(BN) Monsanto, Apple, Nike, McDonald’s: Intellectual Property

Aug. 3 (Bloomberg) -- Monsanto Co. was awarded $1 billion, the biggest U.S. jury verdict this year, in a patent- infringement trial against DuPont Co. over seeds for growing herbicide-tolerant soybeans.

The verdict was the fourth-largest jury award in a patent trial in U.S. history, according to data compiled by Bloomberg. The largest patent verdict, for $1.7 billion, was awarded in 2009 against Abbott Laboratories in a case involving the arthritis drug Humira and was later reversed on appeal.

The panel of five women and three men in federal court in St. Louis began their deliberations Aug. 1 and returned 45 minutes later with the verdict against DuPont, ending a four- week trial.

The trial revolved around Monsanto's patent for making Roundup Ready crops, a technology at the heart of its $13.7 billion in annual revenue. Farmers have embraced the technology because it allows them to kill weeds with Roundup herbicide while leaving crops unscathed.

"This verdict highlights that all companies that make early and substantial investments in developing cutting edge technology will have their intellectual property rights upheld and fairly valued," Monsanto General Counsel David Snively said in an e-mailed statement.

DuPont said in a statement that it strongly disagrees with the verdict and will appeal it.

"There were several fundamental errors in the case which deprived the jury of important facts and arguments and led to the disappointing outcome," DuPont said in the statement. "DuPont will appeal at the earliest possible opportunity and expects to overturn this verdict."

The jury's finding that DuPont's infringement was willful means the damages could yet be increased, according to Monsanto's statement.

Monsanto offered to settle the lawsuit during the trial by giving DuPont the opportunity to license its technology.

"The interesting part of the award was the speed of the decision," Jeff Windau, a St. Louis-based analyst at Edward Jones & Co., said in an e-mail. "Obviously Monsanto put forth some compelling evidence."

The patent was initially issued in 1997, based on a 1994 application. In 2003, Monsanto asked the U.S. Patent and Trademark Office to reissue the patent to correct what it said was an inadvertent mixing of patent claims from 1990 and 1994 applications.

DuPont contended Monsanto did that to mislead the patent office so the agency wouldn't discover it was trying to hide information that might have blocked the patent.

The case is Monsanto Co. v. E.I. du Pont de Nemours & Co., 09-cv-686, U.S. District Court, Eastern District of Missouri (St. Louis).

Apple Seeks Sanctions for Samsung's Evidence Leak at Trial

Apple Inc. said a federal judge should rule its phone patents were infringed by Samsung Electronics Co. after a lawyer for the Korean manufacturer publicly released evidence the judge had excluded from trial.

Apple, in an Aug. 1 filing with the U.S. District Judge Lucy Koh in San Jose, California, said the July 31 release was designed to convey to jurors, through the media, arguments rebutting Apple's central allegations that Samsung copied the iPhone and iPad. The move was "bad faith litigation misconduct" meant to prejudice the jury, Apple said.

"Apple requests that the court issue sanctions granting judgment that Apple's asserted phone-design patent claims are valid and infringed by Samsung," according to the filing signed by lawyer William Lee .

The evidence fight between the companies is being conducted without the jury, which on July 31 heard opening arguments in the case. Apple, based in Cupertino, California, seeks $2.5 billion for its claims that Samsung infringed patents covering designs and technology for mobile devices. Samsung countersued and will present claims that Apple is infringing two patents covering mobile-technology standards and three utility patents.

John Quinn, the Samsung attorney who approved the release of the information, said in his own statement to the court that is was done in response to a request from members of the media and the information was already in public court filings made by Samsung or Apple and wasn't intended to prejudice the jury.

Koh on July 31 barred Samsung from presenting images of a smartphone that Samsung claims it was developing in 2006, the year before Apple introduced the iPhone. Koh rejected Samsung's request to reconsider her ruling for what she said was at least the third time, standing by her earlier decision that the evidence wasn't "timely disclosed" in Samsung's arguments pertaining to patent infringement.

In its e-mailed statement that Apple objects to, Samsung said that Koh's ruling means it "was not allowed to tell the jury the full story and show the pre-iPhone design for that and other phones that were in development at Samsung in 2006, before the iPhone."

Adam Yates, a Samsung spokesman, declined to comment on Apple's initial letter seeking sanctions.

Apple said that if Koh doesn't simply rule that Samsung has infringed the patent, alternatively she should tell the jury Samsung engaged in "serious misconduct," that she has found Samsung copied the designs and features from Apple products, and preclude Samsung from any further mention of evidence regarding a pre-existing design.

The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11- cv-01846, U.S. District Court, Northern District of California (San Jose).

Nike Planning Soccer Ball Radar Device, New Patent Indicates

Nike Inc. has released shoes and wristbands this year that allow athletes to track their performance. Now it's planning to put sensors on soccer balls and other equipment to offer data to players of team sports.

The world's largest sporting-goods maker this week obtained patent 8,231,506, which covers an invention dubbed Nike+TM that uses a computerized radar system with transmitters placed on a ball and players to evaluate individual statistics such as the strength of a shot in soccer and how well a team plays together.

Nike, based in Beaverton, Oregon, has been pushing into digital gadgetry as more people turn to mobile applications to enhance daily activities. The company released the FuelBand, a bracelet that tracks daily activity in January, followed a month later by shoes equipped with sensors that can record such metrics as how high a player jumps during a dunk.

Mary Remuzzi, a spokeswoman for Nike, declined to comment on the patent and when such a product might come to market.

These offerings are part of the company's Nike+ brand that began in 2006 with a running shoe that used a sensor to record data to Apple Inc.'s iPod.

Nike is using its digital strategy to increase the amount of time consumers spend with its brand as a way to drive sales. With the FuelBand, users can download data to a smartphone application. They can then compare results with friends who also have the bracelet and share them on Facebook Inc.'s social network.

The new system could eventually work with several sports including football, basketball, baseball and hockey and serve as a way for coaches to evaluate players, according to a copy of the patent posted on the U.S. Patent and Trademark Office website.

In one scenario, it could track two soccer players at the same time with sensors on their shoes, as well as the ball, to measure how well they pass to each other.

For more patent news, click here.

Trademark

McDonald's Objects to Use of 'Happy Meals' in Political Ad

McDonald's Corp., the world's largest restaurant chain, told the Topeka Capitol-Journal that it will ask a candidate for Kansas State Senate to stop using its name in a political advertisement.

Kansas State Representative Joe Patton was to receive a cease-and-desist letter from the chain, asking him to change his "Happy Meals" ad, in which he compared an opponent's tax scheme to someone who goes into McDonald's, orders a "Happy Meal," eats it himself and then asks his grandson to pay for it, the newspaper reported.

Patton told the newspaper that he was using the McDonald's ad as a metaphor and will pull it upon request from the chain.

McDonald's, based in Oak Brook, Illinois, became aware of the ad after hearing a report from one of its Topeka, Kansas- area franchisees, according to the newspaper.

For more trademark news, click here.

U.K. Furniture Makers Threatened by Proposed Copyright Changes

British furniture makers are concerned about a proposed change in the U.K.'s copyright law that would bar reproductions of furniture by famous designers until 70 years after their death, the Daily Mail newspaper reported.

Famous furniture designs such as those by Charles Eames can now be copied in the U.K. 25 years after their creation, the newspaper reported.

The proposed changes, which would bring U.K. copyright law up to the standard in the European Union, would place furniture in the same category as musical compositions or paintings, according to the Daily Mail.

The revised law would criminalize the unauthorized production or sale of such furniture, according to the newspaper.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Physician Sued Over Pennsylvania 'Medical Gag Rule' for Fracking

A Pennsylvania physician filed a lawsuit in federal court challenging as unconstitutional a state law that bars him from revealing information about the chemical makeup of hydraulic fracturing fluids used in the gas-drilling industry.

Dr. Alfonzo Rodriguez of Dallas, Pennsylvania, is opposing a section of a 2012 amendment to the Pennsylvania Oil and Gas Act that is known informally as the "Medical Gag Rule."

This section of the rule mandates that in the event of a medical emergency related to hydraulic fracturing, health professionals to whom information is given about the chemicals involved in the fluid be barred from passing that information on to anyone else. The legislation covers chemicals deemed to be a trade secret or otherwise proprietary information, according to the bill's text.

Rodriguez, a specialist in kidney disease, has treated patients who have been directly exposed to high-volume fracturing fluids, he said in his complaint, filed July 27 in Scranton, Pennsylvania. One such patient "was admitted to the hospital with a complicated diagnosis with low platelets, anemia, rash, and acute renal failure that required extensive hemodialysis and exposure to chemotherapeutic agents," according to court papers.

The doctor argued in his complaint that the so-called Medical Gag Rule is an impermissible restriction on his freedom of speech, and required him to violate his principles of medical ethics mandated by his medical licensing authority.

Under his profession's ethics code, Rodriguez said he is required to "continue to study, apply and advance scientific knowledge, maintain a commitment to medical education, make relevant information available to patients, colleagues and the public, obtain consultation and use the talents of other health professionals when indicated."

He said his patients' right of self-decision is violated if he is barred from giving them enough information to enable them to make informed choices.

The Medical Gag Rule, he said, is "unconstitutionally overbroad" restriction on free speech because it requires a health-care professional to enter into a confidentiality agreement before receiving information "for the ethical and competent treatment of a patient."

Rodriguez asked the court to declare the rule unconstitutional and to bar Pennsylvania officials from enforcing it. He also requested awards of damages, attorney fees and litigation costs.

In a fact sheet about hydraulic fracturing, the Pennsylvania Independent Oil & Gas Association said that the chances of groundwater contamination from the process is "one in 200 million" and that water and sand make up about 99.5 percent of any fluid used in fracking, together with "a small number of dilute chemicals."

Rodriguez is represented by Paul. A. Rossi of Kennett Square, Pennsylvania.

The case is Rodriguez v. Krancer, 12-cv-01458, U.S. District Court, Middle District of Pennsylvania (Scranton).

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(BN) Electronic Arts Sues Zynga for Infringement for The Ville

Aug. 3 (Bloomberg) -- Electronic Arts Inc., the second largest U.S. video-game maker, sued Zynga Inc. claiming the company's The Ville video game infringed copyrights for The Sims Social, a game that runs on social media site Facebook Inc.

Zynga's Facebook game The Ville copies original elements of The Sims Social, lawyers for Electronic Arts said in a complaint the company said was filed in federal court in San Francisco. The filing couldn't immediately be confirmed from court records.

The Sims Social was released in August 2011 and has tens of millions of users, and a current user base of several million active players on Facebook, Redwood City, California-based Electronic Arts said in an e-mail.

Electronic Arts seeks a court order barring copyright infringement and unspecified damages.

Reggie Davis, Zynga's general counsel, said in an e-mailed statement that The Ville builds on the San Francisco-based company's earlier games.

"It's unfortunate that EA thought that this was an appropriate response to our game, and clearly demonstrates a lack of understanding of basic copyright principles," Davis said. "It's also ironic that EA brings this suit shortly after launching SimCity Social, which bears an uncanny resemblance to Zynga's CityVille game."

The case is Electronic Arts v. Zynga, U.S. District Court, Northern District of California (San Francisco).

(BN) Corn’s 60% Surge Is More Dangerous Than Euro Mess

If Jim Yong Kim was hoping for a honeymoon, the new World Bank president can forget it: To his headaches over Europe's debt crisis he can add surging food prices.

Kim's first month on the job was largely about gauging how Europe is affecting the plight of the poor. There are troubling signs that China and India are slowing, and that might leave Asia, which has the largest share of extreme poverty, devoid of growth engines.

That's almost manageable compared with what's confronting Kim in month No. 2: the worst U.S. drought in 56 years and dry weather in agricultural regions in India, Kazakhstan, Russia and Ukraine. Coupled with exploding demand for food, the phenomenon is causing violent commodity-price volatility at the worst possible time for Asia.

Rising food prices limit how much central bankers can cut interest rates to safeguard growth. More troubling would be the potential setback to poverty-reduction programs for decades to come.

The last food crisis began amid the 2008-2009 crash of the U.S. economy. In the second half of 2010 alone, according to the World Bank, some 44 million people were pushed back below the extreme poverty line, defined as those living on $1.25 a day or less. Asia is home to the bulk of those who spend between 60 percent and 80 percent of their paltry incomes on food.

Price Spikes

"When food prices rise sharply, families cope by pulling their kids out of school and eating cheaper, less nutritious food, which can have catastrophic lifelong effects on the social, physical and mental well-being of millions of young people," Kim says. "We cannot allow short-term food-price spikes to have damaging long-term consequences for the world's most poor and vulnerable."

Poverty isn't an important metric for currency traders placing bets. It doesn't figure readily into bond yields or stock valuations. Yet Asia is the latest and perhaps largest frontier for capitalism and opportunity. Multinational companies are counting on its swelling populations, growing cities and emerging middle-class consumer sectors for profits in the future.

Asians won't consume if growth doesn't reach them. They won't buy cars, electronics, fancy handbags, imported beer or designer clothes if putting food on the table is at risk. More important, if too many Asians are preoccupied by the struggle to get enough to eat, that increases the threat of instability, never an ideal setting for a flourishing economy. Food inflation, remember, was among the crucial forces behind the Arab Spring protests.

The good news is that corn prices may already be easing, suggesting we might avoid a price spike as severe as that of 2010, when prices jumped 73 percent in just six months. Corn, of course, goes into everything from sweeteners to biofuel to feed for cows, pigs and chickens. Asia imports loads of it. The bad news, of course, is that any price increase means consumers will have to divert spending to food while the cost of other goods rises as well. This raises the specter of stagflation.

India is the most obvious candidate for that dreaded combination of weak growth and rising prices if its central bank tries to offset any slowdown by printing more money. Markets are already wary of inflation -- up 7.25 percent in June alone -- coming in above central-bank forecasts of 6.5 percent this year. India's worst power crisis, one that left some 640 million people in darkness this week, bodes poorly for the inflation outlook. It's emblematic of the nation's infrastructure neglect.

China's Exports

China has its own challenges as the era of cheap food ends. The recent 60 percent jump in corn to a record since June 15 is one problem. This year's 35 percent surge in soybeans is another; China is by far the Asia-Pacific region's biggest importer of soy. Wheat prices are zooming higher, too. China is already slowing rapidly as Europe's mess depresses demand for its exports.

Asia's policy makers also face a new dilemma. In recent years, the challenge was boosting growth. Even the food-price shock of the period was viewed as a cyclical phenomenon that would pass once farmers responded with increased supply.

What's different this time is that demographic trends point to increasing demand for food as weather patterns undermine supply. As world temperatures rise, agricultural yields are becoming less predictable. And as U.S. droughts remind us, the world's food chain has become more interconnected at a time when weather has rarely been so erratic. On top of it all, water is becoming scarcer. It's the new oil.

The quickest fix is increased investment in infrastructure and smart government policies. The first remedy might be easy if not for the traumatized state of the world economy. Strapped nations want the private sector to step up, but market turmoil is reducing appetite for risk-taking.

The second would be more plausible if farsighted leadership were present. How many U.S. politicians are brave enough to end all the policies that encourage massive supplies of corn to be squandered making ethanol? And are Asian leaders willing in this environment to provide a broader safety net?

In terms of policy, it's vital that Asia get the next six to 12 months right, and take measures to protect the poor. There's also more to be done by the World Bank, which Kim pledges will be a "more flexible partner" than it has been in Asia's recent past. If not, food costs might soon be wrecking too many lives in Asia.

(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)

(BN) $440 Million Bug

Knight Capital Group Inc. (KCG) has "all hands on deck" and is in close contact with clients and counterparties as it tries to weather trading errors that cost it $440 million, Chief Executive Officer Thomas Joyce said.

Joyce said it's "hard to comment" on discussions with creditors as Knight stock extended a two-day plunge to 70 percent and the firm explored strategic and financial alternatives following a loss almost four times its annual profit. The problems were triggered by what Joyce called "a bug, but a large bug" in software as the company, one of the largest U.S. market makers, prepared to trade with a New York Stock Exchange program catering to individual investors.

"Technology breaks," Joyce said in an interview on Bloomberg Television's "Market Makers" program with Erik Schatzker and Stephanie Ruhle today. "It ain't good. We don't look forward to it."

Knight was fighting to preserve its business as concern grew about its solvency. Analysts at CLSA Credit Agricole Securities said bankruptcy was a possibility if it failed to get financing. The trading error caused dozens of stocks to swing as much as 151 percent, leaving the firm with what Joyce called a "large error position."

The company is in contact with clients, counterparties and creditors as it works to recover.

'Capable People'

"That's what our goal is," he told Bloomberg TV. "We understand what the issues are. We're talking to a lot of capable people, people who are in touch with situations like this," he said. "You might imagine during the day-to-day activity, it's kind of hard to comment" on discussions about credit lines.

Knight said that while the bug occurred as the firm prepared to trade with the NYSE's new so-called retail liquidity program, it had "nothing to do" with the NYSE.

"The software had a fairly major bug in it," he said. "It sent into the market a ton of orders, all erroneous. So we ended up with a very large error position which we had to sort through during the balance of the day."

The bad software code is gone now, he said, and clients of the market-making business were executing with the firm by the end of the day after Knight told them initially to go elsewhere.

NYSE Review

The New York Stock Exchange reviewed trading in 140 stocks from Molycorp Inc. to AT&T Inc. yesterday as the market's open was disrupted. Trades that occurred during the height of the volatility were canceled in six securities, where prices swung at least 30 percent in the first 45 minutes.

Knight's market-making unit executed a daily average of $19.5 billion worth of equities in June with volume of 3.1 billion shares, according to its website. The $440 million loss compares with net income of $115.2 million in 2011 on revenue of $1.4 billion, data compiled by Bloomberg show.

"Although the company's capital base has been severely impacted, the company's broker/dealer subsidiaries are in full compliance with their net capital requirements," Knight said today. "The company is actively pursuing its strategic and financing alternatives to strengthen its capital base."

The loss represents about 40 percent of Knight's book value and would "exhaust" the firm's cash, according to CLSA Credit Agricole Securities, which said Knight should consider selling itself.

Sell Rating

"We believe Knight Capital is at risk of bankruptcy following the loss and so we are lowering our rating to sell," Robert Rutschow, a New York-based analyst with CLSA who had an outperform rating on the stock, wrote in a note today. He also cut the price estimate to $3 from $9. "The company's best option at this point is a sale."

While Knight reported July 18 that second-quarter earnings exceeded analyst projections, sales fell short by 1.7 percent. Cash and equivalents fell 22 percent to $364.8 million in the last quarter, data compiled by Bloomberg show. The company's debt amounted to 46.4 times total assets, compared with 64 a year ago, data compiled by Bloomberg show.

"This loss is larger than we expected," Rich Repetto, a New York-based analyst with Sandler O'Neill & Partners LP, wrote in an e-mail. "More monitoring and safeguards need to be built into these trading algorithms of both market makers and exchanges."

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(BN) California Says Tax Revenue ‘at Risk’ From Facebook Drop

Aug. 2 (Bloomberg) -- Facebook Inc.'s declining price may cost California "hundreds of millions of dollars" in revenue expected from taxes on capital gains, the state's fiscal analyst said.

The owner of the world's largest online social network, touched $19.82 today, the lowest price since the Menlo Park, California-based company first offered shares to the public at $38 on May 17.

The most populous U.S. state's $91.3 billion budget, signed by Governor Jerry Brown in June, counted on $1.9 billion in income-tax revenue from company insiders such as Chief Executive Officer Mark Zuckerberg exercising options or sell shares, assuming an average price of $35. Facebook, which touched $45 May 18, has averaged $29.49 on the Nasdaq stock market.

"Facebook share prices have fallen far below levels assumed in the state's revenue projections," the nonpartisan Legislative Analyst's Office said yesterday in a report. If "the lower share prices persist through November and December, hundreds of millions of dollars of income-tax revenue assumed in the state budget plan are at risk."

Ashley Zandy, a Facebook spokeswoman, said the company didn't have a comment. Executives and investors were expected to sell 157.4 million shares in the initial public offering, according to a regulatory filing.

Sales Growth

Facebook, which hasn't closed above the $38 IPO price since May 18, its first day of trading, last week said second-quarter sales growth was 32 percent from the same period a year earlier, down from 45 percent in the previous three months. The company still needs to prove to investors that it can profit from the growing number of users who access the site on mobile devices, said Tom Forte, an analyst at Telsey Advisory Group in New York.

Zynga Inc., an online-game developer based in San Francisco, went public in December and has declined from a $15.91 high on March 2 to as low as $2.68 today, a record.

A Zynga investor sued the company and the IPO underwriters this week, claiming shareholders were misled about its financial health. The company reported lower-than-expected second-quarter earnings July 25, and fell 37 percent the next day.

State finance officials typically update revenue estimates when presenting the governor's proposed budget in January. New information on Facebook probably will be used in that update, according to the Legislative Analyst's Office.

California, the world's ninth-biggest economy, took in $7.2 billion from income taxes in April.

(BN) Oracle Says SAP to Pay $306 Million in Copyright Deal

Aug. 2 (Bloomberg) -- SAP AG will pay at least $306 million to Oracle Corp. in a copyright-infringement lawsuit over an SAP unit's downloading and copying of Oracle software.

Oracle, the world's largest maker of database software, won a $1.3 billion jury verdict in the case in 2010. A federal judge reduced the award to $272 million. Oracle opted instead for a new trial, which was scheduled for Aug. 27.

The companies agreed on a judgment for $306 million in damages "to save time and expense of this new trial," lawyers for Oracle and SAP said in a filing in federal court in Oakland. The accord requires approval from U.S. District Judge Phyllis Hamilton.

Oracle, based in Redwood City, California, will also ask a federal appeals court in San Francisco to reinstate the jury verdict, the company said in an e-mail. SAP doesn't have to pay the damages until after all appeals or new trials in the case have concluded, according to court filings. If Oracle wins a judgment that is less than $306 million in any subsequent ruling or trial, SAP agreed to pay the difference.

"The conduct that led to this lawsuit and jury award is truly unprecedented," Oracle attorney Geoff Howard said in an e-mail.

SAP, the biggest maker of business-management software, was sued by Oracle, which is its biggest competitor, after the discovery that an SAP software maintenance unit had downloaded and copied Oracle software. Oracle said SAP's aim was to avoid paying licensing fees and to steal customers.

TomorrowNow Unit

SAP, based in Walldorf, Germany, didn't contest that it was liable for the infringement by its TomorrowNow unit, which it closed in 2008.

"SAP believes this case has gone on long enough," Jim Dever, an SAP spokesman, said in an e-mail. "Although we believe that $306 million is more than the appropriate damages amount, we agreed to this in an effort to bring this case to a reasonable resolution."

SAP already has paid Oracle $120 million for its legal fees in the case.

The case is Oracle v. SAP, 07-1658, U.S. District Court, Northern District of California (Oakland).

Lunch Talk: History of Gaming

This is a university video-project made by "Game Design"-students from munich.

Games:
Tennis for Two, Oscilloscope, 1958
Pacman, Arcade, 1980
Donkey Kong, NES, 1986
Sonic the Hedgehog, Sega Mega Drive/Genesis, 1991
Street Fighter II. SNES, 1991
Super Mario 64, Nintendo 64, 1996
Final Fantasy VII, Sony Playstation, 1997
Need for Speed: Hot Pursiut 2, Sony Playstation 2, 2002
Ecco the Dolphin, Sega Dreamcast, 2000
Super Smash Bros. Melee, Nintendo Game Cube, 2001
Wii Sports Golf, Nintendo Wii, 2006
God of War III, Sony Playstation 3, 2010
Rock Band, XBox 360, 2008

On a related topic,  here's a good example of how a breakthroug technology delivers a better solution at 1/10 of the original price.

Cartridges are a very expensive medium, however, and many game developers resented Nintendo’s decision to continue using them. Sony’s licensing structure was built around a $10-per-game arrangement that included manufacturing disks, manuals, and packaging.
Compared to the cost of pressing CDs, manufacturing cartridges for Project Reality would be prohibitively expensive. At the time, it cost more than $20 to manufacture an 8-megabyte cartridge, compared to less than $2 to press a 640-megabyte CD. And the additional storage space on CDs could be used for video clips, animations, audio files, music, and larger games. -- The ultimate history of video games.

 tags: lunchtalk, gaming, 10X, trade-off, breakthrough, 

(BN) California Gene-Altered Food Campaigns Draw $4.3 Million

Aug. 2 (Bloomberg) -- A campaign to make California the first state to require labeling of genetically modified foods has raised $2.3 million in donations, compared with $2 million collected by opponents, state records show.

Mercola.com LLC, a closely held distributor of vitamins and nutrition products based in Hoffman Estates, Illinois, donated $800,000 to back the November ballot initiative as of July 27, according to data posted on the Secretary of State's website. Major contributors to the campaign against the measure include PepsiCo Inc., the world's largest snack-food maker, Nestle SA's Nestle USA and Coca-Cola Co., records show.

California voters were among the first to ban junk food from schools and trans-fats from restaurants. Proponents, financed by Mercola and several organic farms, are focusing their effort on the most-populous state after the failure of similar legislation in 19 states and the rejection of a petition to the U.S. Food and Drug Administration in April.

"People want to know whether their food contains genetically engineered ingredients," Stacy Malkan, a spokeswoman for the Oakland-based California Right to Know campaign, said by telephone. "This type of labeling is standard procedure in much of the industrialized world."

Proposition 37 would require manufacturers to label as "genetically engineered" food sold in retail outlets and made from plants or animals with specific changes in their genetic material. Such foods couldn't be labeled "natural." Certified organic foods and prepared foods at restaurants would be exempted.

Higher Prices

Opponents contend that mandatory labeling would raise the price of food and encourage litigation.

"The motivation for this measure is more about lawsuits than about people's health and safety," said Kathy Fairbanks, a spokeswoman for Stop Costly Food Labeling. "Setting up a California-only distribution system for foods is also costly."

PepsiCo spokesman Jeff Dahncke referred an e-mailed inquiry to the Grocery Manufacturers Association, which represents food makers. Brian Kennedy, a spokesman for the Washington-based trade group, said the FDA has "exhaustively" studied foods and beverages containing genetically engineered ingredients and found no health hazards.

Messages left with the U.S. media relations offices of Atlanta-based Coca-Cola, the world's largest soft-drink maker, and Nestle, the world's largest food manufacturer, based in Vevey, Switzerland, weren't returned yesterday.

California's Legislative Analyst's Office, in an analysis of the measure in January, concluded that it could cost as much as $1 million a year to administer, in addition to "unknown, but potentially significant" costs associated with litigation.

Grocery Shelves

Modified foods have been on U.S. grocery shelves since 1994. Ninety-three percent of those responding to a nationally representative poll by Thomson Reuters Corp. in 2010 said genetically engineered foods should be labeled.

The trend in food labeling is toward more disclosure, said Mike Owen, an agronomy professor in Ames, Iowa, at Iowa State University, in a telephone interview.

Passage of the California measure would raise the stakes across the U.S, he said.

"It would be a watershed nationally and would set a precedent," Owen said. "If we do that, there could be an added expense to the consumer for the cost of making that disclosure."

Malkan disputed assertions of additional costs. Manufacturers would have 18 months to phase-in the new labels, during which most update their product labeling anyway, she said.

Mercola.com is headed by Joseph Mercola, a suburban Chicago osteopath who has warned in videos posted on YouTube of the dangers of genetically modified foods. A Mercola spokesman, Brian Barth, didn't respond to an e-mail seeking comment yesterday.

"This isn't just about California," Mercola said in one video. "This is an authentic grassroots efforts to get genetically engineered foods labeled everywhere in the U.S."

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(BN) Google Plans $184 Million Finland Data-Center Expansion

Aug. 2 (Bloomberg) -- Google Inc., owner of the world's most-popular search engine, plans to spend 150 million euros ($184 million) to expand its data center in Finland as demand rises for online access to video and data.

The construction work to expand the facility in Hamina, about 150 kilometers (93 miles) east of Helsinki, will last about 18 months, Google said today in a statement distributed at a media event at the site.

Google, based in Mountain View, California, needs more capacity as demand increases for data-intensive services such as its YouTube video website and Gmail. In April, the company said it will spend more than $300 million building its largest Asian data center in Taiwan, after announcing smaller centers in Hong Kong and Singapore in September.

In 2009, Google said it planned to invest an initial 160 million euros to set up the Hamina facility in a former newsprint mill -- Google's first conversion of an existing building into a data center. The company paid 40 million euros for the coastal paper mill, part of which was designed by Finnish architect Alvar Aalto.

(BN) InterDigital, Burberry, Warner: Intellectual Property

Aug. 2 (Bloomberg) -- InterDigital Inc. won an appeals court ruling reviving its effort to force Nokia Oyj to pay patent royalties on the third generation of mobile-phone technology. InterDigital soared as much as 25 percent on the decision.

The U.S. Court of Appeals for the Federal Circuit overturned a U.S. International Trade Commission decision yesterday that cleared Nokia of claims it infringed InterDigital patents, and sent the case back to the agency for further review. The decision was posted on the court's website.

The commission "erred in construing certain critical claim terms in both patents," the appeals court said. The patents in the case, first filed in 2007, cover power control and high- speed data transmission, InterDigital contends.

InterDigital has said it asked the ITC to block imports of Nokia's 3G phones because the Espoo, Finland-based company refuses to pay patent royalties on networks that allow mobile- phone users to hold videoconferences, download music and browse the Internet. Patent royalties accounted for almost all of the $301.7 million in revenue InterDigital reported last year.

In the ITC case, the trade commission sided with Nokia, saying the patents weren't infringed. Nokia, whose sales have declined amid smartphone competition from companies including Apple Inc., had also claimed the InterDigital patents were invalid.

InterDigital filed a second complaint at the ITC against Nokia, as well as ZTE Corp. and Huawei Technologies Co., accusing the Chinese phone-equipment makers of infringing patents related to 3G wireless technology. A hearing in that case is scheduled for October in Washington.

InterDigital, based in King of Prussia, Pennsylvania, said in its annual report that it received royalties from more than half of all 3G mobile devices sold last year, including ones from Samsung Electronics Co., Apple, Research In Motion and HTC Corp.

Nokia had a license with InterDigital for second-generation and some third-generation technology that expired in 2006. Nokia paid $253 million in a settlement reached in 2006. The companies were unable to reach a new agreement, InterDigital has said.

The case is InterDigital Communications v. ITC, 2010-1093, U.S. Court of Appeals for the Federal Circuit (Washington). The ITC case is In the Matter of Certain 3G Mobile Handsets and components thereof, 337-613, U.S. International Trade Commission (Washington).

The pending ITC case is In the Matter of Wireless Devices with 3G Capabilities, 337-800, ITC in Washington.

Samsung Lawyer Fails to Undo Apple Trial Evidence Ruling

Samsung Electronics Co. again lost its bid to use evidence a lawyer for the company described as "critical" to rebutting Apple Inc.'s central allegations in a patent-infringement trial in California.

Samsung was barred by U.S. District Judge Lucy Koh in San Jose from presenting images of a smartphone that it claims to have been developing in 2006, the year before Apple introduced the iPhone. Samsung said in a filing that the images show evidence that it was developing the next generation of mobile phones with a "simple, rounded rectangular body" before Apple's January 2007 announcement of the iPhone.

Samsung said in an e-mailed statement that Koh's ruling means "Samsung was not allowed to tell the jury the full story and show the pre-iPhone design for that and other phones that were in development at Samsung in 2006, before the iPhone."

Samsung's statement included attachments of the evidence that Koh had excluded, prompting a demand from Koh for an explanation of who drafted and issued the release.

Harold McElhinny, a lawyer for Apple, told Koh the release was "on perception an intentional attempt to pollute this jury" rising to "contempt of court."

Quinn said in a filing yesterday with the court that he authorized the statement, and that material included in the excluded exhibits was previously in the public court record.

Quinn said that distribution of the statement and attached exhibits is consistent with Koh's rulings that the case should be "open to public view" -- a view demonstrated by the judge's repeated denial of Samsung's and Apple's attempt to seal documents.

Apple's accusations that the disclosure amounted to contempt of court "unfairly called my personal reputation into question and have resulted in media reports likewise falsely impugning me personally," Quinn said in the filing.

In another ruling yesterday, Koh said Samsung can use some evidence from a former Apple designer to defend against the infringement allegations.

Apple, based in Cupertino, California, seeks $2.5 billion for its claims that Samsung infringed patents covering designs and technology for mobile devices.

Samsung countersued and will present claims that Apple is infringing two patents covering mobile-technology standards and three utility patents. Samsung is demanding royalties of as much as 2.4 percent for each device sold, according to a court filing.

The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11- cv-01846, U.S. District Court, Northern District of California (San Jose).

For more patent news, click here.

Trademark

Burberry Drops Lawsuit Against Humphrey Bogart Heirs

Burberry Group Plc, the U.K.'s largest luxury-goods company, dropped a U.S. lawsuit against Humphrey Bogart's heirs over the use of an image of the late actor in advertising.

Burberry in May asked the federal court in Manhattan to declare its use of Bogart's name and image didn't infringe Bogart LLC's trademark and publicity rights. The London-based company uses an image from the film "Casablanca" of the late actor wearing a Burberry trench coat.

Bogart LLC, mostly owned by Bogart's children, responded by filing a trademark-infringement complaint in state court in California. That suit hasn't been dropped, according to the court's docket.

Burberry said in its complaint that it used Bogart's image, licensed from photo provider Corbis, to show the historical influence of the brand, not to sell merchandise. The case was dismissed with prejudice, meaning Burberry can't refile the claims against the Bogart estate.

Evan Glassman, a lawyer for Burberry, and Paul Stevens, a lawyer for Bogart LLC, didn't immediately respond to voice-mails seeking comment on the dismissal.

The federal case is Burberry Ltd. v. Bogart LLC, 12-3491, U.S. District Court, Southern District of New York (Manhattan). The state case is Bogart LLC v. Burberry Group, BC483967, Superior Court of California, County of Los Angeles.

Church Officials in Custody in Trademark Dispute With Adventists

A trademark dispute involving rival religious denominations has resulted in an arrest warrant being issued for two church officials, both of whom are now in custody, according to the Redlands-Loma Linda Patch newspaper.

The General Conference of the Seventh-Day Adventists filed suit in a Tennessee federal court in 2006 in an effort to halt a Walter Mc. Gill of Guys, Tennessee from using its trademarks without authorization.

Gill, the pastor of a church known as the Creation Seventh Day Adventist Church, and was accused of using trademarks in connection with religious observances, goods and services to which he wasn't entitled, the conference said in its pleadings.

He was also accused of using the conference's trademarks in his Internet domain names, which confused the public, according to court papers. The conference said it could not control the quality or content of what McGill was offering under its trademarks, and that this was harmful and unlawful.

The conference had sought a court order barring further infringement of its marks, a recall of all infringing promotional material, the transfer of the objectionable domain names and awards of money damages, attorney fees and litigation costs.

McGill told the court he would not participate in settlement discussions because his religious beliefs made it impossible for him to compromise his position on the use of the name. The court ordered him to appear or face sanctions, and issued a similar order to a second church official, Lucan Chartier. When both failed to comply, the court found them in contempt and issued arrest warrants May 3.

In June, the court awarded attorney fees and litigation costs of $72,000 to the conference for the filing of two separate motions in the case, according to Bloomberg data

The Patch newspaper reported that McGill was arrested June 13, and that Chartier surrendered to authorities July 31 in Redlands, California, and that both intend to fast during their incarceration.

Lawyers identified on the court docket as representing the pair are no longer in the case.

The case is General Conference Corporation of Seventh-Day Adventists v. McGill, 1:06-cv-01207-JDB-EGB, U.S. District Court, Western District of Tennessee (Jackson).

For more trademark news, click here.

Copyright

Warner Brothers Sues Amazon Resellers Over Counterfeits Sales

Time Warner Inc.'s Warner Brothers unit filed more than a dozen copyright-infringement suits in federal court in Los Angeles against Amazon.com resellers.

The complaints, all filed on July 30, are each against one named seller and other unnamed defendants. The defendants are among the 2 million Amazon.com resellers, who use the Seattle- based retail giant's system to sell new, used and collectible items, according to court papers.

Warner Brothers said these sellers are selling infringing copies of its products. Among those listed in the various complaints are the Harry Potter films, and "Treme," "One Tree Hill" and "The Wire" television programs.

Amazon.com itself isn't a defendant.

The studio asked the court for orders for the seizure of the allegedly infringing products, and for awards of money damages, attorney fees and litigation costs. Additionally, it seeks an order barring further infringement of its products.

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Raytheon Claims Flir Stole Trade Secrets Revived on Appeal

U.S. defense contractor Raytheon Co. won an appeals court ruling that revives claims Flir Systems Inc.'s Indigo Systems unit lured away former workers to steal trade secrets related to infrared cameras.

The U.S. Court of Appeals for the Federal Circuit said yesterday that a lower court erred in dismissing the case, and sent it back for further review. It said the trial judge erred in saying that Raytheon should have known of any supposed theft before 2004, so it was too late to file the lawsuit in 2007.

"It was for the jury and not for the district court to determine when Raytheon should have first discovered the facts supporting its cause of action," the three-judge panel wrote.

Indigo, now known as Flir Commercial Systems, was founded in 1996 by former Raytheon employees and had a consulting contract with the Waltham, Massachusetts-based defense contractor through 2000.

That year, Indigo was chosen over Raytheon for a contract to provide infrared cameras to the U.S. military, the court said. In 2003, it beat out Raytheon again, this time for a subcontract from Northrop Grumman Corp. to provide the cameras for the F-35 Joint Strike Fighter program.

Raytheon said it received assurances from Indigo that its employees, including ones hired from Raytheon, weren't using Raytheon technology.

In 2004, Raytheon obtained an Indigo camera, disassembled it and "found what it believed was evidence of patent infringement and trade secret misappropriation," according to the ruling. The suit was filed in 2007, within the three-year statute of limitations based on that discovery and the patent claims have since settled.

Raytheon had suspicions in 2000 because of the number of employees it lost to Indigo and the contract losses, the lower court ruled. It should have acted then, the judge said.

The judge should have considered that Raytheon relied on pledges from Indigo that Raytheon intellectual property wasn't being used, the Federal Circuit said. The court panel said the purchase of the Indigo camera was a normal competitive gambit, not out of any particular suspicion.

"The district court essentially concluded that from 2000 on, Raytheon was on permanent inquiry notice and therefore had a constant duty to investigate all acts of competition by Indigo for evidence of misappropriation," the panel wrote.

Flir, a Wilsonville, Oregon-based maker of night-vision cameras, bought Indigo in 2004.

The case is Raytheon Co. v. Indigo Systems Corp., 2011-1245 and 2011-1246, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Raytheon Co. v. Indigo Systems Corp., 07cv109, U.S. District Court, Eastern District of Texas (Sherman).

(BN) Osim’s Massage Chairs Link IPhones to Tap Buyers: Southeast Asia

Aug. 3 (Bloomberg) -- Osim International Ltd., Asia's biggest maker of massage chairs, is tapping on Apple Inc.'s iPhone to help boost sales to younger buyers.

The app will allow users of its latest chairs, which cost S$5,588 ($4,484) each, to download new massage programs that cater to individual needs, Ron Sim, chief executive officer of the Singapore-based company, said in an interview. More massage sequences, such as those for tennis or golf players, may be rolled out and downloaded to existing chairs, he said.

"That means the programs in the future will be infinity," Sim, 53, said yesterday in Singapore. "This business is about well-being and we need to continue to innovate products to innovate demand."

Osim, which sells a variety of massage and so-called well- being products in 26 countries, is banking on new technologies to boost sales in the key markets of China, Hong Kong, Taiwan and Singapore. The iPhone strategy is crucial as Osim expands sales of its products, including new chairs called uDivine App, among customers in their 20s and 30s, Sim said.

The iPhone feature, which connects wirelessly to the chair through Bluetooth, also works on the iPad, he said. A similar product may eventually be added for phones using other mobile technologies, said Sim, who has run his company for more than three decades.

"It's part of their constant drive to innovate products," said James Koh, a Singapore-based analyst at Maybank Kim Eng Holdings, who rates the stock outperform. "For people who have not bought a uDivine chair, that is possibly a very good reason to buy one now."

Installment Plans

Osim's massage chairs, which start at S$2,000, make up 50 percent of its sales and may rise to 60 percent of revenue in three to five years, said Sim, who was named Best CEO for the mid-cap category at the Singapore Corporate Awards last month.

To tap younger buyers, Osim is also offering installment payment plans, Sim said, adding that "a two-hour spa session costs more than an installment."

Osim last week reported second-quarter profit climbed 20 percent to S$22.5 million, while sales increased 12 percent to S$155 million.

"Eventually the strategy for them is to slowly phase out the older chairs," said Brandon Ng, a Singapore-based analyst at UOB Kay Hian, who has a buy rating. "This is just another strategy for them to introduce new products," and the higher price will improve the company's margins, he said.

All nine analysts who track the stock rate it a buy, according to data compiled by Bloomberg. Osim shares have risen 8.2 percent this year, lower than the 15 percent advance in the Singapore benchmark Straits Times Index.

Slowing Growth

The company is also expanding as its biggest markets face slowing growth. China's manufacturing teetered on the edge of contraction in July while Singapore's economy unexpectedly shrank last quarter, adding to signs of a deepening slowdown in Asian growth as Europe's debt crisis curbs demand for the region's goods.

Osim, which operates GNC Holdings Inc. stores in Asia- Pacific markets such as Singapore, Malaysia, Taiwan and Australia, and owns the Brookstone Inc. chain of specialty items in the U.S., expects Asia to drive its growth. Osim expects to list the Merrimack, New Hampshire-based Brookstone within three years, he said.

With S$196 million in cash and no debt, Osim is also seeking acquisitions that could expand its lifestyle and well- being business, Sim said. The company owns a stake in TWG Tea Co., a Singapore-based high-end tea retailer.

"As long as the market is uncertain, we have a better bargaining power," he said. The company isn't planning to seek financing for acquisitions as "we are looking for companies with growth potential."

'Real Growth'

The outlook for sales remain positive because of the low penetration rate for massage chairs in its key markets, said Sim, who has seven of these products at home, including four in his karaoke room.

About 5 percent of households in Singapore and Hong Kong own massage chairs, he said, compared with 30 percent in Japan. Osim, which has the biggest market share in the two cities, expects the penetration rate for these markets to reach the level in Japan within 10 years, he said.

In China, less than 1 percent of the households in the cities it operates in own massage chairs, he said.

"That's where the real growth is," Sim said. "There's still a lot of upside."

(BN) Worst India Outage Highlights 60 Years of Missed Targets

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India's worst-ever power crisis is the legacy of 60 years of missed investment targets and on current projections fixing the nation's electricity supply is still decades away.

The network in Asia's third-largest economy loses 27 percent of the power it carries through dissipation from wires and theft, while peak supply falls short of demand by an average of 9 percent, according to India's Central Electricity Authority. Some 300 million people, or one in every four, remain without links to the grid and the number will still be about 150 million by 2030, according to the Paris-based International Energy Agency.

Power was restored in all areas after a blackout yesterday across the north and east of the country, the second in two days, left more than 640 million people without electricity. It forced homes and businesses to switch to back-up supplies, halted trains and public transport and caused traffic jams. Prime Minister Manmohan Singh in response will probably speed approvals for coal mining and power plants, Planning Commission energy adviser I.A. Khan said in a phone interview, developments that will take years to build.

"The proximate cause of a power outage on this scale almost always seems trivial," said Michael Parker, an analyst in Hong Kong with Sanford C. Bernstein & Co. "The blackout highlights the big underlying issue India faces in terms of infrastructure quality. To keep the lights on, India needs to add power capacity, build robust transmission and distribution systems, ensure fuel supply and transport and reform power pricing. Most of that is expensive."

Missed Targets

Power Grid Corp. of India, the nation's largest transmission company, was little changed at 119 rupees at the close in Mumbai. The stock has gained 11 percent in the past year, compared with 5.8 percent drop in the benchmark Sensitive Index. (SENSEX)

India has missed every capacity addition target since 1951, underscoring the urgency behind Singh's effort to make $400 billion in investments, or 40 percent of the total spend planned on infrastructure, over the next five years, according to Power Secretary P. Uma Shankar, the top bureaucrat in India's power ministry.

The world's second-most populous nation suffers from frequent power outages that can last as long as 10 hours, amid summer temperatures of as high as 45 degrees Celsius (113 degrees Fahrenheit) in the capital, New Delhi. Power supply shortages shave about 1.2 percentage points off the nation's annual growth, according to the Planning Commission.

Excessive Draw Downs

States usually contract power purchases a day in advance, according to Jayant Deo, managing director of the Indian Energy Exchange Ltd. Some end up drawing more power than contracted, and are charged a penalty for the additional purchases. When a buyer draws more than is due, the frequency at which the grid operates drops, causing the system to collapse and forcing power plants connected to it to shut down.

It was excessive draw downs by states in north India which caused the grid to collapse this week, said R.N. Nayak, chairman of state-run Power Grid (PWGR), which carries half of the electricity India generates.

Ten north Indian power transmission companies and eight electricity dispatch centers had already been censured for drawing more power than their due between Jan. 1 and March 25 and on July 10 the states of Uttar Pradesh, Rajasthan, Punjab and Haryana were ordered by the Planning Commission to cease overdrawals from the grid to maintain its safety. As of July 30, the overdrawals were continuing, the Commission said.

Price Controls

Coal and natural gas supply shortages and the lowest monsoon rains in three years have cut electricity generation in India, even as demand continues to grow, putting additional stress on the grid. Power stations, including those operated by NTPC Ltd. (NTPC) and billionaire Anil Ambani-controlled Reliance Power Ltd. (RPWR), in north India feed electricity into the grid.

India's government controls the price of electricity and the coal used to produce it as it seeks to reduce costs in the country where about 800 million people live on less than $2 a day. That crimps utilities' profitability and investment. The nation also needs to improve its coal output and transportation, Bernstein's Parker said. Prime Minister Singh is seeking $1 trillion in investment in the five years to 2017 to build out an infrastructure that is currently ranked below Kazakhstan and Guatemala by the World Economic Forum.

Extra Demand

Power Grid, established in 1989, is setting up a nationwide grid to integrate the country's five electrical regions. It plans to spend 1 trillion rupees ($18 billion) in the next five years to double capacity, said I.S. Jha, director for projects.

Four states in northern India - Uttar Pradesh, Haryana, Punjab and Uttarakhand - together drew an average 47.4 million units of extra power a day from the grid in the week starting July 10, according to the Central Electricity Regulatory Commission. That's equivalent to 6 percent of the electricity generated in the northern region on July 27, according to Central Electricity Authority data.

"For long-term solution to such grid indiscipline, it's important all utilities bridge their demand-supply gap and that's only possible when their financial health allows them to contract adequate power purchases and pay for it," said Debasish Mishra, senior director at Deloitte Touche Tohmatsu.

Permits for coal mines and land for power plants will probably now be allocated at a swifter pace, the Planning Commission's Khan said, helping at least $33 billion of stalled projects get off the ground.

Generation Capacity

"The concern is more about our generation capacity," Khan said. "If states had enough power, they would not overdraw and bring us to this crisis situation."

India added about 55,000 megawatts of capacity in the five years ended March 31, 30 percent less than targeted. The country has set itself a goal of adding 76,000 megawatts of capacity in the five years to March 2017.

The nation depends on coal to generate more than half of its electricity. Supply from Coal India Ltd. (COAL), the world's biggest producer, lags behind demand, causing power stations to operate below capacity. Some plants are unable to afford more expensive imported coal because of India's domestic price controls on electricity.

Eighteen of 89 coal-fired power stations in India had "super-critical" stockpiles, or less than four days of supply, and 33 had less than seven days, according to Central Electricity Authority data for July 29. That compares with 14 plants with super-critical stockpiles on July 1.

Hydroelectricity Supply

The shortage of coal has become more acute because the country's worst monsoon in three years has hit India's hydroelectricity generation. Hydroelectricity supply in June shrank 5.5 percent from a year earlier, the first year-on-year decline since 2009, according to the Central Electricity Authority.

"There is a need to ramp up power capacity on a war footing," said Raju V. Kanoria, president of the Federation of Indian Chambers of Commerce and Industry, in an e-mailed statement yesterday. "Coal and gas is a prerequisite for spurring investments in the power sector and reforms that will help make these fuels available must no longer be held back.

(BN) Hong Kong Smog Worst in 2 Years as Storm Traps Air Pollutants

Hong Kong's roadside air pollution hit the worst levels in more than two years as a typhoon approaching Taiwan brought hot weather and trapped pollutants, prompting the government to issue a health warning.

The Air Pollution Index was "severe" at the roadside- monitoring station in Central and "very high" in both Causeway Bay and Mongkok as of 7 a.m. local time, the city's Environmental Protection Department said on its website. The roadside index in Central reached 212, the highest level since March 23, 2010.

Typhoon Saola grounded flights and closed businesses in Taiwan and was moving toward China's Fujian and Zhejiang provinces this morning. Hong Kong is influenced by the outer layer of the storm as hot weather and weak winds result in higher ozone levels, trapping the pollutants in the city, the government said in a statement on its website yesterday.

"The weather conditions only exacerbate the situation," Erica Chan, campaign manager at Clean Air Network, said in a release yesterday. Vehicle exhaust fumes in the city are "the real root of this problem," she said.

The levels of fine suspended particulates reported in the 24-hour period from July 31 to August 1 surpassed the World Health Organization's recommended Air Quality Guidelines, Clean Air Network said.

The Hong Kong government advised people with respiratory or heart illnesses, the elderly and children to avoid heavy- traffic streets and reduce physical activities when the pollution indicator is at the "very high" level.

(BN) Wind Lobby Raises German Turbine Forecast, Offshore Concerns

A German wind-power lobby raised its forecast for the country's turbine installations this year after expansion in the first half was greater than anticipated.

Germany will add 2,400 megawatts of turbines, up from the prior estimate of 2,200 megawatts, Alexander Sewohl, a spokesman at the German Wind Energy Association, or BWE, said in an interview. First-half installations expanded by 26 percent to 1,004 megawatts, according to the lobby group.

"We're seeing the southern German states increasingly backing the German energy switch with new wind projects," Herrmann Albers, president of BWE, told reporters in Berlin. Accumulated installations in Germany rose to 30,016 megawatts.

Germany is investing in clean energy after saying it will phase-out nuclear power. It plans to build offshore wind farms covering an area six times the size of New York city and raising the share of renewable-energy output to at least 35 percent of total production by the end of the decade, from 25 percent now.

BWE forecast 46,000 megawatts of installations around the world this year. The figure may decline to 40,000 megawatts or less next year as the U.S. market is expected to decline "catastrophically" and Europe remain unchanged, said Thorsten Herdan, head of VDMA Power Systems, a manufacturers' group.

Pressure on prices to fall will continue to dominate the industry as Chinese companies try to sell more turbines in Europe after building up capacity that is capable of satisfying "the entire current global demand," Herdan said.

Offshore Delays

Germany added 45 megawatts of offshore wind turbines in the first half, less than expected, mainly on delays in connecting them to the grid, he said. Delays mean it won't reach a target to install 10 gigawatts of turbines at sea by 2020, Herdan said.

RWE AG (RWE), Germany's second-largest utility, last week said it postponed a decision on building the Innogy Nordsee 1 offshore wind farm until 2013 as it waits for the government to set out who will pay for delays. BWE expects 150 megawatts of offshore turbine installations in Germany this year, Albers said.

German turbine makers including Siemens AG and Nordex SE (NDX1) last year produced volumes valued at about 5.96 billion euros ($7.3 billion), or 16.1 percent of the world total, BWE said.

(BN) Internal-Combustion Engine to Enjoy Long Life, U.S. Study Finds

The internal-combustion engine, propelling U.S. automobiles since before the Model T Ford, will remain the dominant power source for cars until at least 2050, according to a study by a panel advising the Energy Department.

The National Petroleum Council said high costs and technology hurdles will impede any substitute technologies such as batteries and hydrogen fuel cells, which have been promoted by presidents Barack Obama and George W. Bush.

The petroleum council, which includes representatives from industry, government and universities, said today U.S. policies should be "technology neutral" and depend on "market dynamics" to pick winners and losers.

"It's too soon to choose" which technology holds the most promise, said Linda Capuano, a co-author of the report and vice president for technology at Marathon Oil Corp. (MRO) in Houston.

Energy Secretary Steven Chu asked the council in 2009 to study how advancement of "alternative-fuel vehicle systems" can improve fuel efficiency, helping to lower greenhouse-gas emissions and reduce the need for oil imports. Chu was briefed on the report by the council at an event in Washington today.

The internal-combustion engine will remain the "dominant propulsion system for decades to come," said Bill Reinert, a co-author of the report and a Toyota Motor Corp. (7203) executive.

Combining traditional engines with electric batteries in plug-in hybrids and reducing the weight of cars and trucks promise to increase per-gallon mileage averages, the report states.

Efficiency Gains

Vehicle efficiency gains could be as much as 90 percent even with the internal-combustion engine as the dominant technology, the council said.

It will take some kind of "disruptive innovation" to knock the internal-combustion engine from its perch, the report states.

Obama has sought to advance battery development through U.S. grants, tax breaks and loan guarantees to companies including Fisker Automotive Inc. and Tesla Motors Inc. (TSLA) He also set a goal of one million electric vehicles on the road by 2015.

General Motor Co. (GM)'s Chevrolet plug-in hybrid Volt more than tripled sales this year to 8,817 as of June 30, while sales of Nissan Motor Co. (7201)'s all-electric Leaf slid from a year earlier.

Vehicles fueled with compressed natural gas -- not electric batteries -- will emerge as the biggest competitor to the combustion engine if natural-gas prices remain low, the report found. Hydraulic fracturing in shale rock formations has boosted supplies and pushed prices for the fuel to their lowest level in a decade.

Gas Emissions

Chu also asked the council to examine the likelihood the U.S. could cut in half greenhouse-gas emissions from cars and trucks by 2050.

S. Shariq Yosufzai, Chevron Corp. (CVX) vice president for global downstream and among the authors of the report, said greater use of biofuels, natural gas and electric batteries will lead to significant per-mile carbon-emission reductions.

Those gains may be offset with an increase in total miles driven as forecast by the Energy Information Administration, which tracks and analyzes energy data for the U.S.

There isn't a clear path to meeting the 50 percent greenhouse-gas reduction target, Yosufzai said.

In 2010, transportation accounted for a third of U.S. greenhouse-gas emissions.

Of that, about 80 percent comes from cars and trucks on the road, with boats, railroads and airplanes accounting for the remainder, according to the report.

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(BN) Your 119 Billion Google Searches Now a Central Bank Tool

Margo Sugarman spent months last year searching on Google for the appliances to complete her dream kitchen, scouring the Internet for information on the latest double ovens and low-noise mixers.

Not only did those queries guide the Tel Mond, Israel, resident to the best deals for her 70,000-shekel ($17,680) renovation, they also helped the Bank of Israel, which looks to searches like Sugarman's to assess the state of the nation's $243 billion economy.

The central bank stands at the forefront of the world's hunt for new economic indicators, analyzing keyword counts for everything from aerobics classes to refrigerators -- reported by Google almost as soon as the queries take place -- to gauge consumer demand before official statistics are released. The Federal Reserve and the central banks of England, Italy, Spain and Chile have followed up with their own studies to see if search volumes track trends in the economies they oversee.

At stake is the ability of the guardians to deploy nimbler policy responses. Greater foresight could make the difference between a slowdown and a recession, a recovery and an inflation- stoking boom, according to Erik Brynjolfsson, a member of the Federal Reserve Bank of Boston's Academic Advisory Council.

"When central bankers were looking at traditional data, they were essentially looking out the rear-view mirror," said Brynjolfsson, a professor at the Massachusetts Institute of Technology in Cambridge. The December 2009 study he co-authored on predicting U.S. home sales using search volumes was cited by three of the central bank studies.

'Better Forecasts'

"If the Fed had had access to this information, they would have been able to make better forecasts of what was happening to the housing market and known more quickly the depth of the problem" during the 2007-2009 recession, he said.

It all started with a hunch in Mountain View, California. On the heels of developing a new website reporting how often users searched for certain keywords, Hal Varian, Google Inc. (GOOG)'s chief economist, said he wondered whether this data could foreshadow what traditional economic reports would show later. So he ran the numbers.

"The 'aha moment' was, gee, this actually works," Varian said in an interview.

The result was a 23-page paper he co-wrote in April 2009, demonstrating how data reported on the Google Trends service improved forecasts of auto and home sales and retail spending in the U.S.

New Data

Tanya Suhoy, a senior economist at the Bank of Israel, released a paper three months later finding that the new data helped predict slowdowns and slumps in Israel.

Economists from the Central Bank of Chile to the Bank of England soon began to ask similar questions: Did more people browsing for cars predict an increase in auto sales? Was a jump in research on unemployment benefits a hint that people were losing jobs?

Neither Varian nor MIT's Brynjolfsson say they are surprised central bankers have been particularly interested in the technique: One of the challenges of policy making has been having to set interest rates based on delayed economic information.

Google makes its data available one to three days after users perform searches. The U.S. Commerce Department typically publishes its monthly report on retail sales two weeks into the following month.

"With monetary policy, you can turn the spigot left and right in a few seconds," said Varian, whose former students from his more than three-decade teaching career include Fed Chairman Ben S. Bernanke. "If you're going to be more responsive, you need to have up-to-date information."

Fischer's Suggestion

That's the philosophy underpinning the Bank of Israel's analysis, spearheaded by Suhoy, who began studying Google's data at Governor Stanley Fischer's suggestion.

Using query volumes in place of government statistics that are not yet available, the staff computes a monthly index that reflects the current health of the economy. The figures then are presented to Fischer and his policy committee before they set the nation's benchmark interest rate.

Margo Sugarman in Tel Mond exemplifies why this works. Like a growing number of consumers around the world, the 45-year-old communications consultant turns first to the Internet whenever she's considering buying something. That makes her queries a precursor to what often results in a purchase.

Favorite Brownies

When she wanted a mixer for her three children's favorite cream-cheese brownies, Sugarman scrutinized the reviews she found through Google to decide between a model from Kenwood and one from KitchenAid. She ended up buying the KitchenAid appliance at her local electronics store.

To be sure, the research connecting economic forecasting with Google's search counts -- totaling 119 billion worldwide in June, according to Internet research company ComScore Inc. (SCOR) -- is still in its early stages. Even the biggest proponents of the tool cite causes for reservation. The figures go back only to 2004, constraining comparisons with statistics that have a longer track record. And by limiting its sample to Internet users, the search volumes may not reflect the purchases of those who spend less time online: the elderly and the less affluent.

"Potentially, using Google could be interesting, but at the moment its forecasts of macroeconomic variables aren't reliable," said Lucrezia Reichlin, a former head of research at the European Central Bank and now a professor at the London Business School. "Google is sexy and something may come of it, but more research is needed."

Jobseeker's Allowance

Even with those limitations, the Bank of England is another central bank that tracks Google's searches. The popularity of search terms like "JSA," short for the U.K.'s jobseeker's allowance, helped predict unemployment data, according to a June 2011 study authored by BOE researchers Nick McLaren and Rachana Shanbhogue.

Search counts "are likely to become an increasingly useful source of information about economic behavior," they wrote. Chris Shadforth, a spokesman, declined to comment further.

At the Bank of Spain, Concha Artola and Enrique Galan analyzed travel-related queries in the U.K. in a paper released in March. Their conclusion: Searches predicted the inflow of British tourists into Spain with a lead of almost one month.

Mortgage Refinance

At the New York Fed, Rebecca Hellerstein and Menno Middeldorp compared the popularity of the phrase "mortgage refinance" with an index tracking the number of refinancing applications filed by homeowners. In Italy, Francesco D'Amuri at the Rome-based central bank found that Internet searches generated jobless-rate estimates that were more accurate than ones relying on traditional leading indicators of the labor market.

Even in a developing economy like Chile, where less than half the population goes online, data on car-related searches helped predict auto sales, according to a paper from Central Bank of Chile economists Yan Carriere-Swallow and Felipe Labbe.

The central banks of Spain, Italy and Chile don't use Google data to assess their economies at the moment, while Spain is exploring future uses, and Chile believes the results of research on the tool worldwide are promising, according to spokesmen and spokeswomen at the respective banks who declined to be named because of bank policy. New York Fed spokeswoman Andrea Priest declined to comment.

Market Edge

Investors hoping for an edge in the markets also are canvassing the trove of data left behind by Internet users. Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds, uses search counts to examine what consumers intend to buy even before they actually make their purchases.

"The biggest benefit of this data is that you get an imperfect look at the mind of individuals," said Jacobsen, who helps oversee $211 billion in assets in Menomonee Falls, Wisconsin. "Oftentimes, we can look at incomes, interest rates and past behavior and try to determine what individuals are going to do. This gives us a peek at what people are interested in at that very moment."

Beyond forecasting, Google's statistics are helping economists determine the effectiveness of policy. In an August 2011 paper, Mark Spiegel, vice president of international research at the San Francisco Fed, looked at search volumes of words such as "freeze" and "crisis." He examined changes in perceptions of various countries' default risk during the 2008 credit crunch, when the Fed was establishing swap lines with other central banks to ease global liquidity shortages.

"This is all in its infancy, but it's fascinating," San Francisco Fed President John Williams told reporters in March, referring to what he sees as a "data revolution." It's "an enormous amount of information" that will better help "us understand in very real-time what's going on."

(BN) Monsanto Awarded $1 Billion Against DuPont by Jury

Monsanto Co. was awarded $1 billion, the biggest U.S. jury verdict this year, in a patent- infringement trial against DuPont Co. (DD) over seeds for growing herbicide-tolerant soybeans.

The verdict was the fourth-largest jury award in a patent trial in U.S. history, according to data compiled by Bloomberg. The largest patent verdict, for $1.7 billion, was awarded in 2009 against Abbott Laboratories (ABT) in a case involving the arthritis drug Humira and was later reversed on appeal.

The panel of five women and three men in federal court in St. Louis began their deliberations yesterday and returned 45 minutes later with the verdict against DuPont, ending a four- week trial.

The trial revolved around Monsanto's patent for making Roundup Ready crops, a technology at the heart of its $13.7 billion in annual revenue. Farmers have embraced the technology because it allows them to kill weeds with Roundup herbicide while leaving crops unscathed.

The companies are the two biggest in the $34 billion commercial seed market, which includes $13.3 billion of genetically modified seeds.

"This verdict highlights that all companies that make early and substantial investments in developing cutting edge technology will have their intellectual property rights upheld and fairly valued," Monsanto General Counsel David Snively said in an e-mailed statement.

'Fundamental Errors'

DuPont said in a statement that it strongly disagrees with the verdict and will appeal it.

"There were several fundamental errors in the case which deprived the jury of important facts and arguments and led to the disappointing outcome," DuPont said in the statement. "DuPont will appeal at the earliest possible opportunity and expects to overturn this verdict."

The jury's finding that DuPont's infringement was willful means the damages could yet be increased, according to Monsanto's statement.

Lawyers for St. Louis-based Monsanto argued at the trial that DuPont had no right to make hundreds of lines of soybeans combining the Roundup Ready trait with a similar DuPont technology known as GAT.

DuPont, based in Wilmington, Delaware, countered that Monsanto deceived the government to obtain the patent, rendering it unenforceable.

'Common Sense'

"You need to use your common sense," Leora Ben-Ami, a DuPont lawyer, said in her summation. "If they had nothing to hide, why did they hide it. These rules are not made to be broken."

The Roundup Ready trait is engineered into more than 95 percent of soybeans, largely through licensing agreements, generating $22 billion in revenue in the past eight years for Monsanto and the more than 200 seed companies that license the technology, George C. Lombardi, a partner in Chicago-based Winston & Strawn LLP, told the jury July 10 in opening statements.

Monsanto sued in 2009 to block DuPont from adding the Roundup Ready trait to its GAT soybean seeds, which are engineered to tolerate so-called ALS herbicides and glyphosate, the active ingredient in Roundup. Adding a second glyphosate- tolerance gene to Roundup Ready crops is prohibited by the companies' licensing agreement, U.S. District Judge Richard Webber previously ruled.

At trial, DuPont claimed Monsanto sued only after it was shown data that the two genes work better than either GAT or Roundup Ready alone. DuPont argued there was nothing wrong with making the combination because Monsanto's Roundup Ready patent is invalid and unenforceable.

Settlement Offer

Monsanto offered to settle the lawsuit during the trial by giving DuPont the opportunity to license its technology.

"The interesting part of the award was the speed of the decision," Jeff Windau, a St. Louis-based analyst at Edward Jones & Co., said yesterday in an e-mail. "Obviously Monsanto put forth some compelling evidence."

He rates DuPont shares a buy and Monsanto a hold.

The patent was initially issued in 1997, based on a 1994 application. In 2003, Monsanto asked the U.S. Patent and Trademark Office to reissue the patent to correct what it said was an inadvertent mixing of patent claims from 1990 and 1994 applications.

DuPont contended Monsanto did that to mislead the patent office so the agency wouldn't discover it was trying to hide information that might have blocked the patent.

'Inside the Bag'

"Monsanto didn't want people to know what was inside the bag, what was inside the seed," Ben-Ami, a New York-based lawyer with Kirkland & Ellis LLP, told the jury in her July 10 opening remarks. "Monsanto didn't want people to know how the seed was made."

She returned to that theme again yesterday in her closing argument.

"When Monsanto went to reissue its patent it was not to correct an error, it was a strategy, an attempt to lengthen its exclusivity," Ben-Ami told the jurors.

Rebutting, Lombardi asked the panel for $800 million to $1 billion in royalties.

"They should pay the license fee," he said. "If you infringe, you take over the license. They infringed and they have to pay for it."

The case is Monsanto Co. (MON) v. E.I. du Pont de Nemours & Co., 09-cv-686, U.S. District Court, Eastern District of Missouri (St. Louis).

(BN) Missile Defense Staff Warned to Stop Surfing Porn Sites

The Pentagon's Missile Defense Agency warned its employees and contractors last week to stop using their government computers to surf the Internet for porn sites, according to the agency's executive director.

In a one-page memo, MDA Executive Director John James Jr. wrote that in recent months government employees and contractors were detected "engaging in inappropriate use of the MDA network."

"Specifically, there have been instances of employees and contractors accessing websites, or transmitting messages, containing pornographic or sexually explicit images," James wrote in the July 27 memo obtained by Bloomberg News.

"These actions are not only unprofessional, they reflect time taken away from designated duties, are in clear violation of federal and DoD and regulations, consume network resources, and can compromise the security of the network though the introduction of malware or malicious code," he wrote.

Individuals identified as violating the rules face referral for "appropriate" disciplinary action, he wrote. They put "their security clearances in jeopardy, and are subject to suspension and removal from Federal service or MDA sponsored contracts," he wrote.

Agency spokesman Rick Lehner said in an e-mail statement that the memo was written in response to "a few people downloading material from some websites that were known to have had virus and malware issues."

A government cybersecurity specialist, who spoke on the condition of anonymity because such work is classified, said that many pornographic websites are infected, and that criminals and foreign intelligence services such as Russia's use them to gain access to and harvest data from government and corporate computer networks.

Missile Defense

The Missile Defense Agency is responsible for developing, fielding and upgrading the nation's ground- and sea-based missile defense programs, working with Japan and Israel, among other nations. Its top contractors are Chicago-based Boeing Co. (BA); Lockheed Martin Corp. (LMT), headquartered in Bethesda, Maryland; Raytheon Co. (RTN) of Waltham, Massachusetts; Falls Church, Virgina- based Northrop Grumman Corp. (NOC); and Orbital Sciences Corp. (ORB) of Dulles, Virginia. The Pentagon is seeking $7.7 billion for the agency in fiscal 2013.

The Pentagon Inspector General criticized the agency's director, U.S. Army Lieutenant General Patrick O'Reilly, for abusive behavior toward subordinates in a May 2 report.

"Witnesses testified that O'Reilly's leadership style resulted in a command climate of fear and low morale," the inspector general found. The report was posted on the IG's website.

Network Monitored

In his memo, James reminded employees that MDA "network systems are subject to monitoring at all times. Inappropriate usage will be detected and reported to supervisors for appropriate disciplinary action."

"The seriousness of the potential breach to operations cannot be overstated," James wrote. "Contracting officers will coordinate action through contractor management when contractor personnel engage in inappropriate usage."

Asked if the memo was issued to intimidate MDA employees from accessing the IG report, Lehner said no.

(BN) Mercedes Lead Over BMW Narrows to 104 Deliveries in U.S.

Aug. 1 (Bloomberg) -- Bayerische Motoren Werke AG's namesake BMW brand, posting its first year-over-year sales decline in more than two years, managed to outsell Daimler AG's Mercedes-Benz in the U.S. last month, narrowing the distance between the two competitors to 104 deliveries for the year.

BMW's U.S. sales fell 0.5 percent last month from a year earlier to 21,297, the Munich-based automaker said today in a statement. Mercedes sold 19,311 cars and SUVs last month, a 1.6 percent gain, while Toyota Motor Corp.'s Lexus sales rose 25 percent to 18,235.

"High summer is typically a time for vacations rather than car buying which makes the July result satisfying, especially with the unsteady economy and the very short supply of new models in our dealerships," Ludwig Willisch, head of BMW's U.S. unit, said in the statement.

Mercedes U.S. sales through the first seven months of the year rose 14 percent to 147,905, according to the Stuttgart, Germany-based automaker. BMW, which overtook Lexus last year to become the top-selling luxury brand in the U.S., sold 147,801 through July, a 9.4 percent gain. BMW beat Mercedes last year by 2,715 deliveries.

Prior to July, Mercedes led BMW by more than 2,000 U.S. deliveries for the year.

The sales results don't include Daimler's cargo vans and Smart cars and BMW's Mini brand, which aren't luxury vehicles.

Targeting Repeat

Willisch has predicted that the brand will again finish No. 1 following the introduction of the redesigned 3 Series sedan. Sales of the compact car line fell 11 percent in July to 7,653. The automaker may see a sales boost later this year when it introduces the all-wheel-drive version.

The "change to model year 2013 happened this summer and the German factories had both the changeover and summer shutdowns to deal with, so supply is really tight right now," Kenn Sparks, a BMW spokesman, said in an e-mail.

All-wheel-drive 3 Series cars are being made for sale starting in September, he said.

Willisch said that August will be "the tightest month as we complete the model year transition."

The last time BMW had a year-over-year sales decline in the U.S. was in May 2010 when the company had limited availability of the 5 Series and X3 sport-utility vehicle before redesigned versions arrived at dealerships.

Incentives Reduced

BMW pulled back in incentive spending during July, according to estimates by TrueCar.com, a website that tracks auto sales. BMW's average incentive spending fell 18 percent last month from a year earlier to $3,248 per vehicle while Mercedes spending rose 29 percent to $4,096.

BMW and Mercedes are both facing better challenges from rivals in the luxury segment since vaulting into the No. 1 and No. 2 positions last year after Toyota struggled with production issues following natural disasters in Asia.

"Competition is a big part of it even though people don't necessarily directly cross-shop Cadillac to BMW," said Jesse Toprak, an industry analyst with TrueCar.com, referring to General Motors Co.'s luxury brand.

Cadillac sales rose 21 percent to 13,417 vehicles in July, the Detroit-based automaker said in a statement.

Through seven months, Lexus sales gained 23 percent to 126,367. Toyota has targeted a 25 percent increase to 250,000 vehicles this year. The brand may gain sales from the new ES sedan and RX crossover.

Audi, Acura

U.S. sales of Volkswagen AG's Audi brand rose 28 percent last month to 11,707, the company said in a statement.

Sales of the Tokyo-based Honda Motor Co.'s Acura brand rose 36 percent to 12,825 last month, the company said in a statement.

Porsche AG, the Stuttgart-based automaker, sold 2,803 vehicles in the U.S. last month, a 1.3 percent increase, the company said in a statement.

Ford Motor Co. sold 6,975 Lincolns in July, an 11 percent decline from a year earlier, according to a statement from the Dearborn, Michigan-based automaker.

Jaguar Land Rover deliveries rose 14 percent to 4,331, the U.K. brands, owned by Mumbai-based Tata Motors Ltd., said in an e-mailed statement.

Nissan Motor Co.'s Infiniti sold 11,619 vehicles last month, a 57 percent gain from a year earlier, the Yokohama, Japan-based company said in a statement. Pent-up demand is boosting sales growth, Ben Poore, head of U.S. Infinti brand sales, said in a phone interview today.

"There's no fear, at this point, in luxury," Poore said. "People are changing cars. We're seeing that as a very positive sign."

Infiniti sales jumped 21 percent for the first seven months, aided by demand for the new JX crossover and G cars.

"There's a lot of uncertainty, but that is the new norm," Poore said. "That is the new norm for the last 24 months."

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(BN) Apple App Developer Marketing Costs Higher (Correct)

July 31 (Bloomberg) -- Getting noticed on Apple Inc.'s App Store has become more expensive for developers this year, while application downloads haven't increased much, according to Fiksu Inc., a digital marketing company.

Developers who actively market their apps on the world's largest mobile-software marketplace spent about $1.44 to attract each loyal user in June, an increase of 13 percent from a year earlier, Boston-based Fiksu said in a report today, Bloomberg.com reported on its Tech Blog. A loyal user opens an app three or more times, according to Fiksu.

Competition between app developers is heating up as the market matures and users have more choices among apps offering similar features. Costs peaked in December at $1.81 per user as developers tried to attract people who got an Apple device for the holidays.

The 200 most popular free iPhone apps were downloaded 4.63 million times per day, on average, last month, an increase of 2.7 percent from June of last year, Fiksu said.

Apple has paid $5 billion to developers selling their wares in the App Store and more than 30 billion apps have been downloaded since the digital store's opening in 2008, Tim Cook, the company's chief executive officer, said at a conference last month.

Most developers aren't complaining. Apps for Apple and Google Inc. smartphone operating systems will generate $8.7 billion in revenue this year, up 60 percent from last year, according to a report today by Flurry Inc., a mobile-research company.

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(BN) Amazon Splits With Peers in Pushing Online Sales Taxes

Aug. 1 (Bloomberg) -- Amazon.com Inc. and brick-and-mortar stores urged U.S. senators to pass legislation to let states collect sales taxes from online retailers based elsewhere, as other Internet companies said they oppose the measure.

Federal legislation would create "an even-handed national framework for sales tax collection," Paul Misener, vice president for global public policy at Amazon, the largest U.S. online retailer, told the Senate Commerce Committee.

The legislation would let states impose new and complex tax burdens for companies that would have to comply with 9,600 jurisdictions, Steve DelBianco, executive director of NetChoice, a group backed by EBay Inc., Oracle Corp. and Facebook Inc., said in written testimony for a hearing today.

"Amazon and big-box chains would benefit if Congress allows states to impose new tax-collection burdens on their smaller online-only competitors," DelBianco said.

Amazon has been making tax agreements with states where it plans to expand its warehouses and shipping centers. Under a 1992 Supreme Court ruling, Web retailers only need to remit sales taxes to states where they have a physical presence.

Last year, the company said it would spend $500 million on facilities and add 10,000 full-time jobs in California by December 2015, ending a fight against a state law that taxes online sales. It will start remitting the levies in September if Congress doesn't act, according to a statement from Governor Jerry Brown, a Democrat.

Closing Loophole

The Senate is considering a bill, S. 1832, introduced by Michael Enzi, a Wyoming Republican. Enzi told lawmakers the measure would close a loophole and benefit local businesses that have to collect sales taxes while online retailers don't, according to the Congressional Record.

Enzi submitted letters of support from the National Conference of State Legislatures, the National Association of Counties and the U.S. Conference of Mayors.

"This bill doesn't raise taxes," Enzi said at today's hearing. "It collects what's owed by the purchasing individual."

Senator Jim DeMint, a South Carolina Republican, said he opposes the measure.

"Let's be clear about what this bill does: It mandates that online companies with no physical presence in the state collect sales taxes for any state that demands it," DeMint said at today's hearing. "This is a mandate on business."

"Are they going to have to fill out a sales form and send it to every state?" DeMint said.

Seattle-based Amazon collects levies on sales to Washington state residents, as well as on transactions with customers in Texas, Kansas, Kentucky, New York and North Dakota, according to the company.

Pressing Congress

States have pressed Congress to act for years without results, and for a decade Amazon has backed changes in federal law that would ease Web sales-tax collection.

"Congress should authorize the states to require out-of- state sellers to collect the sales tax already owed," Misener, the Amazon executive, said in today's testimony. Technology can ease the burden of tax collection for small sellers, Misener said.

A House bill received a hearing July 24 at which Judiciary Committee Chairman Lamar Smith, a Texas Republican, said the Constitution doesn't allow one state to tax other states' retailers. As a result, "online retailers, who maintain a very limited physical presence and use common carriers to fill orders, enjoy a competitive advantage over traditional retailers," he said.

Tax Policies

Smith said a bill, H.R. 3179, sponsored by Arkansas Republican Steve Womack, would replace the physical-presence rule with a requirement that state and local governments simplify their tax policies if they want to collect sales taxes from out-of-state retailers.

Online-only companies can achieve as much as a 10 percent price advantage over brick-and-mortar retailers by not collecting state sales taxes, the Retail Industry Leaders Association said in a letter of support to Enzi that the lawmaker submitted to Congress.

The trade group, based in Arlington, Virginia, says it represents retailers including Wal-Mart Stores Inc., Target Corp. and Sears Holdings Corp.

The National Retail Federation, with board members including executives from Macy's Inc. and Saks Inc., in a submission to the Commerce Committee today said Congress should pass Enzi's bill.

"All that we want is a level playing field," David French, senior vice president for the Washington-based group, said in an interview. "It's only certain Internet sellers that don't collect sales taxes."

Washington-based NetChoice says Amazon is trying to suppress competition from smaller online merchants by requiring them to comply with separate tax requirements in the 45 states that have sales and use levies.

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Lunch Talk: Innovation at Google

Presentation by Google CIO Douglas Merrill on Innovation at Google

tags: innovation, lunchtalk, google

(BN) InterDigital Wins U.S. Appeal in Patent Fight With Nokia (1)

Aug. 1 (Bloomberg) -- InterDigital Inc. won an appeals court ruling reviving its effort to force Nokia Oyj to pay patent royalties on the third generation of mobile-phone technology. InterDigital soared as much as 25 percent on the decision.

The U.S. Court of Appeals for the Federal Circuit today overturned a U.S. International Trade Commission decision that cleared Nokia of claims it infringed InterDigital patents, and sent the case back to the agency for further review. The decision was posted on the court's website.

The commission "erred in construing certain critical claim terms in both patents," the appeals court said. The patents in the case, first filed in 2007, cover power control and high- speed data transmission, InterDigital contends.

InterDigital has said it asked the ITC to block imports of Nokia's 3G phones because the Espoo, Finland-based company refuses to pay patent royalties on networks that allow mobile- phone users to hold videoconferences, download music and browse the Internet. Patent royalties accounted for almost all of the $301.7 million in revenue InterDigital reported last year.

InterDigital rose $4.86, or 18 percent, to $32.16 at 11:11 a.m. and traded for as much as $34.10 in Nasdaq Stock Market trading.

Commission Decision

In the ITC case, the trade commission sided with Nokia, saying the patents weren't infringed. Nokia, whose sales have declined amid smartphone competition from companies including Apple Inc., had also claimed the InterDigital patents were invalid.

InterDigital filed a second complaint at the ITC against Nokia, as well as ZTE Corp. and Huawei Technologies Co., accusing the Chinese phone-equipment makers of infringing patents related to 3G wireless technology. A hearing in that case is scheduled for October in Washington.

InterDigital, based in King of Prussia, Pennsylvania, said in its annual report that it received royalties from more than half of all 3G mobile devices sold last year, including ones from Samsung Electronics Co., Apple, Research In Motion and HTC Corp.

Nokia had a license with InterDigital for second-generation and some third-generation technology that expired in 2006. Nokia paid $253 million in a settlement reached in 2006. The companies were unable to reach a new agreement, InterDigital has said.

The case is InterDigital Communications v. ITC, 2010-1093, U.S. Court of Appeals for the Federal Circuit (Washington). The ITC case is In the Matter of Certain 3G Mobile Handsets and components thereof, 337-613, U.S. International Trade Commission (Washington).

The pending ITC case is In the Matter of Wireless Devices with 3G Capabilities, 337-800, ITC in Washington.

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