NIKE SUES FORMER DESIGNERS

Original Story: espn.go.com

For years, the world's two largest shoe and apparel companies -- Nike and Adidas -- have battled for supremacy, with the competition occasionally leading to a lawsuit over a particular design or material, which one considers proprietary.

But on Monday, Nike took it to the next level, suing three former designers who had left the company, alleging they used Nike's trade secrets to sell themselves to Adidas. A Portland Intellectual Property Lawyer is reviewing the details of this case.

The lawsuit, filed in the county in Oregon where Adidas has its U.S. headquarters, alleges that some of its biggest designers, Denis Dekovic, Marc Dolce and Mark Miner, while still employees of Nike, began to build a blueprint to replicate Nike's famous Innovation Kitchen and stole secrets from inside its walls to take elsewhere. The Kitchen is where Nike's top designers build out shoes years in advance, testing new materials and concepts. Only a select few on Nike's sprawling campus have access to open its doors.

The lawsuit, which asks for more than $10 million in damages, alleges that before the three left Nike, they were already consulting with Adidas. To further sell themselves and capitalize on their position, Nike says Dekovic had the contents of his laptop duplicated, which gave him access to "thousands of proprietary documents relating to Nike's global football (soccer) product lines" where Adidas and Nike most fiercely battle. A Boston Intellectual Property Lawyer have experience representing clients in intellectual property litigation.

Among other things, the documents included specific designs, including models of team uniforms and products for the 2016 European Championships, plans for Nike-sponsored athletes in at least seven countries, unreleased financial information and projections concerning the company's business and information about Nike's planned launches in the marketplace.

"All of this information is among the most important and highly confidential information in Nike's athletic footwear business, particularly its global football business," the lawsuit reads. "Disclosure of any of this information would irreparably harm Nike, by, among other things, enabling a competitor to effectively undermine and counter Nike's performance in the athletic markets for the next three to four years."

Before leaving the company, Nike alleges the three designers erased emails from their computers and text messages on their phones to destroy any incriminating data that would lead back to their scheme.

"We find Nike's allegations hurtful because they are either false or are misleading half-truths," the designers said in a statement provided to the Portland Business Journal by their law firm. "We did not take trade secrets or intellectual property when we departed Nike in September. The athletic footwear industry is fast moving and rapidly changing and, as creative people, we thrive on innovation and freshness. We are looking forward to bringing new and innovative ideas and designs to Adidas when our non-competition agreement expires." An Atlanta Trade Secrets Lawyer is skilled in the development of trade secret protection programs, buying and selling trade secrets, and licensing trade secrets.

Dekovic was the senior design director for Nike football (soccer), Dolce worked on the shoes for LeBron James and Kobe Bryant and managed historic brands such as the Air Force One and the Dunk shoe and Miner was the senior footwear designer for Nike running, one of the company's biggest growth categories.

Nike says the three had signed a noncompete contract that spanned to September 2015. Yet less than two weeks after the three resigned, Adidas announced that it would back a Brooklyn-based design studio managed by Dekovic, Dolce and Miner.

Even though Adidas said at the time that the three wouldn't work for them until 2015, Nike remained concerned about the trade secrets it claims were stolen from them.

The company says it has spent more than $1.5 million in the past three years alone to ensure that its employees keep information confidential, and said in a statement Tuesday night that "Nike is an innovation company and we will continue to vigorously protect our intellectual property."

Adidas officials did not specifically address the allegations.

"Many of our employees have storied careers and rich experiences, but we have no interest in old work or past assignments as we are focused on shaping the future of the sporting goods industry, not looking at what has been done in the past," the statement said.

Nike's world headquarters in Beaverton and Adidas' U.S. headquarters in Portland are located about 13 miles from each other.

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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Microsoft Replaces Chinese Chief Exec

Story first appeared in The Wall Street Journal.

Microsoft Corp. reorganized its leadership in China, as the company continues to contend with software piracy in world's largest personal-computer market and regulations barring sales of its Xbox 360 game console.

The Redmond, Wash., company said Friday that its Greater China chief executive, will be succeeded by the current area vice president for Microsoft Germany. It also said that the Greater China Chief Operating Officer will be switching positions with the managing director of Microsoft U.K.

Microsoft said in a written response to questions that its Greater China chief executive "decided to leave Microsoft for personal and family reasons," adding that the company's Greater China business has "experienced dramatic growth in the past four years under the strong leadership. He will depart at the end of April but remain in an advisory role, the company said.

Microsoft has reached a key milestone in their ambitious growth plans for the Greater China region and it is a good time for new leaders to take these plans to the next level.

Piracy has been a problem for Microsoft since it entered China about 20 years ago. In the past, people familiar with the matter have said piracy has been a cause for disagreements on performance expectations within the company's ranks. It was unclear Friday whether that was still the case.

In an address to employees in the company's Beijing office last spring, the Chief Executive said Microsoft's revenue per personal computer sold in China was only about one-sixth of the amount it gets in India, and that the company's total revenue from China—with a population of 1.3 billion—is less than what it gets in the Netherlands, a country with fewer than 17 million people.

At the time that the expected revenue from China—which Microsoft doesn't disclose—to be only 5% of the company's revenue in the U.S. in 2011. China surpassed the U.S. to become the world's largest PC market by number of shipments last year.

Microsoft's profits from China were growing, thanks in part to government crackdowns on intellectual-property theft and initiatives to make state-owned enterprises buy authorized software. On Thursday, the Greater China chief executive spoke at a roundtable about intellectual property hosted by the U.S. Ambassador to China, praising the government's efforts to improve intellectual-property-rights protection and saying he was "more optimistic than ever before about the Chinese market."

In its efforts to combat the piracy problem, Microsoft has maintained a close relationship with Chinese authorities, made deals with PC makers to have its software pre-installed on more computers, and even dropped its prices for its Microsoft Office software to encourage buyers to opt for authorized software.

The Greater China chief executive was also in talks with Chinese officials about restrictions on the sale of game consoles. In 2004, a group of government agencies issued a regulation to limit the influence of videogames and arcades on children, and it has had the effect of preventing Microsoft from officially selling its popular Xbox console in China, the company said.

The new appointments are a deviation for Microsoft in that both have worked in the company for years but not as managers in the Greater China region, which includes Taiwan and Hong Kong. Its last two top executives, who were brought in from Motorola Inc., had prior experience in the region.

Microsoft said in its statement that the new appointment is a "seven-year veteran of Microsoft" who "delivered excellent and sustainable results in growth and profitability," including in a previous position as head of the company's Europe, Middle East and Africa division.


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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.