suit against Samsung, filed in 2011, Koh rejected Apple's requests to ban sales of Samsung's phones -- even after the iPhone maker won a jury verdict finding that Samsung had infringed six of its patents.

The legal basis for her decision, Koh explained, was that Apple failed to draw a close enough connection between Samsung's infringement of patented features, and the sales Cupertino, California-based Apple claimed it had lost.

An appeals court said Koh had set the bar too high and urged her to reconsider. Koh held her ground. In March 2014, she again said Apple hadn't marshaled enough evidence to win a sales ban.

While many of the phones in question have already been phased out, Apple has said that Suwon, South Korea-based Samsung has sold tens of millions of Galaxy phones that use similar technology. Apple and Samsung are the world's top two smartphone vendors, according to the International Data Corp., which expects global shipments to reach 1.2 billion smartphones this year, from 1 billion last year.

As she has considered sales bans, Koh showed a preference for preserving commerce over curbing the public's choice of devices, said Brian Love, a law professor at Santa Clara University. Taking a phone off the market for infringement of what may be relatively minor features would represent a "gross mismatch between the patent owner's award and its actual contribution to society," he said.

"Vague at Best"

Meanwhile, Koh is at the center of discussions with potentially broad repercussions, over whether big Internet companies are violating users' privacy.

Plaintiffs suing Mountain View, California-based Google said the Internet search giant didn't make clear that it electronically scans messages to build user profiles and create targeted advertising. Google argued that e-mail users understand and accept that the company does such scanning and said its terms of service shielded it from liability.

Koh disagreed. Google's privacy policies, she said in September, weren't clear enough.

In March, Koh scrutinized Google's procedure for gaining consent from students who use the company's e-mail through their schools. Google's privacy policies are "vague at best and misleading at worst," she said, adding they could "actively obscure Google's interceptions" of e-mail content.

Spelling It Out

Not long after, Google said it would stop scanning some e-mails -- not only those sent through Apps for Education, used by more than 30 million students, but also messages sent by its business and government customers.

While Google would continue scanning the messages of general users of its Gmail service, it amended its terms of service to spell out its scanning regime.

"Our automated systems analyze your content (including emails)" to help provide personalized ads and search results, its newer terms of service read. "This analysis occurs as the content is sent, received, and when it is stored."

While some privacy experts say they are waiting for more evidence that Google isn't otherwise profiling student, government and business users, they credit Koh's rulings for bringing the issue to light.

Exposing Google

"The Google policy shift is a really big deal," Chris Jay Hoofnagle, a law professor at the University of California at Berkeley, said in an e-mail. "This lawsuit exposed Google's scanning and stopped it."

Google, in a statement, said the recent changes were "a continued evolution of our efforts" to serve users, including students.

Also in March, Koh refused to grant class-action status to the suit against Google, giving the company a tactical advantage. Hundreds of millions of privacy plaintiffs, unified behind one group of lawyers with pooled resources, would have had great leverage against Google. Koh said lumping different types of users together like that would be too unwieldy.

Still, privacy experts say they were encouraged when Koh expressed enthusiasm to have a jury hear plaintiffs' concerns about Google's alleged wiretap violations.

"This case raises really important issues," she told lawyers at an April 24 hearing in the case. "It's been hard fought. You know, if you want to see it to the end, I'm right there with you."

20 Boxes

Koh also presided over an antitrust suit in which workers alleged that Apple, Google, Intel Corp. (INTC) and Adobe Systems Inc. (ADBE) conspired to suppress salaries by not recruiting one another's workers. Late last month, the companies agreed to pay $324 million to settle claims.

In order to review e-mail messages between Silicon Valley chiefs discussing non-poaching agreements, Koh and her staff combed through more than 20 boxes containing 3,000 pages of documents each, said lawyers familiar with the case. Many judges take attorneys at their word about the nature of such evidence, these lawyers said.

Such intensity is typical of Koh, say those who know her.

At Harvard, she organized rallies to push the school to hire minorities and women as professors. The interest stemmed from her experience growing up as the only Asian-American in all-black, all-white and integrated towns and cities in Mississippi and Oklahoma, according to an article she wrote in a 1995-96 law-school publication.

Left, Right

In Silicon Valley, Koh was a senior associate at Wilson Sonsini Goodrich & Rosati PC in Palo Alto before moving to McDermott Will & Emery in Menlo Park. As a McDermott partner, Koh became the "go-to person" for important motions, said Vera Elson, a Wilson Sonsini partner who worked with Koh at both firms.

In 2008, California's then-governor Arnold Schwarzenegger, a Republican, appointed Koh to the state court in San Jose. Two years later, Obama nominated her the federal bench. With several left-leaning internships under her belt and recommendations from Republican Governor William Weld and Patriot Act co-author Viet Dinh, the Senate confirmed her 90-0.

Koh lives in a home on the campus of Stanford University with her husband, Mariano-Florentino Cuellar, a professor at the university's law school, and their two children. Cuellar described 2012 as "enormously challenging" for the family as Koh's father was ill with cancer.

His stomach was removed, and on Aug. 24, the day the jury in the first Apple-Samsung trial delivered its verdict, Koh was told by the doctors that her father was terminally ill. He moved into the Koh's living room and died about a month later.

After each day of the patent trial, Koh came home to spend time with her father and children and would then "plunge back into work," Cuellar said. She didn't tell lawyers in the case about her father and didn't consider pausing the trial, he said.

"She was very determined to do her duty," he said. "You want to do your best, and you want to deliver justice on time."

Thursday, May 08, 2014

Invention skills are very similar to wisdom

Today I learned that:

In recent years wisdom has received much scientific attention in psychology. It can be defined as expertise in coping with difficult or unsolvable life problems.

Wisdom is a multidimensional psychological construct, including dimensions like
(1) change of perspective,
(2) empathy,
(3) perception and acceptance of emotions,
(4) emotional serenity,
(5) factual knowledge,
(6) procedural knowledge,
(7) contextualism,
(8) value relativism,
(9) uncertainty acceptance,
(10) long-term perspective,
(11) distance from oneself and
(12) reduction in level of aspiration.

Wisdom can be learned and taught (source: DOI: 10.1159/000321580)
Practically, all items on the list apply, except #12. Inventors must have aspirations to change the world.