Pacific Northwest Alcatel-Lucent, the world's largest supplier of telecommunications equipment, asked a federal court to reinstate a record...

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Pacific Northwest

Software

Alcatel-Lucent, the world’s largest supplier of telecommunications equipment, asked a federal court to reinstate a record $1.52 billion patent verdict against Microsoft over the MP3 digital-music standard.

A three-judge panel of the U.S. Court of Appeals for the Federal Circuit heard arguments Monday over whether U.S. District Judge Rudi Brewster erred in throwing out the verdict. Brewster said in August that one Alcatel-Lucent patent wasn’t infringed and the second was co-owned by a German research institute that licensed the invention to Microsoft.

A San Diego jury said in February 2007 that Microsoft must pay $1.52 billion for violating the two patents, the largest patent verdict in U.S. history.

The dispute comes down to what is considered “new work” that has added to the technology, Richard Taranto, an attorney for Paris-based Alcatel-Lucent, told the judges in Washington, D.C., Monday.

Aviation

Frontier Alaska enters partnership

Alaska Airlines is entering into a partnership with the regional carrier Frontier Alaska.

Starting this fall, Frontier Alaska passengers will be able to book through Alaska Airlines and redeem miles in its mileage plan.

Frontier Alaska serves 92 destinations, from commuter and postal-service operations for Fairbanks and Anchorage to the state’s bush communities. It was formed by the recent combination of Hageland Aviation Services and Frontier Flying Service.

Alaska Airlines and its regional sister airline Horizon Air serve 94 cities in Alaska, the Lower 48, Hawaii, Canada and Mexico.

Nation / World

Finance

Fannie, Freddie sink on warnings

Shares of mortgage purchasers Fannie Mae and Freddie Mac tumbled Monday after a Federal Reserve official warned housing-market problems would likely extend into next year and an analyst said accounting changes could leave the two woefully short of necessary capital reserves.

In a speech in San Diego, San Francisco Federal Reserve President Janet Yellen said problems in the housing market and banking system could get even worse before the economy recovers.

The government-sponsored enterprises are the nation’s largest purchasers of mortgages. A continuation of the housing slump would hurt Fannie Mae and Freddie Mac’s new business.

Freddie Mac shares fell $2.59, or 18 percent, to close at $11.91, while Fannie Mae shares tumbled $3.04, or 16 percent, to $15.74.

Consumer goods

P&G raising prices as much as 16%

Procter & Gamble, the maker of Tide laundry detergent and Head & Shoulders shampoo, will raise prices as much as 16 percent because of higher costs for plastic, energy and paper.

The increases are the company’s steepest in at least 18 months. Procter & Gamble is betting that customers will continue to buy its Gillette shaving cream and Ivory soap rather than switching to store brands with lower prices promoted by Kroger and Wal-Mart.

Retailers will pay P&G 2 percent to 16 percent more for fabric, home and hair care, bar soaps, and health and shaving products beginning in September, P&G spokesman Paul Fox said Monday.

Commodity expenses will climb more than $2 billion this year, he said.

P&G previously added 4 percent to 8 percent to prices in the past 18 months, Fox said.

The company tries to counter as much as a third of rising expenses for pulp, used in paper, tallow, an animal fat used in soap, and oil-based products such as plastics through the reduction of distribution costs, Fox said.

“We don’t price in anticipation,” Fox said. “We only price to recover costs.”

U.S. consumers have slowed spending as costs for milk and bread increase and gasoline remains above $4 a gallon.

The U.S. economy lost jobs for the sixth straight month in June, the Labor Department said last week, raising the risk that people will cut back further.

Beer

Belgian brewer’s move criticized

Anheuser-Busch says InBev’s plan to remove its board is an attempt by the Belgian beer maker to buy the company at a price that is too low.

InBev said earlier it will file a preliminary consent solicitation asking Anheuser’s board to consult shareholders about replacing Anheuser’s board.

The move is part of its hostile $46 billion bid for St. Louis-based Anheuser, which Anheuser rejected two weeks ago, saying it undervalued the company.

Shareholders have the right to sue Anheuser’s board if they feel the directors are not acting in their best interest. A majority of shareholders would need to back InBev’s plan.

Anheuser-Busch is asking its shareholders to take no action and not sign or return any consent they may receive in the future from InBev.

Finance

Companies’ value drops $1 trillion

U.S. financial companies have lost more than $1 trillion in value this year, and yet another decline on Monday shows concerns aren’t going away soon.

Banks and brokerages began the week lower on the same fears that have been proved toxic since last summer in the ongoing credit crisis. The financial sector was hit with a confluence of troubles on Monday: cautious remarks from a Federal Reserve official and new capital concerns at Freddie Mac and Fannie Mae.

The drop in names like Lehman Brothers, Morgan Stanley and Merrill Lynch caused the financial section of the Standard & Poor’s 500 index to lose almost $150 billion in value on Monday, according to the rating agency.

That means S&P 500’s 85 financial components have lost some $1.3 trillion since the sector reached a high last October.

Even more startling is that shares of 35 of the companies, which include insurers, have lost more than half their value so far this year.

The financial sector used to be the index’s main driver, and many economists believe that the broader market will rise or fall on their health.

Compiled from Bloomberg News and The Associated Press