Former Sun CEO Says Google Didn't Violate Patents

Story first appeared on CNET.

The Former Sun CEO took the stand in San Francisco today as a witness for the defense, and disputed Oracle's claim that Java APIs were proprietary code from Sun.

Google's lawyer asked whether, during his tenure at Sun, Java APIs were considered proprietary or protected by Sun.

He responded by stating that the JAVA APIs are open APIs, and that they wanted to bring in more people and build the biggest tent and invite as many people as possible.

Oracle contends that Google's Android platform violated some of its patents and copyrights around Java and its APIs, which it acquired from Sun in a $7.4 billion deal at the beginning of 2010.

The former Sun CEO corroborated testimony by former Google CEO (now executive chairman), who said that during meetings following the launch of Android the Sun CEO didn't express any concerns or disapproval regarding Android, nor did he state that Google needed a license to use Java APIs in Android.

Regarding a partnership between Google and Android, the former CEO said that Sun wanted Google to pay a big license fee to call its phone a Java phone, and join Nokia, Motorola, Blackberry (RIM) and others in developing apps that run across all the platforms. At this point Nokia was dominant, and Apple's iPhone was not in the market, and Java licensing was a $100 million plus business for Sun. Sun would profit by enlarging the Java community and creating more of a barrier to competition with the likes of Microsoft at the time.

The partnership with Google did not work out, even though Sun was willing to pay to have Google onboard with its Java platform. Basically, Sun did not want to cede control of managing the key components in the Java stack, and Google wanted more control over its destiny.

'We decided to grit our teeth'

The former Sun CEO stated that Sun didn't like what Google was doing with Android, but complaining about it wasn't going to stop it.

Google could have chosen to work with Microsoft, a major competitor for Sun, or an open-source Java implementation.  Without the Java community, Google would have to reinvent a whole community. Even though Android handsets bypassed the Sun brand and licensing restrictions, this was overlooked in the interest of furthering Sun as part of the value chain. Developers could use Sun's Java developer tools NetBeans to write applications. Sun developed JavaFX, which could run on top of the Android stack.

In cross-examination, Oracle's lawyer asked the former Sun CEO about a document referencing Sun's approach for granting intellectual property rights for independent implementations of Java, such as Android and Apache. It was stated that as long as Google, Apache or others creating independent implementations didn't call their product Java, Sun had no problem. 


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Facebook Beefs Up Intellectual Property Portfolio

Story first appeared on CNET.com

When a company with nearly limitless resources shows itself ready to spend whatever is necessary to beef up its intellectual property portfolio, patent challengers have added incentive to seek out easier fights elsewhere.

So it is that Facebook is again putting its very deep pockets to work, adding a new clutch of patents from Microsoft to an earlier trove it acquired from IBM. The message to Yahoo and beyond is clear: Do you want to get into a spending war with a company whose deep pockets are about to get a lot deeper? In other words, there's a lot more where that came from.

All this marks a rapid turnaround for Facebook. The announcement earlier today that Facebook would spend $550 million to buy patents held by Microsoft was the second big patent purchase by the social networking company in as many months.

At the end of 2011, only 56 US patents But the company received the proverbial wake-up call when Yahoo sued the company, claiming that Facebook infringed upon several of its patents. Rejecting the allegations, Facebook has since counter sued.

Then in March, Facebook acquired around 750 patents held by IBM covering software and networking for an undisclosed sum. And now this agreement to purchase a portion of the patent portfolio Microsoft recently agreed to acquire from AOL. As of today, the company is estimated to have 775 granted U.S. patents and approximately 100 pending US applications, according to a managing director and chief intellectual property officer at MDB Capital Group LLC.

Facebook is starting to focus on IP in a big way, state San Diego Intellectual Property Lawyers.

For the record, Facebook isn't saying anything beyond its official press release announcing the deal with Microsoft. But insiders acknowledge the obvious motivation: Facebook's working quickly to bulk up its intellectual property portfolio in advance of its initial public offering, taking another preemptive move to dissuade any patent trolls thinking about filing a Yahoo-like lawsuit out of the blue.

All told, Facebook likely spent nearly $1 billion on IP acquisitions to fundamentally address its issues with Yahoo, which remain unresolved.

The first acquisition (from IBM) appears to be encumbered - meaning that real leverage won't come until existing licenses to Yahoo expire. This portfolio is presumed to have not been licensed to Yahoo, and so would have more immediate value in settlement negotiations.

One side issue to come out of today's news: Microsoft's now risks getting involved in that Facebook-Yahoo snit. In October 2007, Microsoft paid $240 million in return for approximately 1.6 percent of Facebook. As part of that deal, which broadened an earlier marketing arrangement, Microsoft would help sell Internet ads for Facebook. At the time, the Facebook arrangement was seen as a way for Microsoft to counter Google's increasing clout in the online advertising market.


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Apple and Samsung to Talk It Out

Story first appeared in The Inquirer.

A US DISTRICT COURT JUDGE has ordered Apple and Samsung to sit down at a table to work out the patent infringement claims made by both firms.

Apple and Samsung have been engaged in bitter and long running disputes over allegations of patent infringement. The firms have sued and countersued each other, with Apple claiming Samsung copied its Iphone and Ipad while Samsung claims Apple uses a number of its patents without a licence, but the Judge has told both parties to sort the matter out in a gentlemanly manner.

Apple's new CEO and his counterpart at Samsung, will meet along with their respective general counsels in an attempt to end what has become a farce, with the two firms filing a number of lawsuits all over the world.

The two CEOs are likely to know each other well. After all Apple is one of Samsung's largest customers, buying everything from flash memory to LCD display screens. Although Apple has managed to win some temporary injunctions against Samsung's products, the long drawn out saga has had no clear winner, apart from the highly paid lawyers.

Apple might even use the talks with Samsung to try to get better deals on the products it buys from the Korean firm.


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Watching for Copycats who Steal your Business Model

USA Today

Quick, what's the name of the blanket with sleeves?

If you said Snuggie, you'd be in good company. But that wouldn't make Gary Clegg or Sean Iannuzzi very happy. Clegg created the Slanket and Iannuzzi created the Freedom Blanket before the Snuggie launch — and then they were out-marketed by Snuggie-maker Allstar Products Group.

Sure, their "functional" blankets sell, but it's the Snuggie that rose to superstardom with its wacky TVinfomercials. It's Snuggie that Jay Leno, Ellen DeGeneres and Oprah Winfrey mentioned in front of millions of TV audience members.

And as Allstar President Scott Boilen conceded during an interview on The Oprah Winfrey Show: "It's not a wholly original idea." But that didn't stop his company from reaping millions in sales off the concept.

There's a slew of Snuggie-esque stories in the business world.

It's the oft-repeated tale of an innovative firm coming out with a novel idea or a fresh take on an existing product, and then a new competitor — seeing the riches to be made on a popular product — creates a similar version.

Adam Glickman says that after he opened his first Condomania condom retail store in New York in 1991, several stores in the U.S. copied his idea, and the idea was quickly replicated in Japan, Singapore and South America. Yuen Yung, creator of customizable-sushi restaurants in Texas, says he found out earlier this month that his idea has been copied in Cincinnati.

And Jane Wyler, creator of a reusable dry cleaning bag called the Clothesnik, says she was "shocked" when her product idea was knocked off by a couple she met at a trade show where she was selling her product.

Sometimes the imitation is happenstance — it's the great-minds-think-alike phenomena. But often, it's another firm tweaking an idea or outright copying a product.

Easy to rip off ideas

In this time of technological innovation and rapid-fire manufacturing, it's easier than ever for a rival to rip off an idea, says David Kappos, director of the United States Patent and Trademark Office. "If someone sees your idea built, they will almost certainly be able to copy it and have it manufactured," he says.

The first line of defense, Kappos says, is a patent.

"If you have a great idea, you've got to protect it," he says. "If you don't protect (your ideas), it's very easy for others to legitimately take them."

The filing charge per patent is about $1,000, but individuals and small businesses are able to get a 50% discount, Kappos says. His other advice is a bit more costly to follow: He suggests that firms hire legal help with the patent filing. The fees can be stiff: "in the ballpark of $5,000 to $10,000," he says. But "It's just like preparing a will or contract or leases. Sure, you can do them yourself, but it really is better to get an attorney, if you can."

Yet, investing in patent protection doesn't mean a company can become complacent. Firms should monitor for patent infringements and be ready to dole out cease-and-desist letters, as well as lawsuits.

And even if a company secures a patent, there is always a chance that competitors can legitimately tweak a product idea then sell their own version.

It sickens Wyler that she helped a rival to replicate her idea. In 2008, she met a couple at a trade show who expressed interest in investing in her company. She was intrigued by the potential partnership and filled the husband in on business. Wyler's reusable dry cleaning bags were made of organic cotton. Soon afterward, she discovered that the couple had modified her concept to create a reusable bag made from the material polypropylene.

"I'm so naive that I didn't think people would do this to me," she says. "I told him all of my trade secrets."

Kappos' advice is that all innovative firms ask others to sign non-disclosure agreements before spilling any information. "(NDAs) are very common, and people don't react negatively to them," he says.

Another way to stay ahead of competitors is to consistently innovate, says Mark Rampolla, founder of coconut-water company Zico.

When he launched in 2004, demand for the beverage (made from the clear liquid inside young, green coconuts) was small. Now it's a huge industry that is consistently attracting more makers.

Rampolla says he's focused on the brand's core attribute — it's an all-natural body hydrator — but that he will also tinker with the marketing, packaging and other elements to stand out. The latest change: He offers plastic bottles in addition to the more-common carton that most companies fill with coconut water.

The new bottle "is a very unique offering, and that is consistent with our positioning of nature's sports drinks," he says.

Sarah and Jenifer Caplan, co-founders of the flat shoe brand FootzyRolls Luxe, also spend much time trying to keep their product line unique as rivals step onto their turf.

"We look at our market and say, 'How can we be different?' " Jenifer says.

There were few competitors when they entered the market last year with rollable ballet flats that easily fit in a handbag. But the rivalry has heated up immensely.

Their newest competitor is Dr. Scholl's. The footwear king just launched Fast Flats foldable shoes, which it markets as "a practical solution for a long day or night in heels."

Competing with the big boys

Dr. Scholl's - maker of custom orthotic inserts - deployed a large ad campaign, and stores nationwide now have large Fast Flats displays. That type of promotional footprint worries the Caplans.

"We are two girls who started this company from nowhere," Jenifer says. "We don't have the money to go out like Dr. Scholl's and do multimillion-dollar marketing campaigns."

Despite their concerns, the sisters have crafted a plan to stay one step ahead of Dr. Scholl's and other rivals. They are coming out with new styles and colors, as well as forging partnerships that can take their distribution beyond retail stores.

With so many others entering the rollable-shoe market, Sarah says that many smaller brands will likely be stomped out of business: "Only a few are going to be able to survive," she says. And, if they keep innovating, "We know that we're going to be able to."

Kodak Sees Fewer Patent Fights Ahead

The Wall Street Journal

Kodak Chief Perez Plans to Curtail Patent Lawsuits

Eastman Kodak Co. Chief Executive Antonio Perez said he plans to curtail the aggressive patent lawsuits that have generated cash for Kodak as it struggles to reinvent itself with a focus on making printers.

Since becoming CEO in 2005, Mr. Perez, a former Hewlett-Packard Co. printer executive, has successfully turned Kodak's patents into a lucrative sideline and key source of funding to finance its push into digital printing.

But those printing efforts haven't yet paid off and the slow pace of the company's turnaround has frustrated analysts. Meanwhile, Kodak's once-lucrative film business continues to shrink and its need to invest in printers continues.

"We need [cash flow from patents] right now because we're investing too much for the size of the company in these new businesses," he said in an interview at the company's Rochester, N.Y., headquarters.

"Film will never come back," Mr. Perez said. "Those very, very, very high gross margins that film had will never come back. I don't know of any digital businesses that will even have half of the margin that film had."

Kodak has reported only one full-year profit—in 2007—since 2004. Last year, its loss narrowed to $210 million from a loss of $442 million the prior year. But sales have continued to tumble, falling 19% last year to $7.61 billion from $9.42 billion in 2008.

Mr. Perez says his efforts to transform the 130-year-old company are making a noticeable difference. "When I came into the company [it] had a revenue profile that was 85% based on film and a profit profile that was 130% based on film," he says. Today, the company gets 70% of its sales from digital products.

In March, Kodak's movie-film business, which had remained relatively steady even as camera film sales plunged, suffered a new blow when three big movie theater chains secured financing to convert 14,000 movie screens to digital projection by 2013. The funding is expected to accelerate the digital distribution of movies, giving Kodak less time to adapt to the long-anticipated decline in its film cash cow.

Earlier in his tenure, Mr. Perez pushed aggressively to get Kodak into digital cameras, and now he is making a big bet on consumer and commercial inkjet printers. But he doesn't expect the printer businesses to be profitable until 2012.

Kodak's consumer printer business has gained some traction, with the number of households with Kodak printers doubling last year to about two million. Its printers are priced higher than rivals such as Hewlett-Packard and Seiko Epson Corp., but its ink cartridges, at $10 to $15, cost about half as much. Mr. Perez believes Kodak will finish the year with more than 5% of the consumer printer market in the U.S.

Chris Whitmore, an analyst with Deutsche Bank, says it will be difficult for Kodak to gain significant market share in consumer printers because the market is so competitive and profits come from ink, which requires lots of printer sales.

"We are somewhat skeptical they can actually get to that level [of market share] in that timeframe," Mr. Whitmore says.

In commercial printing, Mr. Perez has high hopes for a fast digital printer introduced in the first quarter called Prosper Press, aimed at publishers and catalog makers. Mr. Perez says more than 100 companies have requested the Prosper Press but so far Kodak's only shipped four of them because of manufacturing complexities. The commercial printers cost $1.4 million to $4 million each.

He says Kodak so far is incapable of making more than "a few dozen" this year. "We're desperately trying to get the technology under control so we can expand," he says.

While he has worked to build these new businesses, patent payments have provided a cash cushion for the company. In 2008, he set a goal to generate between $250 million and $350 million on average each year in intellectual property licensing—mainly its digital imaging patents—through 2011. He later extended the target for that goal to 2012 but had disclosed little on his plans afterward.

In the past year, Kodak's patent attorneys settled lawsuits with Samsung Electronics Co. and LG Electronics Inc. receiving lump sums of $550 million and $400 million respectively. In January, it filed lawsuits against Apple Inc. and Research in Motion Ltd. alleging their smart phones infringe Kodak's digital-imaging patents. Analysts say it may be difficult for Kodak to match its earlier success in the latest patent fights.

But Mr. Perez says he'll wean Kodak off the patent lawsuits once the commercial and consumer printer businesses are profitable. "We'll find more value getting into business relationships that generate revenue working with some other partner rather than asking for cash," he says.

He says he didn't want to litigate so much, but felt he had to during the downturn when he says companies using Kodak technology ignored his requests to strike licensing deals. "Going to court is expensive, it creates a lot of publicity, nobody benefits from it except law firms," he says.

Mr. Perez expects intellectual property income to continue generating revenue for Kodak even as the number of new patent-suit filings slow. "It will be very valuable," he says.

Cutthroat Competition at Heart of Ge-Mitsubishi Dispute

NY Times

 

Industrial heavyweights General Electric Co. and Mitsubishi are raising the temperature of a 2-year-old dispute claiming patent infringements and monopolistic behavior in the U.S. wind turbine market.

In a complaint filed in a U.S. District Court in Arkansas yesterday, Mitsubishi Heavy Industries accused GE of scheming to control the nation's wind power market. Through a series of "baseless claims of patent infringement," Mitsubishi said in its complaint, GE has successfully scared off potential Mitsubishi customers and discouraged well-capitalized foreign competitors from setting up shop in the United States.

"GE is attempting to kill competition in the marketplace to the detriment of U.S. consumers," said Mitsubishi spokeswoman Sonia Williams. "We anticipate damages will be in the hundreds of millions of dollars, and may be over $1 billion."

In a separate suit filed in Florida yesterday, the Japanese turbine maker accused GE of infringing on a critical Mitsubishi patent.

The Mitsubishi complaint is the latest in a series of claims and counterclaims unfurled by the two companies, made as competition increases in the U.S. wind market and as both companies roll out their latest high-capacity wind turbines. GE, Japan's Mitsubishi, Denmark's Vestas Wind Systems, Germany's Siemens AG and a growing crop of global industrial conglomerates are racing to get a permanent foothold in North America, where wind projects are grabbing a bigger share of electricity generation.

This grudge match started in 2008, when GE filed complaints at the U.S. International Trade Commission alleging Mitsubishi had infringed on GE wind-turbine patents. The U.S. ITC ended its investigation in January after finding Mitsubishi had not violated the patents, but it left the door open for further action. In February, GE then filed a suit in a Texas court accusing Mitsubishi of breaching the GE patents.

Japanese turbine maker claims it's been shut out

The dispute at the ITC attracted the attention of influential members of Congress with GE factories or headquarters in their states. Democratic Sens. Charles Schumer and Kirsten Gillibrand of New York, which is where GE Energy is located, and Republicans from Southern states wrote letters to the ITC warning that job losses would result if GE lost the patent case.

The dispute also continues to play out amid heated discussion about U.S. leanings toward protectionist policies and the capacity of global wind and solar companies to reach American consumers without expanding their U.S. manufacturing base.

In the complaint yesterday, Mitsubishi said that GE has a 70 percent market share for variable-speed wind turbines. As Mitsubishi tells it, once it entered the market in 2006 and secured lucrative contracts, GE "embarked on an unlawful scheme" to drive it and others out of the U.S. market.

Variable-speed windmills are designed for significant utility-scale power generation. They operate on a wide range of wind speeds when connected to the transmission grid. Mitsubishi also claimed that GE obtained a handful of wind-turbine patents through improper means and failed to disclose sources of information to the U.S. patent office.

"GE's unlawful scheme has worked," says the complaint. "Prior to the initiation of GE's first lawsuit against Mitsubishi, Mitsubishi had sales of approximately $2 billion a year of variable speed wind turbines in the United States. Since GE's litigation campaign began over two years ago, Mitsubishi has not sold a single variable speed wind turbine in the United States."

GE calls claims 'outrageous'

When GE filed a new suit against Mitsubishi shortly after the ITC ruling, Mitsubishi explains, "This, GE hoped, would prolong the period of uncertainty over Mitsubishi turbines in the U.S. market for the pendency of the second suit."

GE spokesman Daniel Nelson in an e-mail called Mitsubishi's antitrust complaint "meritless and outrageous."

"GE stands strongly behind the merits of its patent infringement lawsuits against [Mitsubishi] and will fight to protect its intellectual property," Nelson said, adding that the company intends to "vigorously defend itself" against Mitsubishi's charge of patent infringement.
Matt Kaplan, a wind analyst at Emerging Energy Research, said wind purchasers have been scared off by the potential for legal problems if they purchase turbines from Mitsubishi instead of GE. The market-level impact is there, but he said the complex patent infringement claims made by the companies are hard to parse.

"It shows that the market is very competitive," he said, "and that Mitsubishi does feel a real threat from GE patent issues."

Tempest in once-tranquil market

GE controls about 44 percent of the North American market for wind turbines and components, and Mitsubishi comes in a distant fourth. Still, Kaplan said, the Japanese manufacturing giant isn't to be toyed with, and neither is the line-up of significant global power players that want a piece of the U.S. wind market.

"GE's dominant lead over the market has made it difficult for companies to enter and steal market share," Kaplan said. "But Mitsubishi, a heavy industrial company, does have the ability to threaten GE."

Kaplan said the ITC ruling and its ability to push back against GE litigation is critical for Mitsubishi. The company plans to begin construction this year on a $100 million plant in Fort Smith, Ark., to build wind-turbine engines for the U.S. market.

While Mitsubishi's Williams said the project is still a go and could employ nearly 400 people, she acknowledged the drop-off in Mitsubishi wind contracts since GE's claims raised concerns about building the plant. She warned that the plant could sit idle "if GE's unlawful conduct continues."

According to the American Wind Energy Association, 15 companies sold large-scale wind turbines to U.S. customers in 2009, up from five companies in 2005. "The wind industry is increasingly in the hands of major industrial players," Kaplan said. "This is a clear shift from what we've seen in the past."

Companies interested in installing wind-power capacity in the United States haven't shied away from the market, Kaplan said, but the GE-Mitsubishi disputes have caused those companies to pause for a second and walk gingerly as they chooses their suppliers.