Bose filed complaint with U.S. International Trade Commission (ITC) seeking investigation and ultimately ban on import of radios and clock-radios sold by promotional specialty goods marketer, alleging they were “copycat” knockoffs that infringed on Bose registered trademark (2,299,158) for uniquely configured Wave radio. Attorney for Commerce, Cal.-based marketer, Sun Coast Merchandise Corp., responded that company planned vigorous defense against Bose charges, at least partly on ground that 2 U.S. design patents it held on “Curve” radio products gave it right to continue selling them.

Microsoft is trying to get govt. to bar 2 unlicensed Xbox accessories from U.S. market. At issue are videogame system selector X-Selector and X-Connection dual shock controller from Ultimate Game Club (UGC), based in Old Saybrook, Conn. As we first reported late last month, Fish & Richardson law firm, acting on Microsoft’s behalf, filed complaint with U.S. International Trade Commission seeking investigation of UGC for alleged violations of Sec. 337 of 1930 Tariff Act (CED June 25 p2).

Blockbuster is seeking to recover up to $250,000 from video rental dealers that filed antitrust suit against it. Following U.S. Dist. Judge Edward Prado’s June 27 decision that dismissed suit and ended trial in San Antonio, Blockbuster Gen. Counsel Edward Stead said rental chain would move to recover some court costs from 49er Video, Sacramento; Lone Star Video, San Antonio; The Big Picture Video, Rome, N.Y. Fees are charged for each motion and submission filed with court and federal rules allow defendants to attempt to recover those costs from plaintiffs. Blockbuster and Hollywood studios spent several million dollars on their defense, Stead said. Chances of recovering costs may be slim. Lone Star Video and 49er Video have closed some or all of their stores since 1997, while Big Picture is operating under bankruptcy protection. Whether Blockbuster is successful in recovering costs could have impact on similar case filed by 200 independent video rental dealers in Cal. Superior Court. Trial date for Cal. case hasn’t been set. Meanwhile, some dealers are questioning VSDA Pres. Thomas Warren’s N.C.-based Video Hut chain’s revenue-sharing agreement with Universal Studios. Video Hut signed agreement with Universal in Jan. 2000, capping 5 months of negotiations, and did so in order to compete with Blockbuster in terms of VHS copy depth, trade reports quoted Warren as saying. Warren’s comments followed heated discussion on VSDA message board that questioned whether Video Hut received revenue-sharing agreement because of Warren’s position in VSDA, reports said. Warren said idea that he would use VSDA position to win gain for his chain is “abhorrent” to him.

WorldCom’s financial scandal could have repercussions on entire communications industry and how it’s regulated, said Washington policymakers, analysts and others who follow sector. FCC Comr. Copps said scandal “should give us some pause at the Commission before we rely fully on [corporate] data” when reviewing applications for mergers and other financial changes. It might be better for FCC to do its own analysis, he said. One industry lobbyist warned that companies would have tougher time getting deregulatory action on Hill, for example broadband relief sought by Bell companies through measures such as Tauzin-Dingell, because Congress was expected to become much tougher on corporations in general. Randolph May, senior fellow at Progress & Freedom Foundation, said he had hoped WorldCom’s problems wouldn’t lead to backlash against deregulation because bankruptcy was “about accounting practices and human frailties, not regulatory policy.”

Gemstar was dealt serious setback late Fri. when ITC administrative law judge ruled that 3 of its patents for on-screen interactive program guides weren’t infringed. Judge Paul Luckern found that “no domestic industry” exists for patents, thus allowing EchoStar, Pioneer and Scientific-Atlanta (SA) to continue importing satellite receivers and cable set-top boxes. EchoStar, SA, and Pioneer all designed own IPGs for STBs and Gemstar filed complaint with ITC in 2001 seeking to block import of STBs it said had IPG that infringed on its patents.

Defiant executives at Gemstar TV Guide International vowed Mon. that their company would “ultimately prevail” in its patent dispute despite ITC administrative law judge’s June 21 finding that 3 of its patents covering interactive program guides (IPGs) hadn’t been infringed upon. Gemstar Gen. Counsel Jonathan Orlick said while Judge Paul Luckern ruled that EchoStar, Pioneer and Scientific-Atlanta (SA) could continue importing satellite receivers and set-top boxes, finding was “only initial step” in legal battle that’s likely result in case ultimately moving to U.S. Appeals Court, D.C.

Intellectual property developer InterTrust said Mon. it was “substantially broadening” patent infringement suit filed last year against Microsoft on Xbox videogame consoles and other key products. Santa Clara-based InterTrust said it added 4 new patents to suit, more than doubling number of claims involved in case to 11 patents, 144 claims and “over 190 separate infringement scenarios.” InterTrust said it was seeking injunction against various Microsoft products, including Xbox, Windows XP, Office XP, Microsoft.NET and Windows Media Player as well as compensatory and punitive damages. Microsoft couldn’t be reached for comment by our Mon. deadline.

CE industry and investment community were awaiting preliminary decision by ITC judge in Gemstar-TV Guide International patent case that was believed imminent late Fri. (after our deadline) and was likely have future bearing on how interactive program guide (IPG) technology would be commercialized. ITC Administrative Law Judge Paul Luckern, who postponed earlier March deadline for decision, was to rule in case in which Gemstar claimed that EchoStar, Scientific-Atlanta (SA) and Pioneer had violated its patents for IPG and was likely determine whether company built momentum or suffered blow to status as key supplier of IPG technology. Luckern’s ruling will set stage for ITC to complete investigation by Sept. 23.

U.S. Trade Representative’s (USTR) office urged FCC to approve proposed U.S.-Mexico settlement rates only for 2002 for now. USTR said Commission should consider deferring approval of 2003 rates “until it becomes clear whether and when the Mexican government intends to reform its long distance rules.” USTR submitted comments June 17 on requests for waivers by WorldCom and AT&T on Commission’s international settlements policy to change accounting rate for services with Telmex. Telmex, WorldCom and AT&T reached agreements to change settlement rates for 2001 through 2003. Agreements introduce 3 new rates for 2002 and 2003 based on final destination of call, with weighted average of 8-9 cents per min. “These rates appear a positive step,” USTR said. “However, the new average rate still appears to be at least double the actual cost of terminating these calls in Mexico and differs only marginally from the single 10 cent rate proposed for 2003 in the WorldCom-Telmex agreement that was filed with the Commission last year.” In March, WorldCom petitioned FCC for waiver to lower accounting rate for international traffic it exchanged with Telmex. That would lower average 19-cent rate now in effect with Telmex. It would provide rate of 15 cents in each direction for 2001 and 13.5 cents in each direction for 2002. For 2003, different rates would apply based on whether traffic was northbound or southbound and, in some cases, in which cities it terminated. WorldCom argued that deal would be in public interest because it would move settlement rates “much closer” to cost-based levels on U.S.-Mexico route and would shift it to levels “far below” 19 cents benchmark rate set by FCC. AT&T petitioned FCC in April to implement similar rates. “While AT&T would like to obtain greater reductions, Mexico’s restrictions on competition continue to prevent the negotiation of competitive, cost-based rates on the U.S.-Mexico route,” AT&T said. USTR told FCC it was “particularly disappointing” that pacts don’t consider even deeper reductions for 2003. “Thus, while the rate reductions proposed in the petitions for waiver are a step forward, the proposed rates are still far above cost -- reflecting the power Mexico’s international long distance rules give to Telmex to negotiate these rates,” USTR said. It said Mexico needed to reform those rules to let competing suppliers negotiate rates and to promote “the public interest of achieving cost-based settlement rates.” Telmex in March filing asked Mexican regulator Cofetel to repeal critical provisions of what U.S. had termed anticompetitive international long distance rules. USTR said: “With this filing, the principal Mexican and U.S. telecom providers are now actively seeking to open the cross- border basic telecommunications market to competition.” But it said Mexican govt. hadn’t yet moved to reform rules and create competitive international telecom market. By approving only proposed rates for 2002, FCC could wait until it was easier to evaluate whether additional reductions for 2003 and beyond were likely, USTR said.

Gemstar-TV Guide International CEO Henry Yuen spoke to New America Foundation Wed. about sanctity of patents as company was expecting decision June 21 in its patent infringement case against EchoStar. Gemstar has charged that EchoStar, Pioneer Corp., Pioneer Digital Technologies, Pioneer New Media Technologies, Pioneer N. America, Scientific-Atlanta and SCI Systems imported set-top boxes with Interactive Program Guides that it said infringed on patents held by Gemstar and its StarSight Telecast subsidiary. In briefing with reporters at National Press Club in Washington, Yuen said he couldn’t predict which way International Trade Commission (ITC) judge would decide but said Gemstar could appeal if ruling came down on other side. He acknowledged case had affected company’s stock price adversely. Yuen said company had concluded 180 license agreements without litigation and bemoaned company’s reputation as being litigious. “We are a company that is quite misunderstood,” he said: “We have to sue infringers who are flagrant in these kinds of cases. Otherwise, it would be very, very unfair to licensees who paid.” Although company has 20-year interactive program guide agreement with Adelphia, Yuen said Gemstar’s bottom line wouldn’t be badly affected if Adelphia filed for bankruptcy. There are some accounts receivable, Yuen said, but they aren’t large enough to have significant impact on Gemstar’s balance sheet. He said he was hopeful FCC would change its mind on its decision that Gemstar’s electronic program guide (EPG) data wasn’t “program-related” and therefore wasn’t entitled to must-carry status when it was transmitted by broadcasters. Gemstar filed motion to reconsider, which is pending. Yuen said company officials had met with FCC commissioners. “I clearly cannot predict how they will make up their minds but we are satisfied with how we presented it,” he said. He acknowledged that arguments over transmission of data over vertical blanking interval (VBI) in analog might become moot in coming years as nation transitioned to digital, where there’s no VBI. Nevertheless, he said it was important to argue point because analog probably still would be available for many years.