(BN) IBM’s Watson Gets Wall Street Job After ‘Jeopardy’ Win

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IBM's Watson Gets Wall Street Job After 'Jeopardy' Win

March 6 (Bloomberg) -- International Business Machines Corp.'s Watson computer, which beat champions of the quiz show "Jeopardy!" a year ago, will soon be advising Wall Street on risks, portfolios and clients.

Citigroup Inc., the third-largest U.S. lender, is Watson's first financial services client, IBM said yesterday. It will help analyze customer needs and process financial, economic and client data to advance and personalize digital banking.

IBM expects to generate billions in new revenue by 2015 by putting Watson to work. The technology giant has already sold Watson to health-care clients, helping WellPoint Inc. and Seton Health Family analyze data to improve care. IBM executives say Watson's skills -- understanding and processing natural language, consulting vast volumes of unstructured information, and accurately answering questions with humanlike cognition -- are also well suited for the finance industry.

Financial services is the "next big one for us," said Manoj Saxena, the man responsible for finding Watson work. IBM is confident that with a little training, the quiz-show star that can read and understand 200 million pages in three seconds can make money for IBM by helping financial firms identify risks, rewards and customer wants mere human experts may overlook.

Banks spent about $400 billion on information technology last year, said Michael Versace, head of risk research at International Data Corp.'s Financial Insights, which has done research for IBM.

Cloud-Based Service

Watson the financial assistant will be delivered as a cloud-based service and earn a percentage of the additional revenue and cost savings it is able to help financial institutions realize. Watson, including its work in the health- care and finance industries, will contribute "a portion" of IBM's target of $16 billion of analytics revenues in 2015, Saxena said, and that portion will "have a B next to it."

Watson may add $2.65 billion in revenue in 2015, adding 52 cents of earnings per share, Ed Maguire, an analyst at CLSA in New York, estimated in a November research note.

IBM, the world's biggest computer-services provider, reported revenue of $107 billion in 2011 and earnings of $13.06 a share. The company ended 2011 with $11.9 billion in cash.

IBM shares closed above $200 for the first time yesterday, factoring in stock splits. The stock fell 1.7 percent to $197.26 at the close in New York today.

Language of Wall Street

Watson "can give an edge" in finance, said Stephen Baker, author of books The Numerati and Final Jeopardy, a Watson biography. "It can go through newspaper articles, documents, SEC filings, and try to make some sense out of them, put them into a context banks are interested in, like risk."

In addition to Citigroup, Armonk, New York-based IBM has been working with financial institutions teaching Watson the language of Wall Street, and adding content including regulatory announcements, news and social media feeds. IBM won't say which other institutions Watson is already working with.

"It's not selling them software, it's selling them outcomes," Saxena said in a phone interview.

Watson offers a "more global" picture by looking beyond financial data, Saxena said. For example, Watson can comb 10-Ks, prospectuses, loan performances and earnings quality while also uncovering sentiment and news not in the usual metrics before offering securities portfolio recommendations. It can also monitor trading, news sources and Facebook to help a treasurer manage foreign exchange risk.

'Huge Marketing Edge'

Some of the biggest financial institutions have already built big data centers. IBM is competing with most other major technology companies to sell them tools to analyze and use accumulated information, Versace said.

"Apparently Citi gets it -- analytics is the new core in competitive banking," Versace said. "The ability to efficiently and effectively exploit big data, advanced modeling, text analytics, in memory and real-time decisions across channels and operations will distinguish those that thrive in uncertain and uneven markets, from those that fumble."

Watson gives IBM "a huge marketing edge" in the race among tech giants including Google Inc. and Microsoft Corp. to obtain intelligence for businesses by teaching machines to understand sentences and paragraphs rather than searching for single words or phrases, said author Baker.

Parts of Watson could already be combined with other IBM technologies to help banks with regulatory compliance by surveying internal documents and flagging those that seem amiss, Baker said. Watson was designed to be loaded with information rather than grapple with a live streaming feed, making it likely IBM will partner it with other technologies.

Applications Beyond Banking

Beyond banks and other financial institutions, and insurance companies, Watson may have applications for telecommunications companies, and perhaps even call centers, said Saxena, who joined IBM when it acquired his company Webify Solutions Inc. in 2006.

IBM plans to use Watson in financial services "mostly for portfolio risk management, they're not going to do stock picking," CLSA's Maguire said in a Feb. 17 phone interview. "They think that Watson can make a difference." Still, Watson isn't perfect. It is weak in languages other than English, and its processing of social media streams from platforms including Facebook and Twitter can be sluggish. The lag is "getting shorter", Saxena said.

Precise Answers

A year ago last month, about 15 million viewers watched Watson beat former Jeopardy champions Ken Jennings and Brad Rutter -- a highly publicized victory in artificial intelligence that IBM always aimed to apply to the business world.

Watson had to learn how people speak and write, and evaluate its level of understanding, said Eric Brown, a member of the team that built him in an IBM research facility in New York. Precise answers delivered with confidence distinguish Watson from Web searches, enabling the technology to advise real-life decision makers, Brown said.

"I'm sure they use all this stuff internally to manage their own portfolio," said CLSA's Maguire. "IBM's treasury is bigger than a lot of trading desks. If they went into asset management they would kick ass, but that's not what they do."

To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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(BN) Google, Motorola Mobility Must Give Android Data to Apple

Bloomberg News, sent from my iPhone.

Google, Motorola Ordered to Give Android Data to Apple

March 6 (Bloomberg) -- Google Inc. and a Motorola Mobility Holdings Inc. unit were ordered by the U.S. judge presiding over an Apple Inc. patent lawsuit to turn over information about the development of Google's Android operating system.

The Motorola Mobility unit and Google must also hand over to Apple information about Google's pending $12.5 billion acquisition of the mobile-phone maker, U.S. Circuit Judge Richard A. Posner in Chicago ruled yesterday.

Posner's decision came in a patent lawsuit filed in 2010 by Cupertino, California-based Apple against Motorola Mobility, which has countersued.

"The Android/Motorola acquisition discovery is highly relevant to Apple's claims and defenses," Apple's attorneys' said in a March 2 filing requesting the judge's order.

Apple, maker of the iPhone, has been waging a global fight with the former Motorola Inc. unit that sells phones using Google Inc.'s Android operating system.

Posner, a federal appeals court judge who is presiding over the trial court-level case, has scheduled back-to-back trials before separate juries starting June 11. The first will address six Apple patents, and the second will cover three Motorola patents.

"Motorola shall be expected to obtain full and immediate compliance by Google with Apple's liability discovery demands," the judge said in a February order.

Motorola's Opposition

Motorola Mobility opposed Apple's request, arguing that Google, the operator of the world's most-visited Internet search portal, isn't a party to the lawsuit.

"Google's employees and documents are not within the 'possession, custody, or control' of Motorola, and Motorola cannot force Google to produce documents or witnesses over Google's objections," lawyers for the mobile phone maker said in a court filing earlier yesterday.

Motorola Mobility was spun off from Motorola Inc. -- now Motorola Solutions Inc. Jennifer Erickson, a spokeswoman for the Libertyville, Illinois-based company, declined to comment on the ruling.

Niki Fenwick, a spokeswoman at Google, said in an e-mail that the company wouldn't comment beyond what was submitted in court papers.

The case is Apple Inc. v. Motorola Inc., 11-cv-08540, U.S. District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew Harris in Chicago at aharris16@bloomberg.net

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

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(BN) Nike Sock-Like Flyknit Transforming Shoes as Shares Rise: Retail

Bloomberg News, sent from my iPhone.

Nike Sock-Like Flyknit Transforming Shoes on Share Surge:

March 7 (Bloomberg) -- Nike Inc.'s latest running shoe got its start when designers tried to solve a longstanding request from athletes: make shoes as comfortable as socks.

"We think a lot about what-ifs," said Ben Shaffer, studio director of Nike's so-called innovation kitchen. "This was a what-if. What if we made sock shoes?"

Nike had tried bringing sock attributes to shoes before, starting in the 1980s with a flimsy mesh sneaker called the Sock Racer. More attempts followed, and while offering comfort, they were insufficiently durable for running and other sports.

The world's largest sporting-goods maker now says it has the solution with Flyknit, a 5.6-ounce running shoe made from synthetic yarn woven together by a knitting machine. Besides giving Nike an edge in the fast-growing lightweight running category, executives say the new weaving process could cut costs enough to move production outside Asia and one day allow anyone to personalize shoes to their exact specifications.

"This is a complete game changer," said Charlie Denson, president of the Nike brand, while holding a Flyknit after its debut in New York last month. The process cuts costs so much "that eventually we could make these shoes anywhere in the world, which makes things very interesting."

Flyknit, which costs $150 and hits U.S. stores in July, is the latest product aimed at the minimalist running movement, whose devotees advocate lightweight shoes to reduce injuries. The lightweight category accounted for 30 percent of the $6.5 billion U.S. running shoe market last year and was responsible for all of its 14 percent growth, according to SportsOneSource, a research firm based in Charlotte, North Carolina.

Top-Selling Shoe

The lightweight Nike Free, originally a niche product when it appeared in 2004, is now the top-selling running shoe in the U.S., SportsOneSource said. It helped push Nike's North American footwear sales up 21 percent to $1.31 billion in the three months ended Nov. 30. Running is Nike's biggest category, generating $2.8 billion in annual global sales, about 50 percent more than basketball and soccer.

Those sales gains have coincided with a surge in Nike's shares, which have advanced 19 percent in the past 12 months. Nike reached an all-time closing high of $109.24 on March 5.

The sock shoe project started four years ago with a prototype of a sock attached to a foam bottom. The concept got early support when Chief Executive Officer Mark Parker, who joined Nike as a shoe designer in 1979, made one of his regular visits to the innovation kitchen at Nike headquarters in Beaverton, Oregon, and saw the sock.

What's This?

"I was going in to look at some other things, and it was sort of like, 'What's this?'" said Parker, whose design credits include a patent for Nike Air. "We got into it, and it was like 'Wow, this has huge potential.'"

The designers soon decided that in order to create a shoe that replicates a sock they had to mimic how a sock is made. Nike hired a team of computer programmers and engineers to take a machine used to knit sweaters and socks, and re-engineered it to weave the upper part of a sneaker.

Spools of colored polyester yarn are fed into the 15-foot long machine, which weaves together the top of the shoe and creates a "second skin" with tiny synthetic cables knitted into the weave around the mid-foot for support.

In a process the company calls "micro-level precision engineering," in-house software instructs the machine to minutely alter a shoe's stability and aesthetics. If the toe needs more stretch, the design can be digitally altered instantly to add Lycra-infused thread. For added strength in the heel, the computer can use multiple layers of yarn of varying thickness. Nike plans to patent the process.

Faster Production

Unlike Nike's other shoes, there is no cutting out pieces and assembling them. The upper is made in one piece and then fastened to the sole. That makes production quicker with less labor and larger profit margins, Parker said. The process also fits into Nike's sustainability push because the amount of material wasted weighs as much as a sheet of paper.

"If you think about shoemaking, it largely hasn't changed for decades, arguably centuries, because it's cut material that is sewn together," Parker said. "There is no more cutting and stitching with this. The most labor-intensive part of the footwear manufacturing process is gone from the picture."

U.S. Manufacturing

The manual work needed to attach pieces is the main reason sneakers are made in Asia's cheaper labor markets, according to Matt Powell, an analyst for SportsOneSource. Without that step, Nike could reduce production time by making shoes in the U.S. and other major markets. Nike makes 96 percent of its shoes in Vietnam, China and Indonesia, according to a public filing.

"One of the critical issues our industry hasn't figured out is how to get products to market more quickly," said Powell, who is based in Scarborough, Maine. "The biggest time in the life cycle of getting a shoe to the U.S. is the time it spends on a boat coming from Asia. If you could eliminate that, that's a huge chunk out of the time line."

The flexibility created by cheaper, more automated shoemaking could eventually lead to a day when a person can visit a Nike store and have their foot scanned. The customer would be able to design the shoe by color and style down to a single thread. The software would then use the information to make personalized shoes.

"The potential for this is almost infinite," said Denson, who started as a Nike store manager in 1979.

The impact of shoe weaving on Nike's bottom line will depend on whether it meets consumers' demands for performance and style, according to Sam Poser, an analyst for Sterne Agee & Leach Inc. in New York. Flyknit is also just one shoe at a company with about $23 billion in annual sales, he said.

Gross Margin

Flyknit may help Nike boost gross margin, the percentage of sales left after costs of goods sold, which has narrowed for three straight quarters and is projected to decline for a fourth owing to rising labor and material costs.

"The margins can be great, but if it doesn't sell they've got a problem," said Poser, who recommends buying Nike shares. "These are all steps in the right direction, but individually it's not material" to the company's short-term results.

Nike's approach to innovation is to develop technology for one category and then apply it to others. Flywire, which uses synthetic cables to increase support, was released in 2008, and is now used in 60 percent of Nike's footwear. Air has even been implemented in dress shoes at subsidiary Cole Haan. Management has similar, if not bigger, plans for Flyknit.

"Because this is so revolutionary, and so comfortable, this one is going to hit from a revenue standpoint much quicker" than recent innovations, Denson said. "What this gives us the ability to do is almost unlimited."

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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Snack Talk: DARPA Nano Air Vehicle (NAV) program

One of the videos from DARPA's Youtube channel.

Link

tags: lunchtalk, control, tool, communications, detection

Lunch Talk: (@UC Berkeley) Printing Revolution

Paul Duguid explores the origins of the printing technology and popular myths about its impact on the society.

link

tags: lunchtalk, history, technology, evolution, tool

(BN) Cash Hoard Grows by $187 Billion in Untaxed Overseas Profits (1)

Bloomberg News, sent from my iPhone.

Cash Hoard Grows by $187 Billion in Untaxed Overseas Profits (1)

March 2 (Bloomberg) -- U.S. companies led by General Electric Co. and Pfizer Inc. stockpiled an additional $187 billion in untaxed overseas profits over the past year, boosting their offshore holdings by 18.4 percent, according to data compiled by Bloomberg.

The 70 U.S.-based companies studied hold $1.2 trillion in profits around the world. GE and Pfizer have built up the most money outside the U.S., with $102 billion and $63 billion respectively, according to securities filings. Apple Inc., Google Inc. and Microsoft Corp. were among the companies that increased their accumulated overseas profits by more than 40 percent in 2011.

As U.S.-based companies expand globally, they keep profits overseas, legally out of the reach of the Internal Revenue Service. Lawmakers from both political parties point to the stockpiling as a symptom of a failed corporate tax system, even while they remain deadlocked over whether the U.S. should impose higher or lower taxes on its companies' global profits.

"You're seeing more and more business go on overseas, because that's where an increasing amount of the global purchasing power is," said Matt Miller, director of public policy at the Business Roundtable, a Washington-based association of chief executives at large companies that backs lower taxes on overseas profits. "We need to get a competitive tax system that is not antiquated and has all the complexities we have today."

Worldwide Profit Tax

Under the U.S. tax code, the top corporate rate is 35 percent on worldwide profits. Companies receive credits for payments to other governments, and they can defer taxation while the money accumulates. When companies bring their profits home, they pay U.S. taxes after subtracting the foreign tax credits.

Democrats, including President Barack Obama, maintain that the system encourages companies to move jobs and profits overseas. He has proposed a global minimum tax on foreign profits.

Republicans, including Dave Camp of Michigan, the top tax- writer in the House of Representatives, make the opposite argument. They say the residual tax that U.S. corporations face makes them less competitive in global markets and discourages companies from reinvesting their profits at home.

Andrew Williams, a spokesman for Fairfield, Connecticut- based GE, said the company's operations around the world support U.S. facilities that produce goods for export.

Broader Tax Base

"We believe fundamental tax reform would increase domestic investment, create high-quality jobs and encourage U.S. multinationals to reinvest more overseas earnings in the U.S.," he said in an e-mailed statement. "We support a broader tax base, lower statutory corporate tax rate and adoption of a territorial tax system even if it means higher taxes for companies like GE."

Bloomberg analyzed the public filings of 70 U.S.-based companies that had reported at least $4 billion in untaxed overseas profits as of this time last year. The data include information from the two most recent annual reports -- covering the years ending Dec. 31, 2011, and Dec. 31, 2010, for most companies.

A May 2011 study by JPMorgan Chase & Co. found that U.S. companies had $1.375 trillion in undistributed foreign earnings. Last year's total of $1 trillion held overseas by the 70 companies in the data compiled by Bloomberg made up about three- quarters of the total amount cited by JPMorgan.

Low-Tax Countries

As a result, the latest data suggest that, in all, U.S. companies have more than $1.6 trillion outside the country. The total includes cash and investments in assets such as factories and active businesses.

Companies typically bring home money earned in high-tax jurisdictions that can be offset with foreign tax credits and keep profits earned in low-tax countries outside the U.S., said Edward Kleinbard, former chief of staff of the congressional Joint Committee on Taxation.

"The companies continue to reap the harvest of their years of aggressive tax planning to locate as much of their profits as possible in low-tax foreign jurisdictions," he said.

Representatives of several of the companies, including Pfizer and Citigroup Inc., said they keep money outside the U.S. to support their international businesses.

'Matter of Course'

"Citi maintains a presence in more than 100 countries and some of its earnings are retained outside of the U.S. to provide the necessary capital to fund its international operations," said Jon Diat, a spokesman for Citigroup, which increased its accumulated overseas profits to $35.9 billion from $32.1 billion.

Joan Campion, a Pfizer spokeswoman, said the company repatriates profits "as a matter of course." That strategy gives Pfizer a higher effective tax rate than its competitors, its chief financial officer, Frank D'Amelio, told investors on a conference call Jan. 31.

Some tax policy analysts, including law professor Thomas Brennan of Northwestern University in Chicago, say companies are holding money outside the U.S. in part because they are waiting for Congress to repeat a 2004 tax holiday law that set a maximum tax rate for repatriation of 5.25 percent.

"Why not do it?" he said. "It's pure upside. In the worst-case scenario, you're going to be taxed as you would have been in any event."

Issuing Debt

Many large companies can meet their cash needs by issuing debt in the U.S. without tapping their offshore holdings, Brennan said.

A coalition of U.S.-based companies, including Google, Cisco Systems Inc., Qualcomm Inc. and Oracle Corp., has been lobbying for the past year for a repatriation holiday.

"Google's practices are very similar to those at countless other global companies operating across a wide range of industries, such as technology, pharmaceuticals and retail," Google said in an e-mailed statement.

The temporary repatriation proposal hasn't advanced in Congress. Obama opposes a one-time tax holiday, arguing that it would be a giveaway to big corporations.

Doug Thornell, an adviser to the pro-repatriation coalition, called the inaction a "missed opportunity" for Congress.

"The money keeps piling up while Washington fiddles," he said in a statement.

Permanent Change

Other companies, including International Business Machines Corp., have emphasized a permanent change and not a one-time holiday.

Camp has said he prefers to address repatriation as part of a tax-code overhaul. His draft proposal would shift the U.S. to a territorial tax system that exempts 95 percent of foreign profits. That would resemble the systems of other major economies, such as the U.K., Japan and Germany.

All four Republican presidential candidates have endorsed a territorial tax system. In an essay in the Boston Herald yesterday, Mitt Romney wrote that companies will continue to park profits outside the U.S.

"With our high rates and our punitive incentives, we are shooting ourselves in the foot with a machine gun," he wrote. "This has to end and I will end it."

Under the Obama or the Camp approach, the accumulated offshore profits must be addressed, said Kleinbard, now a law professor at the University of Southern California in Los Angeles.

Camp Proposal

"It would be extraordinarily and unnecessarily complicated to imagine a world in which old earnings were taxed one way and new earnings taxed a different way," he said.

Camp has proposed a 5.25 percent tax on the accumulated offshore profits to finance a transition to a territorial system. In his proposal, that one-time revenue would help offset the cost of the territorial system.

Representative Kevin Brady, a Texas Republican, has sponsored a bill for a repatriation tax holiday. He said the punitive nature of the U.S. tax code is illustrated by the growth in offshore holdings.

"It's both a cry for immediate repatriation and an assurance for fundamental tax reform that there will still be stranded profits," Brady said in an interview. "The pot will still be large and I think it will continue to grow exponentially."

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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(BN) Rambus, Dainippon, Broadcom, Nike: Intellectual Property (1)

Bloomberg News, sent from my iPhone.

Rambus, Dainippon, Broadcom, Nike: Intellectual Property (1)

March 5 (Bloomberg) -- Rambus Inc., a designer of high- speed memory chips, lost a ruling from a U.S. trade judge in its efforts to boost patent-licensing fees from inventions.

LSI Corp., MediaTek Inc., and STMicroelectronics NV didn't violate patent rights owned by Rambus, U.S. International Trade Commission Judge Theodore Essex said in a one-page notice posted on the agency's website. The judge's findings are subject to review by the six-member commission, which has the power to block imports of products that infringe U.S. patents.

Rambus has sought to boost royalties from its designs by extending the reach of patent enforcement beyond personal computers -- where the Sunnyvale, California-based company has fought a decade's worth of legal battles -- to communications devices and electronics.

The judge gave no reason for his determination. The findings will be released after both sides get a chance to redact confidential information.

The dispute in this case centers on a type of dynamic random access memory called SDRAM that acts as the main memory in computers. Rambus contends its inventions speed the transfer of data.

The memory controllers are used in networking gear, televisions, set-top decoders and other devices. The complaint also names customers of the three chipmakers, including Asustek Computer Inc., Cisco Systems Inc., Garmin Ltd. and Hewlett- Packard Co.

LSI, based in Milpitas, California; Hsinchu, Taiwan-based MediaTek and Geneva-based STMicro denied infringing the patents and challenged their validity.

Broadcom Corp. and Nvidia Corp. also were part of the original case before they reached settlements of all pending litigation. Rambus asked the ITC to dismiss Motorola Mobility Holdings Inc., which uses Broadcom and Nvidia, because of the settlements.

The case is In the Matter of Certain Semiconductor Chips and Products Containing Same, 337-753, U.S. International Trade Commission (Washington).

Dainippon Sumitomo Unit Wins Mylan Brovana Patents Ruling

Dainippon Sumitomo Pharma Co.'s Sunovion Pharmaceuticals unit won a court ruling invalidating five of seven Mylan Inc. patents related to a compound used in the bronchitis and emphysema drug Brovana.

U.S. District Judge John Koeltl in Manhattan also limited any damages that might be assessed on the two remaining patents, according to a filing. He granted Marlborough, Massachusetts- based Sunovion's motion for partial summary judgment.

Koeltl said in his March 1 ruling that the two remaining patents had "substantially" changed during a review by the U.S. Patent and Trademark Office, and so Canonsburg, Pennsylvania-based Mylan is barred from collecting damages related to sales before October 2011.

"Mylan is disappointed in today's ruling and believes the court erred in its decision," Mylan said in a statement March 1. "Mylan intends to appeal the decision."

The company also said it intends to continue to "pursue damages and an injunction with respect to" the two patents on which the judge limited damages.

Mylan's Dey unit sued Sunovion's predecessor company, Sepracor, in 2007 to block the introduction of Brovana, which Dey said infringed its patent for a spray to open bronchial passages. Dey was owned by Merck KGaA when the suit was filed.

The patents are related to the compound formoterol. Brovana's active ingredient is a variation of formoterol.

The case is Dey v. Sepracor, 07-cv-02353, U.S. District Court, Southern District of New York (Manhattan).

Broadcom Wins Tentative Ban on Infringing Emulex Products

Broadcom Corp. won a tentative ruling prohibiting rival chipmaker Emulex Corp. from selling so-called controller chips for communications networks that were found to infringe two of its patents.

U.S. District Judge James Selna in Santa Ana, California, issued a tentative decision before a hearing March 2 on Broadcom's request for a permanent injunction. The judge said he will allow Emulex to sell the infringing products for another 18 months to existing customers who have ordered them, while paying Broadcom a 3 percent royalty.

A jury found after a three-week trial that Emulex infringed one of Irvine, California-based Broadcom's patents. Selna, after the trial, agreed with Broadcom that Emulex was also liable for infringing a second patent. Emulex objected to a court-ordered ban of sales of infringing products and asked for a mandatory royalty instead.

Katherine Lane, a spokeswoman for Costa Mesa, California- based Emulex, declined to comment on the ruling.

The case is Emulex v. Broadcom, 09-01310, U.S. District Court, Central District of California (Santa Ana).

GlaxoSmithKline Antitrust Probe Dropped by EU Commission

The European Commission said it ended an antitrust probe into GlaxoSmithKline Plc over possible collusion to keep cheaper copies of medicines off the market after a complaint against the company was withdrawn.

"The Commission examined whether there may have been violation of EU competition law by GlaxoSmithKline," Antoine Colombani, a spokesman for the regulator, said in an e-mail March 2. The case involving generic-drug producer Synthon BV concerned "possible anticompetitive agreements or concerted practices in order to delay or exclude generic competition," he said. Colombani declined to elaborate on Synthon's role in the probe.

The announcement came a day after European Union regulators dropped a similar probe into AstraZeneca Plc, the U.K.'s second- biggest drugmaker, and Takeda Pharmaceutical Co.'s Nycomed unit over possible collusion to keep cheaper copies of medicines off the market. That case was brought to a halt because of a lack of evidence.

Antitrust regulators on both sides of the Atlantic are focusing on how patent infringement settlements between companies that make branded medicines and generic-drug producers might harm consumers. The EU opened a probe into Johnson & Johnson and Novartis AG in October and is also investigating Teva Pharmaceutical Industries Ltd. and its Cephalon Inc. unit over possible efforts to hinder generic drugs.

Glaxo didn't respond to a voice-mail message and Synthon, based in Nijmegen, the Netherlands, didn't respond to an e-mail seeking comment.

For more patent news, click here.

Trademark

RIM Persuades USPTO to Reject 'Crackberry' Trademark Application

Research in Motion Ltd., the Canadian maker of the BlackBerry mobile device, defeated a Florida company's attempt to register "Crackberry" as a U.S. trademark.

According to a Feb. 27 ruling from the Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office, the fact that "Crackberry" was already a widely accepted slang expression for the RIM product meant there was already "similar commercial expression for both marks."

The board noted that the term "crackberry" -- alluding to the addictive nature of the BlackBerry's use -- was selected as the "Word of the Year" in a 2006 survey of new words. "There is a strong association among members of the relevant public between these two terms in the field of wireless handheld devices," the board said.

The applications to register "Crackberry" were filed by Axel Ltd. of Inverness, Florida. The company said it wanted to use the mark for a variety of computer, wireless and marketing purposes in addition to clothing. Many of those uses were too close to services provided by RIM under the "BlackBerry" mark, the board said.

Waterloo, Ontario-based RIM was represented by Jeffrey J. Morgan, William. R. Towns and Monica M. Moussighi of Novak Druce & Quigg LLP of West Palm Beach, Florida. Axel Ltd. was represented by Matthew H. Swyers of the Swyers Law Firm PllC of Vienna, Virginia.

Nike Sued by Clothing Company Over 'Fuelband' Marks

Nike Inc., the world's largest sporting goods maker, was sued for trademark infringement by a South Carolina clothing company.

The suit, filed Feb. 27 in federal court in Columbia, South Carolina, is related to trademarks belonging to Fuel Clothing Co., of Hilton Head, South Carolina.

The clothing company objects to Nike's applications to register "Nike + Fuel," "Nike + Fuelband," and "Nikefuel" trademark applications. The Beaverton, Oregon-based sporting goods company's advertisement of products as "Fuel" to promote its wearable sport band is also infringing, according to court papers.

Nike is accused of using "Fuel" to target consumers in the same consumer demographic area that comprises the South Carolina company's consumer base.

According to the Oregonian newspaper's OregonLive website, Nike introduced its Fuelband Feb. 22. It's a $149 digital device that measures and records all sorts of body movement.

The South Carolina company claims that Nike is using the name to trade on "the substantial goodwill and reputation" that Fuel Clothing built in the use of the term. It said it had sent Nike a cease-and-desist letter warning of possible infringement, and that the Oregon company had apparently ignored the demands.

Fuel Clothing asked the court for awards of money damages, litigation costs and attorney fees.

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

Fuel Clothing is represented by John E. Schmidt III and Melissa Copeland of Schmidt & Copeland LLC of Columbia, South Carolina.

The case is Fuel Clothing Co. v. Nike Inc., 3:12-cv-00555- MBs, U.S. District Court, District of South Carolina (Columbia).

For more trademark news, click here.

Copyright

Aereo's Internet TV Service Infringes Copyright, Networks Claim

Aereo Inc. will violate copyrights with its service for subscribers in New York City to watch broadcast television programs on personal computers and smartphones, television networks said.

Walt Disney Co.'s ABC and other networks said in two separate complaints filed March 1 in federal court in Manhattan that Aereo has no right to any of the programs that it offers through its subscription-only Internet service scheduled to start March 14.

"Although other distributors, including cable and satellite operators and telephone companies, pay to retransmit the same programming, Aereo's business is based on circumventing the carefully balanced distribution system mandated by congress," the networks said. "That is infringement."

The networks seek a court order blocking Aereo's service as well as unspecified damages.

Aereo, based in Long Island City, New York, is backed in part by Barry Diller's IAC/InterActiveCorp. The company lets its subscribers access network television broadcasts and local stations on Web-enabled devices with a remote antenna and digital video recorder. The company's membership fee is $12 a month.

"Aereo does not believe that the broadcasters' position has any merit and it very much looks forward to a full and fair airing of the issues," Mike Schroeder, a company spokesman, said in an e-mailed statement. "Consumers are legally entitled to access broadcast television via an antenna and they are entitled to record television content for their personal use."

The cases are American Broadcasting Cos. v. Aereo, 12-1540, and WNET v. Aereo, 12-1543, U.S. District Court, Southern District of New York (Manhattan.)

For copyright news, click here.

IP Moves

SNR Denton Brings in Ex-Howrey Patent Litigator Robert Kramer

SNR Denton LLP hired Robert F. Kramer for its IP practice, the Chicago-based firm said in a statement.

Kramer, a patent litigator, was formerly a partner at the now-defunct Washington firm of Howrey LLP. He has also practiced with San Francisco's Morrison & Foerster LLP, serving in Japan for three years as a registered Gaikokuho-Jimu-Bengoshi (foreign legal consultant).

He has represented clients whose technologies have included electronics, networking and data transmission systems, light emitting diodes telecommunications, and semiconductors in federal courts and before the U.S. International Trade Commission.

Kramer has an undergraduate degree from New York University and a law degree from Brooklyn Law School.

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

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

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(BN) Lundbeck Anti-Binge Drinking Drug Helps Cut Intake by 66% (3)

Bloomberg News, sent from my iPhone.

Lundbeck Anti-Binge Drinking Drug Helps Cut Intake by 66%

March 5 (Bloomberg) -- H. Lundbeck A/S, the Nordic region's second-largest drugmaker, said its anti-alcoholism treatment nalmefene helped patients cut consumption by an average of 66 percent in three clinical trials.

Results of the final stage of clinical trials showed nalmefene helped curb drinking more than a placebo and medical advice, Lundbeck said in a presentation at a medical meeting in Prague today. Nalmefene users reported a 64 percent to 79 percent drop in total alcohol intake, compared with 49 percent to 64 percent for those on placebo, Copenhagen-based Lundbeck said.

Heavy drinking is Europe's second-largest risk factor for poor health. Lundbeck plans to offer nalmefene as a treatment option to those who suffer from alcohol dependency and are turned off by abstinence, which is advocated by most experts, said Anders Gersel Pedersen, head of Lundbeck's research and development. About 70 percent of patients who enrolled in the clinical trials for nalmefene had never received treatment, Pedersen said in a telephone interview.

"It changes the whole paradigm around the conversation about alcohol use between the physician and the patient," he said.

Awaiting Approval

Lundbeck submitted nalmefene, which may become the first new medicine sold to treat heavy drinking in more than 15 years, to the European Medicines Agency in December based on the research. A decision on the drug from the European regulator probably will come in the beginning of next year, Pedersen said.

Lundbeck fell 0.7 percent to 117.10 kroner in Copenhagen. Shares of Turku, Finland-based Biotie Therapies Oyj, which licensed nalmefene to Lundbeck, rose 2 percent to 52 euro cents in Helsinki. If the product is cleared, Biotie may receive as much as 84 million euros ($111 million) in payments from Lundbeck in addition to royalties on sales.

Patients taking nalmefene had high withdrawal rate in one of the three late-stage studies, mostly because of adverse events, Danske Markets analysts attending the Prague meeting wrote today in a note to investors. In the six-month Esense 1 trial, only 142 of 302 patients on the drug completed the study, compared with 205 of 296 patients taking placebo, the analysts said. The most frequent adverse events were dizziness, insomnia and nausea, Lundbeck said.

Heavy Drinking Days

Those who stayed on the medication reported 63 percent fewer heavy drinking days and a 64 percent reduction in total alcohol consumption, the analysts wrote.

"This is quite a substantial difference," they said.

While the differences between drinkers taking nalmefene and those getting a placebo were statistically significant, the results didn't show a huge numerical difference, Jefferies International Ltd. analysts led by Peter Welford wrote in a note to investors today.

Patients who received a placebo and medical advice had a 50 percent reduction in heavy drinking days and total alcohol consumption in the Esense 1 trial, according to Lundbeck. In the six-month Esense 2 study, nalmefene users cut their heavy drinking days by 65 percent, compared with 61 percent in the placebo group. Total alcohol consumption fell 68 percent among those taking the drug, compared with a 63 percent decline for the placebo group.

Placebo Effect

"This should be as expected given the medical advice available to all patients in the trials, and perhaps illustrates an important placebo-effect of a treatment" such as this "being made commercially available," Welford and his colleagues wrote. "Nevertheless, this could complicate regulatory discussions."

A third study, dubbed Sense, followed patients for 12 months and found nalmefene users had about an 80 percent reduction in both heavy drinking days and total alcohol intake, compared with 60 percent and 64 percent declines, respectively, in the placebo group, Lundbeck said.

Lundbeck is targeting Europe for nalmefene, where annual per capita consumption, at 12.18 liters (3.2 gallons), is double the global average and 40 percent higher than in the Americas, according to the World Health Organization. The drug will be marketed under the name Selincro.

Alcohol Deaths

Alcohol abuse results in 2.5 million deaths each year, more than those caused by AIDS or tuberculosis, according to the Geneva-based WHO. The highest proportion of alcohol-related mortality is in Russia and neighboring countries, where every fifth death results from alcohol abuse.

"This is a potential revolution," said David Nutt, professor of neuropsychopharmacology at Imperial College London, said in an interview before the study results were released. "Some people, like Alcoholics Anonymous, will be completely against it. But others will welcome it as a way to control their drinking."

Nutt calls nalmefene a "drinking regulator" that would be "cheaper than getting drunk." He has received grants or fees for consulting or speaking from drugmakers involved in addiction treatment including Lundbeck, though he didn't play a role in any research on nalmefene.

Peak Sales

The drug may have peak sales of $55 million, assuming 10 percent of diagnosed European patients take it, though revenue could reach $300 million, the Jefferies analysts estimated. Higher sales would require a partnership to sell the drug to general practitioners, or promotional support from governments seeking to improve public health, the analysts said.

Lundbeck is aiming to form a marketing partnership once the labeling of nalmefene has been defined with the European Medicines Agency, Pedersen said. Nalmefene won't be sold in the U.S., where it would be protected from generic competition for only five years, compared with 10 years in Europe, Lundbeck Chief Financial Officer Anders Gotzsche said in a November interview.

Nalmefene works by blocking brain signals that make activities such as sex and drinking feel good. Patients on the medicine can continue drinking, an approach that divides alcohol treatment experts because many advocate abstinence.

Existing therapies include the generic drug Antabuse, also known as disulfiram, and Forest Laboratories Inc.'s Campral and are generally used to help patients who have abstained from resuming drinking. Antabuse causes illness when alcohol is consumed, while Campral eases symptoms of withdrawal, such as anxiety and insomnia.

Lundbeck's biggest seller is the antidepressant Lexapro, sold outside the U.S. as Cipralex. The drug generated 8.5 billion kroner ($1.5 billion) in worldwide sales last year and 581 million kroner in the U.S., where the patent expires in 2012.

To contact the reporter on this story: Makiko Kitamura in London at mkitamura1@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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(BN) Angry Birds Boom Spurs U.S. Job Revival on Mobile Demand (1)

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Angry Birds Boom Spurs U.S. Job Revival on Mobile Demand

March 5 (Bloomberg) -- A surge in technology-industry hiring is helping to spearhead a jobs-market revival as demand swells for computer-software applications and data.

Online help-wanted advertising for computer and mathematical occupations rose 2.1 percent in February from January to the second-highest since the Conference Board began compiling the data in 2005. Vacancies outnumbered job seekers by more than three to one, according to the New York-based research group. Postings on tech-career website Dice.com are 12 percent higher than a year ago, with openings for workers skilled in mobile applications up more than 100 percent.

"This feels like the beginning of another tech-driven jobs boom," said Michael Mandel, chief economic strategist at the Progressive Policy Institute in Washington. "The broad communications sector resisted the downward pull" of the recession and "is going to be a leader in the expansion."

Government figures to be released on March 9 will show that payrolls grew by 210,000 in February, according to the median forecast of economists surveyed by Bloomberg News. If that estimate proves correct, job growth in the past three months would total 656,000, compared with 471,000 in the previous three months. The unemployment rate is projected to hold steady at a three-year low of 8.3 percent.

Growing Confidence

Stocks will benefit from the expanding jobs market and growing consumer confidence, said James Paulsen, who helps oversee more than $330 billion as chief investment strategist in Minneapolis for Wells Capital Management. He predicted the Standard & Poor's 500 Index will climb to 1,500 sometime this year, compared with 1,369.63 at 4:00 p.m. in New York March 2.

Technology shares are outperforming this year, with the Vanguard Information-Technology Exchange-Traded Fund, which includes Apple Inc. and Google Inc., up 16 percent compared with a 8.9 percent rise for the SPDR S&P 500 ETF as of 11:10 a.m. in New York today.

President Barack Obama has seen his standing among voters improve as the employment picture brightens. His job-approval rating increased to 53 percent from 44 percent in November, according to a POLITICO-George Washington University Battleground Poll released Feb. 27.

Big Technology

Even as conditions get better, some big technology companies are cutting jobs. International Business Machines Corp., the world's largest computer-services provider, fired more than 1,000 workers in North America last week, according to an employee advocacy group. Doug Shelton, a spokesman for the Armonk, New York-based company, declined to confirm the size of the reductions.

Smaller businesses, though, are taking on workers as the so-called app economy blossoms, with more than 500,000 software programs now written for Apple's iPhone alone, according to the Cupertino, California-based company's website.

Bully! Commercial and Entertainment Media LLC, a Baltimore- based company that specializes in augmented-reality applications, has increased its workforce to 21 people from 11 in about the past six months and is looking to hire more, said Carlson Bull, executive director and founder.

"We're in demand; I'd like to ride that," said the 40- year-old Bull, who added that the company is considering opening up other offices, including overseas.

Tim Burks, of one-man software-development shop Radtastical Inc. in Palo Alto, California, said he gets two to three calls a day from recruiters trying to hire him for other businesses. And "it has gone up lately," the 45-year-old added.

Employment Spillovers

The app economy now is responsible for about 466,000 jobs in the U.S., up from zero in 2007 when the iPhone was introduced, according to a study released last month that Mandel did for TechNet, a Washington-based group of executives that promotes technology issues. The total includes app-related positions at companies including Amazon.com Inc. and employment spillovers to the rest of the economy.

Apple deserves some credit for the gains, according to Bret Swanson, president of Entropy Economics, a research firm in Zionsville, Indiana. Despite criticism that the tech company is building the guts of the iPhone in China, the product has led to jobs in the U.S. -- even if they aren't all necessarily at Apple -- because "the iPhone launched a new software industry," he said.

U.S. Jobs

Apple said on its website that it has created or supported 514,000 U.S. jobs, including 210,000 tied to the app economy. The total, in a report for the corporation by Boston-based consultants Analysis Group, also counts employment at companies that provide Apple with processors and glass and businesses that ship its products.

A separate study released in January by economists Robert Shapiro and Kevin Hassett found that the shift from 2G to 3G Internet and wireless-network technologies led to the creation of more than 1.5 million positions from April 2007 to June 2011 in everything from construction to retail.

"This looks like an unusually powerful jobs driver," said Shapiro, undersecretary of commerce under President Bill Clinton. "After all, it created 1.5 million jobs at a time when the economy was losing five million.

''And the transition from 3G to 4G in terms of jobs is more promising,'' added Shapiro, who is now chairman of economic consultant Sonecon LLC in Washington.

Hassett, director of economic-policy studies at the American Enterprise Institute in Washington, sees two economic effects from these advances: ''Angry Birds'' and ''Angry Boss.''

In Constant Touch

The first, named after the game application, refers to the growing number of developers creating similar software programs, said Hassett, an economic adviser to Republican Senator John McCain of Arizona during the 2008 presidential campaign. The second references the ability of bosses to stay in constant touch with their employees, increasing productivity, profits and ultimately jobs as money is plowed back into businesses.

Congressional authorization last month for sales of wireless spectrum ''will support massive job creation'' by freeing up airwaves for use by mobile devices, Representative Fred Upton, a Michigan Republican who heads the Energy and Commerce Committee, said in an e-mailed statement.

Spending on the wireless network may benefit antenna- building companies American Tower Corp., Crown Castle International Corp. and SBA Communications Corp., Paul Gallant, a Washington-based analyst with Guggenheim Partners, said in a Feb. 15 note.

'Very Fast'

Mandel said employment growth in the app economy may be topping out, albeit at a still ''very fast'' 45 percent year- over-year rate.

Tom Silver, senior vice president, North America, for New York-based Dice Holdings Inc., agreed that the market for tech professionals is cooling off.

''The crackle and sizzle of the early recovery is behind us, but we continue to see strong demand'' on the Dice.com job- posting website, he said.

''We hear a lot about poaching from our customers,'' he added in an e-mail. ''The number of calls from recruiters into certain skill sets, like software engineers, is staggering.''

Where growth seems to be taking off is in the area of so- called big data, where specialists mine and make sense of the constantly-expanding information available via the Internet for companies from Google to Wal-Mart Stores Inc., Mandel said.

'Deep Analytical' Skills

By 2018, the U.S. will need as many as 490,000 workers with ''deep analytical'' skills and an additional 1.5 million data- savvy managers, whether retrained or hired, according to a report last year by McKinsey Global Institute, the research unit of consultants McKinsey & Co.

Supply might not be sufficient to fill all the positions, because ''there is a great skills mismatch,'' said James Manyika, director in San Francisco of the institute. Even so, big data will lead to ''quite phenomenal'' productivity gains as companies make more and better use of the information they have, he said.

An academic analysis last year of 179 publicly-traded companies found that those adopting data-driven decision making were about 5 percent more productive and profitable than their competitors. The study was carried out by Erik Brynjolfsson and Heekyung Hellen Kim of the Massachusetts Institute of Technology in Cambridge and Lorin M. Hitt of the University of Pennsylvania in Philadelphia.

Higher Productivity

The effects on productivity will be ''as great or greater than what they were in the 1990s,'' Brynjolfsson said. Labor- force productivity grew at an average annual rate of 2.1 percent during that decade, up from 1.5 percent in the 1980s.

Technology companies are taking notice and looking for ways to leverage their position through takeovers.

''This year's technology-deal volume could be bigger than last year's and 2007's," said Chet Bozdog, global head of technology investment banking at Charlotte, North Carolina-based Bank of America Corp.

Industry takeovers in 2007 reached $264.4 billion, the biggest year since 2000's record high of $585.2 billion, data compiled by Bloomberg show. Announced mergers and acquisitions last year totaled almost $200 billion.

Dell Inc., the third-largest maker of personal computers, last month introduced a new line of servers designed to help business customers beef up data centers for information storage and the delivery of software and computing via the Internet.

Data Explosion

Brynjolfsson likened the explosion of data -- and the means to store and evaluate it -- to the discovery of the microscope. The microscope allowed scientists to look at a whole new world, leading to numerous medical breakthroughs. Big data is doing the same for statisticians and information analysts.

The MIT Center for Digital Business has used Google search data "to accurately predict housing sales up to three months in the future for each of the 50 states in the U.S.," Brynjolfsson wrote on the university's website.

"Google searchers have even allowed researchers to accurately predict flu-season trends well before the Center for Disease Control issued its own reports," he added.

While big data won't be "the sponge" that absorbs all untrained or moderately trained workers without a job, Robert Litan, vice president for Research and Policy at the Ewing Marion Kauffman Foundation in Kansas City, said he's "convinced" that eventually new industries will be born from it. And they will require workers.

To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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(BN) Apple, Samsung Both Lose Rulings in German Patent Cases (2)

Apple, Samsung Both Lose Rulings in German Patent Cases (2)

March 2 (Bloomberg) -- Apple Inc. and Samsung Electronics Co., which are suing each other over technology used in tablets and mobile phones, both lost rulings over patents in German lawsuits.

The Regional Court of Mannheim rejected Samsung's bid to protect mathematical coding procedures as well as Apple's case over features for unlocking touch screens. Neither company showed a patent was infringed, Presiding Judge Andreas Voss said when delivering the rulings.

Samsung lost because "the standard doesn't protect the result but the way to reach the code," Voss said. Apple didn't prevail because Samsung's devices "don't use a displayed pre- determined path on the touch screen."

Apple, based in Cupertino, California, and Samsung, the world's largest mobile phone maker, are among several device makers clashing in German courts over patents. More disputes over smartphones and tablets are pending in German courts.

The rejection of Apple's case confirms that Samsung's devices are distinctive and don't infringe Apple's intellectual property, Samsung spokesman Alexander Engelhardt said in an e- mail. The company is disappointed the court didn't share its view in its own suit and may appeal.

Apple spokesman Alan Hely declined to comment on today's rulings and referred to the company's earlier statement that Samsung is "blatantly" copying the iPhone and iPad.

Two weeks ago in a Munich court, Apple prevailed in a case over on the same "slide-to-unlock" technology, winning an injunction against Motorola Mobility Holdings Inc.

Today's cases are LG Mannheim 7 O 326/11 (Samsung v. Apple) and 7 0 247/11 (Apple v. Samsung).

To contact the reporter on this story: Konstantin Riffler in Mannheim via kriffler@bloomberg.net; Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net.

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(BN) Broadcom Wins Tentative Ban on Infringing Emulex Controller Chip Products

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Broadcom Wins Tentative Ban on Infringing Emulex Products

March 2 (Bloomberg) -- Broadcom Corp. won a tentative ruling prohibiting rival chipmaker Emulex Corp. from selling so- called controller chips for communications networks that were found to infringe two Broadcom patents.

U.S. District Judge James Selna in Santa Ana, California, issued a tentative decision before a hearing today on Broadcom's request for a permanent injunction. The judge said he would allow Emulex to sell the infringing products for another 18 months to existing customers who have ordered them, while paying Broadcom a 3 percent royalty.

At the hearing, Selna said he would issue a final ruling on Broadcom's request next week.

The judge had found last year that Emulex infringed two of Irvine, California-based Broadcom's patents. Emulex, based in Costa Mesa, California, objected to a court-ordered ban of sales of infringing products and asked for a mandatory royalty instead.

Juanita Brooks, a lawyer for Emulex, said at today's hearing that "incredible market disruptions" would occur if the judge would enter an injunction. She asked Selna to "not carve it out in such a way so the public should suffer because of a war between Broadcom and Emulex."

Bill Lee, a lawyer for Broadcom, asked the judge to triple the royalty rate Emulex will have to pay Broadcom during the 18- month "sunset" period.

The case is Emulex v. Broadcom, 09-01310, U.S. District Court, Central District of California (Santa Ana).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

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

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(BN) AT&T Caps Data Speed for Heavy Unlimited-Wireless Users

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AT&T Caps Data Speed for Heavy Unlimited-Wireless Users

March 2 (Bloomberg) -- AT&T Inc. will start slowing the data speeds of customers with unlimited wireless plans once they reach a certain threshold, a sign of the industry trying to cope with soaring traffic and limited network capacity.

Customers will experience slower access speeds if their data usage exceeds 3 gigabytes a month, the second-largest U.S. wireless carrier said yesterday on its website. For customers with so-called long term evolution, or LTE, devices, the limit is 5 gigabytes a month, the Dallas-based carrier said.

The move means millions of longtime customers may need to deal with reduced speeds at some point in their billing cycle, a nuisance that AT&T is betting will persuade them to switch to its more expensive plans. AT&T is struggling to accommodate rising data traffic as the popularity of smartphones and tablet computers increases, while trying to extract more revenue out of a user base whose growth is slowing.

"The wonderful thing about smartphones is that they are computers in your hand, but they are like cars from the 50s and 60s, real gas guzzlers," said Roger Entner, an analyst at Recon Analytics in Boston.

To expand their limited spectrum capacity, AT&T and bigger rival Verizon Wireless have sought acquisitions and agreements. AT&T Chief Executive Officer Randall Stephenson said in December that the failed acquisition of T-Mobile USA -- a deal AT&T abandoned amid regulatory opposition -- would result in capacity constraints and higher prices.

Tiered Plans

AT&T's new data caps only apply to existing customers with contracts that include unlimited data, plans that the carrier has stopped offering to new subscribers. The new limits represent a change to a previous AT&T policy of reducing speeds to the 5 percent of unlimited users who used the most data.

Instead of offering unlimited data, AT&T now sells so- called tiered plans that include a certain amount of data at various price points. In January, AT&T raised those plans' prices by $5 a month and increased the capacity allowances.

AT&T's tiered data plans cost $30 a month for 3 gigabytes and $50 for 5 gigabytes, and $10 for every gigabyte over those limits. The longtime customers with the old unlimited plans typically pay $30 a month.

To reach 3 gigabytes, every day users would have to stream about an hour of video or 3.5 hours of music, or post photos to Facebook about 300 times, according to AT&T's data calculator.

Sprint Benefiting

AT&T's caps leave Sprint Nextel Corp. as the only carrier in the top three to offer an unlimited data plan with no caps or speed limits. Sprint's unlimited data plan costs $79.99 a month.

"This is part of the reason Sprint has been able to turn its subscriber losses to gains with its offer of unlimited data," Entner said.

AT&T rose 0.3 percent to $30.74 at 10:32 a.m. New York time. Sprint was little changed at $2.50.

Verizon Wireless, the No. 1 mobile carrier, slows the speeds of 5 percent of users who use the most data. Verizon reduces the speed when the phone is in what the company calls a congested area in order to preserve the quality of the network for other users, said Brenda Raney, a company spokeswoman.

AT&T says it's still honoring the original unlimited plans and not capping usage, only reducing speeds to customers going over the monthly thresholds.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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(BN) Kodak Seeks Court Approval to Investigate Patent Claims by Apple

Bloomberg News, sent from my iPhone.

Kodak Seeks Court Approval to Investigate Patent Claims by Apple

March 3 (Bloomberg) -- Eastman Kodak Co., saying sales of some of its digital imaging patents may be disrupted, asked a bankruptcy judge for permission to investigate "the basis" of Apple Inc.'s claims that it owns some of them.

"Whether as an infringer or a prospective purchaser of Kodak's patents, Apple has an economic interest in depressing the value of these patents and disrupting the sale process," Kodak's lawyers said yesterday in a filing in U.S Bankruptcy Court in Manhattan.

Kodak wants Apple to produce a list of all Kodak patents it claims to own as well as documents and communications that support the ownership claims, according to the filing.

Apple on Feb. 14 sought bankruptcy court approval to sue Kodak over allegations it infringes patents for technology used in printers, digital cameras and digital picture frames. Apple previously claimed it is the true owner of the image preview patent that has been the subject of lawsuits.

The U.S. International Trade Commission rejected Apple's ownership arguments in a case that's still pending at the agency in Washington.

Apple has said it developed a digital camera in the early 1990s that it shared with Kodak, and that Kodak then sought the patent on the technology. Kodak has denied the allegations.

Steve Dowling, a spokesman for Cupertino, California-based Apple, didn't immediately return voice-mail and e-mail messages after regular business hours yesterday seeking comment on Kodak's filing.

Kodak filed for bankruptcy Jan. 19. The Rochester, New York-based company listed assets of $5.1 billion and debt of $6.8 billion in Chapter 11 documents.

The case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District New York (Manhattan).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

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

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(BN) BASF May Open Beijing Venture Capital Office in Technology Hunt

Bloomberg News, sent from my iPhone.

BASF's Nachtigal Seeks China Startups for Investment Arm

March 2 (Bloomberg) -- BASF SE, the world's biggest chemical maker, is considering opening an investment office in Beijing or Shanghai in the medium term as China begins to spawn its own technology startups.

Dirk Nachtigal, head of the company's 11-year-old venture- capital arm, is now visiting China twice a year and has identified universities there as a likely source of early stage, high-potential opportunities, he said in an interview. The unit has recently invested in its first fund there, he said.

"We are seeing more and more technology development in China that is interesting to us," Nachtigal said. "The government has put lots of money into universities in the last 10 to 15 years. Now you can see the results."

Chief Executive Officer Kurt Bock aims to have a quarter of sales coming from products based on new technology by 2020 as the 147-year-old chemical maker moves away from cyclical commodities. Innovation younger than a decade should contribute 30 billion euros ($40 billion) in sales by 2020 and take the company closer to end consumers, he said.

China has boosted spending on education, with plans to disburse 4 percent of gross domestic product on schooling this year, Xinhua news agency said on Feb. 15.

BASF has so far channeled its venture capital activities in China through an office in Hong Kong. A move to Beijing or Shanghai would reflect the growing opportunities springing up in and around major cities.

Executive Attention

Venture capital investment in China almost doubled to a record of $5.67 billion in 2010, according to ChinaVenture, a research and investment consulting firm. That still represents a nascent stage in comparison with the U.S.'s industry, which invested $28.4 billion in 2011, according to the National Venture Capital Association.

BASF has so far pumped 150 million euros into the unit. Though dwarfed by the 1.7 billion euros it spends on research and development a year, the venture capital arm has grown in stature as Bock heaped more importance on new technology as a growth driver, Nachtigal said in the Feb. 22 interview. It has the ear of top level management through board member Andreas Kreimeyer, who oversees research.

To capture new technologies on the U.S.'s east coast, BASF opened a venture capital office in Boston this year.

BASF Venture Capital was instrumental in BASF's purchase last year of Inge Watertechnologies AG, a startup making membranes used in water treatment. A two-day internal trade fair invited 11 membrane companies to present their startup ideas. Inge was one of them, leading to their eventual purchase.

BASF may also invest in some of the other startup companies that gave presentations, said Nachtigal, declining to give names. The unit is seeking investments in products surrounding energy management such as battery materials, storage capacity and photo-voltaic as well as wind energy, he said.

"We are looking for the top, game changing technology wherever it is," Nachtigal said. "It's an exciting field."

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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Lunch Talk: (@Google) Leadership, Genghis Khan style.

John Man re-examines the life of Genghis Khan to discover the qualities, characteristics and strategies that made him the great leader that he was. The answers are sometimes surprising. Genghis was far from just the tyrant that history records, but rather a leader of exceptional vision and modernity. And many of the secrets of his success are as valuable and applicable in todays competitive business world as they were in rallying the Mongol hordes.

John is a historian and travel writer with a special interest in Mongolia and China. He is the author of Alpha Beta on the roots of the Roman alphabet, The Gutenberg Revolution on the origins and impact of printing, the international bestseller Genghis Khan as well as Attila the Hun, Kublai Khan, The Terracotta Army and The Great Wall.

link

(BN) Facebook Marketing Boom Fuels Social-Advertising Startup Demand

Bloomberg News, sent from my iPhone.

Facebook Marketing Boom Fuels Social-Advertising Startup Demand

March 1 (Bloomberg) -- Entrepreneur Michael Lazerow parlayed booming demand for advertising on Facebook Inc. -- and reassurances from its operating chief, Sheryl Sandberg -- into a business that generates almost $100 million a year in sales.

Lazerow, 37, founded Buddy Media Inc. in 2007 to help companies promote their brands on Facebook. Two years later, amid concern that Facebook would put him out of business by replicating his company's services, he called Sandberg.

"Sheryl told me, 'We want you to make a ton of money. We want to enable you with great technology,'" Lazerow said of the 2009 conversation with Facebook's chief operating officer. "'We don't have aspirations to be in the enterprise software business.'"

Facebook's decision to stay out the way, along with its surge in popularity, have spawned a cottage industry of startups like Buddy Media that help companies peddle their wares and brands on the world's largest social network. Marketers eager to reach Facebook's 845 million users pay these software-savvy go- betweens fees as high as millions of dollars a year to create pages where customers can get discounts, participate in contests and interact with fellow fans.

"They know the Facebook infrastructure inside and out, and they have developed interesting apps that marketers can tap into so they don't have to reinvent the wheel," said Debra Aho Williamson, an analyst at EMarketer Inc. in New York.

Market Doubles

The market for social-media management tools will more than double to $970 million in 2016, from $389 million this year, according to Forrester Research Inc. This category includes Facebook page managers such as New York-based Buddy Media, as well as so-called "listening platforms," which let businesses monitor conversations about their brands on social networks.

Facebook gave social-media startups a broader range of tools for helping companies reach social media junkies yesterday, announcing its first foray into mobile advertising. Facebook, based in Menlo Park, California, also unveiled features that give businesses more flexibility in posting photos and other content while keeping closer tabs on interaction with customers.

Other social-advertising startups include Wildfire Interactive Inc., Vitrue Inc. and Syncapse Corp.

PepsiCo Inc. worked with Wildfire Interactive in October to create a "Dew Labs" Facebook page, where more than 6,500 fans of Mountain Dew post photos and videos of themselves enjoying the beverage and offer their opinion on new flavors. The company said it pays Wildfire $35,000 a year for the page.

'Scores of Engineers'

Wildfire specializes in services Facebook can't offer, said Victoria Ransom, chief executive officer of the Redwood City, California-based company.

"They've got companies like Wildfire and Buddy and others that have scores of engineers and people thinking all day long about how we can provide the best tools that will support a company's advertising on Facebook," Ransom said. Facebook "can focus on what's core to them."

The social-ad industry that has sprung up around Facebook is comparable to the search-engine marketing boom that followed Google Inc.'s emergence as the dominant Web-search provider. Unlike search marketers, which make money based on consumers' interaction with search-related ads, social-advertising companies generate recurring sales of software subscriptions. That makes them comparable to business-application vendors like Salesforce.com Inc., said Jules Maltz, a venture capitalist at Institutional Venture Partners.

Comparable to Salesforce

"It's analogous to Salesforce," said Maltz, who is a Buddy Media investor and board member. "They are selling subscription software to directors and managers everyday and making it an essential part of their marketing."

Advertisements are Facebook's lifeblood, making up $3.15 billion in revenue, 85 percent of the total last year. Most of those sales are from marketers buying graphical advertisements on the right-hand side of profile pages. Increasingly, these ads direct users to brand pages on the social network, many of which are run by Buddy Media and its ilk, Lazerow said.

"We probably work with clients that represent 20 to 25 percent of all Facebook revenue," Lazerow said. "Facebook is making significantly more money off of our clients than we are."

Ransom estimates that for every dollar clients spend on Wildfire services, they may spend up to $10 buying Facebook ads.

Annie Ta, a spokeswoman for Facebook, declined to comment for this story, citing Securities and Exchange Commission restrictions on companies that have filed for an initial public offering. Facebook filed in February to sell shares in the largest-ever Internet IPO.

Facebook as 'Frenemy'

Any company that relies on Facebook for revenue runs the risk of being overdependent, said Andrew Frank, an analyst at Gartner Inc. in New York.

"Facebook is a frenemy to many of these companies," he said. "They have such market power in social media that they can make the rules."

Frank cites the social network's decision last year to force all game developers on its platform to cough up a 30 percent cut of sales from all virtual goods. Developers like Zynga Inc. had little choice but to fall in line, Frank said.

To help mitigate such risks, the social-ad startups are expanding their services to other sites, including Twitter Inc., LinkedIn Corp. and Google's new social-networking service.

"That's why they're going to invest in LinkedIn and Twitter and Google+," said Jeremiah Owyang, an analyst at Altimeter Group. "That's how you keep Facebook honest."

Fostering Social Advertising

For now, Facebook is doing more to nurture social-ad companies than by merely staying out of their way. Through its fbFund, Facebook invested in Wildfire in 2009. It also maintains a stable of 80 vendors, calling them "Preferred Developer Consultants," that get an early peek at new products.

Facebook executives sometimes refer large advertisers directly to certain startups.

"They approach us and say, 'We have a client that wants to do a major campaign and they have a short window of opportunity to have it delivered,'" said Don Beck, CEO of Involver Inc., a San Francisco-based social-ad company.

Acquisitions have become one way to win customers in social advertising. Social-ad service provider Context Optional was acquired last year by Efficient Frontier, the online-ad company later purchased by Adobe Systems Inc. Buddy Media said earlier this week it bought Brighter Option, a service for purchasing banner ads on Facebook.

"There is going to be a massive consolidation in the industry," said Lazerow, whose company has raised a total of $90 million from venture capitalists and still has more than half of it.

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

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

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(BN) ARM Chips to Leap From Smartphones to Networks That Run Them

Bloomberg News, sent from my iPhone.

ARM Chips to Leap From Smartphones to Networks That Run Them

March 1 (Bloomberg) -- ARM Holdings Plc, whose chip designs are used in most smartphones, is set to power the networks that run them as it steps up competition with Intel Corp. in a $9 billion market.

With ARM already working with Hewlett-Packard Co. to bring out chips for computer servers, the same processor will also be directed at the base stations and wireless network equipment, Mike Inglis, head of the processor unit, said in an interview.

"It will be the networks with the ARM architecture," Inglis said at the Mobile World Congress in Barcelona. "It is the computer farm behind the mobile network."

ARM's low-power semiconductor blueprints are increasingly found in larger devices including tablets and other mobile computers as the company competes with Intel, the world's largest semiconductor maker. ARM aims to use its faster processor in the servers, the machines running websites and corporate networks, to help companies rein in energy costs.

"It is another obvious opportunity for them to move into a market which is right now based on Intel," said Vijay Anand, an analyst at Espirito Santo. "ARM's chips are low-power but they have been trying to improve their performance."

At the Barcelona event, LSI Corp. signed a licensing agreement to use ARM's faster processor in mobile broadband networks, while Texas Instruments Inc. is using the ARM blueprint to build chips for base-station infrastructure.

By 2017

"We need to bring it into the network," ARM Chief Executive Officer Warren East said in Barcelona today. "ARM can reduce power consumption of base stations by as much as 70 percent."

The companies may start producing chips in about a year and a half with shipments beginning from a range of 2014 to 2017, Inglis said.

"A lot of the chips for base stations are very specialized and ARM's designs would be fit only for limited applications inside a base station," said Pierre Ferragu, an analyst at Sanford C Bernstein. "It's not something you can compare with their smartphone presence."

ARM, which powers Apple Inc.'s iPhone, has benefitted from soaring demand for the chips used in smartphones as data traffic surges on the mobile networks. The Cambridge, England-based company is also moving into the personal computer market with the release of Microsoft Corp's next Windows operating system that will run on ARM chips for the first time.

'Barrier'

In the same way, ARM will require the software for servers to be developed before chips can be shipped, according to Nick Hyslop, an analyst at RBC Capital Markets.

"The software will be the barrier for the next three years," he said. About 40 percent of global spending on semiconductors is in the computing market including PCs and servers, Hyslop said. "And ARM's not yet in it."

ARM dropped 1.5 percent to 561 pence in London. The stock has declined 5.9 percent in 12 months.

The market for server processors was worth about $9 billion in 2011, according Framingham, Massachusetts-based researcher IDC.

To contact the reporter on this story: Jonathan Browning in Barcelona at jbrowning9@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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Eugene.