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E-ink Now Being Sued for Patent Infringement

vizplexMike Cane slipped me a press release today which looks to be a simple case of patent trolling – but isn’t.

It seems my favorite screen tech company is now being sued by a company no one has ever heard of.  Copytele, a screen tech company based on Long Island, has filed a patent infringement lawsuit against E-ink in the Federal District Court for the Northern District of California. They’ve also filed suit against AUO and E-ink, alleging "breach of contract, fraud, conspiracy to monopolize, unfair business practices, antitrust".

So, this is a simple case of patent trolling, right? Not necessarily.

Update: Copytele has filed a patent infringement lawsuit against Skype. They are clearly a troll.

You see, Copytele might be an obscure company but I have heard of them before. Between their past press releases and their SEC filings, I cannot say for certain that they do not have a valid case.

Copytele is a reserach firm that, so far as I can tell, has never released a product to market. Instead they focus on developing the tech and licensing it to other companies. They have a broad range of screen tech patents, including ones for EPD screens (like E-ink) as well as MEMS based screens.

I last heard about Copytele in June 2011. At that time this firm announced a deal with AUO, the ginormous screen manufacturer. Copytele licensed their epaper screen tech to Sipix, AUO’s epaper subsidiary, and was also working with Sipix to further develop the technology so AUO could manufacture it. AUO agreed to pay Copytele $3 million up front and another $7 million when certain goals were met.

I didn’t report on the AUO/Copytele deal at the time because I didn’t know enough about the screen tech. But in retrospect I would bet that AUO signed the deal because Copytele had better screen tech than Sipix.

Sipix debuted their first screen on the Pandigital Novel eReader in 2010, with a similar screen going into the Bookeen Orizon a short time later. These ereaders were released months behind schedule due to production issues and they ended up shipping with unsatisfactory screens. As I reported in October 2010 (and was confirmed elsewhere), the screen on the Pandigital Novel eReader was a much darker gray than even the E-ink screen on the original Kindle.

I’m pointing out the general poor quality of the screen because it explains why AUO signed a deal with Copytele. The smaller company probably had better technology and they were paid to help Sipix make better screens.

The latest info I can find on the AUO/Copytele deal is dated July 2012. Copytele’s 10-k SEC filing indicates that the deal with AUO was still going on and that Copytele could not say when the work would be complete.

Do you remember what happened in August 2012? E-ink bought out AUO’s controlling interest in Sipix and announced plans to integrate the Sipix screen tech into the next generation E-ink screens.

Now that is an interesting complication. It makes me wonder if the E-ink/Sipix deal went through before the specific status of the Sipix IP (and whatever part actually belongs to Copytele) had been nailed down.

I’m not pre-judging the case, but I will note that case is not as simple as patent trolling. It’s probably going to hinge on a nuanced reading of the agreement between AUO and Copytele and whatever paper trail the development team has created.

This could be an interesting case.

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Mike Cane January 28, 2013 um 8:56 pm

With all the patents suits flying these days, I tend not to read the damn releases anymore and chalk them up to either trolling or desperation.

Ted Thigpen February 4, 2013 um 2:12 pm

This article fails to mention Copytele was in business for 30 years with no real revenue, products, or profits to speak of. The firm fired it’s CEO for questionable practices, and that Copytele has funding of about $2 million dollars.

Really? You see this as a threat?

Copytele has never shown the screen by the way to a single shareholder or outside person.

Nate Hoffelder February 4, 2013 um 2:22 pm

My post doesn’t mention that Copytele has been failing gracefully for the past 20 years because I didn’t find that out until afterwards.

Even so, Copytele still talked AUO out of $3 million cash. I was told last week that the CEO of AUO had to have signed off on that deal, and that it was virtually unheard of for AUO to make an upfront payment. Can you say with absolute certainty that Copytele didn’t have something to show off that was better than what Sipix could make?

KrusosGooses February 4, 2013 um 2:18 pm

Copytele has 200 million shares outstanding. The vast majority came from insiders selling discounted stock options onto the open market.

Unless Copytele is given a win with billions, the company is so diluted no one but insiders that got discounted shares or shares for free will really profit.

Copytele had an article written about this technology in Fortune Magazine in 1986, they basically called the firm a joke, that was back then. You mean to tell me the author of this article knows all about displays, but not of Copytele.


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