Virtual Birkin Bags on Trial in Hermès Case Testing IP Rights
Lawsuit is an early test of how a company can exercise its rights against virtual assets it didn’t authorize
The Birkin handbag, made by French luxury brand Hermès, for decades has been a symbol of wealth, sold through exclusive shops and mysterious wait-lists at prices that reach tens of thousands of dollars or more.
A self-described entrepreneur and artist in 2021 set out to offer another way to own a Birkin, with a digital nonfungible token. Mason Rothschild created a series of 100 digital images he called MetaBirkins, depicting fur-covered purses in the same shape and style as the Hermès RMS 0.06% luxury product, which he sold as digital tokens on virtual marketplaces. The NFTs sometimes have sold at prices similar to the real handbags.
Beginning Monday, Mr. Rothschild’s MetaBirkins go on trial in New York in a case at the intersection of trademark law and constitutional protections for freedom of expression. Hermès is seeking to stop Mr. Rothschild from using its brand, the destruction of the NFTs and his profits plus other financial damages. Mr. Rothschild says his MetaBirkins are artwork protected by the First Amendment.
Neither Hermès nor its lawyers responded to requests for comment. Mr. Rothschild declined to comment.
Legal analysts say the trial represents an important early test of how a company can exercise its rights against virtual assets it didn’t authorize.
The specter of the unregulated metaverse is top of mind for companies that worry their brands will be used—and abused—as virtual reality expands, said Thomas Brooke, an intellectual property lawyer with Holland & Knight LLP.
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The case “will give us more guideposts for what to do with NFTs,” Mr. Brooke said. “With any new technology the courts are often having to apply existing law and figure out what works.”
NFTs, blockchain-based unique assets that can be collected and traded, exploded in recent years as investors have flocked to marketplaces where tokens are sold. Lawsuits have followed, with retail brands and other companies claiming trademark and copyright infringement.
Among other pending cases, Nike Inc. is suing online marketplace StockX over virtual sneakers depicting the brand’s well-known swoosh that it sold as NFTs in combination with the resale of Nike sneakers. StockX denied the claims and said the introduction of the tokens expedites the process of authenticating and processing the physical items it sells.
Other cases have settled before trial, including a copyright dispute between Hollywood director Quentin Tarantino and Miramax LLC over the director’s attempt to auction off exclusive scenes from the 1994 film “Pulp Fiction,” in the form of NFTs. In another, Jay-Z’s label, Roc-A-Fella Records, stopped the label’s co-founder from selling the rapper’s debut album as an NFT.
In the Birkin matter, Mr. Rothschild received a percentage of each NFT sale. He said his project was designed to explore the issue of conspicuous consumption. The images, he said, aren’t replica Birkins, but rather art that depicts an imaginary bag.
“My MetaBirkins project as a whole was an artistic experiment to explore where the value in the Birkin handbag actually lies—in the handcrafted physical object, or in the image it projects?” Mr. Rothschild said in a legal declaration.
He analogizes his work to Andy Warhol ‘s famous prints depicting Campbell Soup’s iconic cans. The soup maker, after initial skepticism, didn’t take legal action against the pop artist and later embraced his work.
Mr. Rothschild’s lawyers rely heavily on an 1989 case in which an appeals court rejected claims by actress Ginger Rogers that Italian director Frederico Fellini ‘s movie, “Ginger and Fred,” in which two cabaret performers imitate her and partner Fred Astaire, misled the public into thinking she was connected to the film. The ruling endorsed protections for artistic expression, so long as it doesn’t create consumer confusion.
The Rogers precedent is currently being revisited in a case pending at the Supreme Court, involving a lawsuit brought by the makers of Jack Daniel’s, who are asserting trademark claims against a company that made a dog toy that is a replica of the brand’s whiskey bottle.
Hermès sued Mr. Rothschild in January 2022, labeling him a “digital speculator who is seeking to get rich quick.” The company argues his MetaBirkins diluted its brand and confused consumers, while allowing him to profit unlawfully off the goodwill of its sought-after luxury product.
“He seeks to make his fortune by swapping out Hermès’ ‘real life’ rights for ‘virtual rights,’” the company said in court documents.
Hermès said that while it hasn’t yet minted or sold any NFTs, Mr. Rothschild’s actions pre-empt its ability to offer products and services in virtual marketplaces.
U.S. District Judge Jed Rakoff in Manhattan, who is presiding over the case, has rejected requests from both sides to rule in their favor ahead of the jury trial, which begins with jury selection Monday.
New York University law professor Amy Adler said the central issues in the case are in many ways the latest chapter in the age-old debate about the applicability of trademarks in the world of art. Still, “there’s a question of whether this case will serve as a game-changer for intellectual property law,” she said.
Toyota Rethinks EV Strategy With New CEO
The auto maker’s new boss will confront a question dividing the corporate world: whether to take gradual steps or big leaps ahead in the move to green technology
Toyota’s TM 1.16% chief executive always said he wasn’t a skeptic about electric vehicles—he was a realist.
Longtime CEO Akio Toyoda called himself a spokesman for “a silent majority” of people in the auto industry who questioned a single-minded focus on EVs. He argued that hybrid gas-electric vehicles like Toyota’s Prius could be just as environmentally friendly, and said other companies were pushing consumers to make a leap into EVs that they might not be ready for, without a charging infrastructure fully in place.
Then, last week he handed the reins of Toyota to a successor.
“When it comes to digitalization, electrification and connectivity, I personally feel that I belong to the older generation,” said Mr. Toyoda, 66 years old, in announcing that 53-year-old engineer Koji Sato would take over as president and CEO in April, while Mr. Toyoda would become chairman. “For me to take a step back is important.”
The transition is a landmark moment not only in the car industry but in the complicated shift to green energy throughout the business world. Some companies, investors and governments are pushing for big leaps into renewable energy and green technology, arguing that the consumer and the infrastructure will catch up to the changes. In the auto world, Mr. Toyoda is among those who have advocated for moving more slowly and deliberately.
Meanwhile, government agencies and investors are incentivizing companies to move into EVs with subsidies and tax breaks. New EV tax credits in the U.S. law dubbed the Inflation Reduction Act don’t apply to hybrids that don’t plug in.The European Union has mandated zero-emission new car sales by 2035. The state of California will also only allow new sales of EVs, plug-in hybrids and hydrogen-cell vehicles beginning in 2035.
EVs are taking growing chunks of the European and U.S. markets, and one fifth of the world’s largest car market, China, already consists of EVs.
Even before Toyota’s first change at the top in 13 years, it was weighing some changes to its EV strategy behind the scenes. The company has been studying rivals including Tesla Inc., according to people at Toyota, and considering bigger upfront investment in its EV technology and manufacturing capabilities.
Toyota’s current EV platform—the underlying architecture on which various car models can be built—is partly repurposed from an existing platform for gasoline-powered vehicles. Earlier this month, Mr. Toyoda told The Wall Street Journal that the company was considering rolling out a new platform for its EVs, in what would be a shift in its longtime strategy of piggybacking on its existing technology. Last August, the company said it would spend up to $5.6 billion to expand its EV battery factories in the U.S. and Japan.
Last month, Mr. Toyoda wondered aloud how much longer he could keep up his arguments for a more incremental and multifaceted approach. Thanks to his efforts, “the silent majority has been put more at ease,” he said, speaking at a racetrack in a rural area of eastern Thailand as race cars whizzed by. “But who is going to continue to do this?” he asked. “Until more comrades emerge, am I going to do this until I collapse?”
At the racetrack, Mr. Toyoda pulled aside Mr. Sato with a request. “Can you do me a favor? Can you be the president?” he said. Mr. Sato said yes.
The incrementalist
Two generations ago, Toyota was remaking the car industry with innovations like just-in-time manufacturing and an obsession with continuous improvement. Its rise in the 1960s through 1980s was all about trying to match and exceed Detroit’s Big Three with what ultimately became a global network of factories including more than a dozen manufacturing plants in North America.
By the time Mr. Toyoda took the top job in 2009, there were signs that the company had been moving too fast. Its quest for global dominance was cutting into profit margins and causing some to question whether quality was being sacrificed. The grandson of Toyota Motor founder Kiichiro Toyoda, Akio Toyoda was 53 at the time—the same age Mr. Sato is today.
Mr. Toyoda was weeks into the job when a car driven by a California patrolman crashed over an embankment and burst into flames, killing the driver and his wife, daughter and brother-in-law. Reports blamed a floor mat that became lodged against the accelerator pedal.
In the months after the crash, Toyota recalled more than eight million vehicles for fixes. The company temporarily halted production and sale of several vehicles in the U.S., and Mr. Toyoda testified before Congress in 2010 to explain.
The day of his congressional testimony, Feb. 24, became an annual remembrance at Toyota dedicated to making sure such problems never happened again, complete with a commemorative tree near a Toyota museum.
Mr. Toyoda said he had to clean up problems caused by a rush to expand too quickly, exacerbated by a global financial crisis that pushed Toyota into the red. He has often spoken of his loneliness at the top during that period, saying he felt bullied by career executives who, in his telling, didn’t believe a family scion had the grit to lead a global auto maker. He was determined to prove them wrong.
After Japan’s recovery from a devastating earthquake in 2011, Toyota’s vehicle sales, revenue and profit marched steadily forward. Its lineup of hybrids, which began with the pioneering Prius in the late 1990s, grew into a full range of RAV4s, Corollas and other hybrid-equipped models selling more than two million units a year.
Mr. Toyoda cut costs and pared the executive ranks. By 2020, Toyota was the world’s largest auto maker by unit sales, surpassing Volkswagen AG .
In recent years, as electric vehicles captured the imagination of some investors, Mr. Toyoda said he wanted to make up his own mind about the role of EVs, not get swept up by excitement about what he saw as a not-yet-mature technology.
One of his hires was an American chief scientist, Gill Pratt, whose previous jobs included teaching electrical engineering and computer science at the Massachusetts Institute of Technology. Mr. Pratt had researchers run the numbers. He said they showed that factoring in the emissions from manufacturing and generating electricity to charge cars, a diverse lineup of electric and hybrid vehicles has similar lifetime carbon emissions to an EV-only fleet. That was the case even on a power grid getting a significant chunk of its electricity from renewable sources, he said.
Another calculation hinged on the short supplies of lithium for batteries and the fact that hybrid cars, with their smaller batteries, need only a fraction of the lithium used in full EVs. “Let’s not let perfect be the enemy of good,” Mr. Pratt said at a roundtable in Tokyo on Friday.
Mr. Toyoda gave talks making the case for a diverse lineup of vehicles that would include EVs but not only them. He said that it was hardly environmentally friendly to have coal-fired electricity plants powering cars on the road, and in developing nations of Asia it was unlikely renewables could be built out quickly.
“ Ford and GM did a great job convincing Washington that EVs were the only solution,” said Steve Gates, chairman of Toyota’s dealer council. “It’s not popular to talk about things that hybrids and plug-in hybrids have done for the environment.”
The competition
But Tesla surpassed Toyota to become the world’s most valuable auto maker by market capitalization, competition grew. General Motors Co. in 2021 set a goal of phasing out gasoline- and diesel-powered vehicles by 2035. It has several EVs in showrooms now and more coming this year. The Detroit auto maker opened its first battery plant last year and has plans for more. Others including Volkswagen AG, Hyundai Motor Co. and Ford Motor Co. are making similar moves.
Toyota, meanwhile, has remained the leader in selling hybrids and plug-in hybrids, two model types that accounted for nearly 30% of its global shipments in 2022 through November. But sales of pure EVs—models that run on electricity only—are still tiny.
In the U.S., where Tesla dominates the EV market, Toyota didn’t rank in the top 10 of EV sellers last year, according to data-research firm Motor Intelligence, although it did introduce an all-electric sport-utility vehicle called the bZ4X.
Industrywide, more than one in 10 vehicles sold in Europe in 2022 and nearly one in five in China were fully electric vehicles, according to LMC Automotive. In the U.S., EVs accounted for 5.8% of vehicle sales last year.
The first sign of a major shift in Toyota’s EV strategy came in December 2021. Mr. Toyoda said Toyota would aim to sell 3.5 million EVs annually by 2030, a big step up from the previous target.
The company posted a video on its website showing Mr. Toyoda driving a Lexus EV with Mr. Sato beside him in the front passenger seat, egging on the boss to enjoy himself.
Mr. Toyoda hit the accelerator and the two men whooped out “Woo-hoo!” Mr. Toyoda, who loves to drive race cars, said the experience persuaded him that an EV could be fun to drive.
As these trends built momentum, Mr. Toyoda assigned a longtime lieutenant to take another look at the auto maker’s EV strategy, according to people at the company.
The study included a careful examination of the strategies of Tesla, which has been an all-EV company from the start, these people said. Tesla has shaken up industry practices with innovations such as direct-to-consumer sales methods and over-the-air software updates.
One lesson from Tesla is that big spending upfront on common parts and efficient manufacturing processes can pay dividends later when volumes get big and economies of scale kick in. That is the idea behind the EV-dedicated platform Mr. Toyoda said he was considering: It takes a lot of money to design this architecture, but once it’s ready, large volumes and multiple models can be built off similar blueprints, saving costs over the long term.
A competitive EV business remains, for Toyota, one part of a bigger strategy to promote and invest in a diverse lineup that also includes hybrids and hydrogen-powered cars. “We have to take a 360-degree approach,” said Mr. Sato, the next CEO.
Earlier this month, Mr. Toyoda said he was worried that government policies mandating EV sales had sparked a race between auto makers to put EVs on roads as soon as possible and kill off other promising technologies.
“That’s not Toyota’s approach,” he said. “Energy policies are unique in different countries and people have different uses for cars, so why make just one solution?”
That stance isn’t likely to change, but Toyota observers say Mr. Toyoda’s move to the chairman’s role makes it easier for a new CEO to steer in new directions on EVs. Mr. Toyoda said it was the job of younger people to “come up with the answer of what future mobility should be” and added, “We need to be attentive to not being late.”
Brussels loses bid to join legal fight over Spanish green subsidies
UK court rejects commission’s attempt to get involved as Madrid seeks to avoid $101mn payout to investors
A UK court has thrown out a bid by the European Commission to join a legal battle in which Spain is seeking to avoid paying millions of dollars in compensation to renewable energy investors.
Two private equity investors, Infrastructure Services Luxembourg and Energia Termosolar, are fighting the Spanish government to enforce a $101mn arbitration award won in a 2018 case against Madrid over its withdrawal of an incentive scheme for renewable energy investments.
The action is part of worldwide litigation and claims totalling an estimated $9.5bn brought by investors that say they have lost out financially after the termination of the Spanish subsidy scheme.
The battle comes as the EU attempts to boost investment in clean energy industries in response to the US Inflation Reduction Act, a huge package of subsidies for green technology that Washington announced last year.
The case is due to be heard by the UK’s High Court in March, but Spain has applied to set aside the award.
The commission attempted to intervene on Friday on the basis that allowing the award would be against EU treaties and could constitute illegal state aid.
However, the High Court ruled that the commission should not be allowed to join the March hearing. Mrs Justice Sara Cockerill said permitting it to do so would “increase complication and costs” and that it was “demonstrably not neutral”.
Energy investors say Madrid’s decision to end the subsidy scheme, which rendered some projects financially unviable, has damaged Spain’s reputation as a reliable place to fund big projects. Taking advantage of its climate and expanses of unpopulated countryside, Spain wants to become one of Europe’s leaders in renewable power.
The incentives to build solar and wind farms were introduced in 2007 by the Socialist government of prime minister José Luis Rodríguez Zapatero and guaranteed investors in renewable energy sites a reasonable return. But between 2012 and 2014 the conservative government of Mariano Rajoy diluted and withdrew the incentives as Spain sought to shore up public finances in the midst of an economic crisis.
Infrastructure Services Luxembourg and Energia Termosolar claim they are owed compensation after investing in a solar facility in the Granada region of Spain. In 2018 they won an arbitration case in the World Bank’s arbitration tribunal, the ICSID, and were awarded $101mn.
Their case was brought under the Energy Charter Treaty, an international compact drawn up at the end of the cold war to protect investors backing energy projects in post-Soviet countries.
The commission says the treaty should not apply between stakeholders within the EU. That argument is part of a wider push by Brussels to modernise the 30-year-old pact that has so far failed to win backing from the ECT’s 53 signatories.
Several EU countries, including Spain, have in the past year said they would withdraw from the treaty, although this would leave them bound by a 20-year sunset clause.
Spain has filed similar legal actions in Luxembourg and the Netherlands against renewables investors that have won arbitration awards and are seeking to enforce the rulings. Investors argue that Madrid’s behaviour risks deterring support for green energy projects as the world is urgently seeking to move away from fossil fuels.
Antonio Morales, head of energy and public law at Baker McKenzie in Madrid, said the commission was “pushing hard” in several jurisdictions on the grounds that “no court should rule in these cases until [the commission] has made its own decision on whether compensation would count as illegal state aid”.
“By doing that it is at the very least buying time for the government of Spain,” he said.
Nick Cherryman, the lawyer leading in the enforcement case for Infrastructure Services Luxembourg and Energia Termosolar, said Friday’s ruling was “a positive step towards ensuring Spain complies with its international debt obligations, in particular towards renewable investors”.
The European Commission did not respond to a request for comment.
Barron’s Weekend Summary: Policy makers in China are pulling out all the stops and get its 1.4B people spending more
Cover Story:
-Policy makers in China are pulling out the stops to revive the economy and get its 1.4B people spending more, after three hard years of stringent Covid restrictions and harsh crackdowns on technology and other industries. Beijing has completely reversed its zero-Covid policy and has begun loosening regulations on business. Up next: more stimulus to stabilize the residential property market. “Domestically, all the switches that can be switched on have been moved toward growth, and there’s a lot of momentum behind it,” says David Semple, manager of the fund.
Interview:
-No interview this week
Tech Trader:
-Microsoft delivered the stock market a truck full of lemons this past week. Investors chose to see a tanker filled with lemonade. It’s a positive sign ahead of the most important week for fourth-quarter tech earnings. In 2022, tech stocks were crushed, as the Federal Reserve aggressively lifted interest rates. A month into 2023, the Fed seems closer to the end of its tightening cycle than the beginning, but only now are we seeing those higher rates begin to slow demand for tech goods. The result is that corporate earnings for the next few quarters could be ugly. If 2022 was all about reduced price/earnings multiples as rates ratcheted higher, 2023 will be all about reduced “E,” as demand contracts. This coming week many important tech players will report, including Meta Platforms, Apple, Alphabet, and Amazon.com. The results should shed new light on the ad market and consumer spending trends. And they will provide fresh insights into the most important trend in enterprise technology: cloud computing.
The Trader:
-Expect Fed Chairman Jerome Powell to remind investors of interest rates the central bank hikes them this coming week. There’s no big secret about what’s been driving the recent rally. Inflation has been falling, and the market is betting that the Fed will see enough improvement to stop hiking interest rates in the near future. That would be good news, of course, because investors’ big fear is that the central bank will tighten right into a recession. It’s all very encouraging, but there’s a Fed announcement coming Wednesday, and there’s a good chance the central bank will feel the need to push back against the bulls’ expectations. It won’t be with the Federal Open Market Committee’s rate hike; there’s a near certainty of a quarter-point increase in the federal-funds rate.
-Despite a strong start to 2023, the sector hasn’t really budged over the past two months. The iShares Expanded Tech-Software Sector ETF, which counts names like Microsoft, Salesforce, and ServiceNow as top holdings, has returned just 1% since Nov. 25. The stocks have been held back by concerns that customers will cut IT spending as the economy weakens and sales slow, with Microsoft’s disappointing guidance this week highlighting these worries.
Workday stock may be a bright spot amid the software slump. Shares of the company, which provides cloud applications for companies to manage their data, have gained 17% over the past two months, buoyed by strong earnings in November. That report showed that sales still grew quickly even in an uncertain corporate spending environment, and the strength is likely to continue into 2023.
Features:
-On Thursday, Bed Bath & Beyond
admitted what many industry analysts have suspected for quite some time—the company is quickly running out of cash and can’t pay off its sizable debt.
There’s likely more pain—and narrowing options—ahead for the retailer. In a delayed quarterly filing with the Securities and Exchange Commission on Thursday, the retailer said its lenders were calling back their loans after the company failed to prepay an advance on a credit facility, triggering events of default. An event of default is a pre-defined circumstance that allows lenders to demand full repayment of the outstanding loan before it’s due, as well as seize any collateral if the company is unable to pay the debt.
“I am convinced that Bed Bath & Beyond is teetering on the brink of bankruptcy,” said Daniel Gielchinsky, partner at DGIM law. “I am convinced that Bed Bath & Beyond is teetering on the brink of bankruptcy,” said Daniel Gielchinsky, partner at DGIM law.
-The Federal Reserve’s preferred measure of inflation cooled again, the latest sign that an era of red-hot prices is coming to an end and that the central bank may soon shift to a less aggressive stance on monetary policy.
That would be good for stocks, but a recession would be decidedly negative. And the data also added to concern that one could be on the way.
The core personal-consumption expenditures price index, also known as the core PCE deflator, rose 4.4% on an annual basis in December from 4.7% in November, in line with expectations of economists surveyed by FactSet. The headline PCE deflator, which includes food and energy prices, declined to 5% last month from 5.5% in the period prior, further evidence of cooling inflation.
European Trader:
-Investors weary of the past and rough year for US stocks in 2022, might wonder about the chance for better overseas. Germany—the world’s third-biggest economy, known as the powerhouse of Europe—might be one place to look. The country’s DAXDAX index of blue-chip stocks lost 12% last year. Not great, but still better than the S&P 500 index’s nearly 20% drop.
Deutsche Telekom, Germany’s flagship telecommunications company, splits the difference between betting on the US economy and exposure to overseas stock markets. It’s a big German company that makes most of its revenue in the U.S. through T-Mobile, the mobile-phone operator of which it owns just under half. T-Mobile was a Barron’s stock pick in August. Deutsche Telekom has a presence in more than 50 countries, and its shares have gained almost 30% in the past year.
Emerging Markets:
-India, the soon-to-be most populous nation, has increased its imports of Russian crude oil 33-fold since the Russian invasion of Ukraine began last February, to more than one million barrels a day. It’s getting a bargain. Russia’s Urals crude blend is selling at around a 30% discount to global benchmark Brent, $22 on every barrel at today’s price, says Hunter Kornfeind, an oil market analyst at Rapidan Energy Group. That spread was more like 5% before the war.
That’s not all. India imports nearly 90% of its crude oil but is rich in refining capacity. Refiners are gobbling cheap Russian crude for re-export as diesel fuel and other products, at healthy mark-ups. Demand for this trade should leap on Feb. 5, when the European Union adds an embargo on importing Russian refined products to the one it slapped on Russian crude in December. “India could become the de facto refinery for Europe,” says Venkat Pasupuleti, co-portfolio manager for India at Dalton Investments. And one of the biggest oil-products exporters happens to be India’s largest publicly traded company, Reliance Industries
Commodities:
-The European Union will ban imports of Russian oil products early next month, in a move to further punish Russia for its invasion of Ukraine, but one that could lead to tighter global supplies and higher prices for products such as diesel. The ban on Russian oil products is likely to have a bigger impact than the EU ban on Russian seaborne oil and the Group of Seven price cap on Russian oil, says Tom Kloza, global head of energy analysis at the Oil Price Information Service, or OPIS, a Dow Jones company. The EU banned imports of Russian seaborne crude oil from Dec. 5, and plans to ban imports of certain Russian petroleum products from Feb. 5.
Streetwise:
-The Superbowl, television’s biggest draw, is just three weeks away, as Jack Hough reminds us. But millions of households have cut their cable subscriptions. Thus they’ll soon turn to Google with queries like “how to stream Super Bowl 2023.” This year, the answers are confusing and dissatisfying. But some of the same answers serve as useful streaming stock recommendations from Hough. Last year, streaming the Super Bowl was easy. NBC carried it, and cable cord-cutter streamers could turn to its corporate cousin, Peacock, which aired the game on its $9.99 a month premium tier. But this year, the Super Bowl is playing on Fox, which plays Switzerland in the streaming wars.
Recall that Fox sold the bulk of its TV and movie assets to Walt Disney in 2019 for $71.3B. What’s left of the company includes the Fox broadcast network and this year’s Super Bowl, but not enough to easily fill out a mass-market streaming platform, and management doesn’t seem interested for now. Fox and Barron’s parent News Corp used to be part of the same company, and have overlapping ownership. So, cord-cutters who are looking to stream the Super Bowl on the equivalent of Peacock or Paramount+ won’t find it. Instead, they’ll be directed to services like Hulu+ Live TV, YouTube TV, Sling TV, and fuboTV. Those are technically part of streaming, too, but they’re really live channel bundles that pay for the networks they carry. Two companies poised to benefit from all users are Netflix and Disney, because of their global scale. The others have it worse. Former broadcasters who are now building streaming businesses don’t have rich international histories, and their programming tends to be more oriented toward a US. prime-time audience. Expect consolidation says Wolfe Research entertainment analyst Peter Supino. Paramount Global is the likeliest target for its strong growth but weak cash flow in streaming, and Warner Bros. Discovery is the likeliest buyer because it lacks Paramount’s scale in sports.
DOJ Seeks to Ban Sam Bankman-Fried From Contacting FTX Employees
Founder of failed crypto exchange allegedly reached out to the general counsel for the firm’s U.S. operation
The Justice Department on Friday asked a federal judge to bar FTX founder Sam Bankman-Fried from communicating with current and former employees of the collapsed crypto exchange without a lawyer present after prosecutors alleged he recently contacted a potential witness in his criminal case.
Mr. Bankman-Fried, who faces federal charges related to the implosion of FTX, reached out to the general counsel of the company’s U.S. operation through an encrypted messaging application earlier this month, federal prosecutors said in a filing. Prosecutors said Mr. Bankman-Fried has also contacted other current and former FTX employees and are concerned that the communications could lead to witness tampering.
Prosecutors also requested the judge prohibit Mr. Bankman-Fried from communicating through encrypted messaging applications like Slack and Signal, saying that when he headed FTX he directed employees of the company and his crypto-investment firm Alameda Research to set their communications on these platforms to auto-delete after 30 days. That policy has impeded the government’s investigation, prosecutors said.
“Potential witnesses have described relevant and incriminating conversations with the defendant that took place on Slack and Signal that have already been autodeleted because of settings implemented at the defendant’s direction,” prosecutors said in the filing.
Lawyers for Mr. Bankman-Fried in a letter to the judge said the government was mischaracterizing innocuous conduct by their client in “an apparent effort to portray our client in the worst possible light.” They said the government’s request was overbroad and unnecessary, proposing instead that Mr. Bankman-Fried be prohibited from contacting certain limited witnesses, not all of FTX’s current and former employees.
FTX’s U.S. general counsel, Ryne Miller, couldn’t immediately be reached.
The Manhattan U.S. attorney’s office charged Mr. Bankman-Fried last month with stealing billions of dollars from FTX customers while misleading lenders and investors. He pleaded not guilty and is currently under court-ordered confinement in his parents’ Palo Alto, Calif., home while he awaits trial.
Mr. Bankman-Fried sent a Jan. 15 Signal message to the general counsel in which prosecutors allege he said he “would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.”
Prosecutors didn’t identify the other employees that Mr. Bankman-Fried has allegedly tried to contact but called the communications to the general counsel and others troubling.
“Were the defendant to ‘vet’ his version of relevant events with potential witnesses, that might have the effect of discouraging witnesses from testifying in a manner contrary to the defendant’s narrative,” the Justice Department said in the filing.
Mr. Bankman-Fried’s lawyers said the message to Mr. Miller was more reasonably read as an attempt by Mr. Bankman-Fried to offer his assistance to FTX, not a “sinister attempt” to influence testimony at trial.
The robot chisel capable of sculpting masterpieces
The technology could help replicate work from some of the greatest artists in history.
Created by Filippo Tincolini and Giacomo Massari, Robotor(Opens in a new window) is an automated robot chisel driven by self-programming software. Based in Carrara, Italy the robot can replicate some seriously impressive art.
Link to Video : http://bit.ly/3XI7aKU
China’s comeback turbocharges base metal prices
Industrial commodities, led by tin, have surged more than 20 per cent in three months
Industrial metals have ripped higher since November on bets that China’s reopening will boost demand for raw materials.
A group of “base metals” led by tin, zinc and copper have surged more than 20 per cent in three months, further supported by the US Federal Reserve signalling a slowdown in the pace of interest rate rises and a softening in the US dollar, which importers use to buy commodities.
Star performer tin has rocketed almost 80 per cent to $32,262 per tonne, the highest level since June, while copper prices have rallied by a tenth this month to $9,329 per tonne on brighter prospects for China’s economy following the easing of its zero-Covid policies.
Investors have largely shrugged off concerns about slowing manufacturing activity in the face of unprecedented coronavirus outbreaks in Asia’s largest economy.
“At the beginning of the year everyone came in very nuanced, saying we were going to have a [global] recession, that copper would dip in the first quarter and then go higher, but we’ve done exactly the opposite,” said Al Munro, a broker at Marex. “Money flow is what has driven metals in 2023 thus far, and that’s about a China reopening story.”
Mining industry executives say the current situation marks a stark reversal from only a few months earlier when sentiment was weak but physical buying from Chinese customers remained strong.
“It has shifted between where we were that perceptions were bad and on-the-ground was good, to now perceptions are better but on-the-ground is uncertain,” said Richard Adkerson, chief executive of Freeport-McMoRan, one of the world’s largest copper producers.
Jeremy Pearce, who leads market intelligence at the International Tin Association, said that much the same could be said of the metal used primarily to solder electronics.
“The issue is all demand indicators are very negative as global manufacturing purchasing managers’ indices have been nosediving,” he said. “The demand picture is the opposite and disconnected from the price.”
Further fuelling the rally for some base metals has been a spate of supply disruptions from protests roiling copper and tin producers in Peru and production snags in Chile, to Indonesia stalling export license renewals for tin smelters ahead of a mooted tin ingot export ban.
The price of tin, which is becoming increasingly strategic because of its use in solar panels and microchips, has also been pushed higher by speculative buying by China, leading to a build in inventories.
Despite weak demand, last year China swung from net exports of 9,000 tonnes in 2021 to net imports of 20,000 tonnes, according to Amalgamated Metal Trading, a metals brokerage.
“To what extent is it traders or governments building the inventories up?” asks Daniel Smith, head of research at AMT. “If it’s the government then they may sit on it longer”, which would keep prices higher longer term.
Kering picks Italian designer as Gucci creative director
French luxury group appoints Sabato de Sarno to reverse trend of underperformance at its biggest brand
Kering has named Italian designer Sabato de Sarno as the new creative director for its biggest brand Gucci as it seeks new direction after a period of underperformance.
Gucci brings in more than half of Kering’s annual revenue and three-quarters of operating profit, making the appointment a key decision for investors in the French luxury group, which is owned by the billionaire Pinault family.
The Italian brand has increased revenue more slowly than larger rivals like LVMH-owned Louis Vuitton and Hermes in recent years, and it will be up to De Sarno to reverse the trend.
In a statement, Kering said De Sarno, who is now fashion director of men’s and women’s collections at Valentino, would join the group soon, although it did not provide a date. His first show will be in September in Milan.
Kering chief executive François-Henri Pinault welcomed the change. “With Sabato De Sarno at the creative helm, we are confident that the house will continue both to influence fashion and culture through highly desirable products and collections, and to bring a singular and contemporary perspective to modern luxury,” he said in a statement.
Like his predecessor at Gucci when he was named to the post, Alessandro Michele, De Sarno is not a household name in the fashion industry. He has played a key role at Valentino in recent years as the longtime creative director’s right hand and has also worked at Prada and Dolce & Gabbana.
Michele left abruptly in November after seven years. His vintage-infused, colourful designs worn by celebrities like Harry Styles powered several years of double-digit sales growth and nearly tripled revenue at Gucci, putting it on the cusp of reaching €10bn in annual sales before the pandemic.
Michele’s efforts to rekindle the magic that attracted droves of young buyers especially in China foundered despite repeated attempts at a turnround.
Gucci’s woes have led Kering’s share price to lag rivals, despite the two-year luxury boom during which affluent buyers in the US and China drove the industry’s sales to new heights. Its shares have fallen by almost 15 per cent in the past year, compared with a 31 per cent rise for Hermes and 15 per cent for LVMH.
The group’s other brands include Saint Laurent, Bottega Veneta and Balenciaga, and it also has a growing eyewear business. It will report annual results on February 15.