In March 2004 the late Harvey Ross and his On Demand Machine Corporation of St. Louis won a long-running patent infringement suit against Amazon.com, Ingram Industries and Lightning Source Inc., three of the world's foremost print-on-demand businesses. Ingram and Lightning Source (originally Lightning Print - OUP's and CUP's agents) had been clients of ODMC's but decided to break away using Harvey Ross's then newly-developed single-book production technology. ODMC offered to license the technology on a royalty basis, but when Ingram refused, sued for patent infringement. ODMC's recent award of $15 million may be further increased because the jury ruled that Ingram and Lightning Source "had infringed the patent with willful intent".
There are various reports of the case on the Web, two of which Akme reproduces below, with permission and without comment. In due course, Akme hopes to be able to provide further details and analysis concerning this far-reaching and evidently contentious ruling. Nowhere in the case or the reports of it is the issue of authors' rights raised (rf An ultra short run), but as far as Akme is concerned, any ruling which halts - or even pauses - the blithe, blind, trampling march of the mighty conglomerates must be regarded as good news.
As we roll into the On Demand Conference and Exposition in New York this week, this story raised a few eyebrows on Friday. A federal jury ordered Lightning Source, Inc., of La Vergne, TN, the nation's leading provider of on-demand book printing to pay $15 million for patent infringement to the company that claims to have created the concept. Also named as defendants in the case brought on behalf of Harvey Ross and On Demand Machine Corp. were Seattle-based Amazon.com and Lightning Source's parent company, Ingram Industries, also of Nashville TN.
The patent in question is Patent No. 5,465,213, issued to Harvey Ross on 7 November 1995, and entitled 'System and method of manufacturing a single book copy'. The Abstract of the Patent reads as follows:
"A computer based book manufacturing, distributing and retailing system for the high speed reproduction of a single copy of a book is disclosed. The system is especially adapted for direct consumer sales since the manufacture of a selected book can take place at the point of sale. A master module includes a computer having a database of books to be selected, the books preferably being stored in a digital book-description format. Upon selection of a particular book from the database, a single copy of the book (including the text and a color cover) is printed by means of high speed raster printing engines. The system includes a binder for binding the text pages and the cover into a book."
WhatTheyThink was told by an insider who declined to be named that the patent is the only remaining asset of On Demand Machine Corp.
We contacted Keel Hunt, Lightning Source spokesman, who indicated that the press coverage has given rise to questions relative to whether Lightning Source would be closing its doors. Hunt said, "We are continuing to service our customers and business partners; there is no doubt about that. In terms of the verdict, we are disappointed and we certainly disagree with it. We will be appealing this, of course. We think we have a strong basis for an appeal and we expect to prevail. The important thing to know now is that there is a legal process and it is not over." Hunt also indicated that the company had no intention of raising prices to its publisher customers to cover any potential royalty costs that may be required at some future time, should the appeal not be successful.
The verdict was also discussed in a daily electronic newsletter published by Publisher's Weekly, which stated, "Despite some experts' belief - including former B&N POD guru Ken Brooks - that the patent applied to a type of in-store machine, the jury interpreted it broadly to include a storage system, including those used by Lightning and, by extension, clients like Amazon. Brooks was an Ingram witness and described himself as 'very surprised' by the ruling. Many in publishing were surprised too." According to the Publishers Weekly analysis, even with the jury's verdict, a judge must find the infringement willful before any damages are required.
Lightning Source has printed over ten million books on demand since it opened its doors in 1997 as Lightning Print, Inc. The company also produces in excess of 35,000 e-books per month. Lightning Source, while perhaps the largest producer of on demand books, is certainly not the only producer of on demand books. Other notable players include R. R. Donnelley, the $8 billion behemoth printing company which has an on demand book manufacturing operation in Harrisonburg VA, and Quebecor World which operates a facility in Martinsburg, WVA. As evidenced by the volume produced by Lightning Source and operations established by two of the world's largest printers, publishers are beginning to take notice of the benefits of producing books on demand and the positive revenue implications an on demand publishing component can bring to their business.
Harvey Ross, who died in January 2002, has also had a contentious relationship with Xerox over the years. Industry watchers will be aware that Xerox has a significant sales effort around Books On Demand, and has developed a series of equipment configurations designed to support that application, with a number of successful installs including Pearson Education and Perseus Books Group.
Who would have thought that a patent with the innocuous title "System and method of manufacturing a single book copy" could become a heavy hammer hanging over the print-on-demand industry and all its practitioners?
On March 3, a small Missouri company, On Demand Machine Corporation (ODMC), which never actually brought the system in question to market, won a $15 million suit against Amazon, Ingram, and Lightning Source for patent infringement regarding print-on-demand of books.
I called the two companies referenced in four of the five news articles posted on the ODMC website (the fifth is the announcement of the patent infringement award) and spoke to Joyce Meskis, owner of Denver's Tattered Cover Bookstore, and Tom Messer, of Eakins Press, Austin Texas. I wanted to find out exactly how these folks are using the BookMachine System covered by the patent.
In 1999, Eakins Press purchased the first BookMachine built for $65,000. Unfortunately, Eakins was never able to put it into production because of an unresolved cutting problem. The machine did not cut books squarely in the final process so none of the books it produced was saleable. It now sits in Eakins' warehouse, shrink-wrapped, silent, and gathering dust.
While very friendly, Joyce Meskis was able to provide even less information. She was scheduled to receive machine number two in early 2000. It was never delivered. Joyce is still a firm believer in the value of production at the point of purchase, but hasn't been able to implement it in her bookstore.
The Patent
Dated November 7, 1995, United States Patent #5,465,213 describes a system and method of manufacturing a single book. The abstract reads:
A computer based-book manufacturing, distributing and retailing system for the high-speed reproduction of a single copy of a book is disclosed. The system is especially adapted for direct consumer sales since the manufacture of a selected book can take place at the point of sale. A master module includes a computer having a database of books to be selected, the books preferably being stored in a digital book-description format. Upon selection of a particular book from the database, a single copy of the book (including the text and a color cover) is printed by means of high-speed raster printing engines. The system includes a binder for binding the text pages and the cover into a book.
ODMC accused the defendants of infringing on "Claim 8" of the patent, which comprises the following steps:
(Sorry for the legalese...)
The Problem
So what's the problem, you say? This involves the printing of a book from a self-contained machine in a bookstore, right? Well, that might have been the original concept. But during the trial, the judge, Mary Ann L. Medler, issued a Markman Order - an order that defines the meanings of the words in the patent - that seems to change the meaning of some common words and, as a result, stretches the reach of the patent.
The judge's instructions to the jury stated that you "must accept the meanings as I have stated them - whether you agree with them or not..." There are definitions for two words that are especially problematic.
Book
According to Judge Medler, the word "book" in this instance means "a set of written, printed, or blank sheets bound together into a volume." Ms. Medler does not require that a book be bound with a cover and, at the same time, there is no clear definition of the number of pages or the method of binding.
Let's examine this definition a little further. There are certainly other products consisting of "a set of written, printed or blank sheets bound together in a volume," with or without a cover. Though I must admit, I find it a little hard to comprehend how to "print" a blank book on demand, especially if the cover is also blank. A few examples of printed documents of multiple pages that could be considered bound together in a volume, include:
These (and many, many other documents) share some of the characteristics of a book, but are not commonly accepted as books.
There are other ways of defining a book. According to the Encyclopedia Britannica a book is a "published work of literature or scholarship; the term has been defined by UNESCO for statistical purposes as a 'non-periodical printed publication of at least 49 pages excluding covers,' but no strict definition satisfactorily covers the variety of publications so identified." The Columbia Encyclopedia says that the "primary meaning today is... a written work in manuscript or in printed form that is of substantial length."
From postings by Edward Hutchins to the Book Arts List, in 1995 and 1996, comes a description of "bookness."
"Some things that may constitute bookness are: pages, covers, binding, sequence, narration, illustration, table of contents, durability, portability, shape, purpose, meaning, use, acceptance, ISBN number, etc. The more of these characteristics a book has, the more we say it has bookness."
A as in "a book"
Both the abstract and the background segment of the patent refer to the "high-speed reproduction of a single copy of a selected book." Judge Medler's interpretation says that the "preamble does not limit the claim to the manufacture of a 'single copy' of a book, as opposed to manufacturing several or multiple copies." I understand that it's not uncommon for courts to find that a singular is implied in a plural or vice versa in a patent case.
I agree, quibbling over the definition of "a" is a bit like Bill Clinton's grand jury testimony in August, 1998, regarding his relationship with Monica Lewinsky: "It depends upon what the meaning of the word 'is' means. If is means is, and never has been, that's one thing. If it means, there is none, that was a completely true statement."
The point? The difference between a piece of equipment designed for the production of a book at the point of sale and a high-speed digital production printer connected to inline finishing equipment seems rather substantial to me, yet the judge's definitions seem to encompass the functionality of equipment and processes that were in use long before the application for this patent.
The Little Guy
So how does this affect the "little guy?" I spoke to Mike Perry, editor at Inkling Books and the author of Untangling Tolkien, the first book-length chronology of The Lord of the Rings, to get his perspective. Inkling Books, a small imprint, has 22 books in print. Mike's perspective? "There is the potential that Lightning Source could be forced to stop selling books. That would put more than 10,000 books out of print since they keep no inventory. Once they stop printing, there are no more copies of those books," states Mike. "My income would immediately go to zero."
Inkling Books doesn't sell a lot of books, the best sellers move a copy a day or several copies a week. Even if Lightning Source stays in business, and opts to add a royalty to the cost of manufacturing, it will have a big effect on a small publisher. Mike isn't in this business to get rich; "I want people to read my books, and I try to keep my prices competitive with the larger volume, lower cost printing. If my costs go up 2% or 3%, that's a big share of my profit."
The Print-on-Demand Printer
Finding a printer willing to talk about his or her print-on-demand operation was a little more difficult. One business owner, not willing to put herself/himself in the focus of an attorney looking for the next "infringer," asked me not to use a name or location. "I'm not concerned about it... (But) I don't want this guy to get me in his radar."
What Does This Mean? The sky is not falling!
Rather than panic in the street, I called Tom Maliska, a software engineer and an intellectual property attorney by training, an expert at business issues relating to intellectual property, and managing director of Kindling LLC. After I explained the concerns I had heard from the industry, Maliska walked me through all the reasons why it will not mean "the end of the world as we know it." Says Maliska:
"Following judgments like this one, cases usually take one of two paths, typically: appeal or settlement. If the plaintiff pushes for this high award, this is going to get challenged in all likelihood. The judgment is high enough that it makes it worth appealing and taking ODMC on again."I'm very confused why the court walked away from what the author of the patent itself thought was inventive. This patent - unlike many - actually comes out and defines what it is that makes this invention unique. In the inventor's own words the 'singular nature of this machine differentiates it from other general purpose machines of a similar kind which require routine adjustment and intervention. Other general purpose machines, although capable of document production are not specifically designed to be consumer-operated for the on-demand, automatic manufacturing of a single book at the point of sale (author's emphasis).' It's clear that somewhere in the legal process the patent was reinvented."
The original patent included eight "claims" that describe the book manufacturing system. The patent office threw out six of those claims prior to the infringement suit, and the judge's instructions to the jury told them to ignore Claim 7, that Claim 8 was the only one they were to measure any infringement against. If you strip out any clauses from Claim 8 that appeared in the previous claims - those that have been thrown out - whatever remains of the method is the part of the patent that is under consideration.
So as an exercise, I listed the 9 clauses of Claim 8 and matched them with the clauses of Claim 6 and Claim 7, to see what would remain of the system and method the patent described. For those interested in the actual comparison, click here to view a PDF (74kb) of the matrix of clauses.
The result - nothing remained!
Just like one of those Russian dolls, keep taking off layers and what do you end up with? Air... Does that mean there is nothing left against which an infringement can be found?
What's Next?
At this point, we wait for Lightning Source, Ingram, and Amazon to appeal - something that will probably happen in the next few weeks. Watch this space for developments.
Please offer Gail your feedback! She can be reached at gail@business-strategies-etc.com
About Gail Nickel-Kailing:
An analyst and consultant, she provides counsel to commercial and digital printers and to marketing executives who use their services. She can be reached at gail@business-strategies-etc.com