Angry Birds sweet-talk copycats in booming China market

SHANGHAI (Reuters) - When Peter Vesterbacka visited China last spring, the marketing chief for Rovio, the Finnish firm behind the video game Angry Birds, saw fake Angry Birds products everywhere - and he was happy about it.

"I realized that China was already happening in a big way for us," Vesterbacka said in an interview.

"When you see all these knockoffs, you know that there is a lot of demand."
That rosy view of an intellectual property problem that has vexed global brands for decades - and sparked friction in China's relations with the United States and others - underpins Rovio's novel approach to the world's fastest growing consumer market.
While many companies go on the offensive against counterfeiters with legions of lawyers, Rovio is taking a mixed approach: waving a legal stick at some pirates, but seeking ways to cooperate with, and appropriate ideas from, others.
"It is definitely not a traditional approach," said Kenny Wong, a partner at the law firm Mayer Brown in Hong Kong.
While skeptics may see spin behind Rovio's enthusiasm for Chinese fakes, there are also benefits to accepting the reality that China is the world's top source of intellectual property rip-offs and its courts can't always help.
ONE BILLION DOWNLOADS
Rovio boasts a billion downloads of its video game, launched in late 2009, in which cartoon birds are hurled from a slingshot at pigs that stole their eggs. China, with 140 million downloads, is the second largest Angry Birds market behind the United States.
The firm is planning to unleash a blitz of retail stores and Angry Birds "activity parks" in China starting next month.
Paul Chen, Rovio's General Manager China, says the company is concerned about infringement on its intellectual property and does go after some pirates, especially those found to produce harmful goods.
But, he adds: "We tend to want to collaborate."
Rovio says it is recruiting some IP infringers to be partners, and even offering some of them free ad space on the Angry Birds app.
It also now sells officially licensed Angry Birds balloons after Vesterbacka saw a pirated one for sale in Beijing earlier this year and liked the idea. He calls it "pirating the pirates".
"This actually can be a successful model," said Xiang Wang, an IP lawyer with the firm Orrick. Makers of shoes, integrated circuit chips and laminated flooring are among those that have successfully co-opted counterfeiters in China, he said.
The alternative - attacking pirates in court - can be a morass.
"You can win on paper, but paper means nothing. When you go to enforce it, local companies pay the judges, they pay the local government officials, so enforcement will take years," Wang said.
INITIAL STRATEGY
Mayer Brown's Wong likens Rovio's enthusiasm about knockoffs to the way new stars court media attention: Early on, there is no such thing as bad press, but that eventually changes.
"Once you reach a certain level you don't want the paparazzi to be around all the time," he said.
"I think probably it's an initial strategy."
Eventually, Rovio may have to change tack, because companies can only license so many counterfeiters, Orrick's Wang said. But the counterfeiters-turned-licensees could at least be enlisted to help take on the remaining pirates, he said.
Rovio's retail strategy - going from zero to about 100 stores in the next year or so, starting in Shanghai next month - is another element of its strategy against fakes.
The shops will sell unique goods, and purchases of official gear will unlock "digital rewards" in the game, Chen said.
But the challenge goes beyond hoodies and key chains.
Last year, reports emerged that an entirely fake Angry Birds theme park had opened in the southern Chinese city of Changsha, in Hunan province, replete with a giant slingshot.
Could this eventually become a real Angry Birds park?
"It's not out of the question," said Vesterbacka.

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Facebook names 1st woman, Sandberg, to board

NEW YORK (AP) — Facebook's No. 2 executive, Sheryl Sandberg, has become the first woman on the social-networking company's board of directors.

Sandberg was lured from Google in 2008 to become Facebook's chief operating officer. Besides being the first woman, she is the first Facebook executive other than founder and CEO Mark Zuckerberg on the board.

There had been calls for the company to add women to its board ahead of its initial public offering of stock in mid-May.
In announcing the move Monday, Facebook Inc. didn't say whether it came in response to calls to add women. But as the No. 2 to Zuckerberg, she was a logical choice.
"Sheryl has been my partner in running Facebook and has been central to our growth and success over the years," Zuckerberg said in a statement. "Her understanding of our mission and long-term opportunity, and her experience both at Facebook and on public company boards makes her a natural fit for our board."
Sandberg has been largely responsible for building Facebook's advertising business. She also often serves as Facebook's public face, appearing at conferences and important meetings, while Zuckerberg often prefers to stay in the background and focus on Facebook's products.
Sandberg's appointment is somewhat symbolic. She is already a highly influential executive at Facebook, which is unlikely to change with her board appointment. That said, Zuckerberg still controls Facebook and its board due to his holding more than half of its voting stock.
Sandberg, 42, joins Zuckerberg, Netflix chief Reed Hastings and entrepreneurs Marc Andreessen, James Breyer and Peter Thiel. Also on the board are Donald Graham, CEO of The Washington Post Co., and Erskine Bowles, president emeritus of the University of North Carolina system.
Sandberg also serves on the boards of The Walt Disney Co. and of groups such as Women for Women International. She won't receive any additional financial compensation for the board role.
UltraViolet, a women's rights group that has been asking Facebook to add women to its board, said its campaign "should have never been necessary."
"We hope this is a first step for Facebook and in the coming months more women will be added to their board," UltraViolet co-founder Nita Chaudhary said in a statement. "In addition, we hope that other companies with all-male boards, particularly those in the tech sector, will follow Facebook's lead."
Most large corporations have at least one female board member, but that's where it ends for many of them. According to a report on corporate board gender diversity from corporate advisory firm Glass Lewis, 91 percent of companies in the S&P 500 had at least one female board member in 2011.
Catalyst, a nonprofit group that advocates for women in business, says in a report that only 16.1 percent of board seats at Fortune 500 companies were held by women last year.
Companies in the energy and technology sectors had the lowest levels of female board representation, the Glass Lewis report found.

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For Samsung, Galaxy halo effect comes with supply crunch

A woman holds up her new Samsung Galaxy S III after it was launched at Westfield …

SEOUL (Reuters) - Samsung Electronics' struggle to keep pace with rampant demand for its new Galaxy S III smartphone may have cost the South Korean firm some 2 million units of sales in just a month.

For a company that has never stirred the sort of consumer frenzy that accompanies each new Apple Inc gadget, overwhelming demand is a nice problem to have. But some of the shortage stemmed from a manufacturing glitch that affected some European sales, while major carriers in the United States have had to delay delivery of some pre-ordered phones.

The Galaxy S III has received the most positive reviews among any of the Samsung smartphones, and the technology giant says the phone is on track to become its fastest selling smartphone, with sales likely to top 10 million in the first two months since its launch.
The latest Galaxy's launch has been well timed as the next iPhone is not expected until later this year, and offerings from others such as Google's Motorola and Nokia have not created much of a market stir.
"Samsung might have been caught off guard by the demand, not because they did not believe in their own products, but because they might have over-estimated the competition," said Gartner analyst Carolina Milanesi. "In other words, aside from the iPhone and HTC's oneX there's not much out there at the moment, which would have certainly helped Samsung."
Analysts reckon the Galaxy shortage will be a temporary hiccup, affecting some 2 million units of shipments in the April-June quarter. Samsung expects another record quarter of earnings from its handset business in the current period, helped by solid sales of its predecessor S II and phone-cum-tablet Galaxy Note.
Barclays lowered its forecast for Samsung's second-quarter Galaxy S III shipments to 6.5 million from 8 million, but raised its third-quarter shipment forecast by 1 million to 15 million.
Samsung said component shortages have been resolved and it is running at full tilt to meet demand. "It is simply that demand far exceeded our expectation. But that doesn't mean we had set a very conservative demand forecast," Samsung said in an emailed statement to Reuters.
APPLE CHALLENGER
Samsung kicked off global sales of the Galaxy S III on May 29, but immediately signaled a delay of 2-3 three weeks for delivering the pebble-blue version of the model.
Less than a fortnight before launch, Samsung's then CEO Choi Gee-sung, now head of parent Samsung Group's corporate strategy office, ordered that half a million of the blue cases be thrown away as the design, with thin, silver stripes, was unsatisfactory, according to daily newspaper Chosun Ilbo.
After numerous design tweaks, Choi approved the final version on a Sunday less than 10 days before launch, the report said - as he was boarding a plane to fly to a court-ordered meeting in the United States with Apple CEO Tim Cook as part of a long-running patent dispute between the two smartphone powerhouses.
Samsung said on Tuesday that delays caused by the blue case issue were a temporary blip and had been resolved, adding that a supply shortage in the United States was rapidly getting back to normal.
In the United States, where sales were launched last week, major carriers including Sprint Nextel Corp and AT&T struggled to deliver pre-ordered smartphones. Sprint said on its website that both the 16 gigabyte and 32 GB models were out of stock, and an AT&T spokesperson said future orders would arrive within 10 business days based on available supplies.
Samsung launched its first Galaxy two years ago in a bid to counter Apple's iPhone success. At the time, Samsung's global smartphone market share was below 10 percent. It has since overtaken Apple, and the company said in late April that the new Galaxy would "substantially contribute" to second-quarter results.
Samsung sold 44.5 million smartphones in January-March, and current quarter sales are expected to top 50 million.
"It's increasingly apparent the Galaxy S III is being considered a true peer to the iPhone, rather than simply the least-bad alternative," said CLSA analyst Matt Evans.
"The change in status is most evident in the uniformity of the device among the five U.S. carriers. Unlike the Galaxy S II, there's little customization. Samsung has obviously developed huge leverage in negotiations with carriers and created a 'must have' handset."

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Microsoft launches interactive Xbox ads

Microsoft is planning to launch interactive ads on its Xbox 360 streaming services that will rival television networks. The software giant has signed on Toyota, Unilever and Samsung Mobile to offer its new “NUads,” The Los Angeles Times reported. The advertisements will debut this fall and will be found on Microsoft’s Xbox video apps, including those offered by ESPN, TMZ, NBC News and UFC. The first iteration of NUads will let users vote in response to different questions. For instance, Toyota will ask users what other devices they would like to see “reinvented” the way the company has “reinvented” some of its auto models. Users will be able to respond through the Xbox controller or voice and hand gestures with the Kinect. Toyota will then have access to the data and demographic information. Microsoft’s general manager of entertainment and advertising for the Xbox Live online service, Ross Honey, said the company plans to charge a “premium” compared with typical commercial rates. “There have been interactive ads on the Web before, but the beauty of it is that we’re bringing that to the TV,” he said. “It’s a substantially more valuable ad product.”

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FCC to review cell phone radiation guidelines

Julius Genachowski, chairman of the United States Federal Communications Commission, announced on Friday that he plans to ask his fellow commissioners to open a formal inquiry that will evaluate whether or not its standards protect humans from dangerous cellphone radiation, BusinessWeek reported. Despite the increased demand for mobile phones, it is the first time in 15 years that the question has been asked by the FCC. The agency is confident, however, thats its current guidelines pose no risk to consumers. “Our action today is a routine review of our standards,” Tammy Sun, a spokeswoman for the agency, said. “We are confident that, as set, the emissions guidelines for devices pose no risks to consumers.” The FCC last updated its guidelines setting maximum radiation-exposure levels in 1996, at which time about 44 million people in the U.S. owned mobile phones. That number has since swelled to more than 332 million mobile phone owners as of 2011.

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LinkedIn breach puts site's reputation on the line

(Reuters) - LinkedIn Corp's silence on the extent of a security breach that exposed millions of user passwords has damaged its reputation among some business professionals, and may slow the growing company's rise if the breach turns out to be more serious than disclosed.

Several days after news of the theft of the passwords emerged, the site with more than 160 million members still says it has yet to determine the full extent of the breach.
Some cyber security experts say LinkedIn did not have adequate protections in place, and warn that the company could uncover further data-losses over coming days as it tries to figure out what happened.
LinkedIn has hired outside forensics experts to assist as company engineers and the FBI seek to determine how more than 6 million customer passwords turned up on underground sites frequented by criminal hackers.
Company spokesman Hani Durzy said LinkedIn has invalidated the stolen passwords, even though it does not know if any other account information was stolen besides passwords.
The dearth of information has left some security professionals and customers worried that LinkedIn's computer systems may have suffered a more serious breach.
"There is going to be more to come," said Jeffrey Carr, chief executive of security firm Taia Global. "As long as they don't know what happened here, there is a good chance that it is more widespread than originally thought."
Customers whose passwords were among those stolen were still getting notified by LinkedIn as of Friday afternoon, days after news of the breach first surfaced.
Laura DiDio, a technology analyst with a consulting firm known as ITIC, said that was not fast enough.
"I am angry," she said. "As soon as there was an inkling that there was a breach, they should have been all over this. I want to know what they are doing to correct this situation."
SCRUTINIZING PRACTICES
Some security experts say the company's data security practices were not as sophisticated as one would typically expect from a major Internet company.
For example, they noted that LinkedIn does not have a chief information officer or chief information security officer.
Those are positions that typically supervise technology operations and computer security at large corporations.
Company spokeswoman Erin O'Hara said the company did not have managers with those titles, but that its senior vice president for operations, David Henke, oversees LinkedIn's security team.
Several experts said the company fell down in the way it encrypted, or scrambled, the passwords that were stored in the database.
Carr of Taia Global said LinkedIn did not follow an industry standard for encryption, which requires use of a technique known as "salting" that greatly increases the amount of time and computer power needed to crack an encrypted password.
There could be legal repercussions for that failure to comply with industry standards, said Gerald Ferguson, an attorney at Baker Hostetler who is an expert on privacy and intellectual property law.
He said that LinkedIn could face lawsuits if accounts had been breached since its terms of use say it employs the industry standard for security.
"If they can demonstrate that information hadn't been comprised, that would certainly give them a defense," Ferguson said.
Company representatives declined to respond to the criticism of their techniques for protecting passwords or any potential legal implications.
Their user statement spells out the steps it will take to protect customer data and the risks customers face.
"Personal information you provide will be secured in accordance with industry standards and technology," according to the privacy policy on linkedin.com.
"Since the Internet is not a 100 percent secure environment, we cannot ensure or warrant the security of any information you transmit to LinkedIn," it cautions. "There is no guarantee that information may not be accessed, copied, disclosed, altered, or destroyed by breach of any of our physical, technical, or managerial safeguards."
NATURAL TARGET
LinkedIn is a natural target for data thieves because the site stores valuable information about millions of professionals, including well-known business leaders.
"This is the serious social networking site. This isn't the one I go to see pictures of my friend's new dog," said Mary Hildebrand, chair of the privacy practice area at the law firm Lowenstein Sandler.
The way that the company responds to the theft will play a critical role in determining the extent to which the incident damages LinkedIn's reputation, experts said.
"LinkedIn has always claimed part of their strategy is making a better user experience," said Jim Janesky, director of research at Avondale Partners.
"If this were to comprise that in LinkedIn's users minds, it could slow down the growth of new users or limit individuals as repeat users."
Hemanshu Nigam, chief executive of security consulting firm SSP Blue, said he advised all LinkedIn members to immediately change their passwords after he heard news of the breach.
"I don't know how many emails I got from customers saying 'Thank you for telling me to change my password. I'm kind of freaked out now,'" he said.
"Companies like this survive because of their reputation," added Nigam, who previously worked as a security executive at Microsoft Corp and News Corp . "People need to make a decision: 'Can I trust them with my data or not?'"
LinkedIn shares rose 2.6 percent to $96.26 on Friday. While the breach has not appeared to hurt the stock to date, investors are likely closely watching the matter because the stock carries one of the loftiest valuations in the technology sector.
LinkedIn made a monster public debut in May 2011 and is still trading at more than double its IPO price of $45.
The shares are trading at nearly 80 times projected 2013 earnings. Google trades for about 12 times next year's earnings forecast.
Rob D'Ovidio, associate professor of criminal justice at Drexel University, said it is fair to criticize LinkedIn for the loss.
"There is a social responsibility that they have in today's day and age to use the best available security measures," he said. "I am of the personal belief to hold companies liable for these types of breaches."
(This June 8 story has been refiled to fix quote to read "go to" not "got to" in paragraph 25)
(Reporting by Jim Finkle in Boston and Jennifer Saba in New York. Additional reporting by Basil Katz in New York; Editing by Richard Chang and Robert Birsel)

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Privacy gaffe discovered in Internet address bids

NEW YORK (AP) — The organization in charge of introducing new Internet addresses to rival ".com" briefly suspended access to some of the documents on its website after a privacy gaffe.

The Internet Corporation for Assigned Names and Numbers said it had mistakenly published the postal addresses of some individuals — information that was meant to be private. The disclosure was limited to cities and countries in some cases, while full street addresses appeared in others.
The discovery came late Thursday, a day after ICANN revealed nearly 2,000 proposals for new Internet suffixes, including ".joy," ''.barefoot" and ".google." It will be the largest expansion of the Internet address system since its creation in the 1980s.
ICANN posted documents with the proposals to allow the public to comment and raise objections. The documents include bidders' plans for the new names and full contact information for the businesses involved, but they were supposed to list only phone and email information belonging to individuals.
ICANN restored those documents after removing the postal addresses on individuals. It was not immediately clear how long that took; the documents appeared to be inaccessible for no more than a few hours. ICANN did not immediately respond to requests for more information Friday.
This spring, ICANN had to suspend access to its system for letting bidders submit proposals after it discovered technical glitches that exposed some private data. That took more than a month to fix and restore. ICANN also goofed during Wednesday's announcement. It displayed Arabic names left to right rather than right to left, as the language is written.
The latest gaffe provided more fodder for critics of ICANN and the name expansion. Skeptics have questioned ICANN's ability to run the program smoothly in the long run, given that technical problems have cropped up early on.
"If this weren't all so incredibly serious, one could get quite a laugh over the concept of The Gang That Couldn't Shoot Straight being in charge of this process," Lauren Weinstein, co-founder of People For Internet Responsibility, said on his Privacy Forum mailing list.
ICANN officials say the names expansion will permit innovation and increase choice. A new suffix could, for instance, be used to identify sites that have a certain level of security protection. It could be used to create online neighborhoods of businesses affiliated with a geographic area or an industry.
Critics say the names will create confusion among Internet users, while providing little benefit in an era where people often find websites by using a search engine rather than typing in the address.

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Samsung Galaxy S III now just $179.99 at Wirefly

Anyone willing to sign a two-year contract with Sprint can get a Samsung Galaxy S III from Wirefly for just $179.99. Wirelfly will ship the device for Sprint customers on June 21st, and will include a $10 Google Wallet credit with every order. Of course, while saving $20 on a Galaxy S III sounds good, there are a couple of things prospective buyers should consider before taking the plunge. First, the Galaxy S III uses LTE for its 4G connectivity and Sprint currently has no LTE network. Sure, the carrier says that it will roll out LTE in the near future but even at its launch, Sprint LTE will only be available in Atlanta, Baltimore, Dallas, Houston, Kansas City and San Antonio within the next couple months. Second, Sprint doesn’t have a speedy HSPA+ network to rely upon for its pre-LTE technology as T-Mobile does, and instead must rely on the much slower CDMA-based EV-DO Rev. A to deliver data. Sprint could offer faster connectivity to its Galaxy S III users if Samsung had made the device compatible with WiMAX, but a dual mode device with LTE and WiMAX will never see the light of day at Sprint, the carrier has assured us. The bottom line is anyone getting the Galaxy S III on Sprint should expect a slower connection than on any other major U.S. carrier.

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