(BN) Silicon Beach Draws Startups Moving to L.A. as Office Rents Jump

Josh Paynespent seven years in San Francisco, where a technology boom has pushed office rents to the highest level in a decade. He headed south to Los Angeles's Venice area when starting his Internet firm, StackSocial Inc.

Payne and his 10 employees moved in August into a Frank Gehry-designed loft with three-story-high windows that overlook the Pacific Ocean and the boardwalk's parade of characters, such as the roller-skating electric-guitar player Harry Perry. StackSocial cut its costs by sharing the 3,000-square-foot (280- square-meter) space and its $9,000-a-month rent with another startup, Lettuce LLC, which produces order-management software.

"There's no way that we would have landed this type of location for this money in San Francisco and the Bay area," said Payne, founder and chief executive officer of StackSocial, a one-year-old company that operates an online marketplace for software and gadgets. "It is difficult to get really cool, creative office space companies like ours are looking for at prices that are affordable."

Office space is getting more expensive in Venice, part of a 3-mile (5-kilometer) stretch of oceanfront communities known as Silicon Beach because of its popularity with technology companies. Rents are climbing faster than in the wider Los Angeles region as startups pour into the area and compete for a tightening supply of real estate. The surge in demand is attracting developers, who are renovating old and abandoned buildings in hopes of appealing to more and larger companies.

Tightening Vacancy

In the market that includes Silicon Beach, the vacancy rate for office buildings 5,000 square feet or larger was 12.9 percent in the second quarter, down from a post-recession high of 13.6 percent at the end of 2010, according to brokerage Jones Lang LaSalle Inc. The average monthly asking rent during that period rose 6.4 percent to $3.32 a square foot in the area, which encompasses Venice, Culver City, the Olympic Corridor, Marina del Rey, Santa Monica and parts of West Los Angeles.

For all of Los Angeles County, the second-quarter vacancy rate was 20 percent, the highest in Jones Lang records dating to 1996. Rents climbed 2.1 percent from the end of 2010 to $2.47 a square foot. Office buildings in Silicon Beach often range from one to four stories, while other Los Angeles business centers, such as downtown and Century City, are dominated by high-rises averaging about 25 floors.

'Completely Robust'

"Whether it's Silicon Alley in New York, Silicon Hills in Austin, Silicon Beach in L.A. or Silicon Valley in the Bay area, it's the tech sector that's driving office demand," said John Sikaitis, a Washington-based senior vice president at Jones Lang. "In most of these areas, the office market is completely robust and often far ahead of the rest of the recovery of the larger region."

While Silicon Beach is much smaller than technology communities in Silicon Valley and San Francisco, the area is home to a rising number of Los Angeles's more than 600 tech startups, according to a map by Represent LA, a website that promotes the companies.

StackSocial, which raised $800,000 from March to May from venture capitalists including Tim Draper and Paige Craig, competed with at least a half-dozen other small companies for its space, said Payne, 32.

Zambezi, an advertising agency that developed campaigns for such companies as Coca-Cola Co. (KO) and Comcast Corp., chose Venice because of its concentration of startups, access to entertainment-industry collaborators and the outdoor lifestyle, said Chris Raih, a co-founder of the six-year-old company.

Morning Surfers

"We oftentimes run, literally and figuratively, into other talented people" in the neighborhood's hip stores and coffee shops, said Raih, 35. "That's inspiring and a great chance to consult, formally or informally. And the beach is an inspiration. We have many employees who surf in the morning."

Zambezi's 50 employees moved a year ago from smaller offices a few blocks away to an 11,000-square-foot space near Abbot Kinney Boulevard, one of the district's main commercial streets. The property includes decks and patios, showers and a garage that's used to store bikes, surfboards and other sports equipment.

While Raih declined to disclose what the company pays in rent, he said it was "easily" 20 percent more than what a similar space would cost farther inland.

"We are willing to pay a premium to be in this area," he said.

Google Offices

It's not just small companies that are setting up shop in Silicon Beach. Google Inc. (GOOG), operator of the largest Internet search engine, opened its first office in the area 11 months ago. The company, based in Silicon Valley's Mountain View, took 100,000 square feet near Rose Avenue in Venice in the Gehry- designed property known as the Binoculars Building, after the massive sculpture that functions as its entrance.

The beach area's success while greater Los Angeles languishes is a reflection of the spotty commercial real estate recovery across the U.S., which is regional and often industry- driven, according to Jones Lang's Sikaitis.

Silicon Valley, home to such large technology tenants as Facebook Inc. (FB) and Yahoo! Inc. (YHOO), has seen the office vacancy rate drop to about 19 percent in the second quarter from 24 percent in the last three months of 2010, Jones Lang data show. Monthly rents climbed 3.7 percent to an average of $2.68 a square foot during the period.

In San Francisco, rents have surged to the highest since the first quarter of 2001, near the height of the dot-com boom. Office rents averaged $4.06 a square foot in the second quarter, up 35 percent from the end of 2010, according to Jones Lang.

New York

New York, where financial companies have cut jobs, fell to second behind technology-heavy San Francisco for the tightest U.S. office market in the third quarter, according to an Oct. 2 report by brokerage Cushman & Wakefield Inc. It was the first time since 2000 that Manhattan had a larger share of empty office space than the California city, which had a vacancy rate of 9.1 percent at the end of September.

The tightest area in New York is midtown south, also known as Silicon Alley because of its concentration of technology companies. Its vacancy rate was 6.6 percent in the third quarter, according to Cushman.

In Los Angeles, the influx of "30- and 40-something-year- olds with money" working at the many startups has also buoyed retail properties near the beach, said Suzy Frank, founder of Venice-based Abbot Kinney Real Estate. In the past two years, retail rents on Abbot Kinney Boulevard have more than tripled to $10 a square foot, she said.

"Vacancies for anything, retail or office, in this area are at an all-time low," said Frank, who has lived and worked in the region for 25 years. "There's a waiting list for anything becoming available."

Old Landmarks

At least six developers are planning office projects in Silicon Beach, seeking to capitalize on the surge in demand, according to Jones Lang. Some are working to revamp former factories, post offices and run-down landmarks to appeal to larger technology companies that they hope will continue to migrate to the area, according to Carl Muhlstein, a Los Angeles- based managing director at the brokerage.

Construction of new buildings has been scarce, in part because of the area's lengthy permit-approval process, which requires developers to report the potential environmental impact of their projects, he said.

Worthe Real Estate Group, based in Santa Monica, and San Francisco-based Shorenstein Properties LLC teamed to renovate a 380,000-square-foot former mail-distribution center on almost 20 acres (8 hectares) in the Los Angeles neighborhood of Playa Vista, where Internet and media companies such as Digital Domain Media Group Inc. (DDMGQ), YouTube Inc. and FoxSports.com have offices, according to Jones Lang LaSalle.

TMZ Lease

Time Warner Inc. (TWX)'s TMZ division agreed in August to be the first tenant in the development, called the Reserve. The celebrity-gossip website took 34,000 square feet, according to Hayley English Blockley, a senior vice president at Jones Lang LaSalle, the leasing agent.

Rents, not including utilities and other expenses, start at $2.75 a square foot in the building, which will open Dec. 31, according to English Blockley. An average of two potential tenants a week have toured the property, about twice that at similar projects outside Silicon Beach, she said.

"It's a submarket in transition that is becoming more and more attractive," said Charlie Malet, chief investment officer at Shorenstein. "Demand is not evenly spread across L.A. County -- or for that matter, across the U.S. For that reason, developers today are very targeted as to where they get active."

Spruce Goose

Other developers working in the area include Los Angeles- based Ratkovich Co., which renovated 10 buildings totaling about 453,000 square feet in Playa Vista. Tenants in the project -- called Spruce Goose after Howard Hughes's legendary plane, which was built at the site -- include marketing agencies 72andSunny and Earthbound Media Group, according to Jones Lang.

A sustained recovery in Silicon Beach may be at risk if the small startups that are fueling the area's growth struggle to stay alive, said Steven Heller, an attorney at Santa Monica- based Gilchrist & Rutter Professional Corp. The law firm has brokered several leases in the area for companies including Ascent Media Group, Beats Electronics LLC and TrueCar Inc.

"Silicon Valley grew under the power of a handful of huge companies -- Apple, Google, Facebook, etc.," Heller said. "There is no Goliath here, only embryonic companies with promise and excitement. None are 'huge' yet and may never be."

There's also potential for an "opposite problem: too much success," he said. "If this submarket continues to have success luring tenants, then naturally, rents will continue to go up. Young startup companies are not in the position to pay premium rents, so they will naturally seek cheaper rents elsewhere."

Startup Accelerator

Amplify, a so-called startup accelerator based in Venice, offers young companies a way to reduce the cost of office space near the beach. About 30 members are renting space in Amplify's headquarters for monthly fees starting at $520 for a work station and $1,320 for an office. In addition, six startups are participating in a program in which Amplify contributes about $50,000 in seed money in exchange for an 8 percent equity stake, according to Jeff Solomon, a partner at the company.

Amplify pays $3 a square foot for its building, covered with graffiti art and once home to a "hodgepodge" of tenants including a bong shop and video store, said Solomon, 38.

A few blocks away, StackSocial, which got its start with funding from Amplify, relishes its hip and perpetually sunny spot on the oceanfront. Payne said he's glad his company is in Venice instead of Northern California.

"When my San Francisco friends saw I was moving from the Bay area to L.A., they were questioning what I was doing," Payne said. "I love both areas, but it's great for us being here. And let's face it, Silicon Beach weather is a huge plus."

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(BN) Facebook Revising Loan to Borrow as Much as $1.5 Billion

Facebook Inc. (FB), operator of the world's largest social network, is reducing by half a $3 billion credit line arranged to fund taxes for employees who exercise their restricted stock units.

The length of the loan, secured before Facebook's initial public offering in May, was also extended to 3 years from 364 days, and will probably be used to cover about half of the taxes, according to the filing.

Facebook had arranged the original $3 billion bridge loan, along with a $5 billion revolving credit facility, in February. Its tax obligations are now lower than it had expected because the value of its shares have fallen 49 percent since the IPO.

The revised agreement to the loan also named Barclays Plc and Deutsche Bank AG as exiting lenders from the original agreement. The financing was arranged by banks including JPMorgan Chase & Co. (JPM), Morgan Stanley and Goldman Sachs Group Inc.

The company also made amendments to the $5 billion revolving credit facility, mainly due to changes related to the loan.

 

(BN) Apple Adds Amazon’s Stasior for Siri Voice-Recognition Group

Apple Inc. (AAPL) hired Amazon.com Inc. (AMZN) executive William Stasior to lead its Siri voice-recognition software group.

Stasior, who had run a unit of Seattle-based Amazon handling search and related advertising, will head the group that is building out the voice-activated personal assistant that Apple added to its iPhones, iPads and iPod Touch devices last year, said Trudy Muller, a spokeswoman for Apple.

Apple, based in Cupertino, California, introduced Siri after buying a startup of the same name in 2010. The software understands users' questions and provides answers by voice and Web links on a device's screen. Members of the Siri team that came over in the acquisition have since left Apple, including former CEO Dag Kittlaus and co-founder Adam Cheyer.

The personal assistant was the most heavily marketed feature of the iPhone 4S, with Apple hiring actors including Samuel L. Jackson and John Malkovich for commercials. Some customers have complained that the software doesn't work as well as advertised, with one even filing a lawsuit.

Last month, Apple added to the technology with the introduction of its most recent mobile operating system, called iOS 6, building in the ability to search for sports scores, movie times and make restaurant reservations with voice commands.

Sally Fouts, a spokeswoman for Amazon, declined to comment. Stasior's move was earlier reported by AllThingsD.

At Amazon, Stasior was in charge of developing new search and advertising technology. The unit had about 200 employees, according to a copy of his resume. A graduate of Massachusetts Institute of Technology, he previously worked for search-engine creator AltaVista and Oracle Corp. (ORCL).

(BN) First Solar Says Industry in Australia Trails U.S. by Four Years

First Solar Inc. (FSLR), the biggest maker of thin-film panels, said Australia is four years behind the U.S. in building large solar farms and expects its project with General Electric Co. (GE) to help spur the industry's expansion.

First Solar is supplying panels to the 10-megawatt Greenough River project in Western Australia, the nation's first large-scale solar plant. The GE- and Verve Energy-owned solar project, which started this month, may increase capacity to as much as 40 megawatts, the companies said Oct. 10.

"This is less about the size and more about the fact that we now have a utility-scale solar project in Australia," Jack Curtis, First Solar's Sydney-based vice president of business development, said in a phone interview. "The local industry can now look to this project and see they can be developed, that they can be executed. It will provide local operational data that can be used to bring the rest of the industry along."

The Tempe, Arizona-based company estimates as much as 3,000 megawatts to 5,000 megawatts of solar photovoltaic plants may be built in Australia from 2015 to 2020 as the country moves toward a target of getting 20 percent of its power from renewables by the end of the decade, Curtis said yesterday.

Australia currently has 1,936 megawatts of solar projects using photovoltaic panels to convert sunlight into electricity, including just 19 megawatts at large-scale plants, according to Bloomberg New Energy Finance. A large-scale solar project is defined by BNEF as having capacity of more than 1 megawatt.

Missed Deadlines

The Australian government in July started charging polluters for the carbon they emit to reduce the nation's reliance on fossil fuels and encourage wind and solar power. The country also plans to invest A$10 billion ($10.3 billion) in Clean Energy Finance Corp. to help the industry.

"First Solar has labeled Australia as one of the more prospective markets globally, and we would agree with that," said Tim Buckley, managing director at Sydney-based Arkx Investment Management, which owns shares in the U.S. panel manufacturer. "But progress to date has been limited," partly because of uncertainty about government energy policy.

While Australia has the highest average solar radiation per square meter of any continent, according to the government, some projects picked to receive solar grants, including a venture led by Areva SA (AREVA) in the state of Queensland, have failed to meet financing deadlines and sign power-supply agreements.

"If you can't create a sustainable solar market in Australia, it's difficult to see how you can create one in other markets without strong government intervention," Curtis said.

Landmark Project

First Solar completed its first 10-megawatt, utility-scale solar project in the U.S. in December 2008. More than 5,000 megawatts of First Solar modules have now been installed worldwide, according to the company's website.

"It's only by building a 10-megawatt facility can we then learn what the obstacles are to building a 20-megawatt facility and a 40- or 50-megawatt project," Arkx's Buckley said by phone. "The First Solar project is a critical landmark."

First Solar and Sydney-based AGL Energy Ltd. (AGK) in June won A$129.7 million in government funds to build a 159-megawatt solar project across two sites in New South Wales. AGL expects construction to start in mid-2014, with the plants operating by December 2015, it said in August. The AGL plant will cost A$450 million, Energy Minister Martin Ferguson said in June.

Another First Solar proposal with TRUenergy Holdings Pty, which lost to the AGL venture in the government's initial funding round, is now a candidate for funding from the Australian Renewable Energy Agency, according to Curtis. The Australian agency has about A$1.7 billion in renewable energy funding that hasn't been awarded, its website shows..

(BN) Merkel Sees No Alternative to ‘Arduous’ Euro-Area Overhaul

German Chancellor Angela Merkel said there's no way around economic overhauls for euro-area countries struggling in the debt crisis and pledged to help them defend the joint currency.

Merkel said she will hold countries to commitments to make their economies more competitive and attract investors. "It's arduous, but I see no other option that leads to a decent outcome," she said in a speech to a regional convention of her Christian Democratic Union party today. "It isn't some kind of pressure that were creating to make you suffer."

While the euro area needs to regain the confidence of financial markets, Germany would bring on "the risk of a recession" if it refused financial aid to stem the crisis, she told delegates at Celle in the northern state of Lower Saxony.

Many investors "are betting that we won't have the political strength" to defend the euro, she said. "I am determined to make the effort, even if it's hard."

"Trust means that everyone fulfills their commitments," she said. "Trust is good, but verification is better. That's what I'll continue to fight for in Europe, every day."

CDU-led Lower Saxony, home to companies such as Volkswagen AG (VOW) and Continental AG (CON), holds state elections on Jan. 20.

(BN) Postal Service Woos Web Retailers With Same-Day Delivery Test

The U.S. Postal Service, struggling to stem billions in losses as first-class mail usage declines, plans to test a same-day delivery service that would help Internet retailers ship their customers' purchases more quickly.

During the trial of Metro Post, which begins in mid- November in San Francisco, the postal service would deliver packages during the evening that were received before 2 to 3 p.m., said Susan McGowan, a spokeswoman. She declined to provide logistics or pricing details of the test, disclosed in plans filed with the agency's regulator yesterday.

In order to participate, companies must have at least 10 physical locations nationwide with at least one location in the test market, she said. The San Francisco test may last as long as a year, and there are plans to expand into additional cities if it goes well, McGowan said.

"E-commerce is just growing, and this kind of a product improves the shopping experience for everyone," she said in a telephone interview. "This helps us achieve our goals of enhancing our package business and giving customers better access and better service."

The Postal Service is in talks with online retailers and anticipates working with as many as 10 companies during the trial. The agency must obtain approval from the Postal Regulatory Commission before moving ahead, McGowan said.

"The product is likely to contribute to the financial stability of the Postal Service, by generating more package deliveries that do not currently move within the postal system," the agency said in its filing.

The post office, which may have lost as much as $15 billion in the fiscal year through Sept. 30 is seeking to develop new revenue streams and reduce costs.

The agency plans to cut $20 billion in yearly operating expenses by 2015 through steps that include reducing its workforce and closing processing plants. The agency said this month it would offer $15,000 each to members of its biggest union to retire.

(BN) Superbugs Epidemic to Spur Teva Supplier Growth in India

Cocktails of antibiotics aimed at thwarting lethal superbugs may help Venus Remedies Ltd. (VNR) expand at the fastest pace in three years as the Indian drugmaker taps demand from doctors for more bacteria-fighting options.

Venus, which supplies medicines to the world's largest generic drugmaker, Teva Pharmaceutical Industries Ltd. (TEVA), forecasts sales will expand 15 percent for the next two years, driven largely by its treatment for drug-resistant infections of the urinary tract and respiratory system, Chairman Pawan Chaudhary said in an interview.

Sales of fused antibiotics expanded at four times the pace of single-ingredient substitutes in the past two years as physicians in India increasingly relied on cocktails to treat patients with multi-drug resistant infections. Mutant germs producing an antibiotic-destroying enzyme called ESBL first showed up in 1983 and are now responsible for 40 to 80 percent of hospital-acquired infections, according to several studies.

"Resistance has already become a very big problem and in the next five years it's going to be an epidemic," Chaudhary said from his office near Chandigarh in northern India. "We want to give doctors an option, they don't have to rely on the strongest antibiotic to deal with ESBLs."

Sales growth at Venus, set up in 1989, has slowed for six straight years because of declining prices of medicines sold to governments. The company's shares fell 0.2 percent to 279.45 rupees in Mumbai. The stock has risen 83 percent this year, compared with a 29 percent gain on the 17-company BSE India Healthcare Index. (BSETHC)

Bacterial Enzyme

It's become a common practice for drugmakers to introduce a variety of cocktails as there are almost no new antibiotics coming in, Siddhant Khandekar, an analyst at ICICI Direct, said in an interview. Sales of combination drugs containing three of the most commonly used antibiotics have grown 52 percent in the last two years, according to data from IMS Health Inc.

Competition is also intensifying in the market that's led by the Indian unit of GlaxoSmithKline Plc. (GSK)

Augmentin, the best-selling brand in the country, is one such combination of the antibiotic amoxycillin and clavulinic acid, which blocks the activity of a defensive bacterial enzyme. Glaxo is the leader with a 27 percent market share and there are 293 other registered brands for the same product, according to the All India Organization of Chemists and Druggists.

Venus, which also makes injectable medicines to treat pneumonia and meningitis, plans incremental changes and additions to improve the efficacy of existing drugs in ways that can be patented to beat the competition, Chaudhary said.

Sulbactomax Brand

The company's flagship product contains three ingredients: the antibiotic ceftriaxone, a chemical that aids the drug's activity by attacking a defensive enzyme produced by the bacteria, and a compound called EDTA. The compounds have been in use for about three decades and Venus' patents pertain to the specific concentration of the three.

The product is sold under the Sulbactomax brand in seven countries, including Ukraine and Syria, and will be introduced in India next year, Chaudhary said.

In a drug cocktail, three or four ingredients are combined in a single pill or injectable vial. The widespread use of such treatments can also lead to resistance, according to Pankaj Vohra, a pediatric gastroenterologist in New Delhi's Max Hospital.

Bacteria evolve the ability to thwart a drug when it's used repeatedly and this characteristic can be carried in the genes and passed on to other bacteria.

'Indiscriminate' Usage

There is a "strong threat" to the society because patients are demanding quick cures and doctors often prescribe antibiotics without carrying out diagnostic tests, Bhagwat Dhingra, chief executive officer of Unichem Laboratories Ltd. (UL)'s Indian business, said in an interview.

In 2008, researchers studying the case of a diabetic stroke patient of Indian origin found that bacteria cultured from his urine and feces evaded more than a dozen drugs, including last- resort medicines called carbapenems.

The bacteria carried a gene, later named New Delhi metallo- beta-lactamase-1 or NDM-1, that scientists warn is spreading faster, further and in more alarming ways than any they've encountered.

Venus is carrying out laboratory-based tests to verify whether Sulbactomax can work against NDM-1 and will publish the results soon, Manu Chaudhary, head of research, said in an interview.

It's unlikely that the drug would work on NDM-1, said David Livermore, who formerly headed antibiotic resistance monitoring at the U.K.'s Health Protection Agency in London.

The company, which gets about 4 percent of its revenue from selling to Israel's Teva (TEVA), has obtained a patent for Sulbactomax in 40 countries and plans to start sales in 20 nations by 2014.

Demand to treat superbugs such as ESBL has helped sell Sulbactomax, which accounts for about 10 percent of Venus' sales, Chairman Chaudhary said. The company is looking for partners to expand in Africa and South America, he said.

"There is demand because more than anything else, it is giving better results," Chaudhary said. "This is our fastest growing drug."

(BN) Green Power Battles Data Line in Puget Sound

There's a battle brewing in the Puget Sound between a utility that wants to be the first on the U.S. West Coast to generate power from ocean currents and a Japanese telecommunications giant that says the plan threatens its billion-dollar fiber optic cable connection to the U.S.

The Public Utility District of Snohomish County, north of Seattle, is seeking Federal Energy Regulatory Commission approval to temporarily install two 300-ton turbines, each about 20 feet (6 meters) in diameter, on the seabed in Puget Sound to transform tidal flows into electricity. Officials say the pilot project could help meet rising demand and a state target of getting 15 percent of its power from renewable sources by 2020.

Nippon Telegraph & Telephone Corp. (9432) of Tokyo opposes the plan, saying the anchors of vessels that would install and maintain the turbines could damage its cable, which was installed 12 years ago and can carry the equivalent of 23 million telephone calls concurrently across 13,000 miles (21,000 kilometers) to Japan. The company has the support of the Federal Communication Commission and the U.S. Navy.

"It would be quite a setback if it was rejected," Matt Nocella, spokesman for the Washington-based National Hydropower Association, said in a phone interview. "If you have a company that's put in six years of work into something and a regulator is going to reject it, other companies are going to look at it and say it's not worth it."

Avoid Anchors

The utility in August said it was willing to agree not to use anchors, adding that it had employed a remotely operated vehicle in an "extensive survey" for the project without the use of anchors.

Given the strong currents in the area, the utility would avoid anchors and instead use vessels able to stay in place with engine power or other systems, Craig Collar, the utility's senior manager for energy resource development, said in a telephone interview.

The Snohomish utility district, which started pursuing the plan in 2006, said it expects a FERC decision this year, and hopes to have the three-to-five year test project working in 2014. The pilot would provide enough power for a small number of homes but allow the utility to measure generating potential and the project's effects on marine life. Celeste Miller, a FERC spokeswoman, said there is no deadline for a decision.

Large Potential

The utility, which is owned by its 320,000 customers, says the best outcome for the experiment calls for the turbines to be sited 558 feet and 781 feet away from the company's cable, at a depth of about 190 feet. The sites were chosen over 17 alternatives because of water depth, distance from shipping traffic and the strength of tidal currents.

"Puget Sound is one of the larger potential tidal resources in the country," Collar said.

NTT is asking that the turbines be placed at least 2,460 feet, or half a mile, away.

"Our issue is not with the project itself, or with alternative energy, it's with the proposed site," Kurt Johnson, the chief financial officer of Pacific Crossing, an NTT subsidiary, said in an interview. "It raises serious and unacceptable risks for our cable."

FCC Position

The Federal Communications Commission sent a letter to FERC on Oct. 4 saying it doesn't oppose the most recent proposal by the utility, as long as FERC determines the project "does not present material risk" to the cable.

In an earlier FERC filing, the FCC stressed the importance of the undersea cables to American public safety and security interests. About three dozen cables, "each about the size of a household garden hose," carry more than 95 percent of the nation's international voice, data and video, the FCC said.

In a June letter to FERC, Catherine Creese, the assistant director of the Naval Seafloor Cable Protection Office, said the unit concurred with the technical concerns initially raised by the FCC, noting that the "vast majority" of Defense Department overseas communications travels on undersea cables.'' Creese's office falls under the Naval Facilities Engineering Command.

NTT's line is the only one linking Washington state with Japan. The other four trans-Pacific lines go from California or Oregon, according to Johnson.

Miller, the FERC spokeswoman, said the agency can't comment on this specific project. However, the regulator's staff in an April 2008 paper said so-called hydrokinetic energy has "amazing potential" and could double the amount of hydropower produced in the U.S., boosting it to 20 percent of national supply from below 10 percent.

Federal Grant

The public utility district has secured a $10 million grant from the U.S. Energy Department to help cover costs of the project, estimated at $25 million. If FERC asks that the turbines be located further away from the cable, the utility probably would abandon the project, Collar said.

FERC, which has jurisdiction over dams and other hydropower investments, issued its first pilot license for a tidal-energy project to Verdant Power Inc. in January. The company plans to set its first turbines into New York's East River in 2014, the first installment of a project to eventually provide power to more than 9,500 residents of Roosevelt Island, which lies between Manhattan and Queens, according to Trey Taylor, co- founder of the company.

FERC may hold off on a decision to see whether the utility and NTT reach a settlement, said Richard Heidorn Jr., an energy analyst with Bloomberg Government.

"FERC is definitely very supportive of the concept of tidal power," Heidorn said in a phone interview. "The agency does look with favor on settlements, so if there is a way to realign the project, such that it meets the county's plans and avoids NTT's concerns, I'm sure FERC would like to have them settle it that way."

(BN) Monsanto, Dow, Vivendi, Dotcom: Intellectual Property

The U.S. Supreme Court agreed to consider how patent rules apply to self-replicating technologies, accepting an appeal from a farmer seeking to circumvent Monsanto Co. (MON)'s planting restrictions on its genetically modified seeds.

The justices said Oct. 5 they will review a federal appeals court decision that Vernon Hugh Bowman infringed Monsanto's patents when he planted soybeans he had bought from a grain elevator. Those beans were the product of seeds covered by Monsanto's patents, and the St. Louis-based company says its rights extend to the second-generation beans.

The case centers on a technology that has helped make Monsanto the world's largest seed company, with $13.5 billion in annual revenue, while provoking fights with opponents of genetically modified food and some farmers. Monsanto's Roundup Ready seeds are engineered to be tolerant of herbicides. Farmers have embraced the technology because it lets them kill weeds while leaving crops unscathed.

The legal issues stem from Monsanto's efforts to ensure that farmers have to buy the genetically modified seeds every year, rather than planting part of the harvest from the previous season. Farmers who buy seeds from an authorized dealer must agree that they won't use any harvested seeds for planting.

Bowman sought to get around that requirement from 1999 to 2007 by buying less expensive soybeans from a grain elevator. Because the elevator accepted harvests from farmers using Monsanto seeds, the second-generation beans proved to be herbicide-resistant. When Monsanto found out about the practice, the company sued Bowman.

The U.S. Court of Appeals for the Federal Circuit, which handles patent cases, sided with Monsanto. The panel rejected Bowman's contention that Monsanto had "exhausted" its patent rights by the time he bought the seed. The appeals court said Bowman "created a newly infringing article" by growing a new generation of soybeans with the seed.

The Supreme Court took up the case against the advice of the Obama administration, which said the Federal Circuit reached the right conclusion in the case.

The case may undermine a legal doctrine the Federal Circuit has adopted to extend the rights of patent holders. Under the so-called conditional sale exemption, patent holders can enforce their rights even after making a sale of the covered product. The doctrine has given patent holders the power to enforce restrictions against downstream purchasers.

The Supreme Court called that doctrine into question in a 2008 ruling. The justices unanimously said LG Electronics Inc. (066570) couldn't enforce its memory-technology patents against both Intel Corp. and the computer makers that install Intel's chips in their machines.

The court will hear arguments and rule by June. The case is Bowman v. Monsanto, 11-796, U.S. Supreme Court (Washington).

Dow Chemical Sued by Akzo Over Paint-Making Process Patent

Dow Chemical Co., the biggest U.S. chemical company, was sued by a unit of Akzo Nobel NV (AKZA), the world's largest paintmaker, over a patent for a high-temperature coatings process.

Akzo, based in Amsterdam, contends Midland, Michigan-based Dow is wrongly using polymer extrusion technology patented in 2004, according to a complaint filed Oct. 4 in federal court in Wilmington, Delaware.

Akzo deserves "damages, along with permanent injunctive relief" following a jury trial, for Dow's patent infringement, the plaintiff's lawyers said in court papers.

The lawsuit targets Dow Chemical's so-called Bluewave Process used to make paint, and glass, paper and textile coatings, Akzo lawyers said in court papers.

Dow spokeswoman Nancy Lamb said the company hasn't been served with the complaint and had no immediate comment on the lawsuit.

In dispute is patent 6,767,956.

The case is Akzo Nobel Coatings Inc. v. Dow Chemical Co. (DOW), 12-cv-1264, U.S. District Court, District of Delaware (Wilmington).

For more patent news, click here.

Trademark

Australia Tobacco Plain-Pack Law Valid as Country Didn't Benefit

Australia, the first country to require cigarettes to be sold in uniform packages, won a legal challenge to the law because the government didn't benefit from the removal of trademarks, the country's top court said.

The seven-judge panel of the High Court of Australia on Oct. 5 released the reasons for its Aug. 15 ruling that dismissed claims by Japan Tobacco Inc. (2914), British American Tobacco Plc (BATS), Philip Morris International Inc. (PM) and Imperial Tobacco Group Plc (IMT) that the government illegally seized their intellectual property by barring the display of trademarks on packs.

"On no view can it be said that the Commonwealth as a polity or by any authority or instrumentality has acquired any benefit," Chief Justice Robert French wrote in his reasons for dismissing the claims.

Intellectual property law grants a "negative right," French wrote, citing "The Modern Law of Copyright and Designs." Someone owning a copyright on a film can stop others from showing it in public, but doesn't have the positive right to show it himself, French wrote. Trademark law, as a result, prevents others from copying, he wrote. "

The Aug. 15 ruling is a victory for a government faced with A$31.5 billion ($32 billion) in annual health costs from smoking, a habit it estimates killed 900,000 Australians over six decades. New Zealand and the U.K. are among countries whose governments have indicated interest in implementing similar legislation, which takes effect in Australia Dec. 1.

The Australian law requires cigarettes to be sold in packs with no company logos and with the same font for all brands on a dark brown background. Graphic health warnings must cover 90 percent of the back of the package and 70 percent of the front.

Only Justice John Heydon dissented, writing that the government deprived the tobacco companies of control of their property and the law gave that control and the benefits to the Commonwealth.

''The flame of the Commonwealth's hatred for that beneficial constitutional guarantee may flicker, but it will not die'' Heydon wrote, referring to protection from having property acquired by the state without just compensation. ''That is why it is eternally important to ensure that that flame does not start a destructive blaze.''

The case is British American Tobacco Australia Ltd. v the Commonwealth of Australia, S389/2011, High Court of Australia (Canberra).

For more trademark news, click here.

Copyright

Vivendi Label Asks Judge to Shut Used-Music Service ReDigi

Vivendi SA (VIV)'s Capitol Records told a federal judge that a new online music service that allows people to buy and sell used digital songs infringes its copyrights.

The music label argued Oct. 5 in Manhattan federal court that the service, ReDigi Inc., infringed copyrights by allowing unauthorized copying of digital music files and should be closed.

''It is a reproduction and it is a violation of the reproduction right of the Copyright Act,'' Richard Mandel, a lawyer for Capitol, told the judge, requesting a judgment without a trial.

U.S. District Judge Richard Sullivan said he would rule later on motions from Capitol and ReDigi, which asked him to dismiss the case. Sullivan denied Capitol an injunction in February that would have put ReDigi out of business.

''There is no copy involved,'' ReDigi's lawyer Gary Adelman said in court. ''The actual file is being transported. That's how the technology works."

ReDigi, based in Cambridge, Massachusetts, said it made no unauthorized copies of songs. The company said in court papers that it provides digital music storage and a marketplace for tracks legitimately bought from Apple Inc.'s iTunes.

Capitol said in its suit, filed in January, that ReDigi allows users to upload tracks to its site, where buyers can download them for about 79 cents each.

"ReDigi offers a service whose very economic survival depends on the unauthorized reproduction and distribution of copyrighted sound recordings," Capitol said in its motion for summary judgment.

ITunes charges 99 cents for many tracks, and the music companies take about 70 cents from each transaction.

The labels receive no revenue from a ReDigi sale. ReDigi takes a fee of 5 percent to 15 percent of each download, according to the complaint.

ReDigi said in court papers that it is protected from liability by the first-sale doctrine, which allows an individual who has lawfully purchased music to sell it to whomever he wishes without being liable for copyright infringement.

The label argued that what is being bought is not an original track acquired on iTunes but rather a digital copy of it. Capitol is seeking statutory damages of as much as $150,000 for each track infringed. .

Vivendi is the owner of Universal Music Group, the world's largest recording company. The French company last month received regulatory approval in the U.S. and Europe to buy Capitol's parent, EMI Recorded Music.

The case is Capitol Records v. ReDigi, 1:12-cv-00095, U.S. District Court, Southern District of New York (Manhattan).

WIPO Defers Vote on Pirate Parties' Observer Status

The World Intellectual Property Organization, a United Nations agency, deferred consideration of the Pirate Parties non-governmental organization's application for observer-level membership, the TorrentFreak website reported.

Requests from the French, Swiss and American WIPO members caused the postponement of consideration of the anti-copyright group's allocation until 2013, TorrentFreak reported.

TorrentFreak, which also opposes copyright laws, said that while other countries also supported postponement of the Pirate Parties group's application, they were reluctant to go public, given the success of the Pirate Parties in their national elections.

The U.S. sought a hold until WIPO decides if political parties should be accredited observers, even though the Pirate Parties International is an association of political parties, rather than a political party itself, TorrentFreak reported.

Data Owner Allowed to Argue for Return of Megaupload Content

An Ohio resident will get a chance to argue for the return of his files seized by the government in the criminal copyright case against Kim Dotcom.

Kyle Goodwin used Dotcom's Megaupload service to store data related to his OhioSportsNet business, which reports on high school sports events in his state. The files were seized when the government shut Megaupload in January, as part of proceedings against Dotcom, according to court papers.

Among the data Goodwin said he is missing is footage some players parents paid for to be submitted to colleges for recruiting purposes. Also among the data is the raw footage to be used for a full-length documentary on one school's girls' soccer team.

Goodwin filed a petition with the court in March, asking that court develop a mechanism for the return of non-infringing content to Megaupload users. He said in his pleadings that he was expressing no opinion on the legitimacy of the government's case against Dotcom.

In an Oct. 2 order, U.S. District Judge Liam O'Grady said that the court didn't have enough information to make a decision on his request. He said an evidentiary hearing would be required and gave both Goodwin and the government 14 days in which to submit a brief.

After the judge reads the briefs, he said he will designate a date for a hearing.

The case is U.S. v. Kim Dotcom, 1:12-cr-00003-LO, U.S. District Court, Eastern District of Virginia (Alexandra)

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Huawei Poses Security Threat to U.S., Lawmakers Say After Probe

Huawei Technologies Co., China's largest phone-equipment maker, poses a security threat to the U.S., leaders of the House Intelligence Committee said as the panel prepares to issue a report on its probe of the company.

U.S. companies considering purchases from Huawei should "find another vendor if you care about your intellectual property, if you care about your consumers' privacy, and you care about the national security of the United States of America," Representative Mike Rogers, the panel's chairman, told CBS News's "60 Minutes," according to a CBS release about an interview set for an Oct. 7 airing.

Rogers, a Michigan Republican, and the committee's top Democrat, C.A. "Dutch" Ruppersberger, of Maryland, have been investigating whether expansion in the U.S. by Huawei and ZTE Corp., another Chinese phone-equipment maker, enable Chinese government spying and economic espionage, and imperil the U.S. telecommunications infrastructure.

The intelligence committee is scheduled to release a report on its yearlong probe at a news conference today.

"Huawei is a globally trusted and respected company doing business in almost 150 markets with over 500 operator customers including nationwide carriers across every continent save Antarctica," William Plummer, a Washington-based spokesman for Huawei, said in an e-mail. "The security and integrity of our products are world proven. Those are the facts today. Those will still be the facts next week, political agendas aside."

Susan Phalen, a spokeswoman for the committee, didn't immediately respond to a request for comment.

Executives for Huawei and ZTE, both based in Shenzhen, China, denied links to espionage during an intelligence committee hearing last month, telling lawmakers they aren't controlled by the Chinese government.

The companies said they favor independent audits of technology vendors' hardware and software as a way to ensure that devices and networks are secure.

The panel's probe coincides with increased U.S. warnings about digital spying by China. U.S. counterintelligence officials called China the world's biggest perpetrator of economic espionage in a report last November, saying the theft of sensitive data in cyberspace is accelerating and jeopardizing an estimated $398 billion in U.S. research spending.

(BN) Target, Remy Cointreau, McDonald’s: Intellectual Property

Target Corp. (TGT), the Minneapolis-based retail chain, was sued for patent infringement by a Philadelphia-based garment manufacturer.

Destination Maternity Corp. accuses Target and its supplier of infringing patent RE43,531, which was issued July 24. The patent covers a garment with an expandable belly panel and a torso-encircling circumference that recedes downward to make room for the growing abdomen of a pregnant woman.

Target continues to sell the allegedly infringing garments even after having been put on notice by Destination Maternity, according to court papers. Counsel for the parties have "exchanged further correspondence without resolution," Destination Maternity said in its pleadings.

The company asked the court to bar Target and its suppliers from further infringement, and for money damages "in no event less than a reasonable royalty" and awards of attorney fees and litigation costs.

Target didn't respond immediately to an e-mailed request for comment on the lawsuit.

The case is Destination Maternity Corp. v. Target Corp., 12-cv-05680, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).

For more patent news, click here.

Trademark

Remy Cointreau Wins Order Temporarily Banning 'Controy' Liqueur

Remy Cointreau SA (RCO)'s Cointreau unit persuaded a federal judge in Dallas that La Madrilena SA's Controy orange liqueur has the potential to infringe its "Cointreau" trademark.

In an Oct. 2 order, U.S. District Judge David C. Godbey issued an order temporarily barring Mexico City-based La Madrilena from importing and selling any liqueur under the "Controy" name. He required Cointreau to post a $1 million bond for payment of damages and costs should La Madrilena be able to demonstrate it was wrongfully restrained and harmed in the process.

Cointreau sued in July 2012, claiming its multiple "Cointreau" marks -- some the company has used since 1995 -- were infringed by La Madrilena's "Controy." It noted that the liqueurs were both sold in similar squat square-shaped bottles, with the name depicted on a banner.

In its complaint, Cointreau cites a survey from the National Alcohol Beverage Control Association that ranked its Cointreau behind only Grand Marnier in annual sales in the orange liqueur category.

The Paris-based distiller accused La Madrilena of trying to hitchhike on the fame and goodwill associated with the Cointreau trademarks and trade dress. It asked the court to bar the sale of the allegedly infringing product and award money damages, including extra damages, to punish the Mexican company.

The case is Cointreau Corp. v. Pura Vida Tequila Co., 12- cv-02257, U.S. District Court, Northern District of Texas (Dallas).

McDonald's Files Trademark for Ground, Whole Bean Coffee

McDonald's Corp. (MCD), the world's largest restaurant chain, filed a trademark for its name for use on ground and whole bean coffee, according to September filings with the U.S. Patent and Trademark Office.

The company filed to register both McDonald's and its double arch logo as trademarks for use with coffee. It also is seeking registration for "McCafe" for the same purpose.

Danya Proud, a spokeswoman for McDonald's, declined to comment in an e-mail on whether the company may introduce a bagged coffee under its name in grocery stores, calling the idea "speculative."

McDonald's coffee trademark quest comes more than five years after Dunkin' Brands Group Inc. (DNKN) began selling coffee in stores with Procter & Gamble Co. P&G has since sold its coffee business to J.M. Smucker Co., which said in August that sales of the Dunkin' brand increased 11 percent in the first quarter ended July 31.

"As part of doing business, we register a number of trademarks to protect our brand equities," Proud said.

Starbucks Corp. (SBUX) has sold bagged coffee in groceries since 1998, when it signed a distribution agreement with Kraft Foods Inc. Starbucks, which has since regained control of the packaged coffee business, said July 26 that its share of the premium coffee segment in groceries, drugstores and mass markets rose to 28.2 percent from 25.6 percent a year earlier.

TAO Licensing Says Maine Restaurant With Similar Name Infringes

TAO Licensing LLC, which operates TAO Asian-fusion restaurants in Las Vegas and New York, sued a Maine restaurant for trademark infringement.

Tao Restaurant LLC of Brunswick, Maine, is accused of infringing the TAO trademarks, and attempting to trade on the goodwill and fame of the New York and Las Vegas restaurants.

According to the complaint filed Oct. 2 in federal court in Portland, Maine, TAO registered its trademarks with the U.S. Patent and Trademark Office beginning in 2001.

When Tao Restaurant LLC opened its TAO property in Brunswick in May 2012, TAO claims the choice of name was deliberate in order to take advantage of the fame of the two TAO properties. The Maine restaurant followed the same convention in its naming by the use of TAO plus a geographic origin -- Tao Maine -- that TAO uses for its New York and Nevada properties, according to court papers.

TAO, based in New York, also objects to the Tao-Maine.com Internet domain name used by the Maine restaurant. It claims that Tao Restaurant has caused harm and economic damage through its name choice.

In addition to seeking an order barring further use of the TAO name, the New York company asked the court for awards of money damages, attorney fees and litigation costs.

The owner of the Maine restaurant told the Portland Press Herald that while the two companies' names were similar sounding in English, the Chinese character for "Tao" it uses means "peach" and the name was chosen to celebrate a Chinese fairy tale about a fisherman and a peach orchard.

TAO's "Tao" is written with a different Chinese character that is associated with the philosophical and religious practice of Taoism, according to the Portland Press.

The case is TAO Licensing LLC v. Tao Restaurant LLC, 12- cv-00302, U.S. District Court, District of Maine (Portland).

For more trademark news, click here.

Copyright

Google Plans to Appeal Infringement Verdict in Oracle Trial

Google Inc. (GOOG) said it will ask a federal appeals court to overturn a jury's finding of copyright infringement or order a new trial in a lawsuit by Oracle Corp. over Android software for mobile devices.

Google, owner of the world's most popular search engine, said in a court filing yesterday in federal court in San Francisco that it will appeal the trial judge's decision not to set aside a jury's verdict or order a new trial.

A federal jury found May 7 that Mountain View, California- based Google infringed Oracle's copyrights when it developed Android software for mobile devices. The jury also deadlocked on whether Google's copying was a permissible "fair use."

Google's attorneys said in earlier court filings that the jury found the company had infringed just nine out of millions of lines of code in a Java programming language platform, which they said was legally insignificant.

The appeal will be filed in the U.S. Court of Appeals for the Federal Circuit in Washington, the attorneys said. The trial was held in San Francisco.

Oracle, based in Redwood City, California, is the largest maker of database software. Deborah Hellinger, an Oracle spokeswoman, declined to comment on the filing.

The case is Oracle v. Google, 10-cv-3561, U.S. District Court, Northern District of California (San Francisco).

Google Reaches Book-Scanning Agreement With Five Publishers

Google Inc., operator of the world's biggest Internet search engine, settled a lawsuit with five publishers over the digital scanning of books. The deal doesn't resolve litigation by authors.

The agreement ends the publishers' portion of a copyright infringement suit filed in federal court in New York in 2005, Google and the Association of American Publishers said yesterday in a statement. U.S. publishers can now choose whether to make their books and articles available for scanning or have them removed, according to the statement.

Google disclosed a plan in 2004 to scan millions of books from public and university libraries digitally in order to provide snippets of text on its search engine. The Authors Guild, individual authors and publishing companies sued, claiming Google hadn't sought authorization from the owners of the works.

"We are pleased that this settlement addresses the issues that led to the litigation," Tom Allen, chief executive officer of the publishers' association, said.

The agreement is with McGraw-Hill Cos., Pearson Education Inc., Penguin Group USA Inc., John Wiley & SonsInc. (JW/A) and Simon & Schuster Inc., which is owned by CBS Inc.

"The publishers' private settlement, whatever its terms, does not resolve the authors' copyright infringement claims against Google," Paul Aiken, executive director of the Authors Guild, said in an e-mailed statement

In 2009, Google reached an initial settlement of the class, or group, lawsuit by the authors and publishers that was valued at $125 million.

The writers' case is Authors Guild v. Google, 05-cv-08136, U.S. District Court, Southern District of New York (Manhattan). The visual artists' case is The American Society of Media Photographers v. Google, 10-cv-02977, U.S. District Court, Southern District of New York (Manhattan). The appeals case is Authors Guild v. Google, 12-3200, U.S. Court of Appeals for the Second Circuit (Manhattan).

(BN) Profit Amputations Are ‘Just a Flesh Wound’

If the stock market were a Monty Python movie, Zynga Inc. (ZNGA) would be the character known as the Black Knight, who cheerily yelled "just a flesh wound" after losing both of his arms in a sword fight. Anyone can see the company is bleeding profusely. Yet it won't admit defeat.

Consider Zynga's Oct. 4 news release, in which the maker of online games said it expected to report a third-quarter net loss of $90 million to $105 million. But never mind those figures. Zynga has developed its own rules for measuring financial performance. And under this approach, which doesn't comply with generally accepted accounting principles, the company said its loss would be only $2 million to $5 million.

Why such a big difference? Here's where the numbers get comical. Zynga paid $183 million in March to buy another games company called Omgpop. Then last week, Zynga said it would write down that acquisition by $85 million to $95 million. Zynga excluded the writedown from its non-GAAP results for the third quarter, and encouraged others to do the same.

The notion is absurd. The $183 million that Zynga paid for Omgpop was cash. It's writing down about half of the purchase price. Zynga bought Omgpop less than seven months ago. In other words, Zynga's management wasted a lot of money and acts as if it doesn't matter.

Investors didn't buy into the ruse. The shares fell 12 percent on Oct. 5, the day after the warning. They closed yesterday at $2.43, down 76 percent since Zynga's initial public offering last December, giving the San Francisco-based company a $1.8 billion stock-market value.

Numbers Spinning

Why bother with spinning the numbers this way? In addition to requiring a complete reconciliation to GAAP, the Securities and Exchange Commission's rules for non-GAAP financial metrics say companies must provide "a statement disclosing the reasons why the registrant's management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the registrant's financial condition and results of operations."

"Non-GAAP net loss" is one of a few nonstandard metrics that Zynga publishes. Here's the explanation from its Oct. 4 press release: "We believe these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key financial metrics we use in making operating decisions and because our investors and analysts use them to help assess the health of our business."

That reasoning is circular. All Zynga said is that the information is useful because it's useful. That can lead to only one conclusion: If Zynga's executives actually make decisions based on such numbers, this might explain why the business is such a disaster. When asked for a comment, a Zynga spokeswoman, Stephanie Hess, referred me to the company's public disclosures.

The spread of hokey non-GAAP financial metrics in corporate-earnings releases became a big issue during the late 1990s stock-market bubble. The practice seems to have gotten out of hand again. Zynga is merely an extreme case.

About half of the companies in the Standard & Poor's 500 Index presented non-GAAP earnings for their most recent quarters in ways that made their results look better, according to data compiled by Bloomberg. Only about one-fifth of the companies showed non-GAAP earnings that looked worse. These numbers wind up in a vast information food chain, where they often are repeated in the financial press and used as benchmarks for Wall Street stock analysts' earnings estimates.

Showing Profits

Hewlett-Packard Co., for example, showed a profit of about $2 billion for the quarter ended July 31 -- excluding almost $11 billion of restructuring charges and asset writedowns, all of which are considered ordinary expenses under GAAP. HP said its net loss was $8.9 billion.

News Corp. reported a $1.6 billion net loss for the quarter ended June 30. Meanwhile, its Aug. 8 earnings release highlighted a $783 million non-GAAP profit. That excluded about $2.4 billion of writedowns and restructuring charges, as well as expenses related to phone-hacking investigations at the company's U.K. newspapers.

This week, Alcoa Inc. reported a third-quarter net loss of $143 million, but a profit of $32 million "excluding special items." The items were a lawsuit settlement and costs from an environmental cleanup, which are nothing special. This is a metals company. Lawsuits and environmental hazards are routine.

Do these companies' executives think they are fooling anybody? They must. Otherwise they wouldn't do it.

In the 1975 movie "Monty Python and the Holy Grail," the Black Knight kept trying to provoke his adversary, King Arthur, even after getting his legs cut off, too. "Come back here and take what's coming to you! I'll bite your legs off!" he shouted.

In life, as in art, some people just won't accept reality.

(Jonathan Weil is a Bloomberg View columnist. The opinions expressed are his own.)

(BN) VMware CEO Sees New Cisco Relationship After Nicira Buy

VMware Inc. (VMW), the biggest maker of software that enables computers to handle multiple operating systems, said its partnership with Cisco Systems Inc. (CSCO) will change after its $1.26 billion acquisition of Nicira Inc.

Nicira makes software that helps networks run more efficiently, an area where Cisco is dominant with hardware sales. The industry is watching to see how the move to software- based networking will impact Cisco, said VMware Chief Executive Officer Pat Gelsinger in an interview this week.

Cisco, the largest maker of computer-networking gear, is poised to face further competition and profit margin pressure from technologies developed by Nicira, Arista Networks Inc., Big Switch Networks Inc. and Cyan Inc. By helping businesses run their networks more efficiently, such software reduces the need for the devices that make up most of Cisco's revenue.

"Does it change our relationship with Cisco? Well, certainly, but we are reviewing this as a positive opportunity to create more partnerships with them," Gelsinger, who became CEO of Palo Alto, California-based VMware in September, said in Barcelona, Spain.

VMware plans to accelerate growth by expanding in software for managing computer networks and storage devices, stepping up competition with San Jose, California-based Cisco. Software such as Nicira's is designed to give technicians a faster and more efficient way to manage network changes and monitor them from one place.

Dominant Player

VMware is majority owned by EMC Corp. (EMC), which has a joint venture called VCE Co. with investment from VMware and Intel Corp. (INTC) to sell software and equipment to large businesses.

Nicira is "tiny" in terms of revenue and the virtual networking space is only "a few million dollars of revenue," Gelsinger said. There has been "an explosion in interest" in the area after the acquisition, according to the executive. "Obviously we hit a nerve," he said, adding the company could cause a "very large potential disruption."

"Of course, everybody looks at it as, 'Okay, how does it affect Cisco?'," Gelsinger said, adding that the company would continue to develop virtual networking technology with Cisco. "Cisco is a 70 percent share player so there's particular interest."

Gelsinger said he would also use VMware's roughly $4 billion of cash to pursue acquisitions that could help it to develop what it calls the software-defined data center, including security, networking, storage, availability or automation, he said.

"I have plenty of money, that's not the limitation," Gelsinger said, adding that it was about finding companies that fit VMware's strategy. "We've proved it with Nicira, we'll pay what it takes to get the right deal done."

Tough Market

Along with companies such as Intel and Hewlett-Packard Co. (HPQ), Gelsinger said the next few months will be difficult in the technology space as companies seek ways to conserve cash.

"We certainly see that there's a tough market," he said. "Overall, business conditions are hard. Chief information officers are very careful with their budget. They're making decisions very late in the quarter and they're looking very, very hard at their investments and scrutinizing them harder than they have been in the past."

(BN) Spotify Added 5 Million Users to Digital Music Service

Spotify Ltd. said 5 million more users have signed up for its advertising-supported music service since January with the company's expansion to countries including Australia and New Zealand.

Spotify also added 1 million paying customers who get ad- free music accessible on computers and mobile devices, Ken Parks, chief content officer, said today at a conference in London. The company provided details of his remarks.

Spotify is adding new markets, including Germany, and features such as incorporating the service on Facebook Inc. (FB) and other social networks to build subscribers. The company released an application for Apple Inc. (AAPL)'s iPad in May and one for Google Inc. (GOOG)'s Android operating system last month.

The London-based service has 15 million users of the ad- supported music service, which is limited to playback on computers. Spotify has 4 million subscribers paying $4.99 a month for ad-free access on desktops and laptops or $9.99 including mobile devices.

Spotify has deals with Sony Corp. (6758) 's Sony Music, Vivendi SA (VIV)'s Universal Music, EMI Group and Warner Music Group. Under those agreements, artists, record companies and publishers receive a cut of ad sales and subscriber fees.

The company faces competition from other subscription services, including Rdio Inc., as well as online ventures by Viacom Inc. (VIAB)'s MTV, AOL Inc. (AOL) and Yahoo! Inc. (YHOO)

Spotify raised $100 million last year from investors including DST Global, Accel Partners and Kleiner Perkins Caufield & Byers, achieving a valuation of about $1 billion. The company was raising another $100 million to $200 million from investors that may include Goldman Sachs Group Inc. (GS), people with knowledge of the situation said in May.

(BN) Top Business Books

Convicted Ponzi schemer Sam Israel fell for a con artist while trying to dig his hedge fund out of the hole; early American bankers used their political connections to make a killing. Learn more in two of our favorite business books so far this year.

Here's a list of recommended titles.

"Are You Smart Enough to Work at Google?" by William Poundstone (Little, Brown). A guide to brain-bending interview questions asked at Google and other innovative companies. "You are shrunk to the height of a nickel and thrown into a blender," one begins. What do you do in the 60 seconds before the blades start whirring?

"The Art of the Sale" by Philip Delves Broughton (Penguin Press/Portfolio). The journalist who brought us "Ahead of the Curve," a chronicle of how he earned an MBA at Harvard Business School, uncovers the dark arts of sales -- a discipline absent from the HBS curriculum.

"Bailout" by Neil Barofsky (Free Press). The former special inspector general policing the $700 billion Troubled Asset Relief Program lifts the lid on the U.S. Treasury and settles scores in this angry yet illuminating memoir.

"Demystifying the Chinese Economy" by Justin Yifu Lin (Cambridge). A patriotic yet pragmatic look at how China notched up average annual growth of 9.9 percent for three decades.

"A Disposition to Be Rich" by Geoffrey C. Ward (Knopf). Ferdinand Ward, the Bernie Madoff of the Gilded Age, comes to life in this elegant and perversely fascinating biography of the swindler who ruined Ulysses S. Grant.

"End This Depression Now!" by Paul Krugman (Norton). The Princeton economist makes his case for more government spending and less austerity. You can almost hear his teeth gnash as he takes on the "Austerians."

"Engines of Change" by Paul Ingrassia (Simon & Schuster). Ingrassia, who shared a 1993 Pulitzer Prize for writing on management turmoil at General Motors Co., presents a quirky history of American culture as seen through 15 cars.

"Exile on Wall Street" by Mike Mayo (Wiley). Mayo, an old-school bank analyst, chronicles his battle to change the status quo on Wall Street.

"Finance and the Good Society" by Robert J. Shiller (Princeton). The influential Yale University economist argues that finance, for all its manifest failings of late, remains a force for good in society.

"Financial Turmoil in Europe and the United States" by George Soros (PublicAffairs). This is a compilation of op-ed articles that the billionaire investor wrote as the euro crisis boiled up. As a retread, it displays Soros's knack for assessing market linkages and psychology on the fly.

"Getting It Wrong" by William A. Barnett (MIT). Poor monetary data were a root cause of the financial crisis, argues Barnett, a University of Kansas economist and former Federal Reserve Board staffer.

"The (Honest) Truth About Dishonesty" by Dan Ariely (Harper/HarperCollins). We like to think of ourselves as honest. Yet experiments show that we all cheat, says the behavioral economist.

"The Hour Between Dog and Wolf" by John Coates (Fourth Estate/Penguin Press). During his 12 years at Goldman Sachs Group Inc. (GS), Merrill Lynch & Co. and Deutsche Bank AG, Coates began to wonder whether testosterone and other hormones were impairing the judgment of traders -- and fueling bubbles and busts. So he retrained as a neuroscientist and conducted tests on trading floors. He synthesizes his findings in this highly speculative and absorbing book.

"The Idea Factory" by Jon Gertner (Penguin Press). A rich history of Bell Labs, a hothouse of 20th-century innovation.

"Luck" by Ed Smith (Bloomsbury). Serendipity molds everything from sports to politics and finance, argues the former cricketer.

"A Nation of Deadbeats" by Scott Reynolds Nelson (Knopf). The U.S. was founded by bankers who used their political connections to make lots of money. Sound familiar?

"The New Geography of Jobs" by Enrico Moretti (Houghton Mifflin Harcourt). A persuasive look at why some U.S. cities have prospered in recent decades while others have declined.

"Octopus" by Guy Lawson (Crown). Hedge-fund manager Sam Israel, who faked suicide in 2008 to escape a prison sentence for running a $450 million Ponzi scheme, was himself the victim of a con artist.

"Paper Promises" by Philip Coggan (Allen Lane/ PublicAffairs). Our Ponzi scheme "is running out of suckers," the Economist's Buttonwood columnist argues in this look at the West's debt crisis.

"The Power of Habit" by Charles Duhigg (Heinemann/Random House). Dipping into neurological case studies, Duhigg explores how our brains form habits and how we can change them. Examples range from murderous sleepwalkers to Goldman Sachs.

"The Price of Inequality" by Joseph E. Stiglitz (Allen Lane/Norton). Economic growth and democracy suffer when the top 1 percent of Americans earns a fifth of the country's income and controls more than a third of its wealth, the Nobel Prize- winning economist says.

"Red Ink" by David Wessel (Crown Business). The Wall Street Journal economics editor presents a slim primer on the people and politics driving the U.S. budget war.

"Wait" by Frank Partnoy (Profile/PublicAffairs). From F- 16 pilots to speed traders, the best performers are those who learn to delay their responses, argues Partnoy, a former Morgan Stanley (MS) banker.

"What Money Can't Buy" by Michael Sandel (Allen Lane/ Farrar, Straus and Giroux). The Harvard University professor who wrote "Justice" explores the moral limits of markets in civil society, from baseball to death bonds.

"White House Burning" by Simon Johnson and James Kwak (Pantheon). A survey of how the U.S. government, ignoring Alexander Hamilton's precepts, piled up more than $15 trillion in debt.

"Winner Take All" by Dambisa Moyo (Allen Lane/Basic). China has embarked on a "commodity crusade," making it the pre-eminent buyer of resources ranging from metals to food, says the former Goldman Sachs banker. The result may be "famine, conflict and worse" for everyone else in the decades to come.

"Why Nations Fail" by Daron Acemoglu and James Robinson (Crown/Profile). Why do some nations prosper while others remain mired in poverty? The answer lies in politics, the two economists argue in this compelling and readable study.

(Laurie Muchnick is an editor for Muse, the arts and leisure section of Bloomberg News. The opinions expressed are her own.)

Quote of the Day: Model-Dependent Realism

 Stephen Hawking (and Leonard Mlodinow) write:

we will adopt a view that we will call model-dependent realism: the idea that a physical theory or world picture is a model (generally of a mathematical nature) and a set of rules that connect the elements of the model to observations. (The Grand Design).

In Scalable Innovation, Max and I introduce a system model (my Stanford students know it as 5-element analysis) and multiple case studies that connect the model to observation. Part I of the book briefly introduces the model and shows how to make the connections. Part II discusses methods for navigating system levels and their connections to reality. Finally, Part III shows the system dynamics: how it evolves along the S-curve and its correspondence to observations.

tags: book, quote, model, five element analysis,

(BN) Women Flock to Startups While Trailing in Computer Science: Tech

Women in technology say they have plenty of opportunities to start Web-based companies and raise capital, though there are still too few of them studying computer science and taking engineering roles.

That's the message from a group of female executives on "Women to Watch," which aired yesterday on Bloomberg Television. The special features Facebook Inc. (FB) Vice President Carolyn Everson, SurveyMonkey.com LLC Senior Vice President Selina Tobaccowala, Stella & Dot founder Jessica Herrin and venture capitalist Theresia Gouw Ranzetta from Accel Partners.

"For the first time, I actually see male co-founders and male co-founding teams who are explicitly looking to bring women into the executive team or the founding team," said Ranzetta, whose investments include Imperva Inc. (IMPV) and Trulia Inc. She said companies are saying, "'You know, two-thirds of my users, my most valuable users, are women. We've got to get a woman into the boardroom here, right?'"

Herrin created fashion startup Stella & Dot after previously starting and selling WeddingChannel.com. Stella & Dot is among a crop of e-commerce companies started by women that also includes ModCloth Inc., another one of Ranzetta's investments, as well as Gilt Groupe Inc., Rent the Runway Inc. and One Kings Lane.

Solid Ideas

Stella & Dot raised $37 million in 2010 from high-profile venture firm Sequoia Capital. Herrin said that investors have been on board from early on, even as she's been raising her two daughters.

"I fundamentally believe that venture capitalists are interested in good business ideas," she said. "They'll take you, whether you're -- whatever color, whatever gender. They'll take you if your idea is sound and solid."

Still, even with more females joining the Silicon Valley entrepreneurial ranks, the computer science field remains dominated by males, and the numbers have been getting worse. Women accounted for 12 percent of U.S. college graduates in computer science last year, according to the Computing Research Association. That's down from 14 percent five years earlier.

The dearth of women in computer science shows in the workforce. Tobaccowala runs the engineering department at SurveyMonkey, a provider of online surveys, and previously founded the website Evite Inc. Of the 26 people on her team, only one of them is female, she said.

"There's still a pipeline problem of women in computer science and engineering, even from 10 years ago," Tobaccowala said.

Mentoring Program

Two female computer scientists addressing the problem directly are Harvey Mudd College President Maria Klawe and Piazza Technologies Inc. founder Pooja Sankar. They teamed up to create a program, which began yesterday, called WitsOn (Women in Technology Sharing Online), connecting women who are pursuing computer and science degrees with mentors in the industry.

"It's going to take a decade or more to be more representative" in these fields, Ranzetta said.

Everson, who joined Facebook from Microsoft Corp. (MSFT) last year, has been working in advertising and business development since 1996. While she's not a technologist, she said she "thrives on new technology and really loves to see how new technology can transform businesses."

And as the world of marketing merges with the Internet, there's a bigger role for women to play because of the amount of time they spend online.

"They're key decision-makers," she said.

(BN) AstraZeneca, Kraft, Reggae, Facebook: Intellectual Property

AstraZeneca Plc (AZN) suspended share buybacks as the board and new Chief Executive Officer Pascal Soriot review strategy at the U.K. drugmaker, prompting renewed speculation that the company will embark on larger takeovers.

The decision to stop repurchasing shares gives the drugmaker more flexibility to undertake a big acquisition, said Brian Bourdot, an analyst at Barclays Plc's investment-banking unit in London. Under Soriot's predecessor, David Brennan, AstraZeneca stuck to smaller purchases and licensing agreements to replenish sales as its best-selling drugs lose patent protection and face generic competitors.

AstraZeneca has repurchased $2.3 billion of stock this year, compared with an initial target of $4.5 billion, the London-based company said in a statement yesterday. The company confirmed its forecast for profit excluding some items this year of $6 to $6.30 a share.

"It's a bit of a surprise that they changed course mid- year, but a new chief executive likes to take control and see what the options are," Bourdot said in a telephone interview. "It would increase their ability to do a deal, that's something we have to bear in mind."

AstraZeneca is undergoing its annual strategy review, and has said it plans to announce the results in January, when it reports 2012 earnings. The company also will provide a forecast for 2013 at that time, according to today's statement.

"As I assume my new responsibilities at AstraZeneca, I believe this is a prudent step that maintains flexibility while the board and I complete the company's ongoing annual strategy update," Soriot said in the statement.

Soriot, 53, took over yesterday at AstraZeneca. Brennan stepped down June 1 after setbacks in drug research.

Under Brennan, AstraZeneca focused on paying dividends and buying back shares to provide a return for investors while the company waited for experimental drugs to make it to the market and boost earnings. Brennan told investors not to judge the company by its earnings as it went through patent expirations on some the company's key drugs.

Brennan said repeatedly the company wouldn't do any deals on the scale of AstraZeneca's purchase of MedImmune Inc. in 2007 for about $15.2 billion. Analysts criticized the company for overpaying for MedImmune. Since then, the company has done only one acquisition of greater than $1 billion, the purchase of Ardea Biosciences Inc. for $1.1 billion this year.

Repeated failures in drug development undermined that approach, and Brennan retired this year. AstraZeneca pays an annual dividend equal to 6.2 percent of the share price, the highest yield among the world's 10 biggest drug companies. Last year the company paid out $3.68 billion in dividends, according to data compiled by Bloomberg.

For more patent news, click here.

Trademark

Kraft's Cadbury Wins Ruling in Nestle Suit Over Color Purple

Kraft Foods Inc. (KFT)'s Cadbury unit won a trademark case brought by Nestle SA (NESN) over purple packaging for chocolate, after a London judge found the color was distinctive to the maker of Dairy Milk bars.

Nestle, the world's biggest food company, challenged a trademark ruling from December 2011 covering chocolate bars and drinks, saying a color shouldn't be protected.

"The evidence clearly supports a finding that purple is distinctive of Cadbury for milk chocolate," Judge Colin Birss wrote in rejecting Nestle's appeal. Cadbury has used purple for its Dairy Milk bars since 1914, he said in yesterday's ruling.

Kraft became the world's largest producer of chocolate candy when it bought Cadbury, based in the London suburb of Uxbridge, in 2010. The company had a 20.2 percent share of the Western Europe chocolate confectionery market in 2011, according to Bloomberg Industries data. Nestle, which makes KitKat and Baby Ruth bars, has an 11.1 percent market share for the region.

The dispute dates back to 2008, when Vevey, Switzerland- based Nestle opposed Cadbury's initial application for a color trademark.

Yesterday's decision is a partial victory for Nestle as it "protects our brands by further limiting the range of goods for which Cadbury's application may be registered," Nestle spokesman James Maxton said in an e-mailed statement.

Birss said the trademark wouldn't apply to boxes of chocolates, or other products such as white or dark chocolate. "In my judgment it would not be right to say that the color purple is distinctive of chocolate generally."

Cadbury said that the ruling "allows us to register as a trademark and protect our famous color purple across a range of milk chocolate products."

The "color purple has been linked with Cadbury for more than a century and the British public have grown up understanding its link with our chocolate," the company said in an e-mailed statement.

Dominican Republic Mulls Next Step in WTO Dispute With Australia

The Dominican Republic said it held consultations with Australia over its World Trade Organization complaint about Australia's measures mandating the plain packaging of tobacco products and "remains concerned that Australia's measures are not consistent with its WTO obligations regarding intellectual property rights and trade in goods."

The Dominican Republic said in a statement yesterday that it will "now carefully consider the next steps in its dispute."

Music Industry Official Calls for Jamaican Reggae Trademark

Jamaica needs to establish a trademark for its indigenous reggae music, an official of the Jamaica Reggae Industry Association said at a copyright-management workshop co-sponsored by the World Intellectual Property Organization and the Jamaica Intellectual Property Office, the Jamaica Observer reported.

Charles Campbell, vice chairman of the reggae group, said that it's important to "set the record straight" that the island country is the birthplace of reggae, according to the Observer.

He said European bands are using token Jamaican musicians "so they can give the illusion to the marketplace that this is authentic reggae," the newspaper reported.

An unnamed workshop attendee differed with Campbell, saying that if performers from other countries want to play reggae music "I think it is a benefit to us because Jamaica is a small pond as it relates to reggae," according to the Observer.

For more trademark news, click here.

Copyright

Facebook's Zuckerberg, Russia's Medvedev Talk IP Issues

Facebook Inc. (FB)'s founder Mark Zuckerberg met Russian Prime Minister Dmitry Medvedev in Moscow to discuss intellectual property issues, the Voice of Russia reported.

Medvedev told Zuckerberg that the right to set limits on intellectual property belongs to owners, according to Voice of Russia.

The prime minister said the use of new forms of communication such as the Internet must be balanced with the traditional approach to copyright, Voice of Russia reported.

Zuckerberg told Medvedev that Menlo Park, California-based Facebook, the world's largest social-media site, is so serious about intellectual property rights that it has invested a great deal in copyright protection, according to Voice of Russia.

Japan's New Copyright Infringement Penalties Opposed by the Bar

Japan's criminalization of copyright infringement has drawn opposition from the Japan Federation of Bar Associations, the umbrella organization for lawyers in that country, the BBC reported.

In response to requests from the Recording Industry Association of Japan, lawmakers enacted punishments of as many as two years in prison or fines of up to 2 million yen ($25,700) for copyright infringement, according to the BBC.

The lawyer's group issued a statement saying that the damage done by private individuals who download content without permission is "highly insignificant" and that imposition of criminal penalties "must be done very cautiously," the BBC reported.

The music-industry group has estimated that the ratio of illegal downloads to legal ones in Japan is 10 to one, the BBC reported.

(BN) Samsung, Kimberly-Clark, Whirlpool: Intellectual Property

Samsung Electronics Co. (005930) can pursue its efforts to rescind a ban on U.S. sales of the Galaxy Tab 10.1 tablet computer that's part of a dispute with Apple Inc., a U.S. appeals court said Sept. 28.

The court said U.S. District Judge Lucy Koh in San Jose, California, can have jurisdiction to consider whether to lift the ban, which had been imposed before a patent-infringement trial that ended in August. The jury found that Samsung didn't infringe a design patent that had been the basis for blocking sales in the U.S.

Apple contends the ban should remain in place because the jury found the Galaxy Tab infringed other patents. Koh had refused to act because the ban was on appeal before the U.S. Court of Appeals for the Federal Circuit. She said she might permit sales if granted jurisdiction.

An order granting her that authority was posted on the Federal Circuit appeals court's electronic docket.

The Federal Circuit said it isn't taking a position on how Koh should decide the issue.

The case is Apple Inc. (AAPL) v. Samsung Electronics Co., 12-1506, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-01846, U.S. District Court, Northern District of California (San Jose).

Whirlpool, LG Electronics Settle Refrigerator Patent Suits

Whirlpool Corp., the world's largest appliance maker, and LG Electronics Inc. (066570) agreed to settle patent-infringement cases over refrigerator icemakers for an undisclosed amount.

The settlement resolves three patent lawsuits filed in federal courts in New Jersey and Delaware, Benton Harbor, Michigan-based Whirlpool and Seoul-based LG said Sept. 28 in a statement.

"This agreement, which concludes years of patent litigation between LG and Whirlpool, will result in the dismissal" of the cases, the companies said.

A Delaware jury found in 2010 that LG infringed a Whirlpool icemaker patent and awarded $1.78 million in damages. U.S. District Judge Gregory M. Sleet in Wilmington questioned the jury's calculations and ordered a new trial. Whirlpool had sought more than $22 million in damages.

Last year, Whirlpool said it won a six-month stay of patent litigation over refrigerator technology while it challenged the validity of LG's patents at the U.S. Patent and Trademark Office.

One case resolved by the settlement is LG Electronics v. Whirlpool Corp. (WHR), 08-cv-234, U.S. District Court, District of Delaware (Wilmington).

Kimberly-Clark Sues First Quality Over Diaper Closure Patent

Kimberly-Clark Corp. (KMB), the Dallas-based maker of paper consumer products, sued a manufacturer of disposable training pants for patent infringement.

According to the complaint filed Sept. 28 in federal court in Green Bay, Wisconsin, First Quality Products Inc. (QPDC)'s Baby Products unit infringes patent 8,221,378, which covers a refastenable closure to be used for disposable diapers and training pants. The patent, which was issued in July, was assigned exclusively to Kimberly-Clark on the date the patent issued, according to court papers.

Kimberly-Clark, which makes Depends adult diapers and Pull- Ups training pants, asked the court for an order barring further infringement of its patent, and for awards of money damages and litigation costs.

First Quality, based in McElhattan, Pennsylvania, didn't respond immediately to an e-mailed request for comment.

The case is Kimberly-Clark Worldwide Inc., v. First Quality Baby Products LLC, 1:12-cv-00993, U.S. District Court, Eastern District of Wisconsin (Green Bay).

Dow Prevails in Weed-Control System Patent Dispute with Bayer

Dow Chemical Co. (DOW)'s Dow AgroSciences unit has prevailed in a patent-infringement case brought by Bayer AG (BAYN)'s Bayer CropScience unit.

In a Sept. 27 ruling, U.S. District Judge Renee Marie Bumb said the technology used in Dow's Enlist Weed Control System doesn't infringe patent 6,153,401, which covers a mechanism for the genetic manipulation of a plant that will enable it to resist the 2,4-D herbicide.

Bayer had claimed that Dow's genetically corn and soybean strains genetically manipulated to resist the herbicide infringed the patent, which was issued in November 2000.

Judge Bumb disagreed, saying because the court had accepted the way Dow considered the patent claims, and Bayer hadn't disputed that the Dow products wouldn't infringe the patent under those claims, she found no infringement.

The case is Bayer CropScience AG v. Dow AgroSciences LLC, 1:10-cv-01045-RMB-JS, U.S. District Court, District of Delaware (Wilmington).

For more patent news, click here.

Trademark

Urban Outfitters Asks That 'Navajo' Trademark Suit Be Relocated

Urban Outfitters Inc. (URBN), the lifestyle specialty retailer based in Philadelphia, has asked the court to move a trademark suit from Albuquerque, New Mexico, to Philadelphia.

Urban Outfitters was sued in March for trademark infringement by the Navajo Nation, which is the largest Native American tribe in the U.S.

The suit is related to the retailer's use of "Navajo" with products it sells.

In October, the Navajo Nation sent Urban Outfitters a cease-and-desist letter objecting to the use of the word "Navajo" on underwear and the sale of a flask wrapped in what was described as "Navajo Print Fabric." The Navajo Nation complained that the use of the word on underwear offended the tribe's spiritual beliefs about modesty, and calling a flask "Navajo" was insensitive, given the ban on the sale and consumption of alcohol on the reservation.

Other items to which the Navajo Nation objected included an "Unknown Techno Navajo Quilt Oversized Crop Tee" and a "Truly Madly Deeply Navajo Print Tunic," according to court papers.

In a Sept. 30 court filing, Urban Outfitters argues that the New Mexico court is inconvenient for everyone, even including the Navajo Nation, which is headquartered in Window Rock, Arizona, according to the tribe's website.

The filing also notes that 75 percent of the docket for the New Mexico court is comprised of criminal matters, and that this makes the court the third-busiest in the nation in that regard. As a result, delays in the handling of civil matters are more likely, according to court filings.

Additionally, Urban Outfitters said that the court in Philadelphia is "particularly well-versed in intellectual property matters," hearing 200 such cases for a 12-month period ending June 30, 2011.

Urban Outfitters also argued that the Navajo Nation has previously released a statement commending the retailer for removing the Navajo name from its online marketing and products, and accused the plaintiff of "reneging on their public representation that they were committed to avoiding what is now this lawsuit."

The case is Navajo Nation v. Urban Outfitters Inc., 1:12- cv-00195, U.S. District Court, District of New Mexico (Albuquerque).

Amazon.com Seeks Dismissal of Apple's False Advertising Claim

Amazon.com Inc. (AMZN), the world's largest online retailer, has asked a federal court in Oakland, California, to reject Apple Inc.'s claim that its use of "AppStore" constitutes false advertising.

Cupertino, California-based Apple sued Amazon in March 2011, and asked for a preliminary court order barring the online retailer's use of "Appstore," pending the outcome of the lawsuit.

Apple, whose top-selling product is the iPhone, claimed it would be irreparably harmed because the value of its own App Store will be eroded as consumers confuse the two services.

In its Sept. 26 court filing, Amazon said "AppStore" is part of the name of its "Amazon Appstore for Android" and the only claim Amazon makes about the nature and characteristics of the Amazon Appstore is that it contains thousands of apps and that they have been tested to perform on its Kindle Fire portable device.

Apple didn't contend that these claims are false, Amazon argued. A claim for false advertising requires a false statement of fact about the nature, characteristics, or quality of the seller's product, Amazon said, arguing that none of those allegations can validly be made about its use of "Amazon Appstore for Android."

Amazon claims Apple is trying to turn its trademark- infringement claims into a false advertising case, and says in its filing that trademark infringement and false advertising are "distinct types of wrongful conduct." Apple shouldn't be allowed to "piggyback on its trademark infringement claim," Amazon said.

Instead, "from its inception, this has been a simple trademark case," Amazon says, and asked the court to dismiss the false advertising claims in the suit.

The case is Apple Inc. v. Amazon.com Inc., 11-01327, U.S. District Court, Northern District of California (Oakland).

For more trademark news, click here.

Copyright

AF Holdings Sues Single Defendant for BitTorrent Film Sharing

AF Holdings LLC, a maker of adult films, sued a single defendant for infringing the copyright to one of its videos.

According to the suit filed Sept. 27 in federal court in Worcester, Massachusetts, the film was infringed through the use of the BitTorrent file-sharing protocol. In recent months many copyright infringement cases have been filed by makers of adult films, generally listing as many as several hundred unidentified defendants.

In this case, although a name is listed for a defendant, the complaint doesn't list a specific place of residence. Instead, AF Holdings alleges that the defendant "may be found" in the Massachusetts federal judicial district, or the action that gives rise to the claims in the case occurred there.

AF does give the defendant's Internet protocol address, which is a unique series of numbers separated by dots.

The alleged illegal downloading was observed by AF in April 2011, the film company says in its pleadings. AF also says the defendant used BitTorrent to share the film with others. Because of this, AF is also accusing the defendant of civil conspiracy.

The film company asked the court to order a halt to the alleged infringement, and for the seizure of all infringing content under the defendant's control. Additionally, AF seeks money damages, and awards of litigation costs and attorney fees.

AF said that if the defendant didn't do the illegal file sharing, and instead simply permitted it to take place on his computer, then he is accused of negligence and is still liable for illegal actions performed on his computer.

The case is AF Holdings V. Maxime St. Louis, 4:12-cv-11797- TSH, U.S. District Court, District of Massachusetts (Worcester).