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[cja]

This has been brewing for some time, looks like Sony are risking product being taken off shelves by not settling.

Press Release Source: Immersion Corporation


Immersion Wins Patent Infringement Trial Against Sony
Tuesday September 21, 10:34 pm ET


SAN JOSE, Calif.--(BUSINESS WIRE)--Sept. 21, 2004--Immersion Corporation (Nasdaq:IMMR - News), a leading developer and licensor of touch feedback technology, today announced that the jury returned a verdict favorable to Immersion in its patent infringement suit against Sony Computer Entertainment, Inc. and Sony Computer Entertainment of America, Inc. (Sony). The jury found that Sony infringed all the asserted claims of U.S. Patent Nos. 6,275,213 and 6,424,333 and that those claims were valid. The verdict also awarded Immersion damages in the amount of $82.0 million. A judgment has not yet been entered, and Immersion expects that post-trial motions and other actions by Sony will be filed with the Court with respect to the jury's decision and other matters. Immersion intends to ask the court to issue a permanent injunction to enjoin Sony's continued infringement. After judgment has been entered, the case may be appealed to the U.S. Court of Appeals for the Federal Circuit.

rest of press release & (8-K)

Response from Sony to Dow Jones

A spokeswoman for Sony Computer Entertainment Inc. replied to the jury's verdict via email from Tokyo.

"With regard to the verdict, while we appreciated the hard work of the court and the jury, we are disappointed and disagree with the outcome," she wrote. "We will appeal."

Background from Dow Jones

SAN JOSE, Calif. (Dow Jones)--Immersion Corp. (IMMR) said a jury awarded it $82 million in its patent dispute with Sony Corp. (SNE) over video game technology that simulates touch sensations.

In a press release Tuesday, Immersion said the judgment has yet to be entered and that it expects post-trial motions from Sony, which makes the PlayStation line of video game consoles.

A spokeswoman for Sony Computer Entertainment Inc., one of the units named in the suit, said she hadn't seen the statement by Immersion and therefore couldn't immediately comment.

Immersion said it intends to seek a permanent injunction against Sony, but added that the case can still be appealed to the U.S. Court of Appeals for the Federal Circuit.

In July, Xbox maker Microsoft Corp. (MFST) agreed to pay Immersion $26 million to license the technology following a similar suit.

Shares of Immersion, which reported $20.2 million in 2003 revenue, closed Tuesday at $5.82, down 5 cents.

 

[DarienA]

Holy shit... guess Sony should have followed MS' lead on this one....

 

[cybamerc]

Force feedback?

 

[Lord Error]

Force feedback?

I think it's even less than that - rumble function.

 

[neptunes]

I'm sure they have plebty cash.

EDIT: that's retarded.

 

[hirokazu]

I think it's even less than that - rumble function.

what the hell... how come they didn't go after Nintendo as well then?

 

[Elios83]

So Dual Shock is the guilty product?

 

[gofreak]

what the hell... how come they didn't go after Nintendo as well then?

Presumably it depends on the implementation..whether or not it infringes on their patents. Perhaps Nintendo's doesn't? Or perhaps Nintendo licensed use of the technology described in the patents from Immersion in the first place?

So..will Immersion be happy to license the tech to Sony now, or are they looking to have it stopped being used in Playstations altogether?

 

[cja]

Force feedback?

Pfft, patents say "Tactile feedback man-machine interface device"

United States Patent 6,275,213
Tremblay , et al. August 14, 2001

--------------------------------------------------------------------------------
Tactile feedback man-machine interface device


Abstract
A man-machine interface which provides tactile feedback to various sensing body parts is disclosed. The device employs one or more vibrotactile units, where each unit comprises a mass and a mass-moving actuator. As the mass is accelerated by the mass-moving actuator, the entire vibrotactile unit vibrates. Thus, the vibrotactile unit transmits a vibratory stimulus to the sensing body part to which it is affixed. The vibrotactile unit may be used in conjunction with a spatial placement sensing device which measures the spatial placement of a measured body part. A computing device uses the spatial placement of the measured body part to determine the desired vibratory stimulus to be provided by the vibrotactile unit. In this manner, the computing device may control the level of vibratory feedback perceived by the corresponding sensing body part in response to the motion of the measured body part. The sensing body part and the measured body part may be separate or the same body part.

The abstract for the other patent (6,424,333) quoted is the same. Think the patent website is sessions based so:
http://patft.uspto.gov/netahtml/srchnum.htm
and enter the patent number 6,275,213 or 6,424,333 for more info.

 

[DarienA]

I vaguely remember reading something a bit back that said that Nintendo's Rumble is done very differently... but I could just be remembering nothing...

 

[ManDudeChild]

They should have started this whtn PS2 came out.

 

[kaching]

I wonder why Sony is fighting this.

 

[ManDudeChild]

I wonder why Sony is fighting this.

Immersion intends to ask the court to issue a permanent injunction to enjoin Sony's continued infringement. After judgment has been entered, the case may be appealed to the U.S. Court of Appeals for the Federal Circuit.

That's why.

 

[kaching]

What I mean is, why didn't the seek a settlement like MS did earlier? Unless that wasn't an option.

 

[Panajev2001a]

I find this Microsoft settling a bit weird... first they fill SCO with cash settling so early for something they would not have had a real problem anyway (SCO's case is not that strong and never was really strong) and then SCO fired lawsuits away at corporations... including IBM and the Linux operating system in general (uhm...).

Now, we see something similar...

I am not claiming ill will in Microsoft, just that this is the second time they settle early with a huge payoff and then the company they settled with goes to attack one of their main competitors.

 

[DarienA]

Hey check this out I did some searching and found this document. It's one of the quarterly reports... anyway down in section 6

On July 25, 2003, the Company contemporaneously executed a series of agreements with Microsoft Corporation (“Microsoft”) that (1) settled the Company’s lawsuit against Microsoft, (2) granted Microsoft a worldwide royalty-free, irrevocable license to the Company’s portfolio of patents (the “License Agreement”) in exchange for a payment of $19.9 million, (3) provided Microsoft with sublicense rights to pursue certain license arrangements directly with third parties including Sony Computer Entertainment which, if consummated, would result in payments to the Company (the “Sublicense Rights”) and conveyed to Microsoft the right to a payment of cash in the event of a settlement within certain parameters of the Company’s patent litigation against Sony Computer Entertainment of America, Inc. and Sony Computer Entertainment, Inc. (collectively, “Sony Computer Entertainment;” the “Participation Rights”) in exchange for a payment of $0.1 million, (4) issued Microsoft shares of the Company’s Series A Redeemable Convertible Preferred Stock that includes redemption features discussed below (“Series A Preferred Stock”) for a payment of $6.0 million, and (5) allows the Company to sell debentures of $9.0 million to Microsoft under the terms and conditions established in newly authorized 7% Senior Redeemable Convertible Debentures (“7% Debentures”) with annual draw down rights over a 48 month period.

Under these agreements the Company is required to make certain cash payments to Microsoft based on a settlement of the Company’s ongoing patent litigation against Sony Computer Entertainment. As discussed in Note 10, the Company intends to continue its patent litigation against Sony Computer Entertainment. In the event of a settlement of the Sony Computer Entertainment litigation under certain terms, the Company will be required to make a cash payment to Microsoft of (i) an amount to be determined based on the settlement proceeds, (ii) a redemption of the Series A Preferred Stock for a maximum of two and one half (2 1/2) times the original purchase price plus any dividends in the form of additional shares of Series A Preferred Stock that remain unpaid plus any accrued but unpaid cash dividends per share, (iii) any accrued but unpaid dividends on the Series A Preferred Stock, and (iv) any funds received from Microsoft under the 7% Debentures.

In a settlement outcome of the Sony Computer Entertainment litigation, the Company will realize and retain net cash proceeds received from Sony Computer Entertainment only to the extent that settlement proceeds exceed the amounts due Microsoft for its Participation Rights and the payments required to redeem the Series A Preferred Stock, 7% Debentures, and accrued dividends and interest as specified above. Under certain circumstances related to a Company initiated settlement with Sony Computer Entertainment, the Company would be obligated to pay Microsoft a minimum of $30.0 million. Such amount would be reduced to the extent that Microsoft elects to convert its shares of Series A Preferred Stock to Company common stock.

In the event of an unfavorable judicial resolution or a dismissal or withdrawal by Immersion of the lawsuit meeting certain conditions, the Company would not be required to make any payments to Microsoft except pursuant to the redemption and dividend provisions of the Series A Preferred Stock and the payment provisions relating to the 7% Debentures.

Am I reading this correctly? MS pays Immersion, but then based on the outcome of the Sony lawsuit Immersion pays MS back all the money? Unless they lose then they don't have to pay MS anything? AND MS now has the rights to sub-license the Immersion tech out and make money that way as well?

 

[kaching]

Heh. I guess that answers my question. Good find.

 

[pilonv1]

Who was claiming MS wasn't smart in that commentary thread?

 

[User 406]

Yeah, this sure looks like their SCO strategy. Sue competitors out of business by proxy. They prop up an outside company's patent claim by paying them money in a deal that is ostensibly "royalties", in order to give a sense of legitimacy to the patent claim, but part of the deal is for the company to enforce that claim against Microsoft's competition. However, that suit is not intended to get more royalties, but to harm or stop the competitor's business. That way, Microsoft's hands are theoretically clean.

And some people still defend these vile motherfuckers with "Oh, all companies are like that!" ¬_¬

 

[gofreak]

Woah, that's pretty sleazy of Microsoft. I mean, I'm all for "business is business", but that's downright dirty.

 

[DarienA]

Yeah, this sure looks like their SCO strategy. Sue competitors out of business by proxy. They prop up an outside company's patent claim by paying them money in a deal that is ostensibly "royalties", in order to give a sense of legitimacy to the patent claim, but part of the deal is for the company to enforce that claim against Microsoft's competition. However, that suit is not intended to get more royalties, but to harm or stop the competitor's business. That way, Microsoft's hands are theoretically clean.

And some people still defend these vile motherfuckers with "Oh, all companies are like that!" ¬_¬

You're saying this is a tactic they've used in the past?

 

[JayFro]

It certainly sounds dirty, but I hardly feel sorry for Sony. Do whatever it takes to get to the top huh?

 

[kaching]

Who was claiming MS wasn't smart in that commentary thread?

No one, actually. The only thing that was disputed was the claim that MS execs are smarter than Sony execs. To pull this kind of thing, you don't have to be smarter you just have to be less scrupulous.

 

[pilonv1]

Same thing

 

[MoxManiac]

Haha, Sony got owned.

 

[Duckhuntdog]

In all my years of following Nintendo and trying to get a grasp of the enigma that is their corporate mentality, I have found that Nintendo is VERY patent savy. If they come up with an idea, they always seem to do checks to see if anyone has a simiar idea or patent, then alter their design. Of course Nintendo has quite the patent library as well.

 

[User 406]

You're saying this is a tactic they've used in the past?

Yeah, with the SCO lawsuit that Panajev mentioned. Short version: SCO makes a patent claim (a very weak patent claim) to certain technologies central to linux and open source software. Microsoft makes a show of paying "royalties" to SCO for the use of these technologies. SCO sues IBM and others who are using open source software to get them to stop. Later, internal Microsoft documents are leaked that indicate that there was a private deal between MS and SCO to get SCO to attack users and providers of open source. Basically, Microsoft paid SCO to be their attack dog. Whether SCO wins or not is irrelevant, since they already got paid, and the suit helps to add to the negative publicity about open source software that Microsoft has been working so hard to create.

I'm sure Pana could give you a much better overview.

It's a crying shame that Microsoft wasn't broken up by the antitrust suit, because they clearly have no intention of changing the way they do business. I don't know why people are so willing to just accept this.

 

[cja]

A history of the case from Immersion's latest quarterly report. Microsoft and Sony were fighting on the same side to begin with.

Immersion Corporation vs. Microsoft Corporation, Sony Computer Entertainment Inc. and Sony Computer Entertainment of America, Inc.

On February 11, 2002, we filed a complaint against Microsoft Corporation, Sony Computer Entertainment, Inc., and Sony Computer Entertainment of America, Inc. in the U.S. District Court for the Northern District Court of California alleging infringement of U.S. Patent Nos. 5,889,672 and 6,275,213. The case was assigned to United States District Judge Claudia Wilken. On April 4, 2002, Sony Computer Entertainment and Microsoft answered the complaint by denying the material allegations and alleging counterclaims seeking a judicial declaration that the asserted patents were invalid, unenforceable, or not infringed. Under the counterclaims, the defendants are also seeking damages for attorneys’ fees. On October 8, 2002, we filed an amended complaint, withdrawing the claim under the ‘672 patent and adding claims under a new patent, U.S. Patent No. 6,424,333.

On October 10, 2002, the Court entered an Amended Case Management Order that set, among other dates in the case, April 25, 2003 for a hearing to construe the claims of the asserted patents and April 5, 2004 for the start of trial. On October 28, 2002, Sony Computer Entertainment and Microsoft answered the amended complaint and alleged similar counterclaims for declaratory relief that the asserted patents are invalid, unenforceable, or not infringed. On March 21, 2003, Sony Computer Entertainment filed a motion for summary judgment of non-infringement. At our request, the Court ordered this motion stricken, without prejudice to its being refiled at a later date after the Court rules on claim construction. On April 25, 2003, the Court held the scheduled claim construction hearing. On July 9, 2003, the Court issued an Order Modifying Case Management Order that reset certain scheduled dates in the case, including setting April 12, 2004 as the start of trial. On October 2, 2003, the Court issued its Claim Construction Order construing certain terms of the patents asserted in the lawsuit. On January 16, 2004, Sony Computer Entertainment filed a motion for summary judgment of invalidity and that Sony Computer Entertainment Inc. should be dismissed as a party. We filed a motion for summary judgment seeking to dismiss Sony’s defenses that the asserted patents are unenforceable. On February 27, 2004, the Court held a hearing on these motions. On March 2, 2004, the Court issued a written ruling on the summary judgment motions. The Court denied Sony’s motion for summary judgment of invalidity. The Court granted all but one of Immersion’s motions and dismissed several Sony defenses. On March 23, 2004 the Court rescheduled the trial from April 12, 2004 to April 19, 2004. On April 13, 2004, the Court held a pretrial conference to address various pretrial matters. Due to a scheduling conflict with another matter on the Court’s calendar, the Court tentatively rescheduled the trial date to May 24, 2004, with a tentative backup date of August 16, 2004. On May 18, 2004, the Court rescheduled the trial date to August 16, 2004. This date continues to be subject to the Court’s calendar. There are also several additional pretrial matters which are scheduled for hearing before the Court on August 13, 2004.

On July 28, 2003, we announced that we had settled our legal differences with Microsoft, and we and Microsoft agreed to dismiss all claims and counterclaims relating to this matter as well as assume financial responsibility for our respective legal costs with respect to the lawsuit between Immersion and Microsoft. We continue to pursue our claims of infringement against Sony Computer Entertainment. In the event we settle our lawsuit with Sony Computer Entertainment, we will be obligated to pay certain sums to Microsoft as described in Note 6 to our condensed consolidated financial statements. If Sony Computer Entertainment was successful in its counterclaims and our patents involved in this litigation were deemed invalid and/or unenforceable, the assets relating to the patents that were deemed invalid and/or unenforceable would be impaired. We currently believe it is unlikely that our patents will be deemed invalid and/or unenforceable in connection with the counterclaims of Sony Computer Entertainment. We cannot at this time estimate the amount of a possible loss associated with the possible impairment of these assets nor can we forecast the amount of any future revenue streams that may be affected. Sony Computer Entertainment has requested that it be awarded attorneys fees in the event it prevails. The court in exceptional cases may award reasonable attorney fees to the prevailing party. We currently believe it is remote that Sony Computer Entertainment would be awarded attorneys’ fees.

"Note 6" is what Darien has quoted above.

The first patent mentioned (5,889,672) was filed June 3rd 1998 and issued March 30th 1999. Both of these postdate Starfox 64 and the inclusion of the rumble pak. One possible reason for Nintendo's exclusion from the proceedings.

 

[Lord Error]

If true, it surprises me is that they (MS or Nintendo??) are willing to do this over something this petty. 82M fine is just not that much with businesses of these proportions, and any publicity impact would be minimal either way.

 

[sc0la]

I absolutely despise vague copyrights. "tactile achine-man feedback?" what the fuck. That is absolutely ridiculous. Don't turn your bass up on your stereo too loud now.

I don't think there should be any grounds fo suit as long as the mechanisms that deliver the tactile feedback are uniquely designed i.e. Sony wanted their controller to shake and designed the components in house to make it do so.

To me it would actually "make sense" if sony had taken a unit designed and/or built by this other company and simply plugged it into the controller.

has anybody patented electromagnetic transmission of data and power over plastic encased metal lines yet?

 

[Justin Bailey]

So if this goes through it means Sony will have to pay Immersion royalties for every DS controller they build? So more money out of consumer pockets? Yay.

 

[DarienA]

Oh I missed the part where MS also got a stake in Immersion.... man this stinks to high heaven.

 

[maskrider]

Damn, all vibrators manufacturers will have to pay a license to Immersion. Or Tactile feedback man-machine interface device only limit to men and not women ?

Another xxxxing patent.

 

[RevenantKioku]

So if this goes through it means Sony will have to pay Immersion royalties for every DS controller they build? So more money out of consumer pockets? Yay.

Isn't that always the short of the long?

 

[kaching]

So if this goes through it means Sony will have to pay Immersion royalties for every DS controller they build? So more money out of consumer pockets? Yay.

They're seeking a permanent injunction, so it sounds like they're looking for Sony to stop implementing any kind of rumble feedback that infringes on their patent.

 

[Justin Bailey]

They're seeking a permanent injunction, so it sounds like they're looking for Sony to stop implementing any kind of rumble feedback that infringes on their patent.

So let me get this straight: MS settles with Immersion, ends up with a stake in the company, and now Immersion (MS) is going to try and prevent Sony from using rumble in its controllers permanently? They've got a funny way of looking at "competition."

Hey Microsoft, this middle finger is for you.

 

[sohka88]

so, they are not even willing to lisence the tech?

 

[DarienA]

So let me get this straight: MS settles with Immersion, ends up with a stake in the company, and now Immersion (MS) is going to try and prevent Sony from using rumble in its controllers permanently? They've got a funny way of looking at "competition."

Hey Microsoft, this middle finger is for you.

Funny thing is... I can remember a thread where someone claimed that MS would never use the type of tactics that used in other industry's in the videogame industry.

well.... ok...

so, they are not even willing to lisence the tech?

I don't think Sony is willing to license it from them(MS/Immersion) at this point. But I guess we'll see.

 

[Deleted member 284]

Funny thing is... I can remember a thread where someone claimed that MS would never use the type of tactics that used in other industry's in the videogame industry.

well.... ok...

Heh, I remember that too Darrien.

 

[human5892]

This is how MS will win the console wars!

Next up: buying a portion of ATi, then suing Nintendo.

 

[impirius]

Maybe I'm getting it confused with something else, but I think I remember reading something about Nintendo doing something with Immersion a while back. (Think I put enough qualifiers on that statement?) I thought it was the development of a new kind of force feedback, but maybe Nintendo just phrased it that way to save face and shut Immersion up.

 

[Justin Bailey]

Maybe I'm getting it confused with something else, but I think I remember reading something about Nintendo doing something with Immersion a while back. (Think I put enough qualifiers on that statement?) I thought it was the development of a new kind of force feedback, but maybe Nintendo just phrased it that way to save face and shut Immersion up.

Actually yes, via Google:

http://immr.client.shareholder.com/ReleaseDetail.cfm?ReleaseID=111784

Immersion's Advanced Force Feedback Technology to be Available for the Nintendo GameCube Platform Through Licensing Partner

Edit: nm, I didn't RTFA, it's talking about the force feedback wheel through logitech. Maybe that's what you were thinking of though.

 

[DarienA]

That's not a Nintendo deal though, Logitech has the license with Immersion they are simply making a force feedback wheel for the GC. Mad Catz and Nyko also have licenses with Immersion.

For the record Immersion from what I've seen is not a company that has been making money, their licenses and this MS lawsuit seem to be what have kept them in business as they've been losing money on the regular.

 

[maskrider]

That's not a Nintendo deal though, Logitech has the license with Immersion they are simply making a force feedback wheel for the GC. Mad Catz and Nyko also have licenses with Immersion.

For the record Immersion from what I've seen is not a company that has been making money, their licenses and this MS lawsuit seem to be what have kept them in business as they've been losing money on the regular.

I wonder why the fuck MS does not have a force feed back wheel for X-BOX.

 

[kaching]

The reason why Nintendo isn't included is probably because of what cja mentioned:

The first patent mentioned (5,889,672) was filed June 3rd 1998 and issued March 30th 1999. Both of these postdate Starfox 64 and the inclusion of the rumble pak. One possible reason for Nintendo's exclusion from the proceedings.

 

[Semjaza Azazel]

This world is pretty sad. Patents used to be a way to push invention forward, now they're just a way to sue other companies with vague terms. Really lame.

 

[segasonic]

I guess that's another monopoly for MS then:

 

[Semjaza Azazel]

Corn on the cob dildo? :lol

 

[DCharlie]

"If true, it surprises me is that they (MS or Nintendo??) are willing to do this over something this petty. 82M fine is just not that much with businesses of these proportions, and any publicity impact would be minimal either way."

um.... for Sony, 82 million $ is a shit load of money.

 

[cja]

$82m excludes interest and lawyer fees. The judgement is only applicable in the US. This could lead to potential lawsuits in the rest of the world. More problematic for Sony could be the ongoing royalty fees if their appeal fails.