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Go Ahead Given For Lawsuit Against Barnes & Noble

December 28, 2010

Barnes & Noble Inc. lost its bid to dismiss Spring Design Inc.’s lawsuit accusing the bookseller of illegally copying a screen design for the popular Nook electronic book reader.

According to a ruling in the federal court in San Jose, California, Spring Design will be allowed to pursue claims accusing Barnes & Noble of misappropriating trade secrets, breach of contract and unfair competition.

The ruling by U.S. District Judge James Ware is a setback for Barnes & Noble, which launched the device in October 2009 to compete with Amazon.com Inc.’s market-leading Kindle. 

Spring Design said it had shared the dual-display of its forthcoming Alex eReader with Barnes & Noble when the companies held talks in 2009 over a possible partnership.

The company said Barnes & Noble later incorporated features of Alex into the Nook, which breached a nondisclosure agreement.  One Nook screen is used for reading and one for browsing.

The Nook starts at $149, and Forrester Research expects sales to reach about $2 million by the end of 2010.

Spring Design started to ship Alex in April and its price starts at $299.

Ware said in his ruling that there was a “significant factual dispute” over whether the information Spring Design shared had substantially influenced the design of the Nook or had been disclosed already in patent applications filed as early as 2006.

The judge also said it was premature to reject charges that Barnes & Noble had violated California law by stealing trade secrets and misleading consumers by advertising that the Nook was the first eReader with features like a color touch screen.

Spring Design was founded in 2006 and is based in Silicon Valley, but has offices in China and Taiwan. 

Barnes & Noble launched the Nook to help stop the declining sales and earnings.

Forrester estimated that Amazon controlled over 60 percent of the e-books market.

Amazon reported strong holiday season sales for the Kindle on Monday, while several Barnes & Noble stores reported having sold out of Nook over the weekend.

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