M-Edge Slaps Amazon With Patent Infringement Lawsuit

By Joseph Mandour on January 9, 2012

California – M-Edge Accessories filed a lawsuit against Amazon for infringing on its patents for Kindle case designs by copying case designs and colors. M-Edge also alleges that Amazon engaged in unfair tactics, false advertising, intentional interference with contracts, and fraud.

The Kindle e-reader device has revolutionized the online reading experience, bringing Amazon increased revenues from e-book purchases, hardware, and related goods. M-Edge, a company well known to any Kindle-user, provides stylish jackets and cases to suit every Kindle model. In October of 2008, M-edge began to sell the Kindle jackets and paid Amazon an 8% commission. The brand proved popular with customers, who liked the array of modern designs. In February 2009, Amazon and M-Edge entered into a “Kindle Compatible” agreement, allowing M-Edge products to be featured in the Kindle Store in return for a 15% commission to Amazon. As one of Amazon’s “special partners” M-Edge seemed poised to benefit from the relationship. In the beginning, the match seemed like a good fit.

The relationship began to sour in May 2009, when Amazon asked M-Edge for direct sale of its products, and M-Edge refused, citing poor terms as its reason. In January 2010, Amazon asked M-Edge to pay a 32% commission. M-Edge refused and Amazon responded by threatening to delist the company’s products. In February 2010, Amazon charged M-Edge $600,000 for back payments at the 32% rate. M-Edge refused to pay Amazon. In April 2010, Amazon made a second request for a direct sales agreement. M-Edge refused to sign it because it lacked a guaranteed minimum volume.

In May 2010, Amazon requested a 25% retroactively applied fee agreement. If M-Edge didn’t comply, Amazon threatened to delist M-Edge’s products and to restructure its product changes so users would not be able to find M-Edge products. Amazon also threatened to restrict pre-launch access to its Kindle 3, which would prevent M-Edge from designing jackets for the launch. In July 2010, M-Edge agreed to Amazon’s demands because it relied on Amazon for 90% of its sales. The same month Amazon only allowed M-Edge a day of pre-release Kindle 3 access. Then, in January 2011, Amazon demanded that M-Edge pay $150,000 for an Amazon executive salary, and requested a larger share of M-Edge sales. By March, Amazon had withheld $2 million in M-Edge payments because M-Edge did not agree to the January terms. That July, Amazon asked for a 34% commission. The following month, Amazon charged M-Edge fees for products not showing an Amazon logo. M-Edge refused to pay, stating that it had never developed the products in question. In September, Amazon excluded M-Edge from the “Amazon Approved Accessory Vendor” list, causing customers to reject M-Edge. Then Amazon demanded $953,000 in back payments. M-Edge argued that it only owed $40,000. In November, Amazon terminated the 2009 agreement with M-Edge due to “repeated failure to perform its obligations under the Agreement.”

M-Edge filed suit this month with claims backed by business documents, e-mails and contracts. M-Edge seeks damages for patent-infringement and an injunction requiring Amazon to remove infringing Kindle jackets from the marketplace.

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Posted in: Patent Infringement