April 7, 2009

Discovery Claims Kindle Patent Infringement

Discovery Communications is alleging a patent infringement suit against Amazon over the development of its Kindle reader, Reuters reported.

Discovery chairman and founder John Hendricks first filed a patent for a device called the Everybook "” which appears to be quite similar to the Amazon Kindle and the Sony Reader "” 17 years ago.

But after both Sony and Amazon refused to pay royalties, Discovery filed the suit against the two companies.

Discovery was granted U.S. Patent No. 7,298,851 for its "electronic book security and copyright protection system" in 2007 "” the same year the Kindle hit the market. The Sony Reader came out in October 2006.
While Hendricks was working at Discovery in the 1980s, he was one of the first to see the potential in newly built digital cable TV systems with nearly unlimited channel capacity and interactivity.

His plan was to offer the best shows on broadcast and cable TV on demand for a fee to cable subscribers, an idea that resulted in Your Choice TV, which offered shows for $1.

And while cable operators liked the idea as an added feature for subscribers, Fox's Rupert Murdoch balked at the plan for fear of advertiser reaction.

By 1993, Discovery spun off a separate company, also headed by Hendricks, to create the first on-demand menus and graphic interfaces. Tests were carried out for Comcast and Time Warner systems across the nation, but broadcasters were concerned they might lose control of their programming.

With networks refusing to embrace Your Choice, Discovery applied for patents for everything the company had developed, including onscreen menus and addressable advertising.

But one of those patents included Hendricks' idea for an electronic book reading device.

Both electronic book security and the infrastructure needed to buy and download the content from a device are a part of the Discovery patent.

Analysts say Discovery refused to seek a temporary injunction to shut down soaring Kindle sales because it wants them to continue growing.

Amazon e-books sales were 10 percent of all U.S. book sales at the end of last year.

The market for e-readers and e-books in 2009 is estimated to be around $1.2 billion, according to Mark Mahaney of Citigroup Investment Research.

The case, which awaits further hearings in a Delaware federal court, has Discovery looking to recover costs, attorney fees and triple any damages from the Kindle.

Discovery is also seeking ongoing royalty payments, all of which may be based on sales.

None of the parties involved have commented on the lawsuit.


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