‘Virtually Untreatable’ Tuberculosis Threat Rising: Study

By Makiko Kitamura and Adi Narayan - Aug 30, 2012 3:01 AM GMT+0400

Almost half of tuberculosis patients who received prior treatment were resistant to a second-line drug, suggesting the deadly disease may become “virtually untreatable,” according to a newstudy.

Among 1,278 patients who were resistant to two or more first-line tuberculosis drugs in Estonia,Latvia, Peru, Philippines, Russia, South Africa, South Korea and Thailand, 43.7 percent showed resistance to at least one second-line drug, according to a study led by Tracy Dalton at the U.S. Centers for Disease Control and Prevention. The findings were published in the Lancet medical journal today.

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A man suffering from tuberculosis rests in the TB ward at the Bairo Pite Clinic in Dili, East Timor. Photographer: Paula Bronstein/Getty Images

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A medical worker is pictured at a mobile testing facilities for Tuberculosis (TB) at Driefontein Gold Mine in Carletonville, South Africa. Photographer: Alexander Joe/AFP/Getty Images

About 1.4 million people died from TB, the second-deadliest infectious disease globally after AIDS, and 650,000 cases were multi-drug resistant in 2010, according to the World Health Organization. Rising infection rates prompted the U.K. to announce in May it will require pre-entry tuberculosis screeningfor migrants from 67 countries seeking to enter the country for more than 6 months.

“The global emergence of extensively drug-resistant tuberculosis heralds the advent of widespread, virtually untreatable tuberculosis,” the study authors said in the published paper.

Previous treatment with second-line drugs was the strongest risk factor for resistance to these drugs, the authors said.

Alcohol Abuse

The prevalence of drug resistance, which ranged from 33 percent in Thailand to 62 percent in Latvia, also correlates with how long second-line drugs have been available in each country.

South Korea and Russia had the longest histories of availability -- more than 20 years -- and the highest rates of resistance. In contrast, Thailand, Philippines and Peru, where second-line drugs were introduced 10 years ago or less, had the lowest resistance rates.

Unemployment, alcohol abuse and smoking were also associated with resistance to second-line injectable treatment across countries.

This is one of the few studies that have followed patients with the multi-drug-resistant form of TB for several years, Justin Denholm, an infectious disease epidemiologist at the Royal Melbourne Hospital, said in a phone interview.

Patients not taking their medicines properly is a major driver for resistance, said Denholm, who is studying TB transmission patterns in Australia’s Victoria state.

Individualized Treatment

The WHO’s current strategy for tackling TB is called Dots, short for “directly observed treatment, short course.” Under Dots, patients are required to show up at a clinic three times a week to be supervised when taking their medicine to be sure they complete the treatment.

“The reality is that this one-size-fits-all approach is a major part of what’s led to this drug resistance issue,” Denholm said. “I think individualized treatment is what we should be aiming for.”

Scientists are also researching new treatments. In a study published last month in the Lancet, researchers from Stellenbosch University in Cape Town said an experimental three- drug combination killed 99 percent of the bacteria within two weeks. As the combination doesn’t contain isoniazid or rifampicin, the two main medicines used against TB, it may also provide a much-needed weapon against drug-resistant strains, the researchers wrote.

China Survey

India and China, which have the world’s highest numbers of tuberculosis cases, weren’t included in Dalton’s study as they hadn’t begun pilot programs for increasing access to second-line drugs until after the study began.

In a 2007 national survey in China, 27 percent of multi- drug-resistant tuberculosis cases showed resistance to the antibiotic fluoroquinolone, according to the Lancet report. In India, a 2006 population-based survey in the western state of Gujarat reported fluoroquinolone resistance in 24 percent of cases.

The U.K. Border Agency this month began requiring TB screening for Indians applying for a settlement visa and will extend the rule to those obtaining a work visa from Sept. 10. The new requirement replaces screening at airports.

TB is at the highest level in 30 years in the U.K. In London, 84 percent of the 3,302 people infected in 2010 were foreign-born, according to the Health Protection Agency.

To contact the reporters on this story: Makiko Kitamura in London atmkitamura1@bloomberg.net; Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

Steve Jobs Vindicated By Verdict Protecting Apple Design

By Peter Burrows - Aug 27, 2012 6:41 PM GMT+0400

Steve Jobs, famous for his view that a product’s look and feel is just as important as how it works, was vindicated by a California court exactly one year after he stepped down as chief executive officer of Apple Inc. (AAPL)

A jury found on Aug. 24 that Samsung Electronics Co. must pay Apple $1.05 billion for infringing six patents, including four covering the design of its mobile devices.

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Apple co-founder Steve Jobs often bemoaned his competitors’ lack of attention to design. Photographer: David Paul Morris/Bloomberg

6:19

Aug. 27 (Bloomberg) -- John Butler, a Bloomberg Industries analyst, and Mark Newman, an analyst at Sanford C. Bernstein & Co., talk about the patent battle between Apple Inc. and Samsung Electronics Co. He speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." (Source: Bloomberg)

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Aug. 27 (Bloomberg) -- In "Street News," Bloomberg's Sara Eisen reports on today's top stories including Samsung Electronics stock dropping on concern devices may be banned in the U.S. after a jury said it violated Apple Inc. patents, Hertz agrees to buy Dollar Thrifty for $2.6 billion and Tropical Storm Isaac is forecast to strengthen over the eastern Gulf of Mexico. She speaks on Bloomberg Television's "Bloomberg Surveillance." (Source: Bloomberg)

Courts tend to give greater credence to utility patents, which cover a product’s underlying technology. This case was distinct for its emphasis on design patents, which reflect Jobs’s focus on the stylized nature of Apple’s devices. Of the 359 patents listing Jobs as co-inventor, 86 percent are the design variety, according to MDB Capital Group LLC.

“Given the infringement of the design patents, which protects the non-functional appearance of the iPad and iPhone, Apple now has considerable power to keep knock-off phones off the market,” said Tim Holbrook, a professor at Emory University School of Law in Atlanta.

The shares of Cupertino, California-based Apple rose 1.9 percent to a record $675.68 at the close in New York. The stock has gained 67 percent this year.

The ruling could prompt more technology companies to issue design patents and bring suits to protect them, said MDB CEO Christopher Marlett. It also deals a setback to Google Inc. (GOOG), maker of the Android mobile operating system running Samsung’s phones.

In a court filing today, Apple sought a ban on eight models of Samsung’s smartphones, including several of its Galaxy S devices.

‘Consumer Desires’

“Because the use of an iPhone is so intuitive, competitors attempting to design around the patents will have a far more difficult time connecting with the needs and desires of consumers,” Holbrook said. “Google’s Android system may suffer as a result.”

Jobs, whose patents cover the final design of many Apple products, including docks, chargers and even the glass staircases found in many Apple stores, died in October 2011.

Courts have historically favored heavy-duty technology involving electronic circuitry or computing algorithms over the brand of innovation that has made Apple’s products more appealing to use and look at. That was the case in the 1980s, when Apple failed to convince courts that Microsoft Corp. (MSFT) CEO Bill Gates had violated Apple’s copyright on the look and feel of the Macintosh operating system in early versions of Windows.

“Steve was furious when Bill Gates introduced Windows 1.0 as he thought Microsoft was ripping Apple off and he told Bill so,” former Apple CEO John Sculley said via e-mail. “That’s when Apple began its lawsuit, which went on for years and Apple eventually lost.”

Design Matters

Jurors who sided with Apple in the case against Samsung were swayed by internal e-mails describing how Google asked Samsung to change the design of its products to look less like Apple’s, Velvin Hogan, foreman of the panel, said in an Aug. 25 interview.

The trial showcased how, in the increasingly competitive market for consumer electronics, design is taking on a more central role. Apple rose above rivals in the nascent personal computing world of the 1970s in part because it was the first to package its device in an attractive enclosure with built-in display.

Jobs often spoke of his fascination with design. In a 1996 interview with Robert Cringely, he described a 1979 visit to Xerox Corp. (XRX)’s Palo Alto Research Center. While there, Jobs was so taken with the graphical user interface of its prototype PC that he didn’t even notice other technical breakthroughs, including the use of networking that linked more than 100 machines.

‘No Taste’

Jobs made no bones about drawing on what he saw at PARC as inspiration for the Mac.

“Picasso had a saying: good artists copy, great artists steal,” Jobs said in the interview. “And we have always been shameless about stealing great ideas.”

He drove Apple engineers to build on the concepts, creating a user interface based on a desktop metaphor, such as moving files into folders, that largely defined the modern PC. Jobs hired graphic designer Susan Kare to create fun, easily- understandable icons, such as the trashcan used for deleting files.

Jobs often bemoaned his competitors’ lack of attention to design, even as Apple benefited from it.

“The only problem with Microsoft is that they just have no taste,” he said in the interview with Cringely. “I don’t mean that in a small way, I mean that in a big way -- in the sense that they don’t think of original ideas, and they don’t bring much culture into their products.”

Pixar Patents

After his return to Apple in 1997, the company benefited all the more from Jobs’s obsession with detail. When Apple introduced its transparent, blue iMac the following year, other PC makers began experimenting with colors other than beige or black.

Jobs was undeterred by Apple’s legal defeat versus Microsoft, and he became adept at using intellectual property to achieve business goals. His Pixar Animation Studios was finishing its first feature-length film, “Toy Story,” while preparing to go public in 1995. Some bankers said that the company’s sales were too low to support an initial public offering, said a person with knowledge of the matter, who asked not to be identified because he’s not authorized to discuss it.

Financial Incentives

Jobs called Microsoft’s then-CEO Gates and threatened to sue for infringement of some of Pixar’s graphics-related software, the person said. Microsoft and Pixar instead reached a licensing deal that gave Pixar’s sales a much-needed boost.

Tara Walberg, an outside spokeswoman for Microsoft, declined to comment.

Apple has stepped up efforts to protect intellectual property, in part due to the rise of Google’s competing Android operating system. Apple in recent years has offered engineers financial incentives for patent applications that increase with the number of filings, said one former Apple manager who requested anonymity because the information is not public.

Kristin Huguet, a spokeswoman for Apple, declined to comment.

By early 2011, Jobs had decided to use the legal system as aggressively as possible to protect Apple’s intellectual property. He famously told his biographer, Walter Isaacson, that he would spend “every penny” in Apple’s coffers to combat Google’s software.

“I’m going to destroy Android, because it’s a stolen product,” Jobs said. “I’m willing to go to thermonuclear war on this.”

On Aug. 24, Jobs posthumously enlisted allies in that war in a nine-person jury in federal court in California.

To contact the reporter on this story: Peter Burrows in San Francisco atpburrows@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Analysis: Friend and foe; Samsung, Apple won't want to damage parts deal

By Miyoung Kim

SEOUL | Mon Aug 27, 2012 4:34am EDT

(Reuters) - While Samsung Electronics is reeling from a patent pounding by its smartphone rival Apple Inc, this is unlikely to damage the other part of their relationship - where Samsung is the sole supplier of Apple-designed chips that power the iPhone andiPad.

At an emergency meeting in Seoul early on Sunday following the damning U.S. legal defeat, the South Korean group's post mortem was led by vice chairman Choi Gee-sung and the head of the mobile business JK Shin, rather than by CEO Kwon Oh-hyun, whose primary role is in charge of the components business.

The clear message from Samsung is that a strict internal firewall between its handset business and its components operations remains intact.

While it plans to appeal the U.S. verdict, and a damages bill for $1.05 billion for copying critical features of Apple's popular mobile devices - a sum that could be trebled - Samsung will not want to put at risk its Apple supply contract which is worth billions of dollars.

As well as being the only supplier of micro processors for the iPhone and iPad, Samsung also supplies DRAM and NAND-type memory chips and flat screens used in the popular Apple gadgets. Samsung products comprise 26 percent of the component cost of the iPhone, Samsung's lead counsel Charles Verhoeven was quoted as saying in the media.

Samsung's component sales could hit $13 billion next year and bring in $2.2 billion in operating profit, according to a recent estimate by Morgan Stanley. That's nearly 8 percent of estimated group operating profit for next year.

TOO IMPORTANT

Experts and analysts said the symbiotic business relationship between Samsung and Apple is too important for either to put at risk.

"Apple needs Samsung to make the iPhone and iPad. Period. Samsung is the sole supplier of Apple's processing chips and without Samsung, they can't make these products," said James Song, an analyst at KDB Daewoo Securities in Seoul. "Samsung might be considering lots of options to leverage its components business' importance and pressure Apple, and Apple could be also well aware of this."

With that in mind, Samsung had sought to resolve the patent dispute with Apple - which Apple first brought up shortly after Samsung launched its first Galaxy model in 2010 - through negotiation rather than in the courtroom.

"We initially proposed to negotiate with Apple instead of going to court, as they had been one of our most important customers," Samsung said in an internal memo sent to employees and released to the media on Monday. "However, Apple pressed on with a lawsuit, and we have had little choice but to counter sue."

While Samsung has been found to have copied innovative features of the iPhone and iPad, the Korean group's lawyers have emphasized that its own innovative components and wireless technology patents, which the U.S. jury ruled that Apple did not violate, made Apple's products a reality.

"Apple isn't that stupid (to risk its Samsung parts deal). Apple's agreements with Samsung will ensure that Samsung has no choice but to comply and supply," Florian Mueller, an intellectual property consultant, posted on his blog.

"Also, Samsung's other customers would lose faith if it turned out unreliable. And since Apple threatened Samsung with litigation two years ago, it's had plenty of time to identify alternatives."

SHARP SELL-OFF

Samsung itself shrugged off market concerns that its component contracts were at risk due to the litigation. Samsung shares tumbled more than 7 percent on Monday, wiping $12 billion off its market value.

"(The) supply contract remains a separate issue from the litigation and there'll be no change to it going forward," said an executive who took part in Sunday's meeting, which was not attended Jay Y. Lee, chief operating offer and heir apparent to Samsung Chairman Lee Kun-hee, according to the executive.

Kwon was promoted to CEO in June, with JK Shin and BK Yoon leading the telecommunications and consumer electronics divisions respectively so as to avoid potential conflicts of interest, as Samsung supplies parts to its main rivals such as Apple, Nokia, HTC Corp and Sony Corp.

As demand for mobile gadgets has soared, Samsung announced just last week a $4 billion investment to boost output at its U.S. chip plant, where it makes chips for the iPhone and iPad. That comes on top of $2 billion of spending Samsung unveiled two months ago to build a new chip plant and the conversion of existing chip lines to make logic chips to power mobile gadgets.

SUPPLY CHAIN

Apple has been looking to spread its supply chain to reduce its reliance on Samsung. The U.S. firm frequently faces a supply crunch when a new product is launched, triggering a consumer stampede that drives demand far in excess of supply and production capability.

Earlier this year, a source told Reuters that Japan's Elpida Memory Inc was selling more than half of its mobile DRAM chips to Apple.

Samsung mainly competes with Toshiba Corp and Korean rival SK Hynix in supplying memory chips for Apple, and LG Display in flat-screen panels.

Samsung has around 70 percent global market share in mobile DRAMs, but Apple sources only 40 percent of its mobile DRAM chip requirement from Samsung, a boon to the likes of Elpida and SK Hynix, analysts say.

Shares in LG Display, which is widely speculated to supply a new and thinner panel for the next iPhone, jumped more than 4 percent on Monday. SK Hynix slipped 0.5 percent in a flat market.

"For its part, Samsung is also diversifying its customer base to reduce its reliance to Apple - adding new ones like Qualcomm, and that'll prove to be a good strategy longer term as Apple component margins are generally low due to its huge bargaining power," said Daewoo's Song.

"Other suppliers may benefit from a worsening Apple/Samsung relationship in the short term, but in terms of margins, I'm doubtful they can make good money from any Apple cookie crumbs that Samsung throws away."

(Reporting by Miyoung Kim; Editing by Ian Geoghegan)

Nokia To Microsoft Seen Benefiting From Possible Samsung Ban

By Adam Ewing, Adam Satariano and Hugo Miller - Aug 27, 2012 9:43 AM GMT+0400

Nokia Oyj (NOK1V) and Microsoft Corp. (MSFT), both looking to increase U.S. sales of smartphones, stand to get a much-needed boost as Samsung Electronics Co. (005930)products face a possible ban and phonemakers come under pressure to consider alternatives to Google Inc. (GOOG)’s Android software.

A federal jury awarded Apple Inc. (AAPL) more than $1 billion on Aug. 24, saying Samsung infringed on six of seven patents for mobile devices. U.S. District Judge Lucy Koh will weigh Apple’s request for a ban on U.S. sales of some devices from Samsung, the dominant maker of Android phones, next month. Some Android- equipment makers may turn to platforms such as Microsoft’s Windows 8 to avoid a similar trip to court, said Carolina Milanesi of the research firmGartner Inc. (IT)

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Microsoft Corp.'s Office operating software is displayed on a Nokia Lumia 900 smartphone screen at a mobile phone store in Helsinki, Finland. Photographer: Ville Mannikko/Bloomberg

“I am sure that vendors in the Android ecosystem are wondering how long it will be before they become Apple’s target,” Milanesi said in an interview. “This might sway some vendors to look at Windows Phone 8 as an alternative, and for the ones like HTC Corp. (2498) and even Samsung, who have already announced plans to bring to market a WP8 device, how much stronger their investment should be.”

The ruling will allow Apple to defend its intellectual property more vigorously, Bloomberg Industries analyst John Butler said in a report.

BlackBerry maker Research in Motion Ltd. will largely miss an opportunity to benefit because the first of the new BlackBerry 10 phones it’s counting on to win sales won’t arrive until next year’s first quarter, said Horace Dediu, a former analyst for Nokia who now runs mobile-phone industry research firm Asymco.com in Helsinki.

Microsoft Benefits

Microsoft stands to gain the most, Dediu said. The Redmond, Washington-based company has already prevailed in patent disputes with Android user Motorola Mobility, which is owned by Google. Microsoft has won orders that banned U.S. imports of some Motorola devices and limits on sales of some of the company’s products in Germany.

“Microsoft can go in to all these accounts and say, ‘Let us remind you again of the cost of Android,’” Dediu said. “What Microsoft has always had trouble with is getting these vendors to switch.”

Samsung sells dozens of Android phone models, according to its website, compared with three for Microsoft.

Microsoft could also boast it offers legal protection that Google, by giving away Android for free to vendors, hasn’t provided, Dediu said.

Nokia’s Partner

“With Windows phones, you’re protected against IP lawsuits because, if anybody sues, they are going to talk with Microsoft,” he said. “Microsoft can do that because they actually do have their IP pretty well sorted out.”

Nokia decided to become partners with Microsoft last year after jettisoning its aging Symbian platform that had failed to keep up with Apple’s iPhone and Android devices. Nokia’s global mobile-phone market share slumped to 20 percent last quarter from 23 percent a year earlier, according to Gartner. Android’s share among platforms rose 21 percentage points to 64 percent, while Cupertino, California-based Apple’s iOS had 19 percent.

“Right now, for Nokia, it is a case of ‘the more the merrier,’ as the strength of the ecosystem is what they need to get traction with consumers and carriers alike,” said Milanesi, of Stamford, Connecticut-based Gartner.

More important than the Aug. 24 U.S. court ruling is the injunction Judge Koh is considering issuing next month, said Mark Lemley, a professor at Stanford Law School in Stanford,California.

New Lineup

“The real question is whether this is enough to derail the momentum the Android ecosystem has gained in the marketplace,” Lemley said in an e-mail.

The injunction may give other handset makers a welcome boost, said Michael Schroeder, a Helsinki-based analyst at FIM Bank.

“A potential sales ban on Samsung products will create some additional room for Nokia as it is preparing to ship the new lineup of Lumia devices over the next couple of months,” Schroeder said.

Nokia shares have dropped 34 percent in Helsinki this year. Suwon, South-Korea-based Samsung rose 21 percent in its home market before the U.S. court ruling, while Apple, the biggest smartphone makers, jumped 64 percent.

Nokia continues to focus on expanding the entire Windows Phone system, said Susan Sheehan, a Nokia spokeswoman, declining to comment on the Samsung ruling.

Elop’s Bet

Last quarter Nokia sold 600,000 handsets in North America, little changed from the previous period even after introducing the flagship Lumia 900 in April at AT&T Inc. Apple sold 5.9 million iPhones, which then-CEO Steve Jobs introduced in 2007, in the U.S. in the quarter, according toStrategy Analytics. Microsoft’s mobile platform gained speed, winning 2.7 percent of global sales compared with 1.6 percent a year earlier, Gartner said.

Nokia is set to show its new Lumia smartphones running Microsoft’s Windows Phone 8 software on Sept. 5. Stephen Elop, the former Microsoft executive who was brought aboard in 2010 to revive Nokia, is now betting that a wave of advertising spending by Microsoft to push the new Windows 8 operating system will help accelerate demand for Lumia.

Tara Walberg of New York-based public relations firm Waggener Edstrom Worldwide, speaking on behalf of Microsoft, declined to comment.

RIM’s Decline

While RIM is fighting a similar battle to regain lost market share with a new platform, it is months behind Nokia. RIM’s take of global smartphone platforms fell to 5.2 percent last quarter from 12 percent a year earlier. The first two new models of BlackBerry 10 devices -- a touchscreen and a traditional Qwerty keyboard version -- won’t be out until early next year, well after the iPhone 5, expected out next month.

RIM’s sales fell 43 percent last quarter as its aging lineup of devices failed to excite buyers. Chief Executive Officer Thorsten Heins said earlier this month that the new BlackBerry 10 platform will soon be ready to license to other manufacturers, even as his company races to release its own handsets with the software early next year.

Waterloo, Ontario-based RIM has no comment on the case, said Amy Jones, a company spokeswoman.

Samsung Damage

Asymco’s Dediu said RIM doesn’t stand to benefit in the same way because it won’t have a new competitive product until next year. RIM’s stock has fallen 76 percent in the past 12 months and is 95 percent off its 2008 high.

“RIM is not competitive,” Dediu said. “RIM’s story will be more next year if they are able to recover.’

The lasting damage may ultimately be to Samsung, not Google, because the judge ruled the infringements had less to do with the Android operating system and were more related to imitating the iPhone’s design, said Edward Snyder, an analyst at Charter Equity Research (MFSEEA1) in San Francisco.

‘‘Apparently, they lifted too much of the look and feel from iPhone, but I don’t believe it has much to do with the Android OS, and even if it did, I doubt Google would have much trouble designing around it,” Snyder said. “We’re unlikely to see a big push to Windows because of this.”

To contact the reporters on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net; 

Hugo Miller in Toronto athugomiller@bloomberg.net

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