Former Samsung Chief Is Convicted - NYTimes.com

SEOUL, South Korea -- The former chairman of the Samsung Group, Lee Kun-hee, was convicted of tax evasion charges on Wednesday but was spared prison after the court suspended his three-year sentence.

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The former chairman of the Samsung Group, Lee Kun-hee, after his conviction on tax evasion charges in Seoul on Wednesday.

Mr. Lee was also fined $109 million. But the Seoul Central District Court cleared him of criminal charges of breach of trust, which stemmed from two Samsung affiliates’ decisions to sell stock to his son, Jae Yong, at unfairly low prices to help the son take over management control of the business empire.

Mr. Lee, who built Samsung into South Korea’s best-known global brand during his 20-year tenure as chairman, was indicted in April on charges of evading taxes on billions of dollars that prosecutors said he hid in stock accounts under the names of his aides.

On Wednesday, the court said there was not enough evidence to convict Mr. Lee on charges involving the subsidiary Samsung Everland. In the case of another affiliate, Samsung SDS, the statute of limitations had expired, the court said.

Prosecutors had sought seven years in prison and more than three times the amount of the fine that was levied, saying the country’s courts should end leniency toward business tycoons.

Mr. Lee, 66, resigned shortly after he was indicted in April after a three-month investigation into of Samsung, the country’s most powerful conglomerate.

The probe was triggered by the a former chief counsel at Samsung, Kim Yong-chul, who alleged that Mr. Lee and his aides managed a huge slush fund to cement the Lee family’s management control and to bribe prosecutors, politicians and officials.

Prosecutors said that they found $4.5 billion of Mr. Lee’s personal assets under other names and that he evaded $112 million in taxes. But they said they could not find evidence to bring bribery charges against him.

Corruption scandals have regularly rocked South Korea’s family-controlled conglomerates, known as chaebols. But convictions have rarely resulted in prison time.

Chung Mong-koo, the chairman of the Hyundai Motor Co. conglomerate was sentenced to three years in prison for embezzlement last year. But an appeals court suspended his term last month, saying he was too important to the nation’s economy to go to jail.

Samsung comprises 60 companies that sell everything from computer chips, cell phones, ships, apartments, textiles and insurance policies. The group accounts for an estimated 20 percent of South Korea’s exports.

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Bloomberg.com: Worldwide

July 16 (Bloomberg) -- U.S. stocks rose, helping the Standard & Poor's 500 Index rebound from the lowest level since 2005, after profit at Wells Fargo & Co. topped analysts' estimates and oil dropped for a second day.

Wells Fargo, which avoided the worst of the subprime mortgage rout, rallied the most since at least 1980, leading Washington Mutual Inc., JPMorgan Chase & Co. and Bank of America Corp. higher. United Parcel Service Inc. and Dillard's Inc. climbed as the two-day retreat in crude prices overshadowed a government report showing the biggest gain in consumer prices since 2005.

The S&P 500 added 7.28 points, or 0.6 percent, to 1,222.19 at 11:50 a.m. in New York. The Dow Jones Industrial Average climbed 78.24, or 0.7 percent, to 11,040.78, while the Nasdaq Composite Index increased 24.12, or 1.1 percent, to 2,239.83. About two stocks rose for each that fell on the New York Stock Exchange.

``The fact that Wells is a huge mortgage underwriter and servicer and their numbers came out better than expected really helps the market calm down,'' said Malcolm Polley, who helps oversee about $1 billion as president and chief investment officer at Stewart Capital Advisors in Pittsburgh. ``Not all mortgage companies are in dire straits.''

Profits have slipped only 0.8 percent on average for the 26 companies in the S&P 500 that have reported second-quarter results so far, according to data compiled by Bloomberg. Earnings for all companies in the index are forecast to drop 14 percent on average, according to an analyst survey published July 11. The quarter is expected to cap a full year of declining earnings, the longest profit slump since 2002.

Wells Fargo, UPS

Wells Fargo rallied $4.90, or 24 percent, to $25.41 for the steepest advance in the S&P 500. Gains in credit card fees and insurance revenue softened the blow from bad home loans. Net income slumped 23 percent to $1.75 billion, or 53 cents a share. That beat the 50-cent average estimate of 21 analysts surveyed by Bloomberg. Revenue rose 16 percent to a record $11.5 billion and the bank boosted its dividend by 10 percent.

UPS, the largest package delivery company, climbed $1.59 to $58.03, helping the S&P 500 Transportation Index rise 3.5 percent as all 10 companies in the group advanced.

Dillard's, the Arkansas-based department-store chain, rallied 67 cents, or 8.1 percent, to $8.92. Retailers in the S&P 500 climbed 3.1 percent as a group.

Crude oil for August delivery declined $5.60, or 4 percent, to $133.14 a barrel in New York after retreating $6.44 yesterday.

The decline in energy prices offset a government report that showed consumer inflation quickened faster than analysts estimated in June. The cost of living soared 1.1 percent last month, the Labor Department said. Excluding food and energy, so- called core prices climbed 0.3 percent, also more than anticipated.

Financials Rebound

Wells Fargo led the S&P 500 Financials Index to a 5.7 percent advance, its first gain in six days, as 83 of its 89 companies increased.

Financial stocks with the biggest losses in the past week were among the shares with the steepest gains today following Wells Fargo's profit report.

Washington Mutual, the largest U.S. savings and loan, surged 23 percent to $4.43 for the third-biggest gain in the S&P 500. The advance pared the stock's drop over the past five days to 26 percent.

JPMorgan, the third-largest U.S. bank by assets, climbed $2.45 to $33.47. Bank of America added $1.35 to $19.87.

Fannie Mae rose 13 percent to $7.99 and Freddie Mac surged 15 percent to $6.05. Fannie Mae tumbled 27 percent yesterday for its steepest slump since at least July 1980 and Freddie Mac plunged 26 percent as investors lost confidence in the government's plan to rescue the largest U.S. mortgage-finance company.

Schwab Rallies

Charles Schwab Corp. had the biggest gain in three months, climbing 8.8 percent to $20.91. The largest U.S. online brokerage reported quarterly profit from continuing operations above the average analyst estimate as an influx of customer assets helped buoy revenue amid a decline in equity markets.

Intel Corp. rose 43 cents to $21.14. Third-quarter sales will be $10 billion to $10.6 billion, the company said yesterday. That compares with an average prediction of $10 billion in a Bloomberg survey of analysts. Computer-processor sales remain strong worldwide, with no signs of the U.S. economy sapping demand, according to Chief Financial Officer Stacy Smith.

Ackman's Target Bet

Target Corp. gained for the first time in six days, climbing 2.8 percent to $44.88. Investor William Ackman put more cash into the $2 billion hedge fund he started to invest in Target as shares of the second-largest U.S. discount retailer declined 38 percent in the past year, according to two people with knowledge of the matter.

About $14 trillion has been wiped off the value of global equities since October, with the S&P 500 falling into a bear market last week, as $417 billion in credit-related losses prolong the global economy's slump and rising commodity prices stoke inflation.

Among the 23 industrialized nations in the MSCI World Index, only Canada averted a bear-market decline of 20 percent. Financial institutions and consumer companies dependent on discretionary spending led the world's retreat in 2008, losing 31 percent and 22 percent.

The global bear market in equities will deepen from New York to London to Tokyo in the next six months as credit losses prolong the economy's slump and inflation erodes profits, a survey of Bloomberg users showed.

Bearish Sentiment

The S&P 500, the U.K.'s FTSE 100 Index, Japan's Nikkei 225 Stock Average, Spain's IBEX 35 Index, the Swiss Market Index, France's CAC 40 Index, Italy's S&P/MIB Index and Germany's DAX Index will decline, according to the Bloomberg Professional Global Confidence Survey of 4,232 users taken July 7 to 11. In Brazil, the only market where investors predict gains, optimism dropped to a five-month low, the survey showed.

The S&P 500 has slumped 22 percent since its Oct. 9 record. Financial shares in the measure capped the steepest-ever five-day decline yesterday, with Citigroup Inc., the biggest U.S. bank, plunging to the lowest level since it was created through a merger in October 1998.

The S&P 500 now trades for 20.2 times the reported earnings of companies in the index, while the MSCI World Index, excluding the U.S., is valued at 11.8 times profit. When the gap between their price-to-earnings ratios widened to 9.89 in May, the rest of the world hadn't been that much cheaper than the U.S. since 2002.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.

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Chicago Selected for new MillerCoors HQ (ChicagoPride.com)

Chicago, IL — MillerCoors LLC announced Tuesday that it has selected Chicago for the corporate headquarters of its new combined operation.

"The decision to select Chicago as the location for our corporate headquarters was made to achieve our goal of becoming the best beer company in America by having access to an attractive base of talent, transportation and business resources,' said Tom Long president of MillerCoors, in a statement released Tuesday.

MillerCoors' Web site listed other determining factors: Chicago's "vibrant, 24-hour" central business district, broad options of affordable housing with easy commutes, and economic incentives to help offset "considerable" relocation costs. 

Chicago offered tax-increment financing and Illinois offered tax credits and training and business development grants.  The decision was based on the promise of an $18 million investment package negotiated by the state.

The company is currently evaluating at least three downtown locations with the corporate headquarters expected to be up and running by early summer 2009.  One possible location includes the former Carson Pirie Scott & Co. store at 1 S. State.

The new headquarter is expected to bring 300 to 400 new jobs when it opens next summer. 

MillerCoors is a joint venture between Molson Coors and SABMiller PLC that was completed two weeks ago. 

Golden, Colorado - based Coors Brewing Company has had a contentious history with African-American and Latino groups, unions and the LGBT community.

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Price jump worst since '91 on record gas, higher food - Jul. 16, 2008

NEW YORK (CNNMoney.com) -- Record gas and higher food prices drove inflation to the biggest annual jump since 1991 and fanned fears about growing pressures on consumers.

The Labor Department reading on Wednesday is another sign, along with mounting job losses and declining home prices, of the economic pain suffered by Americans as prices outstrip increases in paychecks.

The latest reading came as Federal Reserve Chairman Ben Bernanke, in testimony on Capitol Hill, was warning that inflation could pose a major drag on the economy for the rest of this year.

Retail prices were up 5% annually in June, the biggest 12-month change since May 1991 - an annual figure that was skewed by the surge in gasoline prices related to the first Gulf War.

A separate Labor Department report showed the average hourly wage up only 3.4% over the same 12-month period, meaning the typical American is having trouble keeping up with the price increases.

"The government report confirms what every consumer in America has known for months now: inflation is soaring and it's having an adverse impact on the economy," said Rich Yamarone, director of economic research at Argus Research.

On a monthly basis, the Consumer Price Index was up 1.1% in June, after a 0.6% rise in May. Economists surveyed by Briefing.com had been looking for only a 0.7% rise.

Energy prices were up 6.6% in the month, led by a 10.1% jump in gas prices. That left gasoline prices up nearly a third from a year earlier.

Supermarket surge

But there was also pain at the grocery store for many Americans, as food prices jumped 0.8% compared to May, led by a 2.8% jump in fruits and vegetables, and a 1.6% rise in dairy and related products.

The rise left grocery prices up 6.1% compared to a year ago, with cereals and bakery products posting one of the biggest year-over-year gains, up 10.4%.

Yamarone said that he believes inflation could remain at elevated levels for the next six to nine months, even if oil prices retreat from current levels.

"I wouldn't be surprised if we creep up to 6, 7 even 8%," he said.

The so-called core CPI, which excludes volatile food and energy prices, rose 0.3%, after a 0.2% rise. Economists had been looking for another 0.2% rise. The higher than expected core reading was also troubling because that could tie the Fed's hands in its effort to help the struggling economy.

The 12-month rise in core CPI is now up 2.4%, up from a 2.3% rise in that reading in May.

Fed chairman's gloom

Bernanke warned lawmakers on Tuesday and again on Wednesday that inflation poses a risk for the economy.

"Rapid increases in the prices of energy and other commodities ... have sapped household purchasing power even as they have boosted inflation," he said in testimony.

He also warned that spending by consumer spending, which provides nearly three-quarters of the nation's economic activity, "seems likely to be restrained over coming quarters" and that price increases could also make businesses cautious about their own spending plans.

One measure of the economic stress on households is the so-called economic misery index - calculated by adding the 12-month inflation rate and the unemployment rate. With the jump in inflation to 5% in June from 4.2% in May, the misery index is now at 10.5, the first time it has hit double digits since 1993.

While the Federal Reserve responded to economic pain earlier this year by approving deep interest rate cuts, it's not clear the central bank will be providing any more help to help households in the foreseeable future.

The Fed generally wants to see core inflation measures up between 1% and 2%, so the new core reading was well outside the so-called comfort zone.

Bernanke said in his congressional testimony that despite the weak outlook for economic growth, the Fed could not ignore signs of rising inflation. The Fed's strongest measure to spur economic growth, interest rate cuts, are seen as adding to inflation pressure.

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Did Apple Really 'Sell' 1 Million iPhones To End Users? Nope. - Mobile Blog - InformationWeek

That nice, shiny press release that Apple issued yesterday failed to point out one important fact. Apple counts "sales" as any device it has sold to wireless network operators such asAT&T (NYSE: T). The network operators then re-sell the devices to actual end users. According to analysts, only 425,000 end users bought iPhones over the weekend.

Yeah, how about them apples, Apple? Piper Jaffray analyst Gene Munster had calculated the actual number of 3G iPhone sales to be less than half a million. He came to that number by surveying stores on Friday, July 11, and figuring out how many new iPhones were being activated each hour.

His initial projections on Friday came to 28 new iPhones per hour per store. Based on the number of stores and the number of hours they were open, he estimated 425,000 units sold to end users over the weekend. He also suggested that it would take Apple a full 17 days to reach the 1 million mark. So why the discrepancy?

Fortune reports, "One explanation for the discrepancy may have to do with how Apple counts sales. Sales at Apple Stores are recorded at the register. But sales to its partners -- in this case, AT&T and the overseas carriers -- are recorded when the devices leave the loading docks in Asia. In other words, some of those 1 million iPhones recorded as sold by Apple may still be in transit."

Apple has sold one million iPhones to its customers. Some of its customers, such as anyone who bought an iPhone at an Apple Store, are actual end users. But many are not. Some customers are network operators, and Apple would be bulk-shipping hundreds if not thousands of devices to them. Apple may not have explicitly stated who it sold 1 million 3G iPhones to, but the implication was that one million people bought iPhones.

So thanks, Apple spin machine, for your interesting statistics and take on what a "sale" actually is.

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5 Questions for Netflix and Microsoft

How surprised were you to see Netflix (Nasdaq: NFLX) team up with Microsoft (Nasdaq: MSFT) to offer its Watch Now streaming video service through the Xbox 360?

Not very? Join the club. I've been expecting this since Netflix CEO Reed Hastings landed on Microsoft's board of directors 16 months ago. Then again, I also predicted that the board appointment would lead to Netflix renting Xbox games, and that Hastings would help MSN improve its sluggish dot-com ways. (Nobody's perfect.)

Netflix's Watch Now service currently allows existing subscribers to stream roughly 10% of the 100,000 DVD titles available, at no additional cost. Microsoft announced Xbox 360 compatibility during this week's E3 industry trade show, but it won't come into play until late fall.

Like many corporate moves, an answer attracts yet even more questions. Now that the news is official, I'm left with five new questions:

1. Will the Xbox replace the PS3 as the home theater appliance of choice?
By deciding to sell an HD-DVD peripheral for the Xbox 360, Mr. Softy banked on the loser in the optical-disc battle to replace the DVD. Blu-ray, championed by Sony (NYSE: SNE), is standard in every PS3, won the war. This has given the PS3 a marketing edge, since families can buy the console as a game machine, yet also spare themselves the expense of a higher-end stand-alone player.

Adding Netflix to Xbox 360's arsenal helps rebalance the marketplace. We may not know the exact overlap between Netflix members and Xbox Live Gold subscribers (Xbox owners must be paying Live subscribers to use the Netflix service), but it's probably safe to assume that the kind of consumer that shells out for both subscriptions is probably a very juicy demographic.

Potential buyers weighing the PS3 vs. 360 decision now have to consider whether they want the superior imagery of Blu-ray (and its premium price) or the cheaper allure of on-demand flicks at no extra cost. In this dicey economy, you have to like Microsoft's chances. Sony is just starting to ramp up its digital video store, but Microsoft is already undercutting its peer.

2. Will this help or hurt Microsoft's move to sell video downloads and rentals?
There's a downside to every selling point. For Microsoft, streaming unlimited flicks from Netflix at no additional charge -- no matter how limited the current selection -- might also dent the company's nascent digital video offerings. Why buy when you can settle for something else for free?

Thankfully for Microsoft, history has done a good job of testing this out. Cable operators like Comcast (Nasdaq: CMCSA) have been offering free on-demand films to digital cable subscribers for years, alongside premium pay-per-view fare. Does offering free content make Comcast stickier? Are the freebies essentially gateway drugs to lure new users into upgrading to the premium new release? I'm betting Comcast wouldn't offer the free stuff alongside its a la carte menu if it didn't make good financial sense.

3. Who is the other heavy hitter backing Netflix?
"We have LG plus three additional partners actively working on integrating our technology into their products," Hastings said during last month's quarterly conference call. Two of the three "sell millions of devices per year" he added, projecting that full Watch Now functionality would come online during this year's final quarter.

We now know that the small player is Roku, whose Netflix Player debuted in May. Microsoft is obviously one of the two heavyweights. Can the final horseman be anyone other than TiVo (Nasdaq: TIVO)? The digital-video-recorder pioneer has been upgrading the functionality of its networked boxes lately. Whether by streaming tunes from RealNetworks' (Nasdaq: RNWK) Rhapsody or YouTube video clips, TiVo continues to justify its market premium.

4. Will Netflix begin renting Xbox 360 games?
Netflix loves to dismiss this question. Renting games isn't an easy business. The titles cost too much, damage too easily, and age too quickly. However, just as Netflix is willing to take a financial hit from online streaming to grow its base and nurture loyalty, isn't it a matter of time before Microsoft hooks up with Netflix to offer 360 title rentals?

Even as both companies barrel toward a digitally delivered future that will make physical products obsolete, isn't it in Microsoft's best interest to give Netflix subscribers one more reason to choose a 360 over rival systems? The duo don't have to offer a full slate of titles. Just as Microsoft is teaming up with Take-Two Interactive (Nasdaq: TTWO) to serve up a pair of Xbox-exclusive add-ons to Grand Theft Auto IV, surely Microsoft has the flexibility to slip Netflix a few 360-exlusivie releases.

5. Will Microsoft buy Netflix?
I spelled out the reasons why Netflix would be a good catch for Microsoft last summer. The argument is even more compelling today, with Microsoft looking to expand its online presence and turn profitable in that niche at the same time. Netflix would go a long way toward achieving those ends.

Microsoft and Netflix are both in the business of moving discs. They're both grappling with Web-delivered competition, but taking those threats head on. Microsoft authors its content, while Netflix is simply the middleman. However, Microsoft could use a profitable e-tailer with a killer brand, a lucrative subscriber list, and an online niche that won't receive heavy antitrust scrutiny.

Answers! Why do they have to lead to so many questions?

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Sony’s Centrino 2 laptop lineup | Laptops and Desktops | ZDNet.com

Details of Sony’s new laptops have been trickling out for several weeks, but Sony held off on an official announcement to coincide with Intel’s Centrino 2 launch this week.

Sony introduced four new VAIO lines ranging from the 3-pound Z-series ultraportable with a 13.1-inch display to the FW series, the first notebook with a 16.4-inch display. All of them are based on the Centrino 2 platform which includes new Core 2 Duo processors, a chipset with more powerful integrated graphics, and 802.11n wireless.

Sony packed in its usual laundry list of software including VAIO Movie Story for video editing, VAIO MusicBox, a DVD and Blu-ray disc authoring program, and the VAIO Media app for streaming content to other VAIO PCs or a PlayStation 3. If you choose Windows Vista Business with SP1 for an extra $90, you can also opt for Fresh Start, which means your PC comes without VAIO software, and third-party trial-ware and games. Sony is also offering the Windows XP Professional “downgrade” on some models.

Z series (13.1-inch display)
The Z series is an ultraportable with a 13.1-inch LED-backlit display and integrated optical drive. The base model has a display resolution of 1,366 x 768, but you can upgrade to a 1,600 x 900 screen and a Blu-ray drive (all models have HDMI out). Other options include a 128GB SSD, in place of the hard drive, and integrated Sprint EV-DO wireless broadband. With its carbon fiber frame, the Z series weighs in at 3.4 pounds and measures 12.4 x 1.3 x 8.3 inches.

The Z series also is notable because it is one of the first systems–along with Lenovo IdeaPad U330–with “switchable graphics,” which is Intel’s version of hybrid graphics. That means you can use the more powerful, discrete GPU when plugged in (assuming your configuration includes it), but switch to integrated graphics to prolong battery life when unplugged. AMD already offers this feature on its competing Puma notebook platform.

The VGN-Z540 starts at $1,800 with a 2.26GHz Intel Core 2 Duo P8400, 2GB DDR3 memory, Nvidia GeForce 9300M graphics, a 120GB hard drive, DVD burner, and Windows Vista Home Premium with SP1. At the opposite extreme, the $4,000 VGN-Z590UAB has a 2.53GHz Intel Core 2 Duo P9500, 4GB DDR3 memory, a 128GB SSD, and Windows Vista Ultimate.

The Z series will be available in August.

SR series (13.3 inch display)
The SR series is a new ultraportable with a 13.3-inch LED-backlit display. With its magnesium alloy frame, the SR series weighs 4.1 pounds and measures 12.4 x 1.0 x 1.3 inches. Sony says the keyboard design, with keys slightly raised above a one-piece black bezel, is quieter, more durable and provides better feedback when typing.

The SR series is designed to be user customizable. You can create up to three different “personalities” (for work and home, for example) and assign them to the keys located above the keyboard. And it comes in five different colors–some of which cost an extra $45.

The configure-to-order VGN-SR190 starts at $1,260 with 2.26GHz Intel Core 2 Duo P8400, 1GB of DDR2-800 memory, GMA 4700MHD integrated graphics, a 120GB hard disk drive, DVD burner, and Windows Vista Home Premium with SP1. A top-of-the-line model with a 2.8GHz Intel Core 2 Duo T9600, 4GB of DDR2-800 memory, ATI Mobility Radeon HD 3470 graphics, a 200GB hard disk drive, DVD burner, and Windows Vista Home Premium with SP1 costs $2,070.

The SR series ships at the end of July.

BZ series (15.4-inch display)
The BZ is targeted at business users, though some of the features–biometric fingerprint sensor, Trusted Platform Module chip and password protection software, and G-Shock hard drive protection–are available in many VAIO models. It weighs 5.8 pounds and measures 14.3 x 1.2 x 10.5 inches.

The BZ comes standard with Windows Vista Business with SP1 (a Windows XP downgrade is also available) and a “stripped-down software load.” Some models also include Intel’s vPro technology, which allows IT administrators to remotely wake-up and troubleshoot PCs.

Unlike the other VAIOs, the BZ series is not available for pre-order online at Sony Style. It will be sold in retail and through VARs beginning later this month. There are four configurations of the VGN-BZ560 (PDF here) starting at about $1,000.

FW series (16.4 inch display)
The FW series is the first laptop to offer a 16.4-inch widescreen display. Sony says the new 1,600 x 900 screen is ideal for HD video, or for viewing two Web pages or documents side-by-side.

The attractive design borrows from previous models such as the TZ series that that use a cylindrical hinge; it measures 15.1 by 1.46 by 10.3 inches and weighs 6.5 pounds with the standard battery. The premium models, which start around $1,750, include Blu-ray drives (HDMI-out is standard).

The configure-to-order VGN-FW190 starts at $1,060 with a 2.26GHz Intel Core 2 Duo P8400, 2GB of DDR2-800 memory, Intel GMA 4700MHD integrated graphics, a 160GB hard disk drive, DVD burner and Windows Vista Home Premium with SP1. A maxed-out version with Sony’s XBRITE-HiColor display, a 2.8GHz Intel Core 2 Duo Processor T9600, 4GB of DR2-800 memory, ATI Mobility Radeon HD 3470 graphics, a 400GB hard disk drive, Blu-ray Read and Write Drive, and Windows Vista Home Premium with SP1 comes in at about $2,320.

The FW series comes in two colors–titanium gray or powder white–and ships in early August. CNET has posted a review of the VAIO VGN-FW140 and Laptop Magazine gave a higher-end configuration, the VAIO VGN-FW198U, an Editors’ Choice award.

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Why it matters what Chad Hurley watches | News - Digital Media - CNET News.com

What will it mean for YouTube if founders Chad Hurley and Steve Chen have, like many of us, entertained themselves by watching pirated videos found on their site?

Viacom will likely argue that YouTube is guilty of contributory copyright infringement if computer records show employees know unauthorized clips from shows, such as Hogan Knows Best or The Hills, are on the site and don't do anything to remove them.

According to legal experts, YouTube's response is likely to go something like this: "How are we supposed to know what's copyright material and what isn't?" The site is a promotional tool for scores of TV networks and movie studios, which often post their own videos.

The battle royal began in early 2007 when Viacom accused Google, YouTube's parent company, of violating copyright law. Soon after, Viacom hit Google with a $1 billion lawsuit.

The case could now become a landmark and answer a major question in online video, said Mark Litvack, an entertainment lawyer with Los Angeles-based Manatt, Phelps & Phillips.

"Who has the obligation of monitoring Web sites for copyright violations," Litvack said. "Is it the copyright owner who must police sites and be required to send takedown notices, or should Web sites be forced to filter for copyright material?"

Employee data easier to get than users'
The two companies are in the discovery phase of their litigation, when each is supposed to turn over relevant information to the other. On Monday night, the two sides announced they had finally agreed that YouTube would mask YouTube's user information, such as usernames and IP addresses, before handing it over to Viacom. Now, a new disagreement looms on the horizon.

Direct copyright infringement could undermine YouTube's DMCA claims.

--Mark Litvack, attorney

The two sides have been sparring over whether Google must give up information on which videos YouTube employees watch and upload to the site, two sources told CNET News this weekend. Google will unlikely succeed at blocking Viacom from obtaining at least some of this information, said Wendy Seltzer, a fellow with Harvard's Berkman Center for Internet and Society.

"It's arguably more relevant to the litigation (than the user records) because it would be part of what Viacom is trying to prove," Seltzer said. "If the records show that YouTube had knowledge, or the records fail to show that knowledge, then that would be relevant to Viacom's case."

From Google's perspective, what's at stake here is YouTube's protection under the Digital Millennium Copyright Act. The DMCA's Safe Harbor provision shields Internet service providers from being held responsible for illegal acts committed by users. But to qualify for the harbor, a company can't have knowledge of copyright violations and must quickly remove infringing material when notified by a copyright owner.

Viacom has maintained that YouTube's pirate treasure isn't buried. The copyright material is impossible to miss, the media conglomerate maintains. The parent company of MTV and Comedy Central will no doubt argue it's inconceivable that YouTube is unaware of the infringing content on its site.

Who can argue that YouTube isn't home to countless clips from feature films and TV shows?

In April, I tooled around YouTube for a half hour and found clips from the last five Academy Award winners in the best picture category, including Million Dollar Baby, No Country For Old Men and a 10-minute clip from the opening of The Departed. As of Tuesday, the clip still appears on the site.

Could YouTube lose DMCA protection?
But just knowing that the videos exist at YouTube may not qualify as infringement. How can YouTube managers be expected to determine which clips are unauthorized?

It's simple to argue that everybody knows The Godfather is owned by Paramount, a Viacom company. But what about the unlimited number of lesser-known works?

I don't think that copyright owners should be able to outsource the enforcement burden to service providers.

--Wendy Seltzer, attorney and Harvard fellow

How would YouTube determine the ownership of a small independent film or Ecuadorian soap opera?

"This is why the burden of finding (copyright violations) should be on the (copyright owners)," Seltzer said. "We really don't want to put the service providers in the middle. Viacom and rights holders are in the best position to determine what they own."

As for the costs of monitoring YouTube, Seltzer said that whatever it is, "it's just the cost of our intellectual property system...I don't think that copyright owners should be able to outsource the enforcement burden to service providers."

As for what kind of damage to YouTube's case may occur if employees are found to have watched pirated videos, the answer is that it could be very minimal. The judge is likely to look at how much illegal video was viewed by how many employees and ask whether it was bad faith or not, said Seltzer.

What could prove much more damaging, however, is if Viacom uncovers proof that YouTube's employees uploaded unauthorized clips as part of their duties. To those copyright holders, who have wondered for years whether YouTube's workers were violating copyright, this would be a smoking gun.

Direct copyright infringement could undermine YouTube's DMCA claims, according to Litvack.

"Red-flag knowledge"
Here's another scenario that could drastically change the color of the case. What if YouTube finds that Philippe Dauman, Viacom's CEO or Stephen Colbert, host of Viacom's The Colbert Report uploaded clips to YouTube?

YouTube has always said that big media corporations have split personalities when it comes to YouTube. Their marketing departments might beg YouTube to promote their shows or movies one day and the next day the same company's lawyers might demand YouTube pull them down.

If it's determined that Viacom employees uploaded videos, then those clips were authorized and there's no copyright violation, Seltzer said. She added that in such a scenario, YouTube could argue Viacom prevented YouTube from discerning between authorized and unauthorized clips.

"YouTube is going to say that (Viacom's uploading) was an implied license," she said. "YouTube might argue that it couldn't have had red-flag knowledge about (all the other Viacom videos) because it knew to the contrary that the copyright holder wanted some of them posted."

It should be noted here that employees from neither YouTube nor Viacom have ever been accused of uploading clips to video-sharing sites.

At this point, there's no telling who has the upper hand in this case. Nobody knows whether the DMCA covers a user-generated video site like YouTube. Is it really a service provider or an entertainment site wrongfully profiting from the work of copyright owners?

Google's YouTube did get some good news this week. Internet auctioneer eBay fended off a trademark infringement lawsuit filed by Tiffany & Co.

Trademark is different from copyright law but the arguments are surprisingly similar. The jeweler accused eBay of profiting from sales of counterfeit Tiffany goods, but the judge in the case found that it's up to brand owners to police for phony products.

Will the courts determine the same for copyright holders?

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Apple Demands Recall Of Psystar Mac Clones -- Apple -- InformationWeek

pple is asking a court to order Miami-based Psystar to stop making unauthorized Mac clones and to recall all of the systems it has sold to customers since it began offering them for public sale in April.

In a lawsuit filed against Psystar in federal court, Apple is seeking an order "requiring Psystar to recall all such products sold to the public as a result of Psystar's infringement of Apple's copyrights."

It's not immediately clear whether Psystar could legally compel its customers to return their systems. But the clones may not be of much use for long if Psystar is forced out of business and is unable to support them.

Psystar's Web site was offline as of Wednesday morning.

It's also not clear if customers would get their money back -- Apple is also seeking unspecified, but potentially significant, monetary damages from Psystar.

The suit was filed July 3 in U.S. District Court for Northern California in San Francisco before Magistrate Judge James Larson, according to court records. The parties are scheduled to meet for a case management conference on October 22.

Psystar has yet to file a formal response to Apple's allegations.

Psystar, apparently in open violation of Apple licensing rules that forbid installation of its operating systems -- including the Leopard OS -- on third-party hardware, has been selling Mac clones through its Web site since April.

In June, Psystar launched a line of Apple server clones.

Apple is charging Psystar with violating its copyrights and weakening its brand image. "By misappropriating Apple's proprietary software and intellectual property for its own use, Psystar's actions harm consumers by selling them a poor product that is advertised and promoted in a manner that falsely and unfairly implies an affiliation with Apple," the company said in its complaint.

Apple also charged Psystar with illegally copying, modifying, and redistributing some of its products. The 18-page complaint outlines a total of 10 charges against Psystar. Psystar officials did not return a call seeking comment.

Psystar in the past has claimed that its Mac clones cost about one-quarter to half of what Apple-branded systems sell for. In defense of its clones, the company has charged that Apple marks up the cost of the hardware on which its operating systems ride by as much as 80%.

One version of Psystar's Open Computer Mac clone features Apple's Leopard OS X 10.5 operating system ported onto generic PC hardware that includes an Intel (NSDQ: INTC) Core2Duo processor at 2.66 GHz, a 250-GB hard drive, and an Nvidia GeForce 8600 GT graphics card.

The system is priced at $805. A similar, Apple-branded computer would cost at least $1,500.

The problem: Apple's end user license agreement expressly forbids installation or sales of its operating systems on third-party hardware.

Psystar was launched earlier this year by Rudy and Robert Pedraza of Miami.

In a previous interview with InformationWeek, a Psystar employee who identified himself as Robert vowed that the company would challenge Apple's ban on Mac clones and said he believed it won't stand up in court.

"What if Honda said that, after you buy their car, you could only drive it on the roads they said you could?," said Robert.

Apple is now asking a court to decide the issue.

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Wrapup: What Nintendo Announced at E3 - News and Analysis by PC Magazine

Nintendo's E3 press conference is over, and if you were following it on our live stream (and you were, right?), consider this wrap-up a refresher. While Microsoft focused plenty of time on new interfaces and functionality options on Monday, Nintendo was unsurprisingly all about the games: Animal Crossing: City Folk, Wii Music, and Wii Sports Resort are their big announcements for the Wii, and the DS gets another dose of Guitar Hero: On Tour along with -- maybe the biggest surprise of the conference -- Grand Theft Auto: Chinatown Wars.

But this isn't exactly a staggering litany of new game announcements -- in fact, Nintendo deliberately kept the list of game demos short while assuring that it would be "impossible" to fit in showings for all of the games currently in the works for Wii and DS. Still, even with the short list of games on the schedule, they are mostly games we've already heard of or seen before -- including the two most exciting Wii games shown, Animal Crossing and Wii Music.

Animal Crossing was shown first, with a video of gameplay footage accompanied by series producer Katsuya Eguchi outlining some of the new features. The biggest addition also accounts for the new subtitle -- unlike previous versions of Animal Crossing, City Folk lets you venture out from your tranquil village and visit a (relatively) bustling city, where you'll find an auction house, clothing store, academy, and a beauty salon (which lets you transform your character into a Mii). The game also features online play, which seems to be similar to the online play in the DS version and pretty short of the "Animal Crossing MMO" rumor that has circulated for a while. Nintendo also showed off a new "WiiSpeak" peripheral, which is a community microphone that lets anyone in the same room speak into it.

Wii Music closed the show, with Shigeru Miaymoto himself appearing on stage and playing the saxophone with a Wii Remote. Wii Music, of course, was first revealed at E3 2006 as a mere tech demo, but today's showing is a fully formed game, with over 50 instruments including drums, sax, piano, violin, guitar, marimba, and various percussion instruments. You use the Wiimote, Nunchuk and Balance Board to play them, and apparently, success is based more on simply mimicking the motions of playing instruments rather than any musical talent. We should have more impressions of Wii Music soon, so stay tuned.

Also demoed was Wii Sports Resort, a sequel to the Wii pack-in and the first game to use the Motion Plus add-on (which comes with the game). Wii Sports Resort's activities are beach-themed, with onstage demonstrations including playing Frisbee with a dog, riding a Jet Ski, and, um, sword fighting. Maybe that's not a typical beach activity, but with the help of the Motion Plus add-on, it's the direct, 1-to-1 motion-controlled sword-fighting game everyone's been waiting for since the Wii was first announced. The game is due for release next spring.

The DS got an equal amount of time devoted to it, and easily the biggest announcement is Grand Theft Auto: Chinatown Wars, set for release this holiday season. It may not be as fancy as GTA4, but it'll be great to see the überviolent GTA series sharing shelf space with Nintendogs.

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MAJORLY SAVAGE LOSS FOR MEN - FOXNews.com - Jessica Alba Shows Off 'Miracle' Baby Honor - Celebrity Gossip | Entertainment News | Arts And Entertainment

Giving birth to daughter Honor Marie Warren last month "was more like meditation," actress Jessica Alba tells OK! magazine, in which she reveals the first photo of the baby.

"I did yoga breathing. I was focused," says Alba, who opted for a natural birth.

Click here to see Honor and to read more from OK! magazine

Having a newborn still "hasn't totally sunk in," the "Love Guru" star says.

"She dreams, she smiles, and coos and does all these things, but she hasn't seen enough of the world yet to understand any of that stuff. So I still feel like she's connected to the other world, or something. There's no other way to explain it. It's a miracle."

As for getting back into her pre-pregnancy body, Alba says she's taking it slow.

"I started working out last Thursday, but for 20 minutes. I do cardio on my own. I'm doing it slow," she said.

"Now I'm starting to eat more healthy. Because after working out, having fried chicken and mashed potatoes is a little counteractive."

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FX Bids Farewell to 'Nip/Tuck' in 2011 - Savage Loss

FX president John Landgraf made multiple programming and casting announcements about some of the network's critically acclaimed series at the Tuesday's Television Critics Association Summer Press Tour, including some news about the dark medical drama Nip/Tuck.

The network announced that the series that follows the lives of two plastic surgeons, Sean McNamara (Dylan Walsh) and Christian Troy (Julian McMahon), will bow out after 100 episodes.  On the other hand, fans will have enough time to come to terms with that since the final episode isn't slated to air until early 2011.

"It's really hard to be [commercially] successful and creatively excellent, especially when you have serialized shows.  I believe they have a diminishing return.  If you had 150 episodes of The Sopranos or The Shield, you diminish the caliber of those shows," explained Landgraf, who felt it that Nip/Tuck would lose a lot of its creative steam if it continues past the 100-episode mark.  "We have unique challenges as an ad-supported network. Our creative competitors are Showtime, HBO and now AMC.  Commercially, it's networks like USA and TNT. The bar is high."

Nip/Tuck, which won a Golden Globe for best drama series in 2005 and earned show creator Ryan Murphy an Emmy nomination for directing the pilot episode in 2004, has been a controversy magnet and has consistently drawn strong ratings for FX, ranking among the top series on ad-supported cable among adults 18-49 throughout its run.

According to Landgraf, Nip/Tuck recently finished production on the final eight episodes of its fifth season, which were originally schedule for air this spring. But because of the writers' strike, the new episodes have been pushed back and are now slated to debut in January 2009.

Additionally, the network has also ordered 19 more episodes of Nip/Tuck, besides the 22 in production, which will bring the show's total to an even 100 episodes.  The final season is expected to be divided into two batches, which will air in 2010 and 2011.

Meanwhile, creator and executive producer Ryan Murphy, who had been previously attached to the FX pilot Pretty Handsome, will remain with Nip/Tuck until the run ends.

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IS THIS A STUPID IDEA OR IS IT JUST ME? Miley Cyrus seeks ‘Sex and the City’ for the young - The Money Times

Miley Cyrus, the ‘Hannah Montana’ star has expressed a desire to work in ‘Sex and the City,’ which is made for her age. "I'd love to do a younger, cleaner version of Sex and the City," the 15-year-ols told the new issue of ‘TV Guide.’

Seeking a kid-friendly version of the show, does not come plausibly to someone who recently made news for some raunchy pictures under a shower.

Also, ‘the cleaner version’ wish raised some eyebrows as only a few months ago Cyrus had sparked outrage among concerned parents, after she appeared with a mere blanket on the cover of Vanity Fair magazine.

And now we know, the teen is a huge fan of ‘Sex and the City,’ which should probably be classified as risqué for her age. Quite clearly, her generation is watching and thoroughly enjoying the adult-show, so who needs a separate version for the minors.

However, irrespective of what she watches or how she poses, the teenaged daughter of country singer Billy Ray Cyrus asserts she is a virgin and will not indulge in sex anytime soon.

"I like to think of myself as the girl that no one can get, that no one can keep in their hand," she said.

And as a testament to her virginity, Cyrus sports a purity ring like her friends the Jonas Brothers. “Even at my age, a lot of girls are starting to fall,” she says, “and I think if [abstaining] is a commitment girls make, that’s great.”

Cyrus had previously admitted that her bold pictures on the magazine’s cover were a mistake. She wants to dump the issue now. "I want to be a positive role model, so we just try to keep [that stuff] as much not talked about as possible," she says. "I don't dwell on the negativity."

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TG Daily - Redmond, we have a problem: Sony just cut the price of the PS3

Los Angeles (CA) – The game console market is getting more interesting: Following Microsoft’s time-limited price cut of the Xbox 360 Premium, Sony has announced a permanent price cut of its 80 GB flagship console, which will also replace the 40 GB version of the Playstation 3. The decision between an Xbox 360 and a PS3 is now much less a question of cost, but a question of how much the Xbox’ entertainment features or the PS3’s Blu-ray drive are worth to you.  

Sony has seen its PS3 gain traction in recent months and the company now seems to be determined to pull further ahead of Microsoft, which lately seemed to be struggling in European and Asian markets. Sony said that it will drop the 40 GB version of the PS3 and replace it with the 80 GB version, which will now retail for $399, down from $499.

$399 is still a steep price tag for a game console, but Sony is now approaching Xbox territory. The PS3 is now right in the middle between the $449 Xbox Elite with a 120 GB hard drive and the $349 60 GB Xbox Pro. Count in the fact that the PS3 comes with a Blu-ray drive and the Xbox stays with an upscaling DVD player and some could see for the very first time a price advantage for the PS3. Microsoft has recently upgraded its Xbox 360 with new entertainment features and is driving the console much more to become an entertainment center, it will be interesting to see whether Microsoft’s or Sony’s console will be collecting the dollars down the road.

The downside of this cutthroat competition, of course are shrinking margins or increasing losses. The PS3 and especially the Xbox 360 are in a time of their life-cycles where both should be starting to actually make a profit. While Microsoft actually may be making a profit (at least its gaming and entertainment division already does), Sony’s latest price cuts raises further doubts, if the PS3 can ever become a profitable business. As part of a recently filed financial report, the company said that it has lost $3.3 billion on the PS3 so far and analysts actually doubt whether the companies will ever be able to recoup those losses.  However, the Microsoft’s balance sheet looks even worse: Combined losses of the Xbox and Xbox 360 between 2002 and 2007 exceeded more than $7 billion, according to SEC filings.

However, it is not difficult to see that Sony just made a very aggressive move and Microsoft’s temporary price cut seems even more half-baked now. The $299 20 GB Xbox 360 will only be available until supplies last and the new 60 GB almost seems expensive. Another price cut in the near future may me inevitable for Microsoft.

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