LOS ANGELES (Hollywood Reporter) - Discovery Communications chairman and founder John Hendricks waited 17 years for the moment when Amazon and Sony would battle for dominance in the world of portable electronic book readers.
That’s how long ago Hendricks filed for a patent on what he called the Everybook, which now appears to be quite similar to the Amazon Kindle and the Sony Reader. Now Discovery has sued Amazon, alleging patent infringement.
The lawsuit came after Discovery asked Sony and Amazon to pay royalties and both balked.
It took until 2007 — the same year the Kindle hit the market — for Discovery to be granted U.S. Patent No. 7,298,851 for its “electronic book security and copyright protection system.” The Sony Reader came out in October 2006.
The back story related to Discovery’s book-reading device would make for a page-turner in its own right.
In the late 1980s, Hendricks, the resident visionary at Discovery, was one of the first to understand the potential in newly built digital cable TV systems with nearly unlimited channel capacity and interactivity.
His dream was to harness that capacity to offer the best shows on broadcast and cable TV on demand for a fee to cable subscribers. He created Your Choice TV, which offered shows for $1.
Cable operators loved it because it was an added feature for subscribers. Hendricks pitched it to the major broadcasters as a new revenue stream. He convinced CBS to make “60 Minutes” available and NBC to offer “Saturday Night Live” as a test, but he hit a brick wall at Fox, where Rupert Murdoch — years before he would become enamored with all things digital — fretted over advertiser reaction.
Discovery spun off a separate company to tackle the venture, with Hendricks heading both. By 1993, his group created the first on-demand menus and graphic interfaces. There were tests at Comcast and Time Warner systems nationwide. The problem: Broadcasters were frightened of losing control of their shows.
Eventually, Hendricks saw that Your Choice was doomed by network resistance. But Discovery applied for patents for everything the company had developed, from the onscreen menu to addressable advertising. That included Hendricks’ idea for an electronic book reading device.
The Discovery patent covers not only electronic book security but also the infrastructure needed to buy and download the content from a device. It is notable that Discovery did not seek a temporary injunction to shut down soaring Kindle sales because it wants them to flourish.
Amazon at the end of last year said e-books sales were 10% of all U.S. book sales. Mark Mahaney of Citigroup Investment Research estimates the market for e-readers and e-books in 2009 will be $1.2 billion.
Discovery’s suit seeks to recover costs, attorney fees and triple any damages; the company also wants ongoing royalty payments, all of which may be based on sales. The case awaits further hearings in a Delaware federal court.
Sony declined comment and Amazon did not return calls for comment. Hendricks declined to speak on advice of Discovery’s lawyers.
Patent trials are notoriously unpredictable. Patents can be struck down or awards can zoom into the stratosphere. If victorious over Amazon, you can bet next on the Discovery to-do list will be a similar suit against Sony and several other e-book makers.
The market for electronic books is just heating up. So too are the legal battles.
Editing by Dean Goodman at Reuters