Spring Design Will Debut Alex E-Reader at CES

Spring Design plans on rolling out its Alex e-reader during the Consumer Electronics Show in Vegas. Although many small companies are producing e-readers in order to capitalize on a growing market, and perhaps take some percentage points from Amazon.com, Sony, and Barnes & Noble, Spring Design is a unique case in that it is suing Barnes & Noble, alleging that the retailer plagiarized the design of the Alex in order to create its own Nook e-reader. The court recently turned down Spring Design's injunction to halt sales of the Nook.

Spring Design will debut the Alex, its e-reader, in a two-day rollout during the Consumer Electronics Show in Vegas. While a wide variety of electronics will also make their debut during the convention, Spring Design's Alex may attract a good deal of media attention due to its somewhat controversial nature: Spring Design is alleging in court that Barnes & Noble stole the Alex's design to create their own e-reader, the Nook.

While that case has yet to be settled in court, the attendant publicity will likely benefit Spring Design when it hosts media lunches on Jan. 7 and 8.

On Oct. 19, a day before Barnes & Noble's Nook made its debut in a high-profile event on New York City's West Side, Spring Design announced the Alex. Both companies' e-readers feature a 6-inch monochrome e-ink display, paired to an iPhone-like touch screen capable of displaying multimedia content, and run on the Google Android operating system.

According to Spring Design, the similarities were not purely coincidental; on Nov. 2, the company announced that it would sue Barnes & Noble over the alleged misappropriation of the Alex design for the latter's Nook. A few days later, on Nov. 11, Spring Design filed its first amended complaint over the issue.

Barnes & Noble told eWEEK in a Nov. 3 email that it has no comment on pending litigation, as a matter of policy.

"Spring Design unfortunately had to take appropriate action to protect its intellectual property rights," Eric Kmiec, Spring Design's vice president of sales and marketing, said in a Nov. 2 statement. "We showed the Alex e-book design to Barnes & Noble in good faith with the intention of working together to provide a superior dual screen e-book to the market."

However, Spring Design's lawsuit experienced something of a setback on Dec. 1, when the U.S. District Court for the Northern District of California turned down its injunction to halt sales of the Nook.

"Based on the papers submitted to date and oral argument, the Court DENIES Plaintiff's Motion for a Preliminary Injunction," read the court order, signed by United States District Judge James Ware on Dec. 1. "The Court finds that at this time there is a genuine dispute over whether the [Nook] was derived from information disclosed by Plaintiff to Defendant or was the product of earlier independent development by Defendant."

In addition, "Plaintiff's motion was heard on the day that Defendant launched its [Nook] product, at which time Plaintiff did not have a commercial product available," added the order. "Thus, the requested preliminary injunction halting the sale of the Defendant's product would alter the status quo, not preserve it."

Despite being dismissed by some analysts as ultimately a niche product, e-readers became a must-have holiday item for the holiday 2009 season. Retail cost of the devices has fallen, with Amazon.com lowering the price of its Kindle 2 to $259 in order to match the price of the Nook. Despite mixed early reviews of the Nook from prominent media outlets such as The Wall Street Journal, Barnes & Noble claims that extraordinarily heavy demand for the devices has delayed their shipping to many customers before the first week of January 2010.

In a Dec. 1 research note by financial advisory group Collins Stewart, analyst Sandeep Aggarwal estimated that Amazon.com would sell as many as 550,000 Kindle devices in 2009, resulting in revenue of $301.4 million for the year.

A recent note on Barnes & Noble's Nook Website indicated that devices ordered now have an expected ship date of Feb. 1.

Neither Barnes & Noble nor Amazon.com, considered the top competitors in the e-reader space along with Sony, have offered a breakdown of their sales numbers. In a recent interview with Newsweek, Amazon.com CEO Jeff Bezos indicated that "Kindle book sales are 48 percent of the physical sales" of books for the online retailer, up from 35 percent in May.

If Bezos's statement (as well as Barnes & Noble's claims about demand for the Nook) is taken at face value, then the e-reader market can be assumed to be a rapidly expanding one. In which case, Spring Design may feel it well worth both the legal battle and push against larger competitors, if by doing so the company can claim even a small percentage of that market.