The ongoing battle of the e-readers between Amazon (AMZN) and Barnes & Noble (BKS) was already plenty heated after their under-$200 pricing moves earlier this month. But now the competition takes an intriguing twist due to a recent patent ruling that not only puts Amazon way ahead, but threatens the very existence of B&N's popular device, the Nook.

DailyFinance's sister site, Engadget, reported Tuesday that the U.S. Patent & Trademark Office just awarded a patent on e-readers with secondary LCD displays that Amazon first filed for in March 2006. Based on the write-up [PDF] the proposed device sounds an awful lot like the design of the Nook, which operates with a basic e-Ink display -- just like the Kindle -- but then uses a color LCD display for navigation. So far, not so good for B&N.

But because Amazon agreed not to file any additional patents in the four years between application and approval, the USPTO kept that original filing secret. And that might actually let B&N off the hook, unless the company magically discovered that Amazon had filed for a dual-screen patent while developing the Nook.

Then again, B&N already faces similar problems: last November, Spring Design sued B&N on the grounds that the bookseller had violated non-disclosure agreements and appropriate trade secrets related to its own, very similar looking e-reader, Alex. That legal battle is still pending, but it would be highly ironic, as Engadget points out, if B&N and Spring Design were "simultaneously fighting each other in one case while taking on Amazon as allies in another."

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