Rumble in Kindle's Jungle

Mother Nature has it out for the Amazon.

Discovery Channel parent Discovery Communications (Nasdaq: DISCA  ) (Nasdaq: DISCB  ) is suing Amazon.com (Nasdaq: AMZN  ) , claiming that its Kindle reader tramples on Discovery's patent for e-book security and copyright protection.

Discovery is hoping to be compensated financially for the infringement, along with receiving a continuing royalty stream if Amazon doesn't work its way around the patent.

The patent, coincidentally, was filed in the fall of 1999 but wasn't issued until November 20, 2007. Amazon's original Kindle hit the market the day before Discovery's patent was issued.

The media company that airs Dirty Jobs, Shark Week, and MythBusters isn't the type to throw legal fisticuffs. One could argue that Discovery's eco-friendly bent would prefer that Amazon distribute books digitally, beyond the juice-sucking charges and landfill considerations.

However, business is business, and if Amazon's Kindle -- and its recently released Kindle 2 -- are rightfully trampling on Discovery's intellectual property rights, it has every right to go after Amazon, and perhaps even Sony (NYSE: SNE  ) .

I'm no legal eagle, so don't look for me to handicap Discovery's chances. All I know is that it's typically Amazon that is on the plaintiff end of patent disputes.

Whether it's Amazon with its one-click shopping, Rambus (Nasdaq: RMBS  ) with its memory-related stronghold, or TiVo (Nasdaq: TIVO  ) with its time-shifting technology, pioneers with patents thrive on keeping their legal teams busy.

Mr. Market isn't too excited about Discovery's chances. Discovery issued a press release detailing its lawsuit in the middle of yesterday's trading day, and it barely moved the company's stock.

If the patent has legs, though, look out! Now that Amazon and Sony have made e-books fashionable after years of false starts elsewhere, there are juicy revenue streams waiting to be paddled.

Discovery has released enough Shark Week promos to know what happens when there's blood in the water.

Other page-turners in the Kindle saga:

Amazon.com is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He owns a Kindle. He does not own shares in any of the companies in this story, save for TiVo. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On March 18, 2009, at 10:18 AM, razormd wrote:

    ...it's utter nonsense...the patent basically covers ALL data and graphics transmiitted electronically:

    "The invention, electronic book security and copyright protection system, provides for secure distribution of electronic text and graphics to subscribers and secure storage. The method may be executed at a content provider's site, at an operations center, over a video distribution system or over a variety of alternative distribution systems, at a home subsystem, and at a billing and collection system. The content provider or operations center and/or other distribution points perform the functions of manipulation and secure storage of text data, security encryption and coding of text, cataloging of books, message center, and secure delivery functions. The home subsystem connects to a secure video distribution system or variety of alternative secure distribution systems, generates menus and stores text, and transacts through communicating mechanisms. A portable book-shaped viewer is used for secure viewing of the text. A billing system performs the transaction, management, authorization, collection and payments utilizing the telephone system or a variety of alternative communication systems using secure techniques."

    ..."book shaped viewer"???...uhh, like a laptop, maybe...so, in other words, they patented delivery of all information over the internet?...yeah, right!...and the patent dates to 1992 -- it's not exactly like they didn't have the opportunity to raise the issue sooner...just a stupid lawyer trick.

  • Report this Comment On March 18, 2009, at 11:30 AM, imalost wrote:

    The trading in Amazon stock should be investigated by the SEC. They get sued and new competition on cloud computing by Sun and the stock is up over $4 dollars. That doesn't Jive, wasn't Kindle and Cloud computing going to transform this company from a discretionary e-tailer to a tech company?

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