Saturday, September 27, 2014

(BN) Apple Seeks to Defeat Wi-Lan’s Patent Claims Before Trial

(Bloomberg ) Apple Inc. (AAPL) asked a federal judge to rule that its iPhones and iPads don't infringe two patents owned by Wi-Lan Inc. (WIN) ahead of a trial scheduled in November on the Canadian technology licensor's claims.

U.S. District Judge Dana Sabraw in San Diego didn't issue a decision at a hearing today on Apple's request. The judge told the companies' lawyers he will issue a ruling in two to three weeks.

Today's hearing comes almost a year after Wi-Lan lost a jury trial in Texas in which it sought $248 million in royalties from Apple for alleged infringement of another one of its patents. The companies have been in court in California, Florida and Texas for seven years over Wi-Lan's claims.

Apple, which this month unveiled its new, larger-screen iPhone models, has said in court filings that Wi-Lan has a history of asserting patents in bad faith and hasn't prevailed against Apple in any of the five lawsuits it has brought so far, the latest in June.

If Sabraw finds that Apple's products don't infringe the two Wi-Lan patents, the case will effectively end before it goes to trial. Apple said the patented technology pertains to prioritizing connections for allocating bandwidth and isn't relevant to its products because they don't have multiple connections that require prioritizing.

Wi-Lan Attorney

Dirk Thomas, an attorney for Wi-Lan, told the judge that Apple is deliberately misconstruing the specifics of the patents in order to avoid allegations of infringement.

"There is no requirement for multiple connections," Thomas said at today's hearing.

Ottawa-based Wi-Lan, which gets all its revenue from licenses for its patents, fell 23 percent the day after it lost the Texas verdict last year.

In that case, the judge in March threw out the jury's findings that two Wi-Lan patent claims weren't valid and declined to throw out the non-infringement verdict. Wi-Lan appealed in April.

The company said after that loss that it would explore "strategic alternatives" including a sale of the company.

The case is Wi-Lan USA Inc. v. Apple Inc., 13-cv-00798, U.S. District Court, Southern District of California (San Diego).

Monday, September 15, 2014

(BN) Why Musk Is Building Batteries in the Desert When No One Is Buying

(Bloomberg ) Tesla's planned 5-million-square-foot 'gigafactory' wouldn't just be the biggest battery factory in the world. It would be one of the biggest factories in the world, period. But hours before CEO Elon Musk took the podium last week to tout the $5 billion facility came August sales numbers for electric vehicles and a spate of news stories about how U.S. interest for electric cars has stalled.

So what gives? Why would Tesla build capacity for half a million car batteries a year if no one is buying? Four charts below tell the story.

First the bad news.

August brought another month of electric-car sales that came up short of previous highs. Interest isn't falling, but at four percent market share for combined sales of hybrids and plug-ins, people aren't exactly clamoring for them. The dark blue shows hybrids, the light blue shows anything with a plug; stack them together and you've got what's known as the electrified-vehicles market.

But here's the thing: the "stall" is happening entirely in the category of plugless hybrid vehicles (shown above in darker blue). These are gasoline engines backed by fuel-saving battery drive systems. The batteries are primarily nickel-metal hydride like those found in the standard Toyota Prius -- not the high-efficiency lithium ion batteries that Elon Musk wants to crush the market with.

Here's what's happening in the smaller subset of cars that don't require liquid fuel to roll:

Time to plug in.

The rise of the plug-in has been fast, but the category is still diminutive. Most car trackers put plug-in sales at a fraction of a percent of U.S. vehicles sales. But just as it's misleading to lump in growth with hybrid gas cars, comparing plug-ins to all vehicles on the road isn't apples to apples. Plug-in SUVs are only just starting to hit the market.

Quiet, but with great acceleration.

For 2014, plug-ins average 1.5 percent of cars sold in the U.S. That's still not a lot, and the trendline for market share appears more incremental than exponential. At this rate, plug power wouldn't be the dominant form of fuel until the end of the century.

And that excludes the ever-popular SUV category. The BMW i3 and the Mercedes-Benz B Class are still rolling out. Tesla and Toyota recently ended their collaboration on a $50,000 plug-in version of a RAV4 after just 2,000 units sold in two years. Like the Nissan Leaf, the RAV4 was hampered by a limited battery range: 100 miles. Musk told reporters in Tokyo last week that he envisioned a larger project with Toyota than the RAV4 "maybe two or three years from now."

Tesla's first SUV, the Model X, is set to go on sale in the first half of next year, complete with a third row, space-age falcon doors (pictured above), all-wheel drive and little compromise on the Model S's 265-mile range. Here's a sneak peak of pre-orders for the Model X, based on self-reported waitlist numbers tracked on a Tesla Motors Club forum (Tesla doesn't release pre-order tallies). A reservation for the luxury Model X requires a $5,000 deposit.

Americans heart SUVs.

These reservation numbers are significantly higher, and picking up faster, than reservations of the Model S prior to its June 2012 ship date.

Still, to justify the gigafactory, it would take additional market forces to bend the curve skyward on plug-in market share. That's exactly what Tesla is working on. The biggest obstacles to plug-in adoption are availability of charging stations, range, charge time and cost. Here's where those things stand:

Charging stations: By the end of the year, there will be more than 5,000 electric charging stations operating in the U.S., according to the U.S. Energy Department. In the first half of 2014, more stations were opened than from 1970 to 2011 combined.

Range: Drivers want to know they can make their daily commute, get stuck in unexpected traffic and stop by the store for some emergency pickles without having to worry about being stranded. The best-selling Nissan Leaf, at $30,000, leaves room for worry with its 84-mile average range. The high-end Tesla Model S, at more than twice the price, has an EPA-rated range of 265 miles. That's a lot of pickle stops.

Charge time: Home charging of a Tesla is still a commitment at 58 miles per hour of charge. The Tesla Supercharger stations, on the other hand, get 170 miles in 30 minutes. Musk has opened up the system's design for other carmakers to adopt.

Cost: Tesla hasn't released the official price tag for the Model X, but it's expected to be in the same luxury range as the Model S, which starts at $60,000 for a version with smaller battery. Bringing down the cost of batteries will be key to plans for a more-affordable Model 3, still years away from market. Musk estimates the gigafactory will reduce the cost of lithium-ion battery capacity by 30 percent.

Musk's diamond factory.

Last week, Tesla released sketches of the future plant. It's powered by renewable energy and shaped like a diamond. So why has Musk designed a gigafactory to produce batteries for half a million cars a year (twice the number that's been put on the road by all companies combined)? Because it's increasingly looking necessary.

Deutsche Bank analyst Rod Lache last month increased his estimate for sales of the Model S and Model X to 129,000 units in 2017, from a previously estimated 83,000. Tesla can reach its 500,000 annual run rate before the end of the decade, Lache said, in time to put the gigafactory to full use.

Tesla's growth will be "much steeper, their mix will be much richer, and their costs will ultimately be much lower than we previously assumed," Lache wrote in a report on Aug. 11.

This doesn't mean you should rush out and buy Tesla stock. Just 11 out of 20 analysts tracked by Bloomberg give the company a "buy" rating, and the stock price is 261 times estimated earnings, compared with a 12.5 estimated P/E for Ford Motor Co. Even Musk admitted last week that the stock price is "kind of high" right now.

Still, it's easy to get caught up in Musk's vision for the future of cars. Defying skeptics, Musk has established the biggest U.S. solar company by market value, built a private space company that's making deliveries to the International Space Station, and has conjured a $35 billion car company out of thin air. 

(BN) Google Driverless Future Vision at Odds With Automakers

(Bloomberg ) Google Inc., with its vision for a future where cars drive themselves, is putting itself at odds with an auto industry that shares its desire for safer, less-congested roads -- yet won't abide the "driverless" part.

The clash pits the Internet giant, public for barely a decade, against companies that spent a century building the machines that put people behind the wheel of autos. As Google works to perfect a system in research labs and road tests to minimize the involvement of drivers, automakers spend billions of dollars annually on ads to do the opposite. Think BMW and its claims to the Ultimate Driving Machine, or Volkswagen and its Drivers Wanted sales pitch.

The differences are more than philosophical.

Google is sweeping up top talent and research, powered by an almost $400 billion stock-market value that tops those of Toyota Motor Corp., Volkswagen AG and General Motors Co. combined. It's also keeping a tight grip on its mapping data and potential marketing plans for cars while helping to create what many in the auto industry consider unrealistic expectations for how quickly cars can safely become wholly driverless.

"Clearly there's some sort of tension there," said Richard Wallace, director of transportation systems analysis at the Center for Automotive Research in Ann Arbor, Michigan. Google's splashy displays of technology "lead to expectations creep that's probably unrealistic in some ways," he said.

Google's aloofness was on display at last week's Intelligent Transport Systems World Congress in Detroit. The search giant had minimal presence at the annual event where automakers hash out standards for the technology that would keep, at the center of it all, the driver.

The 'G-Word'

Within the industry, Google is sometimes the unmentionable presence in the room -- the "G-word," as Wallace jokingly called it at a conference last month in Traverse City, Michigan.

Among the advancements automakers announced at last week's conference in Detroit was GM's "Super Cruise" system for 2017 Cadillacs, which will let drivers take their hands off the steering wheel and feet from the pedals for periods of highway driving. Like technology being developed by Toyota, Honda Motor Co. and other companies, GM's system hands control back and forth between driver and vehicle.

The approach that Mountain View, California-based Google is taking is, literally, much more hands-off. In May it unveiled plans to deploy at least 100 fully autonomous, two-seat, egg-shaped test cars with a top speed of 25 miles (40 kilometers) per hour and no steering wheel. Google has since said it will include one, as well as brake and gas pedals, as California requires.

Google Talent

Aided by early staffing with top Stanford and Carnegie Mellon University scientists who won a U.S.-backed driverless vehicle challenge in 2005, Google recruited dozens of robotics and artificial-intelligence researchers, and is adding more.

Google has won or applied for 96 autonomous-driving patents since 2011 and has hired talent from Toyota, Bayerische Motoren Werke AG, Daimler AG's Mercedes-Benz and even Silicon Valley upstart Tesla Motors Inc., according to LinkedIn profiles. For high-level advice, Google can turn to former Ford Motor Co. Chief Executive Officer Alan Mulally, now a board member.

It's also backed by more than $60 billion in cash, more than any individual automaker can muster.

"When you're at Google's scale you do plenty of things that disrupt or change the environment," said Frank Gillett, analyst with Forrester Research in Cambridge, Massachusetts. "We now have a race for who's going to build the software and services platform that operates driverless cars."

Societal Benefits

While the effort is still in an early phase, executives including co-founder Sergey Brin have committed Google to making driverless cars a reality. They tout societal benefits of robotic cars, such as a transportation option for the blind and elderly.

To traditional manufacturers, anything that makes human drivers superfluous is automotive heresy.

"Driving is essentially very fun," Ken Koibuchi, general manager of intelligent vehicle development for Toyota, said in an interview in Detroit this month. For that and reasons including liability issues in the case of an accident and yet-to-be-set regulations, the world's largest carmaker isn't planning a driverless car even as it adds automated features.

"Rather than making it seem like the driver can simply take a nap while sitting at the wheel, we need drivers to understand that there will be task-sharing involved, handing controls back and forth, and that overconfidence must be avoided," Koibuchi said.

Nissan Motor Co., Mercedes and Tesla are among those that have said they'll add self-driving features by end of the decade. None has said how much it's spending to do that.

More Investment

"They've kind of shamed the automakers into investing more money into this," said Egil Juliussen, research director for advanced driving systems for IHS Automotive. "R&D budgets for all major auto companies have jumped a lot since this started. They're literally being forced by Google to invest more to show they aren't falling too far behind."

While Google's cash pile tops that of individual automakers, Toyota's $41 billion, Volkswagen's $44 billion and GM's $29 billion ensure they can fund technology advances.

That gives manufacturers the resources to provide a counterbalance to Google, said William "Red" Whittaker, director of the Field Robotics Center at Carnegie Mellon in Pittsburgh.

"No one has a monopoly on this technology," Whittaker said. "The big global OEMs, they run deep, they run strong, and they aren't fooling around."

Accelerated Efforts

To speed its efforts, Toyota in January created an intelligent-vehicle system group that Koibuchi manages to bring automated driving features to market as quickly as possible.

Toyota is also among the automakers and suppliers funding the University of Michigan's Mobility Transformation Center in Ann Arbor, intended to be the largest research center in North America for automated driving systems.

GM, Ford, Honda and Nissan are also MTC backers, as are parts-makers Delphi Automotive Plc, Denso Corp. and Robert Bosch LLC, Verizon Communications Inc. and Xerox Corp.

Google so far hasn't joined that effort. It also hasn't specified whether it will build and sell driverless cars; create a service using such vehicles; or supply its driverless technology to the auto industry.

'Low Margin'

Producing its own vehicles would "be silly," Juliussen said. "The car industry is a low-margin business. The best companies get 10 percent profit margin," he said. "Why would they want to enter the business even if the revenue may be tremendously high?"

Google declined to comment on industry criticism or how its driverless program will evolve. Brin said in May at the Re/code conference in Palos Verdes, California, that the company "will work with partners in the future, including automotive companies," without elaborating.

Google drew some criticism at the Automated Vehicles Symposium in San Francisco in July from audience members who said it's not sharing mapping data with carmakers designing their own systems and has made some academic research on driverless vehicles inaccessible.

Standardized maps are needed as robotic vehicles advance, Seigo Kuzumaki, Toyota's chief technology officer secretary, said in Detroit.

"It's better to have maps that are industrywide, rather than just individually owned and operated," Kuzumaki said.

Automakers' efforts to find software talent is also affected by Google's speed in hiring, Toyota's Koibuchi said.

"Computer vision or artificial intelligence are needed, and that kind of technology is not familiar to us for now so we need to hire new people," he said. "To hire new people in each area is more difficult."

(BN) Paper Clip-Sized Heart Devices Open New Industry Markets

(Bloomberg ) A heart monitor the size of a paper clip may help keep Fred Schakel alive.

Schakel, a 46-year-old Indiana dairy farmer, had a stroke in November, just when he thought he was in the best shape of his life. Doctors couldn't identify a reason, so Schakel now wears the tiny monitor, dubbed the Reveal Linq, inserted under the skin of his chest as he goes about his daily life.

The $5,000 device records heart abnormalities that can occur monthly or crop up less than once a year, and is in constant electronic contact with Schakel's doctor's office. Made by Minneapolis-based Medtronic Inc. (MDT), it's part of a drive to develop consumer-friendly heart devices for an aging and image-conscious boomer population that don't require troublesome and inconvenient electric wires and halters.

The new monitor "is a game-changer in this niche field," said John Day, the medical director at Intermountain Health Care's heart rhythm services in Murray, Utah. "From the patient's standpoint, it's a tremendous win."

It also adds a new horizon for a device industry that's been battered by recalls and questions about safety and overuse, leading to years of falling sales. Medtronic isn't alone with its strategy. St. Jude Medical Inc. purchased Nanostim Inc. last October to acquire its miniature pacemaker.

Medtronic fell less than 1 percent to $65.02 at 9:38 a.m. New York time, after jumping 22 percent in the past year through Sept. 12.

Fastest Growing

The Medtronic monitor was approved in the U.S. and Europe in February. Its ease of use, coupled with an ability to transmit a large amount of data without much effort from the patient or doctor, has made it into one of the company's fastest-growing products, Medtronic executives said. They declined to provide precise sales figures.

"In June we thought this market, which was near nothing before, could be a half-a-billion dollars in a three-year time frame," Medtronic Chief Financial Officer Gary Ellis said in a telephone interview. "The reality is that we are going to get to a half-a-billion market much quicker than we expected. It's going to be a big driver in the years to come."

Medtronic began its miniaturization initiative a decade ago, purposefully keeping it separate from its conventional research group because officials knew it had the potential to disrupt the company's current product pipeline.

First Out

The Reveal Linq is the first product to emerge from the program. A pacemaker now in final human trials may be the second. That device is small enough to be threaded into the heart via an artery, according to Medtronic, and it has the battery power inside it to be left there for a decade.

"Our engineers have gotten very good at being very stingy with power," said David Steinhaus, the medical director for Medtronic's heart rhythm unit. "We have been able to shrink down the size of the electronics and make the power consumption of those chips a lot less."

While U.S. baby boomers are one target for the miniature devices, their simplicity may also open a broad swatch of the world where patients could benefit from the technology but doctors don't have the training to implant the older, more complex models.

The Reveal Linq monitor has been embraced by doctors and patients with certain hard-to-diagnose conditions, according said Intermountain's Day. The risks remain rare, including infections where it is inserted and potential failure with the battery, electronic circuits or remote connections.

Pooling Blood

While an erratic heart beat may be infrequent, just one episode is enough for pooling blood to form a clot that can move to the brain and cause a stroke.

A slowdown or pause can cause fainting, leading to head injuries, car crashes and fear.

"The real benefit of implantable monitors is to spot something that doesn't happen frequently, maybe once or twice a year, especially for someone who is passing out," Day said.

Unexplained episodes of fainting affect about 1 million Americans each year. The trigger can be a drop in the heart rate, which is easily controlled with an implanted pacemaker to ensure a proper rhythm. It can also be caused by other, non-heart related conditions and metabolic problems, making it difficult in some cases to pinpoint the cause.

The fastest growing area of use is in people with cryptogenic strokes, those such as Schakel who suffer a stroke with no clear cause.

Erratic Rate

While doctors can pinpoint causes for about two-thirds of the 800,000 strokes in the U.S. each year, many of the rest may be linked to erratic heart rates, a condition known as atrial fibrillation. Once the condition is diagnosed with monitoring, the risk can be cut with blood thinners or a procedure to fix an electrical defect.

To make the tiny products, Medtronic's engineers consulted with Swiss watchmakers, known for the precision and small size of the watch movements.

"We knew we could make a tiny device, but we didn't know if we could do it in a high volume production facility," Steinhaus said. "We had to learn to do things small, with specialized machinery. Human hands aren't able to do it."

Micra, the pacemaker that is the company's second product from the initiative, doesn't have the traditional wires used to connect to a canister that houses the battery and electronic circuitry. The company is still studying it to identify possible complications, which may include difficulty inserting it through the femoral vein, problems latching it onto the heart wall, infection or a breakdown in its operation.

Less Power

The pacemaker, expected to hit the market in Europe within a year and in the U.S. by 2017, uses less power when turned on than a mobile phone uses when it's off, Steinhaus said.

"Anything that can make it easier for the physician to implant these devices, reduce complications and do it in a cost effective manner -- check," said Joanne Wuensch, an analyst at BMO Capital Markets in New York. "That's the wave of the future. These are both really important evolutions in terms of how technology is being delivered."

Schakel, the farmer from Wheatfield, Indiana, hasn't had any heart problems since his Reveal Linq was implanted in May, he said by telephone. He also hasn't had another stroke.

Reassurance from the constant monitoring has helped him return with confidence to his normal, active life on the farm.

"No news is good news in this situation," he said. "I am fully active again as far as exercise and work. I haven't had any events."