Struggling in-flight entertainment house e.Digital is challenging some of the world's biggest gadget companies with claims that it owns vital patents for using removable flash memory in portable devices.
It's targeting brands such as Casio, LG Electronics, Olympus, Samsung and Sanyo in a legal scrap filed last March. But e.Digital says there's a far larger pool of companies currently infringing its patents, and has "identified annual U.S. revenues of more than $20 billion," from products using its technology.
e.Digital's biggest moments came inside the dotcom bubble, when speculation raised its stock price to the super-inflated highs common during the period. It got its start selling what it claims was the first-ever digital voice recording device with removable flash memory. It later turned to selling digital audio players from 2000 to 2003, but the brand bombed, and e.Digital was hit with heavy losses.
Currently, the company sells only one product: the eVU portable video player, offered to airlines and healthcare companies. The company's only other potential source of revenue is its collection of patents.
E.Digital owns five patents which it calls the "Flash-R patent portfolio." They include methods for recording voice messages to flash memory, a file management system, and an operating system for flash-based devices.
The company has attempted to license these patents since 1997, but with very limited success. With e.Digital facing net losses in the millions of dollars for the last three years, it's turned to the angry little brother of licensing to stir up needed revenue: the patent infringement lawsuit.
"Our company’s ability to continue as a going concern is in substantial doubt and is dependent upon achieving a profitable level of operations and obtaining additional financing," the company wrote in a filing with the US Securities and Exchange Commission in March 2008.
e.Digital began its legal campaign against Vivitar Corporation in September 2007. Vivitar denies the patent infringement claims and filed a counter suit seeking relief. Unperturbed, in one fell swoop, e.Digital filed a nearly identical lawsuit against Avid Technology, Casio America, LG Electronics USA, Nikon, Olympus American, Samsung Electronics America, and Sanyo North American in a US District Court in Texas.
That's unsurprisingly the Eastern District of Texas, a jurisdiction known for favoring the complaints of patent holders. A copy of the filing is available here (PDF warning).
The lawsuit alleges the companies have products including digital cameras, camcorders, voice recorders and mobile phones that infringe four e.Digital patents:
- US5491774: Handheld record and playback device with flash memory
- US5742737: Method for recording voice messages on flash memory in a hand held recorder
- US5787445: Operating system including improved file management for use in devices utilizing flash memory as main memory
- US5839108: Flash memory file system in a handheld record and playback device
Some of the patents cover a lot of basic ground and have the potential to touch a large number of gadget makers, if the lawsuit is upheld. For instance, the '774 patent describes a solid state recording device with a control switch and microphone. The '108 patent covers memory being broken into a number of blocks in which data is stored.
E.Digital is asking to bar the companies from further infringement, unspecified compensatory damages and additional monetary relief.
"Digital recording on to flash memory has become a standard in portable electronic products," stated senior veep of e.Digital, Robert Putnam. "e.Digital created and patented important intellectual property in the use and utilization of flash memory in portable electronics products that we believe is being widely used in cell phones, cameras, camcorders, PDA's and other popular devices without our consent."
"We consider our Flash-R patent portfolio essential to many consumer electronic products and believe the number of companies infringing our portfolio are large with annual sales of what we believe are infringing products in the many billions of dollars," said Putnam.
Each of the companies fingered thus far have denied the charges, and have filed similar counter-claims against e.Digital for potentially harming their reputations.
Patent troll or not — this in-flight entertainment firm apparently has big plans to take on even more companies that incorporate flash into their products. ®