(BN) Top U.S. Solar Company Profits Amid Red for Industry: Energy

First Solar Inc. (FSLR) Chairman Mike Ahearn has found the best way to make money from photovoltaics is to sell whole power plants to Warren Buffett and NextEra Energy Inc. (NEE) instead of competing with China on panel sales.

The biggest U.S. solar company is forecast to report the only profit in the second quarter among the 17 companies in the BI Global Large Solar index, according to estimates collected by Bloomberg. The rest, led by Suntech Power Holdings Co. (STP) of China, are predicted to have losses.

Suntech and the other Chinese manufacturers that dominate the industry have focused almost exclusively on panel sales, exposing themselves to the brunt of a 47 percent plunge in prices in the past year. Ahearn has insulated First Solar by cutting production and expanding sales of the PV power plants, said Sanjay Shrestha, an analyst at Lazard Capital Markets. Buffett and NextEra are among the company's best customers.

"Their strong project pipeline is helping them weather the storm that everyone else is caught in," Shrestha said in an interview. "That's buying them time while the rest of the industry scrambles for the next panel sale."

First Solar will report net income of 60.1 cents a share in the second quarter, according to the average estimate of nine analysts surveyed by Bloomberg. It's due to report earnings after trading finishes tomorrow in New York. Suntech and its rivals, mainly Chinese companies listed in New York, are due to report later in August. Yesterday, Suntech said it may delay its earnings due to a suspected fraud.

Shares Underperform

Investors aren't giving Ahearn credit for the shift yet. First Solar's shares have fallen 88 percent in the past year, sharper than the 75 percent decline in the Large Solar index. Ted Meyer, a First Solar spokesman, declined to comment, citing a quiet period before its results.

"The big risk is that they won't be able to replace the pipeline as existing projects are completed," said Rob Stone, an analyst at Cowen & Co. in New York who has a neutral rating on the stock. Many of First Solar's projects relied on government backing to make them profitable, and those programs have expired. "How much longer can their profitability last?"

MidAmerican Energy Holdings Co., a unit of Buffett's Berkshire Hathaway Inc. (BRK/A), agreed on Dec. 7 to buy the Topaz Solar Farm in California developed by First Solar. The project's development budget is $2.5 billion and may generate 550 megawatts of power starting in 2015, making it one of the world's largest PV plants.

NextEra Deal

NextEra, the biggest U.S. generator of power from solar and wind plants, joined a unit of General Electric Co. (GE) to buy the 550-megawatt Desert Sunlight project in California and in March completed the purchase of 40 megawatts of in Ontario.

First Solar typically sells its projects to an energy company once it's received permits, arranged financing and completed a deal with a utility to buy the electricity. It receives an upfront payment for the sale that's usually confidential and is typically a small fraction of the total development budget. Then it continues to receive revenue during construction, for labor and for supplying the panels.

Ahearn accelerated First Solar's transition to project development in October, when he replaced Rob Gillette after a two-year break from leading the company. By the end of 2011, Ahearn had delayed completion of a factory in Vietnam and shut a California R&D unit.

Ahearn's Strategy

In April, he announced measures to cut 30 percent of the workforce, idle four production lines in Indonesia and shut a flagship plant in Frankfurt an der Oder, Germany.

The moves were part of First Solar's "strategy to pursue utility-scale solar opportunities in sustainable markets," Chief Financial Officer Mark Widmar said on a conference call to discuss the restructuring on April 17.

The goal "is to align our business to a demand profile that is highly reliable and predictable, which largely is our captive pipeline" of solar farms the company is developing, he said. "Our pipeline is a competitive advantage."

About 53 percent of First Solar's $497 million in first quarter sales came from developing and selling solar farms. That was up from 30 percent the prior quarter, and it was the first time panel sales weren't the top driver for results.

Competitors Suntech, JinkoSolar Holding Co. (JKS) and Yingli Green Energy Holding Co. (YGE) get at least 90 percent of their revenue from selling solar panels, either directly or through distributors. All will probably lose money every quarter this year, according to Bloomberg data based on analyst forecasts. They're all listed in New York and report later in August.

China's Losses

Jinko is expected to lose $7.51 an American depositary receipt this quarter, the worst performance within the Large Solar index. Suntech, the world's biggest panel maker, may lose as much as 45 cents an ADR and isn't expected to report a profit until 2014. Analysts expect Yingli to lose 28 cents.

Solar panel prices fell by half last year, which has "killed profitability in module manufacturing," said Mark Bachman, an analyst at Boston-based Avian Securities. "First Solar puts up more profit over the next year than all the other companies combined."

Ahearn's plan to build up project development dates to 2007, when First Solar bought the construction and engineering company Turner Renewable Energy LLC for $34 million. That was followed by 2009 purchase of the closely held developer OptiSolar Inc. for $400 million in stock, and the 2010 acquisition of NextLight Renewable Power LLC for $285 million.

'Logical Step'

"Adding these resources, along with their development team, to First Solar, is our next logical step," Ahearn said when announcing the OptiSolar deal on March 2, 2009.

Those acquisitions came with several utility-scale solar farms already under development. OptiSolar brought the 550- megawatt Desert Sunlight project, which First Solar sold to NextEra Energy Inc. in September and is scheduled to be complete in 2015. Also in the purchase was the 550-megawatt Topaz plant that MidAmerican Energy Holdings bought in December, expected to be finished in 2014.

First Solar had cash and cash equivalents of $610 million at the end of the first quarter, up 72 percent from a year earlier. Their current ratio, which measures the ability to repay short-term debt, was 2.48, or 51 percent higher than the average for the 17 companies in the Bloomberg Industry Large Solar Energy index.

Contracts Ahead

First Solar had contracts to build 2.7 gigawatts of power plants as of May 23, according to slides executives showed to analysts along with the first-quarter earnings.

First Solar's anticipated profit this quarter will be followed by earnings of $1.34 a share for the current quarter and $1.69 in the final three months of 2012, analysts predict. That won't be enough to counter a $5.20 loss in the first quarter, largely due to a $413 million restructuring charge that came along with Ahearn's strategy shift. For the whole of 2012, analysts expect loss of $1.46, according to the median of 24 forecasts collected by Bloomberg.

Even if First Solar arranges as much as 600 megawatts of new contracts annually, its factory utilization will drop to about 70 percent by the end of 2014, Stone said. That may force additional charges and closures that would cut profitability.

"They've got some nice projects and nice prices right now, but any new projects they win will come at much lower margins," Stone said. He has a neutral rating on the stock.

First Solar's production cost averaged 69 cents a watt in the first quarter. Prices for standard, polysilicon based panels were 76 cents a watt at the start of July, according to Bloomberg New Energy Finance.

"For anyone following First Solar it's always been a game of 'What's the next negative to hit?'" said Lazard's Shrestha. "But they keep forgetting about the strong project pipeline."

(BN) Apple Said to Prepare IPhone Redesign for Sept. 12 Introduction

Apple Inc. (AAPL) is preparing to introduce the next version of the iPhone on Sept. 12 in what will be a design overhaul of its top-selling product, according to two people with knowledge of the company's plans.

The people asked not to be named because an official announcement hasn't been made. The new iPhone will have a larger screen and thinner body, and is expected to work with faster long-term evolution wireless networks being introduced by carriers such as Verizon Wireless and AT&T Inc., according to analysts such as Piper Jaffray Cos.' Gene Munster.

The design change will be Apple's first for the best- selling smartphone since 2010, when it unveiled the iPhone 4. Last year's update, the 4S, had the same look as the prior version. Anticipation for the new model has led to a drop in sales for the current devices, causing Apple to miss analysts' sales and profit targets for three months that ended in June. The iPhone accounted for 46 percent of the company's revenue in the quarter.

Apple is battling Samsung Electronics Co. (005930) for supremacy in the $219.1 billion smartphone market. While Apple's strategy has been to release a single smartphone each year, Samsung has become the world's leading handset maker by putting out several devices a year in a range of sizes and prices.

The planned September debut was reported earlier by iMore, a technology news website. Natalie Harrison, a spokeswoman for Apple, declined to comment.

Signs that Apple is preparing to introduce a new product were evident in its quarterly financial results. The company increased the prepayments it is making for components by $1.15 billion -- a jump that may indicate a new product is going to be introduced, according to a report yesterday from Maynard Um, an analyst at Wells Fargo Securities.

Apple co-founder Steve Jobs had worked closely on the redesigned phone before his death in October, one person familiar with the matter said in May.

(BN) Singapore’s GIC Boosts Cash to Levels Exceeding 2008 Crisis

Government of Singapore Investment Corp., managing more than $100 billion, boosted cash to levels exceeding the 2008 global financial crisis as it pared stocks and bonds, reducing its holdings in Europe.

Cash allocation almost quadrupled to 11 percent of its portfolio in the year ended March from 3 percent a year earlier, GIC, as the sovereign wealth fund is known, said in its annual report. Stocks fell to 45 percent from 49 percent as it pared equities in developed markets, while bonds dropped to 17 percent from 22 percent.

GIC is reducing its investments as the MSCI World Index (MXWO) posted its biggest slump since the 2008 global financial crisis and market volatility reached the highest level in more than two years. Trading options have become limited for government funds seeking to preserve capital as policy makers across the world prepare for a deeper impact from Europe's debt woes.

"There are not many safe havens, so cash is king," said Ronald Wan, a Hong Kong-based managing director at China Merchants Securities Co., which oversees about $1.5 billion. "It's logical for everyone to cut investments and take a wait- and-see approach. The economic downturn will last for a while before we can see certainty and a swing-back in investment sentiment."

GIC's holdings in Europe fell to 26 percent from 28 percent, with those in the U.K. unchanged at 9 percent, it said. Within Europe, GIC's assets in Portugal, Ireland, Italy, Greece and Spain made up 1.4 percent of its portfolio, mainly held in real estate and stocks in Italy and Spain, it said.

'Greater Uncertainties'

Assets in the Americas were unchanged at 42 percent, with 33 percent of the total portfolio in the U.S., it said. It raised its allocation to Asia to 29 percent from 27 percent.

"The market experienced many twists and turns over the last year," Lim Siong Guan, president of GIC, said in its annual report today. "There will be greater uncertainties in the future."

Holdings in so-called alternative assets increased to 27 percent from 26 percent, it said, with a gain in private equity and infrastructure investments. Real estate was unchanged at 10 percent of its portfolio, it said.

The so-called 20-year annualized real return was 3.9 percent as of March 2012, unchanged from the previous year, it said. The annualized nominal rate of return in U.S. dollar terms was 3.4 percent over 5 years, 7.6 percent over 10 years and 6.8 percent over 20 years, it said. The fund doesn't report an annual return or disclose the actual size of its portfolio.

Tracking Performance

The 5 and 10-year returns beat two composite portfolios of stocks and bonds it tracks, while it underperformed over a 20- year period, said GIC, which was set up in 1981.

The International Monetary Fund said yesterday that the euro-area debt crisis has exacerbated global financial instability and an orderly adjustment process is likely to be prolonged and costly.

In Asia, Singapore's economy unexpectedly contracted last quarter and China and South Korea cut interest rates this month. Europe was plunged into fresh market turmoil as calls for bailout aid sent borrowing costs surging, while Moody's Investors Service lowered Germany's rating outlook to negative.

The MSCI World Index dropped 7.6 percent in 2011, the worst annual performance since 2008. The decline narrowed to 1.7 percent for the year ended March.

'Heightened Uncertainty'

The cost of insuring sovereign bonds from default in Western Europe reached a high this year of 382.5 basis points before falling to 255.24 basis points, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. A similar measure tracking Asia Pacific reached a high of 232.86 on Oct. 4 before declining to 130.05.

"Due to the heightened uncertainty in global markets, we allowed the cash inflow from investment income and fund injection to accumulate during the year in preparation for better investment opportunities," Ng Kok Song, GIC's chief investment officer, said in the report. "We reduced the allocation to bonds because bond yields in the developed markets had been pushed down to abnormally low levels by the flight to safe assets and central bank intervention."

In the year ended March 2009, when its investments were hit by its stake in UBS AG (UBS), GIC raised its cash holdings to 8 percent from 7 percent, and reduced its bond investments to 24 percent from 26 percent, it said at the time.

China's sovereign wealth fund said last week it will invest with a longer-term focus after it posted a 4.3 percent loss on its overseas holdings last year because of declines in global commodity prices.

CIC's Returns

Net income at the $482.2 billion fund, with a resources- heavy portfolio, fell to $48.4 billion in the year ended Dec. 31, Beijing-based China Investment Corp. said in its annual report on its website on July 25. The overseas investment performance was the worst since the fund was set up in 2007, and compares with an 11.7 percent return in 2010. CIC was set up to improve returns on foreign-exchange reserves by investing overseas. In China, the fund's holdings are largely limited to stakes in financial institutions for the government.

Temasek Holdings Pte, Singapore's state-owned investment company, said it spent the most on new holdings in four years as it added more energy and resources producers to its portfolio. The company said it made S$22 billion ($18 billion) of investments in the year to March 31, boosting assets 2.6 percent to a record S$198 billion.

Temasek's Profit

The investment firm said profit for the year declined 16 percent as contributions from units fell amid the global slowdown. Net income dropped to S$10.7 billion from S$12.7 billion a year earlier, it said in its annual report. Temasek's total shareholder return averaged 17 percent since its inception in 1974.

Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., held holdings of Treasuries and mortgages steady in June after saying that U.S. securities are still the safest bet. Gross kept the proportion of U.S. government and Treasury debt in his $263 billion Total Return Fund unchanged at 35 percent of assets last month, according to a report on the company's website. Pimco doesn't comment directly on monthly changes in its portfolio holdings.

Gross left the Total Return Fund's net cash-and-equivalent position unchanged at negative 21 percent last month. The fund can have a so-called negative position by using derivatives, futures or by shorting.

"Looking ahead, we assess that the investment environment will be characterized by a global economy struggling to return to sustainable growth," GIC's Ng said. "The medium-term investment outlook is therefore challenging."

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(BN) For-Profit Colleges Squander Tax Dollars, Report Says

For-profit colleges in the U.S. receive billions in federal dollars yet spend more money on marketing than on instruction, with many students dropping out without a degree and in debt, according to a Senate report.

The schools, which got $32 billion in tuition aid in 2009-2010, aren't a good investment for taxpayer money, according to the study released today. The report, from the Senate Committee on Health, Education, Labor and Pensions, led by Iowa Democrat Tom Harkin, examined 30 education companies over two years.

More than 9 percent of college students were enrolled in a for-profit school in 2009, up from 0.2 percent in 1970, according to Teachers College at Columbia University in New York. The Obama administration has cracked down on recruitment and marketing practices at the schools and proposed rules to limit funding to those whose students don't earn enough to repay their debt. More needs to be done, including setting minimum standards for services such as tutoring and career counseling, according to the report.

"In the absence of significant reforms," the report said, "the sector will continue to turn out hundreds of thousands of students with debt but no degree, and taxpayers will see little return on their investment."

Educational companies have lobbied against new regulations, which they say will restrict opportunities for working adults and low-income students.

The Bloomberg Education Index (USEDU), made up of 13 publicly traded companies, declined 53 percent in the year through July 27.

Federal Aid

The $32 billion in federal support received by for-profit schools in the 2009-2010 academic year accounted for 25 percent of all Education Department student-aid funds. For-profit colleges got $7.5 billion in Pell Grants, which fund scholarships for low-income students, up from $1.1 billion in 2000-2001, double the rate of growth for all recipients of Pell funds, the report showed.

For-profit colleges spent $4.1 billion, or 22 percent of their revenue, on marketing and recruitment, and took an additional $3.6 billion, or 19 percent, in profit, according to the study. They spent $3.2 billion, or 18 percent of revenue, on instruction.

The schools also devote more staff to recruiting new students than ensuring the success of their existing ones, according to the study. In 2010, the 30 for-profit schools employed 32,496 recruiters compared with 3,512 career services staff and 12,452 support service workers, the report showed.

As a result, 596,556 students who enrolled in the 2008-2009 school year dropped out by mid-2010, the report said. In two- year associate's degree programs, 64 percent dropped out.

Default Rate

For-profit college students take on more debt, with 96 percent receiving loans compared with 48 percent at four-year public universities. They also default at a higher rate than their counterparts at nonprofit institutions. Almost half of all federal student loan defaults came from students at for-profit schools.

The report blames lax enforcement by accrediting agencies that rely on self-reporting, state education departments that lack funds to oversee colleges and loopholes in federal regulations.

(BN) Google-Backed 23andMe Asks FDA to Clear DNA Evaluation Service

23andMe Inc., the Google Inc.-backed DNA analysis company co-founded by Anne Wojcicki, sought U.S. regulatory approval for a genetic testing service that may help people assess their risk for developing cancer and Alzheimer's.

The submission with the Food and Drug Administration will cover seven tests, which 23andMe isn't specifying, Ashley Gould, the Mountain View, California-based company's chief legal officer, said today in a phone interview. The tests are part of a service that tells users whether they carry a disease, are at risk of a disease and would respond to a drug, she said.

"The result that you get when you review a report, the FDA wants to ensure that's a valid result," Gould said.

Wojcicki, the wife of Google co-founder Sergey Brin, started 23andMe about six years ago, and her husband used the saliva kit to determine he had a gene that makes him susceptible to developing Parkinson's. The FDA decided in 2010 that services claiming to evaluate a customer's risk of disease must be cleared by regulators if the companies sell directly to consumers.

"23andMe is working proactively with the FDA to ensure the industry delivers high quality information that consumers can trust," Wojcicki said in a statement on the company's website.

Such types of genetic tests may become a $25 billion annual market in the U.S. within a decade, highlighting the need to identify which work best, UnitedHealth Group Inc. (UNH), the largest publicly traded U.S. health insurer, has said. While UnitedHealth said such tests hold great promise, the insurer in a March report raised concern about accuracy and affordability.

FDA Application

23andMe said it submitted the FDA application today for the least stringent of two types of medical device reviews. The company plans to submit "several" more applications by the end of this year, Gould said.

DNA Genotek Inc. (OSUR), a company bought last year by OraSure Technologies Inc., makes the FDA-approved saliva kit. Gould said 23andMe is seeking approval of the process for analyzing and interpreting DNA results for patients.

"The FDA's role and oversight of direct-to-consumer genetic tests are designed to ensure that manufacturers are delivering on their medical claims and providing the public with safe and effective medical devices," Erica Jefferson, a spokeswoman for the agency, said in an e-mail

Most FDA-cleared genetic tests are for a single disease while 23andMe's would be the first to test for multiple conditions, Gould said.

(BN) Chivalry on Sinking Ships Only a Myth, Researchers Find

"Women and children first" was never the social norm on sinking ships, nor was the self- sacrificing captain who gives the order before going down with his vessel, a study of maritime disasters shows.

Crew members had the highest survival rates in shipwrecks, followed by captains and male passengers, according to the report today in the journal Proceedings of the National Academy of Sciences. The research found that women's survival rate on 16 maritime disasters from 1852 to 2011 was half that of men's, and children had the worst chance of getting off the boat alive.

Men in general have better survival prospects, unless they engage in self-sacrificing, helping behavior, the authors said. The exception is the sinking of the RMS Titanic, in which the survival rate of women and children was three times higher than men's. In that instance, the captain ordered a women-and- children-first evacuation, and officers reportedly shot men who disobeyed, according to the study.

"That women fare worse than men has also been documented for natural disasters," wrote study authors Mikael Elinder, an economist at Uppsala University, and Oscar Erixon, an economist at the Research Institute of Industrial Economics, in Sweden. "It seems as if it is the policy of the captain, rather than the moral sentiments of men, that determines whether women are given preferential treatment in shipwrecks."

The survival rate aboard the Titanic, which sank on her maiden voyage on April 15, 1912, after hitting an iceberg, shaped a perception that women and children first was the unwritten law of the sea, the authors wrote. While 1,496 people died in the diaster, 712 survived, including 70 percent of the women and children on board, according to the study. What likely spurred the survival of women and children in that disaster was captain's policy, which also helped women to survive in four other disasters, the authors said.

Sinking Captains

The research also found that nine of 16 captains sank with their ships.

On average, 60 percent of crew members survived ship disasters such as collisions, groundings, and on-board fires. That may also be because crew members are more familiar with the ships and emergency procedures, and are likelier to know how to swim, the authors said.

About 35 percent of male passengers survived, compared with about 18 percent of female passengers. Whether the ship sank slowly or quickly, women fared worse, according to documents describing the outcome of more than 15,000 people in shipwrecks.

A draft of the authors' report was initially posted online in April this year. Today's published data has now been reviewed by other people in the field.

The gap in survival rates between men and women began to decrease after World War I, suggesting that women's higher status in society improved their survival rate, according to the study authors.

"On the basis of our analysis, it becomes evident that the sinking of the Titanic was exceptional in many dimensions," the authors wrote.

Lunch Talk: David Allen talks about Getting Things Done

From the Talks at Google series: David Allen speaks on GTD and the two keys to sustaining a healthy life and work style.

tags: psychology, lunchtalk, control

(BN) Google, Christie’s, Apple, Samsung: Intellectual Property

July 30 (Bloomberg) -- Google Inc. asked a U.S. court to dismiss a lawsuit by authors over the digitizing of books, saying that the company's book-scanning program is a fair use of copyrighted material and a benefit to the public and authors.

The lawsuit by the Authors Guild, as well as one filed by the American Society of Media Photographers, stems from Google's plan announced in 2004 to scan millions of books from public and university libraries to provide snippets of text to people who use its Internet search engine.

In a motion filed July 27 in federal court in New York, the company seeks dismissal of the Authors Guild's case, arguing that authors benefit from the project because their books can be more readily found, bought and read, while the public gains "increased knowledge." Google also argued that the display of snippets of text is fair use under copyright law and that the authors haven't been harmed by the display.

"Google Books furthers the objectives of the copyright laws because of the public benefits (including benefits to authors)," the company said in its motion. "Plaintiffs have adduced no evidence that Google Books has displaced the sale of even a single book."

Michael Boni, a lawyer for the authors, said July 27 that he was planning to file a sealed motion for a judicial ruling in their favor, by hand rather than electronically, because "it uses a lot of documents Google marked 'confidential.'" A redacted version will be filed at another time, he said in a phone interview.

Oral arguments on both parties' motions for summary judgment are set for Oct. 9.

Last year, a federal judge declined to approve a proposed $125 million settlement between the plaintiffs and Google, saying it was "an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the court."

Further negotiations between the authors and Google were unsuccessful. The publishers remain in talks, Google has said.

The authors' case is Authors Guild v. Google, 05-08136; the visual artists' case is American Society of Media Photographers v. Google, 10-cv-02977, U.S. District Court, Southern District of New York (Manhattan).

Copyright

Megaupload Prosecutors Seek to Keep Company as Defendant

Megaupload Ltd. should remain a defendant in the federal criminal case accusing the Internet company and its founder, Kim Dotcom, of running a massive illegal file-sharing service, U.S. prosecutors said.

Prosecutors seeking to defeat a request for dismissal said on July 27 that the U.S. has the authority to bring copyright infringement charges against Megaupload even though the company has no offices in the country.

"The heart of the issue is whether foreign companies like Megaupload can commit crimes in the U.S. and in this district and then never be brought to justice," Assistant U.S. Attorney Ryan Dickey told U.S. District Judge Liam O'Grady during a hearing in Alexandria, Virginia. "That just can't be the case, your honor."

The dismissal of charges against Megaupload would add to the challenges prosecutors have faced since shutting down the company's file-sharing website and charging Dotcom and six other individuals in January. A judge in New Zealand last month threw out warrants used to seize the Internet entrepreneur's property, delaying Dotcom's possible extradition by at least seven months.

Investigators executed more than 20 search warrants in the U.S. and eight other countries and seized about $50 million in assets in connection with what they said was among the largest criminal copyright cases ever brought by the U.S.

Megaupload operated in the U.S. for more than six years, earning more than $175 million in illegal profit since 2005 from the exchange of pirated films, music, books and software, according to an indictment. More than 500 servers leased by Megaupload were in Virginia, giving the U.S. jurisdiction to prosecute the company, the government argued in court papers.

At the July 27 hearing, lawyers argued over whether federal rules governing criminal cases bar indictment of foreign companies that don't have offices or agents in the U.S. The rules require prosecutors to issue a summons to an agent or officer of the company, and mail a copy to the company's last known address in the U.S., when bringing criminal charges against an enterprise.

Megaupload contends prosecutors haven't tried to serve the company, which is registered in Hong Kong, and can't meet the requirements.

By indicting Megaupload, officials were able to shut down its operations through criminal forfeiture, seizing domain names and freezing assets without any review by a judge, William Burck, a lawyer for the company, told O'Grady.

"The process chosen here illustrates the threat the rule was designed to prevent," said Burck, a partner at Quinn Emanuel Urquhart & Sullivan LLP. "They wiped out a foreign corporation with no office in the U.S. by bringing a criminal indictment."

The case is U.S. v. Dotcom, 12-00003, U.S. District Court, Eastern District of Virginia (Alexandria).

For more, click here.

Vekselberg Wins $2.6 Million Fake-Art Case Against Christie's

Viktor Vekselberg, the billionaire who owns part of a Russian oil venture with BP Plc, won a claim to recoup losses from U.K. auctioneer Christie's International after paying 1.7 million pounds ($2.6 million) for what he thought was a painting by Russian artist Boris Kustodiev.

Judge Guy Newey in London said that the painting was "the work of someone other than" Kustodiev. As a result, the judge said, Vekselberg's Aurora Fine Arts Investment Ltd. had the right to return the painting "and recover the money it paid." Newey cleared Christie's of negligence in his written judgment.

"It is a matter of huge regret to Aurora that it was forced to sue Christie's," Andrey Shtorkh, Vekselberg's spokesman, said by phone from Moscow July 27. "We are pleased with the ruling, which confirmed that the experts from Russian museums were correct in asserting that the painting is not the work of Kustodiev."

Vekselberg, chairman of Renova Group, has a net worth of about $14 billion, according to data collected by Bloomberg. In March, he stepped down as chairman of United Co. Rusal, the world's biggest aluminum maker, citing disputes with co-founder Oleg Deripaska, including the refusal to sell Rusal's stake in OAO GMK Norilsk Nickel.

"We are surprised and disappointed by his view of the painting's attribution," a spokesman for London-based Christie's said in a statement after the ruling. "We maintain our belief in the attribution to Kustodiev and are considering our options."

For more copyright news, click here.

Trademark

Woman Charged in Guggenheim Name Scam Won't Serve Jail Time

Lady Catarina Pietra Toumei, one of three charged in a scheme to use the Guggenheim family name to swindle investors through phony billion-dollar deals, pleaded guilty to a misdemeanor and was given two years of probation.

Toumei, 46, admitted on July 27 to helping her two co- defendants violate a judge's order, issued in a civil trademark lawsuit, that barred them from using the Guggenheim name. Toumei was sentenced by U.S. Magistrate Judge James Cott in Manhattan.

Prosecutors from the office of U.S. Attorney Preet Bharara in Manhattan charged Toumei, Vladimir Zuravel and David Birnbaum in January 2011 with a scheme to use the Guggenheim name to lure investors into fake investments in oil, bank guarantees, diamonds and gold. Charges against Birnbaum, who allegedly used the name "David B. Guggenheim," were dropped in September and Zuravel was sentenced to a year of probation in April after pleading guilty.

"I always was surprised that the case was filed," Toumei's lawyer, Jan Ronis, said after the July 27 hearing. "At all times, she truly thought they were Guggenheims."

The Guggenheim family is descended from Meyer Guggenheim, a Swiss immigrant who made a fortune in mining and smelting in the 19th century. They are known for charitable giving, including the establishment of the Solomon R. Guggenheim Museum in New York.

Ronis said Toumei, who lives in the San Diego area, met Zuravel and Birnbaum on the Internet and had never seen them in person.

Ellen Davis, a spokeswoman for Bharara's office, declined to comment on the case.

The case is U.S. v. Toumei, 11-Mag.-207, U.S. District Court, Southern District of New York (Manhattan).

For more trademark news, click here.

Patent

Apple, Samsung Take Global Smartphone War to First U.S. Jury

Apple Inc. and Samsung Electronics Co., having waged their patent battle on four continents, are now on a collision course in California with little prospect of a settlement before a jury trial set to begin this week.

U.S. District Judge Lucy Koh in San Jose, who practiced as an intellectual-property litigator in Silicon Valley for eight years, is scheduled to start jury selection today. Jurors will decide each company's claims that its rival infringed patents covering designs and technology for mobile devices, with potential damage awards reaching billions of dollars.

The companies have sued each other in the U.K., Australia, and South Korea, among other countries, in a bid for dominance of a mobile-device market that Bloomberg Industries said was $312 billion last year. In San Jose, Apple seeks damages of $2.5 billion based on claims Samsung copied the iPhone and iPad. The Cupertino, California-based company also wants to make permanent a preliminary ban it won on U.S. sales of a Samsung tablet computer, and extend the ban to Samsung smartphones.

"Eventually all the parties to the smartphone wars will have to settle," Mark Lemley, a Stanford Law School professor, said in an e-mail. "But the parties have fought this one long and hard, and I don't see why they would settle now, with an injunction already in place. I expect them to take their chances at trial."

Claiming Apple is infringing two patents covering mobile- technology standards and three utility patents, Samsung is demanding royalties of as much as 2.4 percent for each device sold.

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

For more, click here.

U.K. IP Lawsuits Almost Triple on Smartphone Patent Disputes

U.K. courts are a battleground for the global technology patent wars as intellectual property claims almost tripled last year, according to a report by law firm EMW Law LLP.

There were 183 new patent and registered design claims filed in the U.K. in 2011, the most in more than five years, as firms seek to maintain their advantage over competitors in a difficult economic climate, EMW said. There were 65 similar claims filed in 2010.

"Some technology businesses have amassed a huge war chest of patents, which they can use to swamp the competition with patent infringement claims," said Mark Finn, IP law principal at EMW. "Even if the claim doesn't stick and is eventually rejected by the courts, it can still keep rivals' products off the market for long enough to gain a competitive advantage."

Smartphone makers including Apple Inc., Samsung Electronics Co., Nokia Oyj and HTC Corp. have filed dozens of suits against each other in the U.K. during the past two years as part of a global litigation strategy in the mobile-device market that Bloomberg Industries said was $312 billion last year. The rise in IP litigation comes as the U.K. economy shrank the most in three years, forcing companies to fight "for every edge they can find," Finn said.

Companies in patent-heavy industries look for "any way" to maintain their advantage, Finn said.

Finn said companies rush to sue before the disputed product establishes itself in the country, because U.K. patent courts may take a year to reach a judgment.

For more patent news, click here.

Internet

Google's Failure Over Street View Data May Breach U.K. Accord

Google Inc. may have breached an agreement with the U.K. privacy regulator by failing to delete personal data gathered through its Street View service.

Google contacted the U.K. Information Commissioner's Office on July 27 to say it still had some data that should have been deleted in December 2010, the agency said in a statement the same day. The watchdog said it's in touch with other data protection regulators in Europe "to coordinate the response to this development."

"The fact that some of this information still exists appears to breach the undertaking to the ICO signed by Google in November 2010," the agency said in the statement. "Our response, which has already been issued, makes clear that Google must supply the data to the ICO immediately, so that we can subject it to forensic analysis before deciding on the necessary course of action."

Google was fined $25,000 by the U.S. Federal Communications Commission this year for impeding its investigation into improper data gathering. In an agreement ending the U.K. inquiry into Street View in November 2010, Mountain View, California- based Google agreed to further ICO audits of its privacy practices. One was published in August 2011 and will be reviewed this year to ensure ICO recommendations were followed.

In June, the U.K. regulator re-opened a probe into the data collected through Google's location service. While Street View cars photograph buildings and homes to provide street-level mapping to Google users, they went beyond that by using wireless connections to gather people's personal communications.

Google still has in its possession "a small portion of payload data collected" by its Street View cars in the U.K., Peter Fleischer, the company's global privacy counsel, said in the letter. "Google apologizes for this error."

Music

Universal Said to Offer Sale of EMI Classics, Parlophone

Vivendi SA's Universal Music Group offered European regulators to dispose of local assets that may fetch more than 250 million euros ($309 million) to soothe antitrust concerns over its takeover of EMI Group's recorded-music business, said one person familiar with the matter.

Universal offered to sell Parlophone Records, home to Coldplay and Gorillaz, in the U.K. while keeping the label's Beatles songs, the person said, declining to be identified as the matter is not public. The company would also sell some labels including EMI Classics and Virgin Classics in Europe and EMI's units in France, Belgium, the Czech Republic, Poland, Portugal, Norway and Sweden to get approval for the 1.2 billion- pound ($1.9 billion) deal, the person said.

Universal Music, the world's largest record company, on July 27 said it submitted a package of concessions to European Union regulators. Universal has a list of about 20 entities, ranging from independent music labels to major rivals such as Sony Music Entertainment and Bertelsmann AG's BMG Rights Management LLC, which have indicated interest for assets potentially up for sale, according to two people familiar with the process.

"We believe the package fully addresses the commission's concerns and follows our constructive discussions with regulators, independent labels and competitors," Universal said in an e-mailed statement, adding that it's "confident of receiving clearance."

The offer will now be circulated to third-party record labels and customers for so-called market testing.

A Universal representative declined to comment on details of the concessions. A representative for BMG declined to comment and Sony's representatives couldn't be immediately reached for comment.

Universal on July 27 also offered to sell the Virgin Classics label in Europe and the British catalog of Pink Floyd. A sale of Chrysalis Records wouldn't include songs by Robbie Williams, the person said.

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(BN) Pig Tissue Seen Fixing Injury That Sidelined Lin: Health

A tiny tissue tear has gotten in the way of the careers of former New York Knicks point guard Jeremy Lin and English Premier League soccer star Michael Essien. The same injury also routinely ruins the fun of millions of weekend warriors. Now a new technology using pig tissue may save those careers and undo the painful damage from torn meniscus in knees.

The removal of damaged meniscus tissue is the most common orthopedic procedure in the U.S. and is a major cause of osteoarthritis. While replacing damaged meniscus with donor tissue helps reduce pain and restore normal range of motion, a shortage of donors has limited the scope of such operations. That may soon change. Tissue Regenix Group Plc (TRX) of York, England, is developing a new product using material from pigs that holds the hope of producing abundant quantities of tissue.

"A product that restores normal function of the meniscus and prevents or delays development of arthritis would have huge demand," said Marc Galloway, an orthopedist in Cincinnati and a spokesman for the American Academy of Orthopaedic Surgeons who isn't involved in Tissue Regenix's research.

The menisci are made of C-shaped cartilage that serve as shock absorbers for the knees. Currently, tears are treated through surgical repairs with stitches, a fifth of which fail, or partial removal of damaged portions. The market for these procedures is about $3 billion, according to Peel Hunt LLP.

Cellular Material

Tissue Regenix's dCELL technology involves taking animal tissue and removing cellular material from it that would cause humans to reject the implant. That allows doctors to use the stripped tissue without anti-rejection drugs to replace worn out or diseased body parts. Once implanted, the cellular scaffold is repopulated with the patient's own stem cells.

This decellularization technology may also potentially be applied to heart valves and wound care. Tissue Regenix received European approval in August 2010 for its first product, a vascular patch, which replaces tissue removed during open-heart surgery, and the company is in the process of obtaining U.S. clearance.

Data from a pre-clinical trial for the meniscus application will be released this year, with a trial in humans to start in 2013, Chief Executive Officer Antony Odell said in a phone interview. The company may file for approval as early as 2014, he said.

A recent study at Yale University showed that Tissue Regenix's dCELL scaffold in vascular patches led to much quicker cell re-population after one week, compared with a limited effect after one month for a competing product using cow tissue from Synovis Life Technologies Inc., which was acquired by Baxter International Inc. (BAX) in February.

Acute Healing

"This study shows that after the dCELL process, the stripped tissue is so similar to human tissue that the body accepts it more rapidly than conventional patches," said Alan Dardik, an associate professor of surgery at Yale who led the study published in the journal PLoS One in June. "It appears to be a new breakthrough in acute healing," added Dardik, who has no financial interest in the company. "It might be a very useful replacement in the meniscus area as well."

Currently, no tissue engineering companies have commercialized an orthopedic product, according to Paul Cuddon, a London-based analyst at Peel Hunt LLP, Tissue Regenix's investment banker. "It's a totally unique product in its field," he said.

The technique, if proven to work, could reduce demand for knee replacements by reducing cases of severe arthritis. That would threaten the growing $7 billion prosthetic knee industry, prompting device makers such as Smith & Nephew Plc (SN/) or Johnson & Johnson (JNJ) to consider acquiring Tissue Regenix as a hedge, said Ingeborg Oie, a Jefferies International Inc. analyst in London who follows medical device makers.

Better Technology

The company may also attract bidders or licensing agreements for the technology's other applications based on pending clinical study results, Cuddon said. Given the growing market for heart valves, Edwards Lifesciences Corp. (EW), Medtronic Inc. (MDT), St. Jude Medical Inc. (STJ) and Johnson & Johnson may take an interest, he said.

"They are all major heart-valve players that could do with better decellularization technology," he said.

Tissue Regenix issued shares in June 2010 at 5 pence each after a reverse takeover of Oxeco. The shares traded at 9.13 pence as of 3:05 p.m. in London.

For weekend athletes with knee injuries, tissue transplant procedures can't arrive soon enough. Erin Hallock had four stitches sewn into her meniscus to repair a tear after a fall while skiing on icy slopes in Zermatt, Switzerland in March 2010. Two years later, Hallock, 35, is able to ski and cycle, but she worries how long the repair work will last and one important challenge remains completely out of her grasp: long- distance running. "My doctor said, 'You can't run a marathon anymore,'" she said.

Lin's Surgery

For professional athletes, of course, the consequences of such injuries can be even more devastating. A torn meniscus forced Lin into surgery in April and has taken Los Angeles Clippers forward Blake Griffin off the U.S. Olympic basketball team. Essien, the Chelsea player, injured his anterior cruciate ligament along with his meniscus last year, keeping him off the field for six months.

While calcium build-up, which hardens the donor tissue, is a drawback of decellularization technology developed by others, Tissue Regenix has found an alternative solution. Instead of using the disinfectant glutaraldehyde favored by competitors, the company has chosen to use sodium dodecyl sulphate, an approach that doesn't lead to calcium build-up, Cuddon said.

FDA Timeline

The timeline for obtaining approval from the Food and Drug Administration is unclear. The FDA requires more clinical analysis for non-pharmaceutical medical devices than European regulators. And tissue products like those derived from dCELL's scaffold are categorized as medical devices since they are implanted and not metabolized by the body.

Erica Jefferson, a spokeswoman for the FDA, declined to comment on the approval prospects for Tissue Regenix's products.

Still, researchers remain hopeful. Given the acceptance of porcine tissue by the medical community, especially in heart valves, safety isn't a concern, Yale's Dardik said.

"It's extremely similar to human tissue and is implanted thousands of times every day across the world," he said. "In the future, there will probably be pig organ transplants. That's the holy grail of transplant surgery."

(BN) Banking Union Is Last Gambit to Save Euro Dream

The euro crisis isn't Angela Merkel's fault.

The real culprits are the founding fathers -- Francois Mitterrand, Helmut Kohl, Jacques Delors or Romano Prodi -- who created a common currency based on poor economics and worse politics. They knew their brainchild was flawed, and bet that future crises would force it to evolve. Unfortunately, they willfully ignored the dysfunction of Europe's political structures, which allow Luxembourg, a country with fewer inhabitants than Tucson, Arizona, to veto any communal decision.

As the impending default of the Spanish regions amply demonstrates, a fiscal union without a transfer of political powers to a central authority is pure folly. Yet no European country is willing to relinquish its sovereignty; this is particularly true of those that have proved most irresponsible.

The euro's founders designed this game of chicken on purpose, hoping that in a crisis either the periphery countries would blink and relinquish their sovereignty or Germany would cave and open its coffers.

Beyond their willingness to ignore the risks inherent in playing chicken, the euro founders didn't take into account that even good outcomes of this game could be disastrous. On the one hand, without a transfer of powers, a German rescue would only postpone the disaster. On the other, a transfer of power under duress would fuel such deep national resentment that the idea of Europe would be destroyed for at least a generation.

Bright Spot

Still, there remains one bright spot amid the gloom. A European banking union would provide a litmus test of the only viable long-term solution for Europe -- a quid pro quo between financial rescue and transfer of power. The power to be transferred -- the authority to supervise major banks -- isn't negligible. Regulators, especially in southern Europe, have been known to turn a blind eye to politically affiliated national banks. Relinquishing this prerogative would be a serious loss for local politicians. That is the reason why such a transfer would be no picnic. The devil, as usual, will be in the details.

The first important consideration is the way the bank supervisory authority will be established within the European Central Bank. Would it respond directly to the Governing Council, which is made up of the 17 national central bankers and the six members of the Executive Board? Such a large representative body is ill-suited to making difficult political decisions. The Executive Board is of more appropriate size, but the largest countries tend to dominate it. The danger is that the board would be tough-minded only with banks of the smaller countries, which don't always have an advocate.

The best solution is for the Governing Council to appoint a head of supervision who will oversee and decide all the cases, except the ones for his or her own country; those decisions would be made by the No. 2 (from a different country).

The second important detail is how European insurance should cover a country's exit from the euro. The currency's founders omitted such a contingency from any treaty, hoping to make it impossible. Today, however, this possibility is on the table and deposit insurance should be in place to deal with it.

What would happen to Greek bank depositors if Greece (ETE) were to leave the euro? If the answer is that they would lose their coverage, then the insurance would be unable to prevent a run because Greeks wouldn't want their savings redenominated in drachmas. If the answer is that the deposits would be insured in euros, there is a risk of moral hazard by subsidizing a Greek exit.

Unconditional Insurance

The solution is unconditional insurance, with the sovereign, senior debt first in line for a clawback if the country leaves the euro. In this way, the insurance would appease fears of an exit, but wouldn't risk subsidizing it, because the sovereign would still have to pay at least the insurance costs.

The vision of a Europe without nations, with nothing to kill or die for, is very valuable. Although imagining it isn't hard to do, building it is. By stating the vision, the euro's fathers claimed all the glory. The difficult details were left to their successors, who must now either make good on Europe's promise or recognize that this wonderful project was premature and try to unwind it in the least costly way.

- Luigi Zingales is a professor of entrepreneurship and finance at the University of Chicago Booth School of Business and a contributor to Business Class. He is the author of "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity." The opinions expressed are his own.)  policy on lethal-injection drugs.

(BN) Africa’s Top Media Company Looks Beyond Tencent, Mail.ru

July 30 (Bloomberg) -- As Africa's largest media company, with 5.6 million pay-TV subscribers today and a potential market of hundreds of millions more, Naspers Ltd. would appear to have almost limitless room for growth. Investors, though, seem to place little value on the South African company's primary publishing and broadcasting business.

Investments in Tencent Holdings Ltd., China's biggest Internet company, and Mail.ru, the largest Russian-language Internet firm and a 1.5 percent owner of Facebook Inc., account for almost 90 percent of Naspers' $23 billion market value.

That calculation puts a price tag of about $2.7 billion on Naspers' media operations -- satellite and cable TV across Africa, broadcast rights to English Premier League soccer, South Africa's biggest newspaper, and dozens of other businesses in 133 countries from Argentina to Zambia.

Chief Executive Officer Koos Bekker said the valuation is of little concern and that Naspers' reliance on two outposts on the Internet's wild frontier poses no risk to the company. "These investments look very much like the engine of pay-TV for us," Bekker said in a telephone interview from the company's headquarters in Cape Town.

The company's global Internet push and burgeoning African television operations will account for a growing share of sales and profits in coming years, said David Ferguson, a research analyst at Renaissance Capital in Moscow.

Acquisition Trail

Income from new businesses "will increase to reduce the reliance" on Tencent and Mail.ru, said Ferguson, who has a buy recommendation on Naspers and predicts the stock will rise 26 percent.

Naspers will complete 10 to 20 acquisitions in the year through March 2013, Bekker said. "We see some opportunities in the e-commerce space," particularly in eastern Europe, he said.

The company spent 1.85 billion rand ($227 million) on four major purchases and "various smaller" ones in the previous year, Naspers said on June 27. It had 9.8 billion rand in cash and cash equivalents at the end of March.

This year, Naspers has purchased majority stakes in Netretail SRO, an online retail business in central Europe, and Internet Mall AS, a Prague-based website selling household goods such as washing machines. It also invested in Resolva.me, a Brazilian site that offers ratings of dentists, lawyers and other professionals.

$7 Monthly

Naspers, begun as a newspaper publisher in 1915, is rolling out $7 a month pay-TV deals in underserved markets such as Zambia, Kenya and Nigeria. The company's Daily Sun tabloid is the largest-selling daily in South Africa, while News24.com is the most popular online news service in the country. Its Supersport TV brand is the biggest sponsor of team sports in Africa.

Naspers is "well-positioned to succeed" with its next purchases because the company's executives are prepared to help acquired businesses, said Richard Tessendorf, an analyst at Avior Research in Johannesburg.

"These guys have been doing this for 10 to 15 years now," said Tessendorf, who has a hold recommendation on Naspers shares, which have jumped 29 percent this year.

Chief Investment Officer Mark Sorour is on the board of Mail.ru, and Naspers advises Tencent through the Chinese company's board, Bekker said.

Naspers owns 34.2 percent of Shenzhen-based Tencent and almost 29 percent of Mail.ru. Tencent shares have risen 47 percent this year, better than any company in the Bloomberg World Media Index, which includes Naspers and has jumped 18 percent in the period. Mail.ru has advanced 7.7 percent.

Leaving Garage

"We discovered both opportunities by being very early investors in both markets and learning step by step," Bekker said. Naspers had previously made unsuccessful investments in both China and Russia, he said, "and learned a lot from those failures, including how important good local management is."

Naspers has a team looking globally for investment possibilities and is approached regularly by entrepreneurs seeking partners, Bekker said. Last year, the company evaluated about 300 opportunities and agreed to about 30 deals, he said.

Naspers invested $191 million in Mail.ru in 2007 and its holding is worth $1.7 billion. The Tencent stake, purchased 12 years ago, was worth $18.6 billion as of July 27. Tencent contributed 11.4 billion rand to Naspers' sales of 39.5 billion rand in the year through March, and Mail.ru contributed 1.1 billion rand.

Industry Comparison

Naspers' stock trades at 23 times estimated earnings. The 60 companies in the Bloomberg World Media Index trade at an average of 15 times projected profit. The index includes Walt Disney Co. and Axel Springer AG, which like Naspers have publishing, television and Internet assets. Tencent trades at a multiple of 26 times earnings.

David Reynolds, a London-based analyst at Jefferies, cautions that Naspers' African television operations may face declining margins due to growing numbers of TV shows online.

"Naspers has become a derivative of Tencent, which begs the question why don't you just buy Tencent stock itself," Reynolds said.

Reynolds is the only analyst with a sell recommendation on the stock among seven who have reported on Naspers in the last month and shared their advice with Bloomberg. He initiated coverage with a sell rating on Nov. 23, and the stock has risen about 30 percent since then.

Bekker rejects the notion that shareholders see little potential in Naspers' core holdings. Investors typically value a company's shares in other corporations at about 70 percent of their listed price, he said. "In this thinking," Bekker said, "our Mail and Tencent stakes jointly will then be worth about half our market cap."

(BN) CBS to Text ‘Good Wife’ Fans When NFL Delays Sunday Show

>> telegram before the train <<

July 29 (Bloomberg) -- CBS Corp., owner of the most-watched U.S. broadcast network, will use text messages and will send notifications through Facebook Inc. and Twitter Inc. to alert viewers when its shows are delayed by Sunday football games that are running long.

"We will do everything possible to let the audience know when our shows will be on later," Nina Tassler, who oversees CBS Entertainment, said today at a conference of television critics in Beverly Hills, California.

National Football League games are important to CBS and draw viewers to prime-time shows later in the evening, Tassler said. The network is seeking to retain regular viewers of its programming when games run longer than scheduled, sometimes by as much as 17 minutes.

Football may help CBS achieve a ratings victory in total audience and viewers ages 18 to 49, a group targeted by advertisers, for the first time in two decades. The network hosts Super Bowl XLVII in February and a crucial prime-time National Football League playoff game, promising two of the largest audiences of 2013.

While the NFL may deliver ratings victories for CBS this year, the network wouldn't be in that position without its line- up of shows including "NCIS," "Big Bang Theory" and "The Good Wife," Tassler said.

"Scripted series have been spectacularly successful for us," Tassler said. "It's not all football ratings."

CBS, controlled by Chairman Sumner Redstone, gained 2.9 percent to $33.57 on July 27 in New York. The stock has climbed 24 percent this year.

New Shows

The network is adding four scripted programs to its line-up in the television season starting in September, fewest of the major broadcast networks. CBS plans to air new dramas "Elementary," "Vegas" and Made in Jersey'' and the comedy "Partners."

CBS collected about $2.7 billion in advertising commitments ahead of the new season at a rate increase of about 10 percent, a person with knowledge of the matter said on June 12. CBS sold about 78 percent of its inventory, the person said.

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(BN) Smartphone Patent Fights See U.K. IP Lawsuits Nearly Triple

July 30 (Bloomberg) -- U.K. courts are a battleground for the global technology patent wars as intellectual property claims nearly tripled last year, according to a report by law firm EMW Law LLP.

There were 183 new patent and registered design claims filed in the U.K. in 2011, the highest number in more than five years, as firms seek to maintain their advantage over competitors in a difficult economic climate, EMW said. There were 65 similar claims filed in 2010.

"Some technology businesses have amassed a huge war chest of patents, which they can use to swamp the competition with patent infringement claims," said Mark Finn, IP law principal at EMW. "Even if the claim doesn't stick and is eventually rejected by the courts, it can still keep rivals' products off the market for long enough to gain a competitive advantage."

Smartphone makers including Apple Inc., Samsung Electronics Co., Nokia Oyj and HTC Corp. have filed dozens of suits against each other in the U.K. over the last two years as part of a global litigation strategy in the mobile-device market that Bloomberg Industries said was $312 billion last year. The rise in IP litigation comes as the U.K. economy shrank the most in three years, forcing companies to fight "for every edge they can find," Finn said.

Companies in patent-heavy industries look for "any way" to maintain their advantage, Finn said.

Finn said companies rush to sue before the disputed product establishes itself in the country, because U.K. patent courts may take a year to reach a judgment.

"IP litigation often isn't just about compensation for claimants," Finn said. "It's a vital tool for defending profits and market share."

Tricking people into greatness.

In preparation for The Greatest Innovations of Silicon Valley, I'm reading up on computer history in the San Francisco Bay area. The video games industry was born in the early 1970s with the emergence of Atari. In 1972, Nolan Bushnell co-founded the company in Sunnyvale, CA. Their main business was servicing coin-operated arcade game machines around the valley.

At the same time, he wanted to develop and sell his own machines. For that purpose he hired engineer Al Alcorn, who ended up designing one of the best arcade game machines ever - the PONG. The machine was a result of a ruse Bushnell played to test Alcorn's engineering abilities. Here's how "The Ultimate History of Video Games," by Steven Kent describes this accident of greatness,

Shortly after hiring Alcorn, Bushnell gave him his first project. Bushnell revealed that he had just signed a contract with General Electric to design a home electronic game based on ping-pong. The game should be very simple to play—“one ball, two paddles, and a score…. Nothing else on the screen.”

Bushnell had made up the entire story. He had not signed a contract or even entered into any discussions with General Electric. In truth, Bushnell wanted to get Alcorn familiar with the process of making games while he designed a more substantial project.
found out later this was simply an exercise that Nolan gave me because it was the simplest game that he could think of. He didn’t think it had any play value. He believed that the next winning game was going to be something more complex than Computer Space, not something simpler.

An excerpt from an interview with Alcorn in the same book,

Nolan didn’t want to tell me that because it wouldn’t motivate me to try hard. He was just going to dispose of it anyway.

Pong proved to be extremely successful and put Atari on the world-wide technology map. One of the low-ranking employees at Atari later co-founded a famous "fruit" company. The guy's name was Steve Jobs.


tags: innovation, silicon valley, stanford, luck, history

(BN) Singapore to Meet Water Target Before Deadline: Southeast Asia

Singapore will be able to meet its water requirements independently ahead of the 2061 expiration of a century-long supply agreement with Malaysia "if need be," the head of the city-state's water utility said.

Desalination and recycling plants produce 40 percent of the 380 million British gallons (456 million U.S. gallons) of water companies in Singapore and its 5.2 million population use daily, Chew Men Leong, chief executive of PUB, said in an interview on July 27. A downtown dam adds a further 10 percent, with the remaining coming from its reservoirs and imports from Malaysia.

"We have made progress to the point that we are now much more confident in terms of water security and sustainability," said Chew, 44, a former naval chief who joined the utility about a year ago. "If you're asking me this question about when will we ever get self-sufficiency, I will put it this way that we can be self-sufficient if need be."

Singapore, which relied on Malaysia for its water needs, spent S$600 million ($481 million) to S$800 million a year since 2006 on new technologies to boost its supply. The push to develop the industry has drawn businesses including General Electric Co. and Siemens AG (SIE) to invest, and created local water companies such as Hyflux Ltd. (HYF) that have expanded overseas.

"What they are looking to do is create a virtual market for the water business which is much larger than Singapore," said Glen Daigger, chief technology officer of CH2M Hill Cos., an Englewood, Colorado-based industry consulting firm. "By becoming a thought leader for water in Asia, then they really create a market which is orders of magnitude bigger than Singapore itself."

Rising Demand

The island that's almost half the size of the city of Los Angeles is developing its water industry to meet the country's requirement, which Chew expects will exceed 700 million gallons a day in 50 years. That's equivalent to more than 1,000 Olympic- sized swimming pools, based on data from the U.S. Environment Protection Agency.

Singapore has relied on Malaysia for its water supply, with the first of four contracts signed in 1927, according to data compiled by the city's National Library. An agreement in 1961 expired last year while the remaining 1962 accord, which ends in 49 years, gives Singapore 250 million gallons of raw water daily.

Arguments over the water contracts had overshadowed relations between the two countries, which were briefly united in a federation from 1963 to 1965.

The water strategy "goes back to Lee Kuan Yew with respect to making sure that Singapore, which initially was reliant upon imported water from Malaysia, that it not be put in a position where it was not able to depend on that source as a reliable supply," said Paul Brown, executive vice president of CDM Smith Inc., referring to city-state's first prime minister.

Downtown Dam

CDM Smith, a Cambridge, Massachusetts infrastructure consulting company, designed the Marina Barrage, the dam in the island-state's business district that was completed in 2010 and holds water from the Singapore River and the Marina Bay.

Water from rainfall and drawn through a 7,000-kilometer (4,350-mile) drainage network into more than a dozen reservoirs across Singapore will be supplemented by desalination, which treats seawater, and recycling systems, Chew said.

"Water is a priority area for Singapore, and this has set the tone and direction for water management in the country," Olivia Lum, chief executive officer of Hyflux, the city's biggest water company, said in an e-mailed response to queries.

Hyflux, whose sales quadrupled to S$534.1 million in the past year from 2006, developed the city's first desalination plant and is building similar projects in China and Algeria.

Sustainable Costs

Desalination plants produce 10 percent of water in Singapore, Chew said, which will increase to 30 percent in 50 years. The use of recycled water, known as NEWater, is mainly for industrial purposes such as cooling machines and factory processes, and will make up 50 percent of supply by 2061.

"We have essentially moved from a position of vulnerability to better security," Chew said, adding that the goal is to make the supply "sustainable in terms of costs."

Singapore has achieved more than half of its target of adding 11,000 jobs to the water industry by 2015 as the number of companies in the city doubled to 100 since 2006, PUB said.

"Over the next five to six years, we are committed to increasing our technology and engineering presence leveraging the greater opportunities we have here in Singapore," said Michael Roeder, regional commercial leader of engineered systems at General Electric (GE)'s water unit in the city-state.

Flushers, Faucets

Chew said his main worry is climate change and how that lowers water levels at reservoirs. Changing weather patterns also led to heavy rainfalls and flash floods that added stress to its drainage systems, where parts of the Orchard Road shopping belt were affected over the past two years.

PUB is also working on reducing water consumption, he said, with measures ranging from mandatory dual-flushing systems for toilets and automatic faucets in all public restrooms.

The average usage per person is now 153.4 liters (40 U.S. gallons) a day, down from 165 liters nine years ago, he said. That's expected to fall to 147 liters by the end of the decade and 140 liters in the following 10 years, he said.

"Here, water is an issue of life and death," Chew said. "That's always been the message."

(BN) Apple, Samsung Take Smartphone War to First U.S. Jury

Apple Inc. (AAPL) and Samsung Electronics Co. (005930), having waged their patent battle on four continents, are now on a collision course in California with little prospect of a settlement before a jury trial set to begin this week.

U.S. District Judge Lucy Koh in San Jose, who practiced as an intellectual-property litigator in Silicon Valley for eight years, is scheduled to start jury selection July 30. Jurors will decide each company's claims that its rival infringed patents covering designs and technology for mobile devices, with potential damage awards reaching billions of dollars.

The companies have sued each other in the U.K., Australia, and South Korea, among other countries, in a bid for dominance of a mobile-device market that Bloomberg Industries said was $312 billion last year. In San Jose, Apple seeks damages of $2.5 billion based on claims Samsung copied the iPhone and iPad. The Cupertino, California-based company also wants to make permanent a preliminary ban it won on U.S. sales of a Samsung tablet computer, and extend the ban to Samsung smartphones.

"Eventually all the parties to the smartphone wars will have to settle," Mark Lemley, a Stanford Law School professor, said in an e-mail. "But the parties have fought this one long and hard, and I don't see why they would settle now, with an injunction already in place. I expect them to take their chances at trial."

Claiming Apple is infringing two patents covering mobile- technology standards and three utility patents, Samsung is demanding royalties of as much as 2.4 percent for each device sold.

Samsung's Evidence

Samsung, based in Suwon, South Korea, said in a court filing it plans to show jurors evidence that in 2006, before Apple's January 2007 introduction of the iPhone, Samsung was developing the next generation of mobile phones, envisioning "a simple, rounded rectangular body dominated by a display screen with a single physical button on the face."

Apple is trying to deflect Samsung's infringement claims in part by arguing that Samsung deceived the European Telecommunications Standards Institute, according to a court filing. Samsung was pushing the organization to adopt certain standards without disclosing that it had applied for patents covering the same technology, Apple claims.

Apple's request for $2.53 billion in damages is based on its compensation claims for unjust enrichment amounting to $2 billion, lost profit of $500 million and royalties of $25 million, according to the filing. Apple claims Samsung products infringe four design patents and three software patents, according to a court filing.

'Cutthroat and Nasty'

Kristin Huguet, an Apple spokeswoman, declined to comment on the trial or the possibility of a settlement.

"We will take all available measures to stop Apple's unacceptable free-riding of our intellectual property," Nam Ki Yung, a Seoul-based spokesman for Samsung, said in an e-mail.

Will Stofega, a technology industry analyst with IDC in Framingham, Massachusetts, said this case is "much more cutthroat and nasty" than most lawsuits between technology companies, which usually settle.

Stofega said he expects the dispute to drag on in courtrooms around the world even as it strains an important relationship between the two companies -- Samsung being one of Apple's biggest component suppliers.

'How Interlocked'

"It shows you how interlocked these companies are," he said.

In the second quarter of this year, consumers worldwide bought 406 million mobile phones compared with 401.8 million in the same period last year, with Samsung and Apple shipping almost half of those phones, according to IDC.

Samsung extended its lead over Apple during the second quarter, shipping 50.2 million mobile phones, representing 32.6 percent of the market, compared with 26 million units, or 16.9 percent of the market, for Apple, according to IDC.

Samsung Chief Executive Officer Choi Gee Sung and Apple CEO Tim Cook tried and failed to settle the San Jose case at a court-ordered May 21 meeting in San Francisco. Previously, company officials met in September and December and on May 4 to discuss resolving a related dispute before the U.S. International Trade Commission.

A settlement remains unlikely because Apple may be confident it can prove patent infringement and persuade the judge to permanently bar Samsung products that are "no more than colorably different" from any single banned tablet or smartphone, said Doug Lichtman, a law professor at the University of California in Los Angeles.

Such a ruling would prevent Samsung from evading an injunction by manufacturing new products that are only "trivially different" from a smartphone or tablet found to be infringing Apple patents, Lichtman said in an e-mail.

Eventual Resolution

Samsung may be unwilling to negotiate due to its ability to profit from selling devices at a wide range of prices. During the first quarter, Samsung sold more than 40 percent of all mobile phones that run on Google Inc. (GOOG)'s Android operating system, according to Stamford, Connecticut-based research company Gartner Inc. (IT) Android was installed on 56 percent of new smartphones, more than twice Apple's share.

Moreover, Lemley said, Koh's order last month barring sales of the Galaxy Tab 10.1 tablet would be lifted at the end of trial if Samsung wins. Samsung may be willing to take whatever risks a trial presents rather than pay what Apple requires to lift the injunction, he said.

With so much at stake for both companies globally, Apple and Samsung eventually will have to resolve their differences out of court, Lemley said, citing pending patent litigation over mobile devices also involving HTC Corp. (2498) and Google Inc.'s Motorola Mobility unit.

"Smartphone patents are like nuclear weapons in the Cold War -- there are just so darn many of them," Lemley said. "Apple is riding high right now, but a year from now it may be Apple's products being enjoined on the basis of a Motorola or HTC or Samsung patent. Taken to their logical conclusion, everyone in this market could shut down everyone else."

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

(BN) Penis Politics Obscure Circumcision’s Role Fighting AIDS

Circumcision is in the spotlight again after a German court ruling has pit those who support it for religious and health reasons against those who say boys should have the right to decide for themselves. Lost in the debate is a growing body of recent data that shows circumcision is helping prevent the spread of AIDS in Africa.

"The evidence is overwhelming, at least in low- and middle-income countries that have important HIV epidemics," said David Cooper, director of the Kirby Institute in Sydney, Australia's biggest HIV research center. "It's really important that, given there is a benefit, parents have a choice."

Since a Cologne district court in May opposed religious circumcision after a Muslim boy fell ill after having his foreskin removed, Muslim and Jewish leaders have denounced the ruling as an encroachment on freedom of religion. The controversy has been especially fraught occurring in a country whose history is shadowed by the deaths of an estimated 6 million Jews during the Holocaust in World War II. To diffuse the tension, German legislators on July 19 passed a resolution calling on the government to draft a law explicitly permitting the practice.

While the debate rages on, evidence is mounting that supports what some doctors already consider prudent medical reasons for having the procedure: It eliminates a hiding place for bacteria and viruses. A circumcision program in Orange Farm, South Africa, may have averted 536 infections last year among 52,000 men there, according to estimates presented at the International AIDS Conference last week. An earlier analysis showed the program had reduced the rate of new HIV infections by 76 percent.

Health Measure

Approximately 30 percent of boys and men are estimated to be circumcised globally, of whom an estimated two-thirds are Muslim, according to the Geneva-based World Health Organization.

Circumcision is picking up in Africa as a pragmatic health measure to ward off disease. More than 40 Zimbabwean lawmakers volunteered in June to be circumcised as part of a campaign to boost AIDS awareness. About 500,000 men have been circumcised in Africa since 2008 in programs funded by the U.S. President's Emergency Plan for AIDS Relief and the Global Fund to Fight AIDS, Tuberculosis and Malaria, according to Bertran Auvert, a public-health professor at the University of Versailles outside of Paris.

Herpes Reduction

In addition to curbing HIV infection, the practice also reduces the chance of getting genital herpes and human papillomavirus, according to a study published in the New England Journal of Medicine. The results prompted Thomas Quinn, chief of the International HIV/STD section at the National Institute of Allergy and Infectious Disease, to urge U.S. policy makers to make circumcision available to all boys if their parents choose to have it done.

The same study also showed that women may benefit from a man's circumcision. The circumcised men in the study were 35 percent less likely to get HPV, which causes genital warts and cervical cancer in women. About three-quarters of U.S. adults have had at least one HPV infection, according to the 2009 study.

Circumcision also may reduce the risk of prostate cancer, according to research published in the journal Cancer in March. There is also "substantial evidence" that the procedure protects against urinary tract infections, syphilis and invasive penile cancer, the WHO said in a report.

Lower Risk

Men shouldn't be denied circumcision if requested, as long as there is no medical reason to avoid it, the WHO has said. Removing the foreskin early in a child's life carries a lower risk of complications as well as lower costs compared with performing the procedure on adults, according to the United Nations health agency's manual on infant circumcision.

The WHO estimates that circumcision of newborns has a 0.2 percent to 0.4 percent rate of adverse events, noting differences between religious circumcisions in clinical settings, which it says are generally risk-free, and procedures undertaken in unhygienic conditions, which can result in serious complications and even death.

Two newborn boys died in New York between 2000 and 2011 after being infected with herpes simplex virus as a result of out-of-hospital ritual circumcisions, according to a June 8 report by the U.S. Centers for Disease Control and Prevention in Atlanta.

"One important advantage of infant male circumcision is that the procedure is simpler than that performed on older boys and men because the penis is less developed and the foreskin is thinner and less vascular," the WHO said in the manual. "Healing is quicker and complication rates are lower."

U.S. Controversy

Circumcision of newborn boys is common in Israel, the U.S., Canada, Australia and New Zealand, and in much of the Middle East, Central Asia and West Africa, the WHO said.

Even in the U.S., where more than 50 percent of newborn boys were circumcised between 2000 and 2010, there is controversy. Efforts to ban circumcision in San Francisco and Santa Monica, California, were blocked in July 2011 by a state judge who ruled that cities have no power to regulate a state- licensed medical procedure. In October, Governor Jerry Brown signed a law prohibiting local governments from enacting such measures.

The American Academy of Pediatrics leaves the decision of circumcision up to the parents, neither endorsing nor opposing the practice, though it does say in its position statement that the procedure may reduce the risk of bladder infections and HIV.

The Kirby Institute's Cooper authored a paper in the Medical Journal of Australia in 2010 calling on the Royal Australasian College of Physicians to reverse its policy of recommending against the routine circumcision of newborn boys.

Doctors' Recommendations

The Finnish Medical Association opposes circumcision of infants for non-medical reasons, arguing that it risks the health of the infant as well as his physical integrity. In the Netherlands, the Royal Dutch Medical Association opposes religious circumcision because it may lead to medical and psychological complications. If it helps prevent HIV, the association says, parents should delay circumcision until the male is sexually active and can decide for himself.

"Our departure point is that you are cutting healthy flesh from a minor who has not consented to it," Lode Wigersma, director of policy at the Dutch doctors' group, said in a phone interview. "When you remove that tissue, you can cause complications. We are aware that there are studies supporting prevention of certain diseases but there are many medical experts that find those studies inconclusive."

Sexual Pleasure

Some mild adverse effects may occur, especially when circumcision is done when the patient is older or when the practitioner hasn't been properly trained, according to a review of more than 50 studies published in 2010. Severe complications are rare, the review found.

While there is widespread concern that male circumcision can diminish male and even female sexual enjoyment, recent studies show no signs of that, according to WHO. Two trials that evaluated at least 4,000 adult males each found that circumcision didn't adversely affect sexual pleasure, WHO said in a manual for male circumcision.

In Germany, home to about 4 million Muslims and 110,000 Jews, the legal controversy began in November 2010, when a Muslim couple living in Cologne asked a doctor to circumcise their 4-year-old son. The doctor circumcised the boy using a local anesthetic and closed the wound with four stitches. Two days after the procedure, the mother rushed her son to the hospital after the wound began bleeding. The hospital contacted the police, who started an investigation that led to bodily harm charges against the doctor.

Bodily Harm

While the Cologne court acquitted the doctor in its decision because the law wasn't clear at the time, it ruled male circumcision, even when done properly by a doctor with the permission of the parents, should be considered as bodily harm if carried out on a boy unable to give his consent.

The child's body would be "permanently and irreparably changed," the court said in its decision. The procedure goes "against the interests of a child to decide for himself later on to which religion he wishes to belong."

Following the ruling, the German Medical Association asked its members not to perform circumcisions for religious reasons until the law was clarified. The group also warned that the decision may spur parents to turn to non-professionals to perform circumcisions, increasing the risk of infection through poor hygiene.

Swiss Hospitals

The controversy has spread to Switzerland and Austria. Two Swiss hospitals this month suspended the practice of performing circumcisions after the German court's decision, and the governor of Austria's Voralberg province told state-run hospitals to stop the practice until laws are clarified.

Many Turks living in in Germany with newborn male babies are flying back to their home country for circumcision, which is performed on boys ages 2 to 14 and is often accompanied by festivities, said Serdar Yazar, a member of the interest group Turkish Community in Germany.

European rabbis told Jews on July 12 they should keep circumcising their boys and ignore the court ruling. Circumcision "is a basic law of the Jewish faith," Pinchas Goldschmidt, who heads the Conference of European Rabbis, told reporters in Berlin after a three-day meeting.

Esra Weill, who has been circumcising Jewish baby boys for the past three years, said many Jewish families with newborn boys are apprehensive, holding off until they get a clarification from the German government.

"Why target this indelible part of our culture?" said Weill, a Basel, Switzerland-based mohel, or ritual Jewish circumciser, who is registered to practice in both Switzerland and Germany. "It's not necessarily bad that we are having a dialogue about this, but ultimately I don't think it could be stopped."

Lunch Talk: The Great Stagnation

Economist Tyler Cowen presents his book The Great Stagnation at the Singularity Summit in NYC. He argues that we've reached a plateau of technological stagnation and most of today's innovations are incremental at best.

tags: innovation, economics, lunchtalk

Lunch Talk: (@TED) All Your Devices Can Be Hacked.

Avi Rubin is Professor of Computer Science at Johns Hopkins University and Technical Director of the JHU Information Security Institute. Avi's primary research area is Computer Security, and his latest research focuses on security for electronic medical records. Avi is credited for bringing to light vulnerabilities in electronic voting machines. In 2006 he published a book on his experiences since this event.

tags: lunchtalk, control, security, network

Google: Customer Support from Hell.

In Google's early days Larry Page decided that customer support was a very expensive proposition and the company could not afford it. In a brilliant move, he (and his crew) created community support forums where users were encouraged to help each other to ask questions and resolve problems. The solution was in the spirit of the Open Source movement where fixing bugs and making the system more robust was a community project, not a business responsibility. The idea worked (and still works) well because Google's only mission-critical, money-making service was Search, which didn't require much support  - only expert advice on how to use various product features to improve results.

As Google becomes more of a consumer electronics and cloud services company, the "do-it-yourself-community-based-customer-support" model shows a certain degree of strain. For example, a couple of days ago posting to Blogger from e-mail stopped working. It's a minor problem for me because I use this functionality to archive relevant Bloomberg news from my iPhone. Now, instead of posting the news to the blog I send them to my own mailbox.

In the meantime, Blogger users are becoming restless. On the first day, they dutifully reported the bug and waited for an answer. By midday, a support volunteer related the problem to Google engineers. A couple of hours later somebody from Google named Brett acknowledged the problem and said they were working on it. Then, silence.
The users waited and waited and waited. Finally, this morning the complaints have become a bit louder. Chris Warner summarized the situation,

This is the single worst thing about anything Google; when it works, it works well. When it breaks, there's no way to directly contact them, there's *never* any official feedback. "Community" with Google is a one-way street.

Nuff said.

Update: this seems to be a part of a bigger issue with Blogger e-mail gateways. I wonder why they don't roll back the changes that created the problem in the first place.