Samsung Can Sell Galaxy Nexus During Appeal, Court Rules

By Susan Decker and Todd Shields - Oct 12, 2012 6:47 PM GMT+0400

Samsung (005930) Electronics Co., the world’s largest mobile-phone maker, won its bid to continue selling its newest Galaxy Nexus smartphone in the U.S. while it battles patent-infringement claims filed by Apple Inc. (AAPL)

The U.S. Court of Appeals for the Federal Circuit yesterday granted Samsung’s request to lift a lower court’s ban on sales. Samsung wants to continue selling the phone while it challenges a federal judge’s June 29 ruling that Apple was likely to win its suit claiming the Galaxy Nexus infringed four patents and that sales were hurting Apple’s business in the meantime

Apple argued that it’s important to keep the Galaxy Nexus out of the U.S. market now because most Americans haven’t yet switched to smartphones, and a product that copies Apple’s features could steal customers from its iPhone. Photographer: Denis Doyle/Bloomberg

The case is part of a global battle between the two biggest makers of mobile phones that surf the Web, play video games and do most other functions of a computer. The case involves different patents than the ones at the heart of a $1 billion verdict Apple won against Samsung Aug. 24 in San Jose, California.

Apple argued that it’s important to keep the Galaxy Nexus out of the U.S. market now because most Americans haven’t yet switched to smartphones, and a product that copies Apple’s features could steal customers from its iPhone. A jury trial on the patent claims isn’t scheduled until March 2014, according to the court docket.

A feature in the Nexus phone that aids data searches was an issue in yesterday’s opinion. The appeals court said the district court had abused its discretion by deciding that Apple would suffer harm because of the feature. The patent-holder needs to show “that the infringing feature drives consumer demand for the accused product,” and Apple presented “limited” evidence of such a link, the appeals court said.

’Stifle Competition’

“Today’s decision confirms that the role of patent law is to protect innovation and not to unreasonably stifle competition,” Adam Yates, a spokesman for Suwon, South Korea- based Samsung, said in an e-mail. Kristin Huguet, an Apple spokeswoman for Cupertino, California-based Apple, declined to comment in an e-mail.

Apple and Samsung are involved in more than 30 patent- infringement lawsuits spanning four continents as they vie for a greater share of a smartphone market that Bloomberg Industries said grew 62 percent last year to $219 billion.

Apple claims the Galaxy Nexus infringes patents that cover the way the iPhone’s voice program, Siri, searches for information, its slide-to-unlock function, an automatic recognition of phone numbers or e-mail addresses and a word- suggestion feature, according to the filing. Apple was ordered to post a $95.6 million bond to cover any losses incurred by Samsung should the case end in Samsung’s favor.

‘Menacing’ Letters

Samsung, which makes other phone models that aren’t affected by the order, said in filings that Apple has been sending “menacing” letters to Samsung customers and “engaged in a campaign of litigation around the world against the largest sellers of Android devices.”

Android, owned by Google Inc. and distributed for free to bolster Google’s advertising business, is the most popular platform for mobile phones. The Galaxy Nexus is the first to run on the 4.0 version of Android, called Ice Cream Sandwich.

The case is Apple Inc. v. Samsung Electronics Co., 12-1507, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Apple Inc. v. Samsung Electronics Co., 12-630, U.S. District Court for the District of California (San Jose).

To contact the reporters on this story: Susan Decker in Washington atsdecker1@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

Meningitis Outbreak Linked to Steroid Kills Five People

By Anna Edney - Oct 6, 2012 2:12 AM GMT+0400

 
AP Photo/Mark Humphrey

Dr. Robert Latham, chief of medicine at Saint Thomas Hospital in Nashville, Tenn., is interviewed on Thursday, Oct. 4, 2012. Latham said a fifth person has died in a growing outbreak of a rare form of meningitis that has sickened more than two dozen people in five U.S. states.

A meningitis outbreak traced to a contaminated steroid used for back pain killed five people and threatens thousands more, U.S. health officials said.

The New England Compounding Center, a Framingham, Massachusetts-based pharmacy, supplied the steroid found to be tainted with a fungus, Ilisa Bernstein of the Food and Drug Administration’s Center for Drug Evaluation and Research said yesterday. The steroid, methylprednisolone acetate, was shipped to 75 facilities in 23 states from July to September, according to the Centers for Disease Control and Prevention.

Meningitis is an inflammation of the lining of the brain and spinal cord usually caused by an infection from a virus or bacteria. Forty-seven people in seven states -- Florida, Indiana,Maryland, Michigan, North Carolina, Tennessee and Virginia -- have contracted fungal meningitis and five have died after receiving steroid injections in their backs, the CDC said today in a statement. The fungal illness is not contagious and can be treated with medication, the Atlanta-based agency said.

“All patients who may have received these medications need to be tracked down immediately,” Benjamin Park, medical officer of the CDC’s Mycotic Diseases Branch, said in the statement. Lives may be saved if they are put on antifungal therapy, he said.

The agency and state health departments today released a list of the 75 health-care centers that received the contaminated product.

Expanded Warning

“Out of an abundance of caution, we advise all health-care practitioners not to use any product” manufactured by the Massachusetts pharmacy, Bernstein said yesterday.

The pharmacy recalled 17,676 single-dose vials, Omar Cabrera, community health education manager with the Massachusetts Department of Public Health, said in an e-mail. The company is a compounding pharmacy, which means it custom mixes versions of medications in ways that generally aren’t otherwise available for sale.

“As previously announced, we have voluntarily suspended operations while we assist authorities in this investigation,” the company said in a statement. “The fatalities and illnesses confirmed today by the CDC and FDA are tragic. The thoughts and prayers of everyone employed by NECC are with those who have been affected.”

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

Facebook Flirts With Local Geeks in Battle for Russia

By Marie Mawad and Ilya Khrennikov - Oct 5, 2012 12:14 PM GMT+0400

Why It Matters That Facebook Has a Billion Users
Related Video: http://bloom.bg/VzNc0W

Looking for a public bathroom in Moscow? Facebook Inc. (FB) has you covered.

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The Facebook website. Photographer: David Paul Morris/Bloomberg

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Oct. 4 (Bloomberg) -- Bloomberg Businessweek's Ashlee Vance talks about his interview with Facebook's Mark Zuckerberg. Vance speaks on Bloomberg Television's "Market Makers." (Source: Bloomberg)

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Oct. 4 (Bloomberg) -- On today's "Off The Charts," Scarlet Fu looks at the rate of growth for Facebook's revenue. She speaks on Bloomberg Television's "Market Makers." (Source: Bloomberg)

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Russia's Prime Minister Dmitry Medvedev, left, receives a T-shirt as a present from Facebook CEO Mark Zuckerberg during their meeting at the Gorki residence outside Moscow. Photographer: Alexander Zemlianichenko/AFP via Getty Images

Still a dwarf in Russia, the world’s largest social network is courting local geeks to build apps tailor-made for their home market. Its goal is to win over users in Europe’s most populous country and catch up with local rivals VKontakte and Odnoklassniki, which combined attract 10 times more traffic.

Founder Mark Zuckerberg hosted about 200 developers in Moscow this week in a six-hour competition to create apps meant to get people to sign up and log in daily. An app mapping Moscow’s toilets was on the list, while a Russian-made tool to boost your friendships through Facebook got top spot.

“The reason people love Facebook is because they can play games on it or because they can get their music there,” said Julien Codorniou, Facebook’s head of game partnerships in Europe. “To get ahead in Russia, we need Russian developers who can develop great content in Russian.”

In Russia, Facebook is behind -- its 3.5 million daily users compare with VKontakte’s 22 million and Odnoklassniki’s 16 million, data by research firm TNS Global shows. Menlo Park, California-based Facebook is betting that new apps will attract more traffic, and that its global scale of 1 billion users will convince Russian developers to jump ship.

Growing Market

Facebook needs to win over those trying social networking for the first time, while also persuading VKontakte and Odnoklassniki users to sign up on a second platform. About 63 percent of Russia’s teens and adults use the Internet, up from 39 percent five years ago, according to TNS Global, leaving growth potential. Russia’s population is 143 million.

“There are few places in the world that have such a large number of potential users,” said Brian Blau, an analyst at researcher Gartner in San Francisco. “Internet penetration is still not that high, so there’s room to grow and Facebook has to be there when more Russians sign up to social networks.”

Facebook is looking to replicate the success it had in Brazil, where it came from behind to surpass a strong incumbent. Orkut, which had a head start and dominated the country’s social-networking market for years, ceded its No. 1 position to Facebook in December, according to ComScore Inc.

Zuckerberg, who is 28 and ranks 82nd on the Bloomberg Billionaires Index with a personal fortune topping $11 billion, told Russian developers that reach was Facebook’s main advantage over local competitors.

Dueling Billionaires

“The biggest opportunity for building on Facebook for you guys -- instead of the local networks -- is the opportunity to reach almost a billion people,” Zuckerberg said during what was his first visit to Russia, addressing the crowd at the event near Kremlin, in Moscow’s former chocolate-factory district characterized by red brick walls and bay windows.

In his Russia push, Zuckerberg is up against a fellow billionaire, Alisher Usmanov, whose Mail.ru Group Ltd. (MAIL) controls Odnoklassniki and owns 40 percent of VKontakte. Ksenia Chabanenko, a spokeswoman for Mail.ru, declined to comment.

The gap between VKontakte and Facebook “has been widening” in recent years, Pavel Durov, the founder of the social network also known as VK, said by e-mail. “We feel no need to protect our home markets. The question is rather —- can Facebook hold on to its hegemony in the world?”

Pushing app development is also a way for Facebook to add new revenue sources, as it faces investor pressure to boost sales. Facebook gets about 85 percent of its revenue from advertising, and the rest comes from the 30 percent cut it gets on sales that developers generate through its platform.

“Attracting developers in different parts of the world is critical,” Gartner’s Blau said. “They create the content which will drive more people on the site and keep them coming back.”

Russian Zynga

As of yesterday, Facebook’s stock has lost 43 percent since the company’s initial public offering in May. St. Petersburg- based VKontakte shelved its planned IPO after Facebook shares plunged. Facebook fell 1 percent to the equivalent of $21.64 at 9:52 a.m. in Frankfurt trading. Mail.ru declined 0.6 percent to $32.30 in London.

One Moscow-based developer, Game Insight, was among the first in Russia this year to add Facebook to its list of supported platforms, which so far included VKontakte as well as Apple Inc. (AAPL)’s and Google Inc. (GOOG)’s mobile operating systems.

“Russia has become one of Facebook’s priorities and management is paying attention to it,” said Alisa Chumachenko, Game Insight founder and chief executive officer. “Developers are excited that Zuckerberg is here. Facebook is set to show fast growth in Russia now.”

Sometimes referred to as the Russian equivalent of Zynga Inc. (ZNGA), Game Insight was founded in 2010 and employs more than 400 people. Its “Airport City,” a city-building game, and “Mystery Manor,” a clue-finding adventure, have both passed the one-million user mark on Facebook.

Flipping Apps

About a third of the 34 apps built during the Facebook contest this week were games, made by developers hoping to replicate Game Insight’s success. Some chose to port existing apps from VKontakte to Facebook to save time. In one demonstration, programmer Jacob Ilin flipped his “Cut a Sheep,” a puzzle game revolving around a herd of sheep, in less than six hours.

“BoostMate,” an app for managing one’s friendships using Facebook, won the first prize in the event. Its maker, Ashot Golovenko, said he plans to hire more programmers to turn the beta version into the final product.

‘Go Big’

“You only need one local success story to get people on board and even reshuffle the cards in a market,” Facebook’s Codorniou said. The executive got promoted last month from Facebook’s Paris office to head gaming partnerships across Europe, Middle East and Africa and is now based in London.

Codorniou, who plays number-crunching game “Numbers Together” daily with his Facebook friends on his PC and iPhone, said Russia is on top of his priority list, along with partnering with developers in Israel and with builders of mobile applications.

“There’s already a dozen success stories in Russia,” Codorniou said. “We want to put them forward and get others on board, with the argument that if you want to go big on the Web and on mobile, you’ve got to go Facebook.”

To contact the reporters on this story: Marie Mawad in Paris at mmawad1@bloomberg.net; 

Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net