This could be the ultimate excuse for missing a homework assignment. A Michigan high school student named Justin Gawronski is suing Amazon.com — claiming that when the online retailer recently deleted the George Orwell novel "1984" from his Kindle reader, it also caused his "copious notes" to be "rendered useless." The lawsuit, filed Thursday in U.S. District Court in Seattle (pdf, 18 pages), seeks class action status and unspecified damages.

According to the lawsuit, Gawronski bought a 99 cent digital copy of "1984" for his Kindle 2 for a summer homework assignment and later saw it "vanish before his very eyes." The complaint goes on:

As part of his studies of “1984,” Mr. Gawronski had made copious notes in the book. After Amazon remotely deleted “1984,” those notes were rendered useless because they no longer referenced the relevant parts of the book. The notes are still accessible on the Kindle 2 device in a file separate from the deleted book, but are of no value. For example, a note such as “remember this paragraph for your thesis” is useless if it does not actually a reference a specific paragraph. By deleting “1984” from Mr. Gawronski’s Kindle 2, this is the position in which Amazon left him. Mr. Gawronski now needs to recreate all of his studies.

Amazon spokeswoman Patty Smith said the company doesn’t comment on litigation. Last week Amazon CEO Jeff Bezos, in a message posted on a Kindle discussion board, apologized to Kindle users over the "1984" incident, calling the company’s actions "stupid, thoughtless, and painfully out of line with our principles."

Amazon apparently deleted copies of "1984" and another Orwell classic, "Animal Farm," because they were unauthorized editions. But the event raised questions about Amazon’s ability to remotely control books or other content that people have already purchased.

Gawronski is joined by another plaintiff, Antoine Bruguier, of California, in the lawsuit. It’s the latest legal headache for Amazon, which faces a separate lawsuit over cracked Kindles.

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and Microsoft R&D employment rises, but almost everything else flat  

Microsoft’s total employment in sales, marketing, support, service and administrative roles ended up essentially flat in its recently completed fiscal year as the company cut back on hiring and cut jobs in the face of the tough economy.

The only categories showing an increase in the company’s 10-K report, filed earlier today, were product research and development, which rose from 35,000 to 36,000 positions; and manufacturing and distribution, which rose from 4,000 to 5,000 people.

The company’s rounding of the numbers to the nearest thousand makes it difficult to see subtle changes in employment levels, but the annual report provide a sense for which areas of Microsoft have been impacted most by its cost-cutting. Microsoft has previously given out relatively few details, apart from confirming plans to pull back or eliminate some of its smaller product groups.

Even the increase in R&D employment was relatively modest compared to years past. Last year, for example, the company’s total employment in product research and development rose by about 4,000 positions. The numbers reported in the 10-K include direct Microsoft employees but not those who work for or with the company through third-party employment agencies.

Previously: Microsoft employment falls 3% since peak 6 months ago

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and Drugstore Q2 sales, profit rise  

Drugstore.com hit record sales of $100.3 million in the second quarter amid strong demand for non-prescription products and contact lenses. The Bellevue-based ecommerce company also reported a profit for a third quarter in a row.

Drugstore, which started out as an online pharmacy filling prescription orders, has been steadily shifting its focus to non-prescription, over-the-counter (OTC) items like toothpaste, shampoo, diapers and razor blades.

The company’s Q2 sales of $100.3 were up from $92.2 million the same quarter a year ago. Net income was $1 million, or 1 cent per share, up from a net loss of $2.3 million, or 2 cents per share, in the year-ago period. The company said its Q2 2009 net income includes a $1.1 million non-cash stock-based compensation expense.

It was the third profitable quarter in a row for the Bellevue-based ecommerce company, which turned its first profit in Q4 2008.

"During the second quarter, our marketing strategy, new partnerships, and improved conversion helped drive new customer growth of 14%," said drugstore CEO Dawn Lepore, in a statement.

Drugstore.com on June 1 started handling OTC orders for Medco Health Solutions Inc., a giant pharmacy benefits manager. Lepore said she "expect revenues from this partnership to start to ramp in the second half of the year."

Another key drugstore partnership — with the Rite Aid chain — is changing. For years, drugstore.com ran the software for Rite Aid’s web site for refilling prescriptions (receiving a fee for every order). Rite Aid last fall took control of that operation itself, and paid drugstore.com $1 million a month through June to end the contract early. Drugstore has a new agreement with Rite Aid to handle over-the-counter product orders (along the same lines as the Medco deal).

Drugstore is also developing more "microsites" devoted to specific product categories. The company already sells products through websites beauty.com and visiondirect.com, and plans to launch another site devoted to sexual health products (and perhaps others).

Drugstore’s guidance for the third quarter wasn’t quite as rosy. The company said it expects net sales in the range of $94.0 million to $96.0 million, and a net loss in the range of $2.8 to $3.8 million.

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Real’s revenue falls 11 percent  

RealNetworks’ revenue continues to decline. The Seattle provider of online games, music and other services posted revenue of $135 million in the second quarter, an 11 percent fall off from the same period last year. All of the company’s main units saw declines in sales, except for music, which posted a 9 percent increase.

Meanwhile, the company’s net loss mushroomed to $188.3 million, based primarily on impairment charges. RealNetworks had warned last week that it would report an impairment charge of up to $176 million for the quarter due to an impairment to "all or substantially all of the company’s goodwill," because the company’s market value was trading below its book value for an extended period.

Real said at the time that the impairment "does not reflect a change in the company’s view of its business prospects or expected future result."

"In spite of a difficult consumer environment, our business remained relatively stable in the second quarter," said RealNetworks CEO Rob Glaser in the earnings news release today. "Looking forward, even though we expect the economy to remain weak, we expect to show sequential improvement in the second half of the year based in part on new products such as our innovative RealPlayer SP."

The loss reported today was bigger and the revenue declines sharper than analysts expected, according to Reuters.

Real’s cash position at the end of the second quarter was $362 million, which is just below its $411 million market value.

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