Case on Barnes & Noble’s eReader to Head to Trial

(CN) - An eReader development company can proceed to trial over its claims that Barnes & Noble stole confidential information to create the Android-based Nook device, a federal judge in San Jose, Calif., ruled.

Spring Design sued the bookseller's website division, Barnesandnoble.com, for misappropriation of trade secrets and unfair competition.

The company had filed several eReader variation patents in 2006 and 2007 for a dual-display design, consisting of electronic paper and liquid crystal displays.

In October 2009, after eight months of negotiations between Spring Design and Barnes & Noble over a possible collaboration, Barnes & Noble independently launched the Nook, an Android-based, dual-screen eReader. Several months later in 2010, Spring Design released the Alex, a competing dual-screen eReader.

Barnes & Noble argued that Spring Design's information does not qualify for trade secret protection because the information was publicly available through its own patent applications and through other competitors, like the Kindle.

The website also claimed Spring Design cannot prove that its information has independent economic value.

U.S. District Judge James Ware on Monday declined to grant summary judgment on most of the parties' claims, finding that they each presented debatable arguments.

While one of Spring Design's patents revealed a trade secret, three other undisclosed trade secrets are private.

Ware also found that Kindle and other eReader devices did not necessarily make Spring Design's information public knowledge.

The judge only granted summary judgment on Barnes & Noble's claim as to the first, publicly available, trade secret.

Barnes & Noble's web division also claimed there is no proof that it actually misappropriated any confidential information from Spring Design, arguing that it could have independently developed the same technology and that Spring Design never provided it with the technology in question.

"The court finds that plaintiff has presented sufficient evidence to permit a jury to reasonably infer that defendant improperly used or disclosed at least some of plaintiff's trade secrets information," Ware wrote. "There is significant factual dispute, however, as to whether plaintiff's information had a substantial influence on the Nook's design, or whether defendant independently developed all of the Nook's features. Moreover, comparing the specific features of the Nook with plaintiff's alleged trade secrets is a fact-intensive task best left to a jury."

Ware also declined to rule on the false advertising charge, which alleges that Barnes & Noble misrepresented the Nook as the "first" eReader to have certain features, such as a color touch screen.

"Although it is undisputed that the Nook was available for consumer purchase before plaintiff's Alex, such statements could still be actionable if they were intended to mislead the average consumer into thinking that defendant, rather than plaintiff, was the inventor of these concepts," the ruling states. "Moreover ... it is heavily disputed whether plaintiff was the first to create an eReader with certain claimed features, or whether defendant independently developed these features prior to its meetings with plaintiff.

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