Taiwan Tries to Regain Its Lead in Consumer Electronics

TAIPEI, Taiwan — Jonney Shih, the chairman of Asustek Computer, has epitomized the Taiwanese electronics engineer for a generation: a slender figure in rumpled, baggy trousers, he once helped Intel solve heat problems in its Pentium 4 microprocessors.

So it has been a surprise over the last several years to see Mr. Shih, now 60, reinvent himself with snug-cut Italian suits, innovative designs for tablet and notebook computers and scathing criticisms of Taiwan’s test-obsessed, engineering-oriented educational system.

“I don’t think the Taiwanese got very good training to drive the mentality of innovation,” he said during an interview at Asus’s headquarters here on the outskirts of Taipei. (Mr. Shih also demonstrated his flexibility in the interview, assuming the lotus position while wearing a dark blue Armani suit with a sky-blue Armani tie.)

Fostering innovation has become a mantra among corporate leaders and government officials alike in Taiwan this year because the island’s huge consumer electronics industry has run into serious trouble.

Worldwide sales of PCs, for which Taiwanese companies control over 90 percent of the final design and manufacturing, are declining steadily. Sales of smartphones, for which Taiwanese companies control less than a fifth of the market, are rising briskly. Tablets based on the Android operating system, which most Taiwanese companies, with the exception of Asus, have been slow to embrace, are also on the same upward trajectory.

“Outside of Asus, all the others are struggling,” said Helen Chiang, a Taiwan electronics specialist at the IDC research firm.

Foxconn and Acer have each reported that sales in the first quarter dropped 19 percent from a year ago. HTC’s sales plunged 37 percent, although that was partly because the company began shipping the annually improved version of its best-known smartphone in late March instead of February. At Quanta, a 70,000-employee contract designer and manufacturer of notebook computers, sales have shown double-digit percentage drops from year-earlier levels for 14 consecutive months.

Foreign rivals have proved more nimble. In South Korea, Samsung is expanding rapidly in smartphones, tablet computers and other sectors. After embracing the Android operating system early, the company has built on its huge economies of scale in the mass production of components, like display screens and microprocessors.

In China, Lenovo and many smaller manufacturers are relying on labor that, while no longer cheap, is still less expensive than in Taiwan. That helped make Lenovo the only one among the top five PC makers worldwide to eke out a gain in shipments in the first quarter — although by only a tenth of a percent.

And in the United States, Apple, Google and Amazon have shown themselves adept at producing breakthrough consumer products, while pending legislation would allow them to import more foreign engineers at a lower cost than hiring and training domestic engineers.

As notebooks and other Windows-based PCs have lost ground, first to Apple tablets and now to Android-based designs, even Microsoft has been indicating dissatisfaction with the pace of PC innovation in Taiwan. Despite a longtime aversion to hardware, Microsoft recently introduced its own Surface tablet.

“The Surface tablet is a pretty strong signal to the whole Taiwan PC ecosystem that they’re not innovating enough,” said Bill Whyman, a senior managing director at the ISI research firm.

One exception to Taiwan’s difficulties is Asus. Its many new Android-based tablets, including one that it has branded with Google, allowed it to surpass Amazon in the first quarter of this year to become the third-largest player in the global tablet computer market, behind Apple and Samsung, according to IDC.

And some of its designs are downright clever. One new model, the PadFone, lets the user slide a cellphone into the back, turning the tablet into an oversize cellphone. Another tablet, the Transformer, features a detachable keyboard with a wireless connection and a two-sided display panel that can show a movie on one side to entertain children or guests while the other side is a regular computer display for the owner.

As Culture Moves Online, France Tries to Follow It With a Tax

PARIS — France’s “cultural exception” — the policy that creative works like books, music and movies deserve protection beyond what is accorded ordinary goods — is in line for a digital update.

A government adviser has suggested that manufacturers pay a 1 percent levy on the price of smartphones and tablet computers to help keep funding for such works alive, as more and more end up online and beyond the reach of existing taxes.

The tax, “painless for the consumer,” could also be used to ensure that artists are remunerated at a time when so much is downloaded free, said the report, which was presented Monday to President François Hollande and his culture minister, Aurélie Filippetti.

“Considering the weight of cultural content in connected devices, it is legitimate that those who make and distribute the equipment contribute to the financing of its creation,” according to the report, produced under the guidance of a former television executive and journalist, Pierre Lescure.

“L’exception culturelle” is no trifling matter: Nicole Bricq, the French trade minister, warned in March that it was “a red line” that could not be crossed in talks with the United States on a proposed free-trade area. France and 13 other European Union member nations insisted in a letter this week that the audiovisual sector must be left out of those talks, setting up a possible confrontation with the British prime minister, David Cameron, who has said that everything should be on the table.

In practice, the cultural exception means broadcasters must meet quotas for French music and television programming, for example, and prices for books are set by regulators. The effort stretches throughout the economy, requiring a system of taxes and subsidies for its upkeep, perhaps most visibly in the country’s film industry, which gets hundreds of million euros each year in subsidies — raised from taxes on movie tickets, television stations and Internet service providers — to defend itself from the Hollywood juggernaut.

But technology threatens to render such measures irrelevant, the report noted. The nature of Internet commerce means foreigners can have access to the French market without having to pay the levies that support French culture. And as more content is streamed online or stored in the cloud, a tax on recording media like blank compact discs and memory sticks will raise less money — and that is where the smartphone tax comes in.

Gilles Vercken, an intellectual property lawyer, acknowledged that streaming and the cloud would bring down those levies, which he estimated currently raise about €200 million, or $260 million, a year to support French authors, composers, actors, musicians and the like. But he expressed skepticism that the smartphone tax would see the light of day.

“I wonder what could be the legal grounds for such taxes,” he said, noting that the connection between hardware manufacturers and end users might prove a difficult one to defend in court. “I really don’t see it.”

Monica Horten, a visiting fellow at the London School of Economics who studies the politics of intellectual property rights, said that, in principle, such levies were possible under E.U. law, but that “the problem is in the implementation.”

The first issue would be drafting a law acceptable to the European Court of Justice, while another would be in actually getting device makers on board to pay the tax. “I think you can expect them to filibuster,” she said.

The report seeks to address a problem that is as old as the Internet, which has shifted the balance of power away from content creators in favor of newer actors like Google, Amazon and peer-to-peer downloading services, even as it gives creators previously unimagined opportunities to be seen or heard.

In addressing such matters, France has sometimes chosen to fight battles that other governments have shied away from. For instance, Google agreed in February to set up a €60 million fund to help French newspaper and magazine publishers develop their digital business, though it managed to fend off demands that it pay for the right to link to their content.

And the Lescure report comes less than two weeks after Arnaud Montebourg, the minister for industrial renewal, put the kibosh on a sale to Yahoo of a majority stake in Dailymotion, a French rival to YouTube, because the government had singled out the company as a national champion and did not want control falling into foreign hands.

The Lescure report also suggests that France throw out a “three-strikes” anti-piracy law that Nicolas Sarkozy, Mr. Hollande’s predecessor, had held up as one of his signature achievements and one that had been hailed by the global entertainment industry. Under the Hadopi Law, as it is known, illegal downloaders were to have their Internet access cut off if they failed to heed three warnings; violators were also to be subject to criminal sanctions and large fines. In practice, there has been little enforcement action, though proponents credit the law with helping to reduce Internet piracy.

If Mr. Lescure’s recommendations are followed, law enforcement will focus on the worst violators, and most people would face minimal fines. A proposed “Hadopi authority” would be eliminated, and responsibility for enforcement would revert to the national media regulator, the Conseil supérieur de l’audiovisuel.

NFL Tries to Frame Concussion Litigation As Labor Dispute

The multidistrict litigation brought by thousands of current and former football players who have suffered from the effects of repeated concussions should be dismissed because the responsibility for players' health rested with the individual teams, not the league, the National Football League argued in its motion to dismiss.

Mintz Levin Tries New Recipe in San Francisco Bay Area

Paul Churchill, former head of Goodwin Procter's San Francisco office, has joined Boston-based Mintz, Levin, Cohn, Ferris, Glovsky and Popeo to manage its San Francisco office.

He's joined by litigator Evan Nadel, a former partner in Greenberg Traurig's San Francisco office.

Churchill, a real estate attorney, set up Goodwin's San Francisco office in 2006 and helped the office grow to 28 attorneys. Now he said he's looking forward to doing the same for Mintz Levin, where he officially started his new job Monday.

"I've done this before and I know what it takes," Churchill said. "I expect to have challenges just like any new entry to the market would, but I already have all the support I need from day one."

Like Goodwin, Mintz Levin made a big push in California starting in 2006, opening offices in both Palo Alto and San Diego. But while the San Diego office has since grown to more than 30 attorneys, the firm's office at 5 Palo Alto Square, which focused on patent prosecution work, never gained traction. At its peak, the office had about 15 lawyers, but only a few remained by March of this year.

In April, those attorneys relocated to the firm's newly opened San Francisco office, where Mintz Levin is hoping to have better luck. The San Francisco office will service the firm's roster of life science and tech clients based in South San Francisco, said New York-based Mintz Levin managing partner Robert Bodian. And it will focus on practices like litigation, real estate and employment, as opposed to patent work.

Bodian said he expects that within a few years, the San Francisco office will be as large as the firm's San Diego office, if not bigger.

"San Francisco is an attractive place for firms to be, and there are advantages to being there, especially if you have a strong litigation practice," Bodian said. "But I wouldn't rule out being back in Silicon Valley, depending on how we grow and what practices we attract."

Before joining Goodwin in 2006, Churchill spent 12 years at Cooley, where he headed the firm's real estate group. Some of his clients have included Menlo Equities, Juniper Networks Inc., Misawa Homes of America Inc., Digital Realty Trust Inc. and Woodside Hotels.

Commercial litigator Nadel began his legal career in 1998 at what was then O'Sullivan Graev & Karabell, and then moved to what was then Howard Rice Nemerovski Canady Falk & Rabkin in 2000. He joined Squire Sanders & Dempsey in 2006 and departed for Greenberg Traurig in 2010. Recruiter Larry Watanabe of Watanabe Nason brokered Churchill's move.