Amazon Disputes Kindle-Related Claims in New Suit

Amazon on Friday disputed Kindle-related claims in the latest in a series of patent infringement cases. The latest complaint was filed against the company by Technology Innovations in U.S. District Court in Houston on Dec. 23, court records show. The plaintiff claimed that Amazon’s sale of e-books and Kindle e-readers infringed a patent owned by Technology Innovations for a “Device For Including Enhancing Information With Printed Information And Method For Electronic Searching Thereof,” U.S. Patent 5,517,407.

Technology Innovations sought unspecified monetary damages, injunctive relief, costs, interest and attorneys fees. Amazon said in a 10-K filing at the SEC, “We dispute the allegations of wrongdoing and intend to vigorously defend ourselves in this matter."

In an October 10-Q SEC filing (CED Oct 25 p4), Amazon disputed Kindle-related claims in patent-infringement suits against the company by Olympic Developments and Positive Technologies. On Friday, Amazon also disputed allegations against it in separate suits by Kelora Systems, in Wisconsin, and Global Sessions, in Texas. Kelora claimed Amazon’s website infringed U.S. Patent 6,275,821. Global Sessions claimed that certain Amazon technologies infringed four patents. Amazon said it plans to “vigorously defend” itself in both disputes.

Sales of electronics and other general merchandise (EGM) soared again for Amazon in Q4, growing 60 percent from a year earlier to $7.39 billion globally, Chief Financial Officer Thomas Szkutak said in an earnings call. The company reported continued strong Kindle demand, with e-book sales now surpassing those of paperbacks. It wouldn’t say how many Kindles were sold. Szkutak said only that Amazon “sold millions” of its third-generation e-reader in Q4. Amazon doesn’t break CE sales out from its EGM results.

Szkutak said global EGM sales grew to 57 percent of Amazon’s total revenue in Q4. North American EGM revenue grew 71 percent from a year earlier to $4.56 billion and represented 63 percent of total sales in the region, up from 54 percent, he said. Outside North America, EGM revenue grew 46 percent to $2.83 billion, accounting for 49 percent of total international revenue, up from 43 percent, Szkutak said. Global Q4 media sales grew 12 percent to $5.24 billion. North American media revenue grew 13 percent to $2.37 billion. International media revenue grew 11 percent to $2.87 billion.

Amazon’s Q4 profit grew to $416 million, 91 cents a share, from $384 million, 85 cents. Total revenue grew 36 percent to $12.95 billion. Active customer accounts passed 130 million, and active seller accounts exceeded 2 million, the company said. Amazon said it expects to report Q1 sales of $9.1 billion-$9.9 billion, representing year-to-year growth of 28-39 percent.

The company is “extremely pleased with what we're seeing” in the Kindle business, Szkutak said. Amazon is “continuing to invest in that business,” he said, adding, “We think it’s a very good business for us, and we're excited about the long-term opportunity there.” But he said Amazon’s “physical book business continues to grow” also. It’s “hard to say” how much the proliferation of Kindle apps across multiple devices is helping to increase the overall consumption of books across the industry or from Amazon, he said.

For every 100 paperback books Amazon has sold in 2011, it has sold 115 Kindle e-books, the company said. And it has “sold three times as many Kindle books as hardcover books … across Amazon.com’s entire U.S. book business,” including sales of books where there is no Kindle edition,” it said. Free Kindle e-books weren’t included in the statistic. The third-generation Kindle “eclipsed” the book Harry Potter and the Deathly Hallows as “the bestselling product in Amazon’s history,” it said. The U.S. online Kindle Store now has more than 810,000 e-books, including new releases and 107 of 112 New York Times bestsellers, it said. More than 670,000 of the e-books cost $9.99 or less, including 74 New York Times bestsellers, it said.

Amazon had about 52 fulfillment centers at year-end, Szkutak said. It added 13 last year and “will add” some this year but isn’t “saying how many yet,” as it continues to gauge its growth prospects, he said.