E Ink’s Patent Dispute with TrekStor: Current Status and Future Implications
Almost exactly a year ago (see below), E Ink Holdings announced in a press release that it had filed a lawsuit against TrekStor at the Mannheim Regional Court for patent infringements. The specific issue was that the screen of the TrekStor Pyrus (or eBook Reader 4Ink) was manufactured by the Chinese company Guangzhou OED Technologies (OEDTech for short). The technology was alleged to infringe upon the patents “EP1231500B1” and “EP1010036B1“.
Since E Ink Holding (formerly PVI) is based in Taiwan and likely wouldn’t have a strong case in a Chinese court over patent disputes, the lawsuit was filed in Germany. This caused quite a stir locally, as TrekStor was an integral part of the eBook reader strategy of Thalia, Weltbild, and Hugendubel at that time. However, thanks to the booksellers’ Tolino alliance, they may not be as concerned about the matter now.
Despite the lawsuit, a year later the affected TrekStor devices are still available for purchase, leading one to wonder what has happened to the lawsuit.
Nullity Suit at the Federal Patent Court
A look at the homepage of OEDTech provides an answer as to why nothing has changed so far. According to an entry on their site, the proceedings have been suspended because a nullity suit involving one of the two E-Ink patents is pending before the Federal Patent Court.
This concerns the patent with the number EP1010036B1. It describes the basic structure of an E-Paper or E-Ink display, involving ink, microcapsules, and the materials used.
The nullity suit was filed on February 4, 2013, and according to OEDTech, the Mannheim Regional Court believes it will succeed. This suspension of the case is attributed to that belief. However, it is not mentioned who filed the nullity suit. Nevertheless, OEDTech states that their lawyers expect a decision in about a year and a half, which strongly suggests that the counterclaim might originate from the Chinese company. This would make sense, considering their European business is at stake.
Action Backfired?
Now, the lawsuit against TrekStor and the associated consequences could indeed backfire – if the Federal Patent Court rules in favor of OEDTech.
The current market developments also suggest some changes. For example, the Icarus 8 uses the same technology, as does the Cybook Ocean, which utilizes an OEDTech screen. On the other hand, TrekStor has made a shift with its latest addition, the Pyrus 2 LED, which features an E-Ink Pearl screen. This is very interesting in light of the patent disputes.
If the assessment of OEDTech’s lawyers is accurate, a decision from the Federal Patent Court could be expected by February 2015. After that, it would presumably take some time for the Mannheim Regional Court to make a decision – unless something else interrupts proceedings. So, there probably won’t be a final verdict before 2016.
E Ink Sues TrekStor for Patent Infringement; eBook Reader 4Ink Sales in Jeopardy?
Report from November 5, 2012: In our review of the TrekStor eBook Reader 4Ink, I speculated that the display technology used in the device might be Sipix or eInk-licensed technology. However, that doesn’t seem to be the case, as E Ink Corporation filed a lawsuit last Friday in Mannheim against TrekStor for patent infringement.
The two patents in question are:
- EP 1 231 500 B1, titled “Electronically addressable microencapsulated ink”
- EP 1 010 036, titled “Electrophoretic displays and materials”
The patents concern screen technology, which in our review was perceived to function almost identically to other eBook readers. However, the screen is manufactured in China by a company called “Guangzhou OED Technologies Co., Ltd,” not by a partner of the E Ink Corporation. The affected devices are the TrekStor Pyrus and the slightly modified TrekStor eBook Reader 4Ink, which was recently added to the range by Thalia and Weltbild.
E Ink Corporation wants to achieve a sales ban on both devices and hold TrekStor liable for the damages incurred. The Chairman of E Ink Holding comments on the step as follows: “We have filed the lawsuit because E Ink’s intellectual property is being unfairly exploited. […] E Ink is the market leader in producing high-quality intellectual property in the field of electronic displays and is committed to building a sustainable ecosystem together with customers, suppliers, and industry partners. Our intellectual property is one of our major assets, which we have built through the hard work of hundreds of scientists and engineers over many years and by spending hundreds of millions of dollars in research and development.”
The whole issue might not only become a hassle for TrekStor, but also for Thalia, Weltbild & Co, who are offering the device for sale. Aside from the logistical effort and advertising costs, the retailers would suddenly be left without an affordable entry-level device if the injunction against the sale is successful. However, existing stock could still be sold, which might be sufficient for the Christmas season. Whatever happens, we’ll keep you updated.
TrekStor Responds
Update November 8, 2012: TrekStor points out that the lawsuit filed is not a preliminary injunction but rather a main lawsuit. According to Börsenblatt, this is because TrekStor has filed a protective letter against the threatened preliminary injunction, although this doesn’t guarantee that a quicker decision won’t be reached.
In the TrekStor statement, it is further noted: “In the main legal dispute, a decision in the first instance is not expected before the second half of 2013. A decision in any possible appeal at the Higher Regional Court of Karlsruhe is expected not earlier than the first half of 2015.”
Otherwise, TrekStor remains calm regarding the subject of the dispute. “After thorough review, we have come to the conviction that the challenged products do not infringe any patents of E Ink,” explains the managing director of TrekStor. “We therefore face the upcoming infringement proceedings with confidence.”
It seems the Christmas sales of the TrekStor eBook Reader 4Ink, Pyrus, or Liro Ink are secured for the time being. If the legal dispute really drags on until 2015, the affected devices might no longer be on the market anyway. The TrekStor partners can take a deep breath now and prepare for the Christmas season.
E Ink Holdings and AUO Sued for Patent Infringement
Report from January 29, 2013: A few weeks ago, E Ink Holdings was on the other side of the complaint in the lawsuit against TrekStor for alleged patent infringements, and now they themselves are being sued. According to a press release from the research company CopyTele Inc (CTI), a lawsuit has been filed in the US against E Ink Holdings and AU Optronics (AUO) for patent infringements.
AU Optronics is one of the world’s largest display manufacturers and a former majority owner of SiPix. SiPix was long the only competitor of E Ink Holdings in the ePaper market, but was acquired by E Ink Holdings last year. Before that happened, according to The Digital Reader, AUO and CopyTele had an agreement worth $10 million, which was presumably aimed at enhancing the eInk technology for AUO or SiPix.
SiPix’s eInk technology couldn’t compete with the main rival, so their display technology was rarely used locally. The most famous example is certainly the Oyo series from Thalia. Both devices utilized SiPix technology but had notably darker screen backgrounds compared to competitor products. Although the contrast value was improved with the Oyo 2, there were a series of other hardware and software issues that prevented the device’s success.
SiPix Technology a Setback for E Ink Holding?
When E Ink Holdings acquired SiPix, it was announced that they intended to integrate the competitor’s technology into their own portfolio. At the time, this move baffled us (and many other observers). After all, E Ink Holdings’s displays already dominated the eBook reader market. Acquiring SiPix apparently didn’t add real value to E Ink Holdings.
The allegations from CopyTele now cast the situation in a completely new light, as their press release sharply criticizes both companies. They accuse them of concocting a mutual plan to steal patented and valuable screen technology. The lawsuit was filed on grounds of potential breach of contract, fraud, conspiracy to monopolize, unfair business practices, and other anti-competitive actions.
Serious Allegations from CopyTele
Robert Berman, CTI’s President and CEO, comments on the situation: “This is a case of two foreign multi-billion dollar companies conspiring to steal valuable, patented technologies from a small US company, with the intention of causing severe financial hardship so that CTI cannot defend itself. Given the potential impact of CTI technologies on many product categories such as displays for TVs, computers, tablets, and eBook readers, which are dominated by AUO and E Ink, it’s not surprising they would want these technologies for themselves. CTI now has the resources and expertise needed to ensure AUO and E Ink are held accountable for their violations.”
For AUO, this isn’t the first case of this nature. Just in September 2012, they were fined $500 million for participating in a 5-year scheme to fix LCD prices, marking the highest penalty ever imposed under US antitrust law.
It will be interesting to see how things develop. E Ink Holdings acquired SiPix while the business between AUO and CopyTele was ongoing. If technological patents and know-how also changed hands, it puts the transaction in an unfavorable light.
