In context with IT security it is suggested to encrypt data on portable devices like USB-sticks, so if they get lost the confidential data does remain secret. But what if they confidential material is a paper which I want to read on eReader like a Sony PRS1 or Kindle? Is there a way to password protect certain books to limit the access or maybe to lock the whole eBook?
Kindle comes with a screenlock password, though I doubt it encrypts any data.
Sony PRS1 might also have the same feature.
For encryption - decryption functionality you need the tool to be present on your device and since e-book readers are aimed at leisurely reading there are probably no such apps available for the device ( none that I could find). you could probably store your docs in some cloud storage like google docs and view it directly from the kindle's browser.
If you still want exactly what you specified I suggest you get yourself a tablet which I am sure have encryption tools