Facebook Inc. (FB) (FB), the biggest social- networking service, made an offer for AOL Inc. (AOL) (AOL)’s patent portfolio before losing out to Microsoft Corp. (MSFT) (MSFT)’s $1.06 billion bid, two people with knowledge of the matter said.
The proposal from Menlo Park, California-based Facebook was too low, said the people, who asked not to be identified because the discussions haven’t been disclosed. Facebook Chief Operating Officer Sheryl Sandberg led the negotiations to acquire AOL’s patents, one person said.
Microsoft intends to sell most of the newly acquired portfolio because it doesn’t consider all of the 800 patents and related applications essential to its intellectual property arsenal, according to another person with knowledge of the matter. The technology industry has been bulking up on patents amid a surge in disputes over ownership of rights to key breakthroughs in areas such as mobile communications.
Facebook said it’s buying the Instagram photo-sharing tool for $1 billion the same day Microsoft unveiled the AOL deal.
Larry Yu, a spokesman for Facebook, declined to comment, as did Kevin Kutz, a spokesman for Redmond, Washington-based Microsoft and Caroline Campbell, a spokeswoman for New York- based AOL.
Facebook has lined up $8 billion of available credit from its IPO underwriters. Like more established technology companies, such as Apple Inc. (AAPL) (AAPL) and Google, it is buying intellectual property to protect itself from patent-infringement litigation.
Facebook, which is in the midst of a patent dispute with Yahoo! Inc. (YHOO) (YHOO), acquired 750 patents from International Business Machines Corp. (IBM) (IBM), a person with knowledge of the matter said on March 22. Yahoo sued Facebook on March 12, alleging that the social network infringed patents covering such functions as Internet advertising and information sharing.
“If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition or results of operations,” Facebook said in a March 27 filing.
Nestle Wins Backing in Europe Over Nespresso System Patent
Nestle SA (NESN)’s Nespresso coffee brand won the backing of the European Patent Office over a disputed patent covering its coffee machine and capsules.
The regulator upheld the existing patent in an “amended form” by a committee of technical experts following objections made by companies including Sara Lee Corp. (SLE) (SLE), the office said yesterday in an e-mailed statement. The competing companies have the right to appeal the decision, the Munich-based body said.
Nespresso has sued companies including Sara Lee for alleged patent infringement while rejecting counterclaims. Rivals say their capsules don’t infringe on any patents, seeking to edge in on a market where retail sales may climb 47 percent globally from 2010 to 2015, according to Euromonitor International.
“The decision of the court was positive for our Nespresso” system, Nespresso Chief Executive Officer Richard Girardot said. “Obviously we are satisfied.”
Sara Lee is studying the office’s amendment to determine if it needs to take further steps, Ernesto Duran, a spokesman for Sara Lee based in the Netherlands, said by e-mail.
Nestle has built Nespresso into a brand worth more than 3.5 billion francs ($3.8 billion) after more than a decade of double-digit growth by marketing the coffee as an affordable luxury.
Trademark
Orthodox Union Sues MOOMilk for Using Mark Without Authorization
The Union of Orthodox Congregations of American, one of the organizations that provides Kosher certification for food in the U.S., sued a Maine organic dairy for trademark infringement.
The group’s complaint, filed in federal court in Boston April 11, claims Maine’s Own Organic Milk Company L3C used the Orthodox union’s trademark without authorization. The union’s mark, known as a “hechsher” is a circle containing the letter “U”, and is placed on food to indicate that it is certified as fit for consumption under Jewish law.
The Orthodox union said it initially contacted the dairy about its unauthorized use of the hechsher in June 2010. The dairy, known as MOOMilk, applied for certification that month and received its initial inspection in December 2010, according to the complaint.
The dairy never paid the fees and, continued to use the hechsher on its cartons without authorization, the Orthodox union said in its court papers.
The Orthodox union said it’s harmed by the unauthorized use of the mark, and that kosher consumers are likely to be confused and misled when they see it on MOOMilk’s products.
The group asked the court to bar further use of the hechsher without authorization and for awards of money damages, attorney fees and litigation costs.
Filed with the complaint is a series of letters between the union and the dairy in which an official of the Maine-based company said that it lacked the $5,500 necessary for certification.
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