In the first phase of the trial, a federal judge narrowed the litigation over Oracle’s copyright claims and upheld a portion of Oracle’s claims. In the third phase the judge will assess damages against Google for its infringing use of some parts of Java code in Google’s Android operating system. Oracle has indicated that it intends to seek a seriously large payment for the infringement. Oracle has also said that it will appeal the jury’s verdict.

The verdict did not affect either company’s share price during today’s trading session. After hours both are down slightly.

Paul Ausick

The SEC site noted that the SEC alleges that George Levin and Frank Preve from Fort Lauderdale area raised more than $157 million from 173 investors in less than two years.  Today’s allegations are that they issued promissory notes from Levin’s company and interests in a private investment fund they operated.

The SEC noted that they used the investor funds to purchase discounted legal settlements from former Florida attorney Scott Rothstein through his law firm Rothstein Rosenfeldt and Adler PA. Another charge is that the settlements Rothstein sold were not real and the supposed plaintiffs and defendants did not exist.

Rothstein reportedly used the funds in classic Ponzi scheme fashion to make payments due other investors and support his lavish lifestyle.

Apparently some bad guys do get caught.  The SEC report says that Rothstein’s Ponzi scheme collapsed in October 2009 and that he is currently serving a 50-year prison sentence.

FULL COMPLAINT

JON C. OGG

Samsung Electronics (OTC: SSNLF.PK) and LG Electronics both paid Kodak nearly $1 billion to gain rights to the discredited patent. Kodak claimed that Apple owed it more than $1 billion for infringing.

The patent was one of about 1,100 included in Kodak’s digital capture technology patent portfolio. That’s about 10% of the company’s total patent portfolio that has been valued as high as $3 billion.

Today’s ruling calls into question the value of Kodak’s entire patent portfolio. Many of the patents are fine, of course, but the ones that really matter are all going to be litigated and a buyer’s anticipated profits from the portfolio just dropped. And probably by a lot. Zero may not be too low.

Paul Ausick

The legal fight over the issue, which started in China’s courts, moved to the US. The decision from a judge here was much quicker than one which is still uncertain in the People’s Republic. Proview filed a suit in California superior court three months ago.

The court threw the case out, on the basis of an agreement that Apple and Proview had agreed to settle legal contests in Hong Kong. That apparently means the disagreement will move to a third venue.

Douglas A. McIntyre

Loeb and Third Point are demanding the material for the following reasons:

1. To investigate wrongdoing or possible mismanagement by Yahoo!’s management and/or any member(s) or committee(s) of its Board of Directors (the “Board”) in connection with the hiring of Scott Thompson as the Chief Executive Officer of the Company and his appointment to the Board;
2. To investigate wrongdoing or possible mismanagement by Yahoo!’s management and/or any member(s) or committee(s) of its Board in connection with the appointment of Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr. and Fred Amoroso to the Yahoo! board rather than the nominees proposed by Third Point;
3. To investigate wrongdoing or possible mismanagement by Yahoo!’s management and/or any member(s) or committee(s) of its Board in connection with the statements by Yahoo! on the afternoon of May 3 that the false filings about Mr. Thompson’s educational background were “inadvertent.”
4. To determine whether Scott Thompson, Patti Hart, Peter Liguori, John Hayes, Maynard Webb, Jr., Fred Amoroso, and Thomas McInerney are suitable to serve as directors of Yahoo!;
5. To facilitate communications with other stockholders concerning the matters identified in paragraphs 1 through 4 above, in connection with a proxy contest to replace the current board of directors with nominees proposed by Third Point.

That Thompson does not have the degree he claims to have from Stonehill College has been established. What Loeb is using as leverage here is that in a federal filing of the announcement of Thompson’s hiring Yahoo included Thompson’s misstatement (lie?) about his academic history. Telling the federal government something that is not true on an official filing is a big deal, and Loeb has chosen to jump on it.

The filing also calls into question the competence of Yahoo’s board, which should have checked Thompson’s claims on his résumé. Third Point’s letter cites several academics all of whom suggest that Thompson should be replaced if he did in fact lie on his résumé. Warren Buffett has also weighed in, saying that “it doesn’t sound like an inadvertent error” to him.

The letter from Third Point lists 15 categories of documents that the firm wants Yahoo to provide. Yahoo has not yet responded to Third Point’s letter.

The letter from Third Point is available here.

Paul Ausick

Dish agreed to broadcast the channels for 15 years, but stopped after just 3 years charging Cablevision with failing to support the new channels. Cablevision sued Dish for $2.5 billion.

The Wall Street Journal reports that in a pre-trial ruling, the court found that Dish had “in bad faith” destroyed e-mail evidence. Dish appealed the ruling twice and lost twice, most recently last week. The ‘VOOM’ channels were canceled in 2009.

Normally the threat to withdraw programming is a negotiating ploy when the content provider, in this case AMC, wants more money than the cable or satellite system wants to pay. This case is slightly different, though, given the rulings against Dish. This time Dish is no doubt hoping that AMC will drop the suit in exchange for Dish’s agreement to continue carrying the AMC channels, which include AMC, Sundance, IFC, and We TV. Problem is, Dish has a lot more to lose than AMC does.

Shares of Dish are down about -3% at $31.64 in a 52-week range of $20.89-$35.64. Shares of AMC are down -2.4% at $43.48 in a 52-week range of $29.66-$46.69.

Paul Ausick

[Nokia] told investors that Nokia’s conversion to a Windows platform would halt its deteriorating position in the smartphone market. It did not. This became apparent on April 11, 2012, when Nokia disclosed that its first quarter performance would be worse than expected.

Now it’s true that Nokia has lost its once-mighty position in handsets as smartphones from Apple Inc. (NASDAQ: AAPL) and those using the Android operating system from Google Inc. (NASDAQ: GOOG) have come to dominate the market. But how quickly did the company’s shareholders think it would take to turn things around?

The lawsuit also refers to the bungled launch of the Lumia 900, which led Nokia essentially to offer the new phone for free until the software bug was fixed. Yup, that happened too.

And when you’re down there are always those willing to give you a little extra kick, and Nokia’s shareholders are fleeing the stock again today in the wake of the lawsuit. From a non-legal point of view, the lawsuit doesn’t appear to have a chance. But it will distract Nokia and that’s the last thing the company needs right now.

The Lumia 900 combined with Microsoft’s Windows Phone 7 operating system has gotten good reviews and stands a reasonable chance of recovering some lost ground when Windows Phone 8 launches later this year. The Nokia-Microsoft combination might not ever cause any sleepless nights at Apple or Samsung, but that’s no reason to call the Lumia 900 a flop and to sue the company for not turning around in a couple of quarters a problem that took years to get to this point.

Nokia’s shares are down about -3.6% at $3.16, below the prior 52-week range of $3.54-$8.80.

Paul Ausick

The trouble with the suit may be that nothing has been proven about Wal-Mart’s conduct in Mexico. The New York Times made a very compelling report about the behavior of senior management in light of events in Mexico. It could be some time before the paper’s story is completely vetted. Nonetheless, the CalSTRS action will open the door to more suits by institutional investors and maybe individual ones.

Wal-Mart’s legal costs will rise even more than they would have just to be involved in internal investigations and those which will be made by the US and Mexican governments.

Wal-Mart’s stock almost never moves this much from start to finish in a 3-day period and the shares are approaching an oversold level.  The problem in trusting any chart at this point is that the news flow and headline risk remains greater than the odds that the headlines will suddenly become good here.

We recently noted that options trades were betting on Wal-Mart shares going down to $56.50 os so by mid-June and ultimately to $55.50 or so by mid-September. Shares were down 4.7% to $59.50 at that time, but now they are down to the $57.60 level.

If we use the December 2012 PUT OPTIONS today, the bets are still strong on the downside.  In the DEC-2012 $55.00 PUTS we have seen 2,730 contracts trade against a listed open interest of only 219 contracts.  There were also in the same month $60.00 PUTS some 5,204 contracts traded so far today against a prior open interest of only 155 contracts.  This may be a hedge or a roll, but the implication is that either Wal-Mart is headed down to $52.50 or so in December.  If the bet is not that the stock falls that far, then it is a synthetic long where an investor is willing to take delivery of shares at just under $52.50 just a few days before Christmas.

What is so interesting about the Wal-Mart news is that investors have not gone out and started rewarding rival Target Corporation (NYSE: TGT).  The king of dollar stores is Dollar General Corporation (NYSE: DG) and it and other rivals have not been amply rewarded.  Part of the blame on a negative retail sector may be on stores like Big Lots Inc. (NYSE: BIG) with its downward guidance effectively having taken shares down from $45 to $35 this week.

Maybe Wal-Mart can get saved by statutes of limitation.  Maybe it can sneak its way out of this.  Unfortunately, the negative pressure that Wal-Mart had been getting away from is back and this pressure is unlikely to go away in an instant.  The good news is that the allegations are all in the past rather than the current corporate culture, but the bad news is that the pressure here could end up toppling management at the highest levels of the world’s largest retailer.

The long and short of the matter is that U.S. companies are expected to uphold certain ethical rules and practices.  Bribes are illegal, even if companies do not get punished for the activity on the foreign soil.

The flip-side to this is that no one will really be able to address (nor really fix) the underlying issue: doing business and Mexico and in Latin America is not quite as straightforward as ‘ethics officers’ would hope.  Outright bribes, gifts, donations, and other business enhancing methods are all just a small part of the business culture once you go south of Texas, News Mexico, Arizona, and California.

JON C. OGG

Today’s ruling is related to a Motorola patent related to Wi-Fi technology and is subject to review by the full ITC. Apple challenged the validity of all four patents involved in this case. Apple is already appealing an ITC decision it lost in October 2010 seeking to block imports of Motorola smartphones that use Google’s Android operating system.