Technology

Kindle Battle Heats Up

3/21/2009 2:00 AM Eastern

Discovery Communications said last Tuesday it has filed a lawsuit in U.S. District Court in Delaware claiming online bookseller Amazon.com violated its patents with the popular electronic book product, Kindle.

In a statement, Discovery said that the sale of the Kindle and the Kindle 2 and its electronic book delivery system infringe U.S. Patent Number 7,298,851, “Electronic Book Security and Copyright Protection System,” a patent that was awarded to Discovery founder John Hendricks on Nov., 20, 2007. The Kindle was launched on Nov. 19 of that same year.

According to Discovery, Hendricks and the company were significant players in the development of digital content and delivery services in the 1990s. Hendricks' work included inventions of a secure, encrypted system for the selection, transmission and sale of electronic books.

“We believe they infringe our intellectual property rights, and that we are entitled to fair compensation,” Discovery general counsel Joseph LaSala Jr. said in a statement. “Legal action is not something Discovery takes lightly. Our tradition as an inventive company has produced considerable intellectual property assets for our shareholders, and today's infringement litigation is part of our effort to protect and defend those assets.”

Discovery Communications is being represented in the suit by Morrison & Foerster and Young Conaway Stargatt & Taylor.

Amazon, through a spokesperson, declined to comment on the suit.

Amazon launched the Kindle in 2007 and according to one analyst — Citigroup's Mark Mahaney — the online retailer has sold about 500,000 of the electronic book readers since then at $399 each. That works out to sales of about $200 million for the devices. E-books that can be downloaded onto the device generally sell for $9.99. Although there are no hard sales figures available, according to some published reports, e-book sales increased four-fold in 2008, although from a small base.

That could be a bone of contention in the suit. According to people familiar with the case, the programming giant is seeking compensation that would include a percentage of sales of e-books for the Kindle as well as sales for the physical devices.

“There is no accurate public information on the number of e-books sold,” said a person familiar with the case. “It is all in the realm of speculation.”

Those people said that Discovery could possibly expand the case to other e-book devices such as the Reader Digital Book from Sony Corp.

“I wouldn't rule out anything,” said a person familiar with the case.

Discovery is requesting payment of damages for the infringement and for continuing royalties from future sales; costs, expenses and attorneys fees associated with bringing the suit, pre-judgment interest and any other relief which the court deems the company is entitled.

CORRECTION

The March 16 cover story, Multimedia Madness, misidentified CBS executive vice president for sports sales and marketing John Bogusz in a photo. It also incorrectly spelled the name of Miraj Parikh, video innovation director at media agency Spark.

March