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Author Topic: Sony gets hit with a huge patent infringement judgement  (Read 2146 times)
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Tebunker
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« on: March 28, 2005, 09:31:31 PM »

http://www.gamespot.com/news/2005/03/28/news_6121137.html

Ouch, that hurts, sure sure SCEA has the cash to pay for it, sorta. If the appeal falls through, and it doesn't look goood for Sony then they'll owe that company over 100 million bucks plus licensing on a ton of games, current system sales etc.

Sony should've settled like MS did.
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« Reply #1 on: March 28, 2005, 09:34:18 PM »

Yeah 90.7 million I think, and I know some Sony units were being pulled in Japan. I dont think that will effect anything here, but its still curious.
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Tebunker
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« Reply #2 on: March 28, 2005, 09:36:25 PM »

would also have an impact on the next console's controller, depends on whether Sony wants to pay Immersion a licensing fee for each system sold, especially to a company that's 10% owned by MS now...
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« Reply #3 on: March 28, 2005, 09:41:25 PM »

First off, it's a patent infringement problem.  Not copyright.  Two different animals.

Rage: this DOES affect US sales.  The patent that was infringed on is a US Patent, and the judgement was brought down in a US Court.  This will be massively expensive for Sony in the States, as it is very much a US problem.

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Tebunker
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« Reply #4 on: March 28, 2005, 09:45:51 PM »

FIXED! and yes it's a huge US problem, I mean Sony was very close to not being able to sell any of their products. Remember, Sony, without SCEA and Playstation, is on the verge of being bought out and Bankrupt, their consumer division is a mess and they are being held afloat by SCEJ and SCEA
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« Reply #5 on: March 28, 2005, 10:00:03 PM »

Quote from: "Tebunker"
FIXED! and yes it's a huge US problem, I mean Sony was very close to not being able to sell any of their products. Remember, Sony, without SCEA and Playstation, is on the verge of being bought out and Bankrupt, their consumer division is a mess and they are being held afloat by SCEJ and SCEA


Oh well, thats what I get for not actually reading the link just reading the headline with the monetary costs. Oopsie. Anyways, I should read more into it. I have a passing interest in patent cases since my uncle is a patent attorney (i wont be doing that kind of law, but still interesting). Ill read the linky later.
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AgtFox
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« Reply #6 on: March 28, 2005, 10:00:45 PM »

I was talking about this with co-workers at my job today.  I said that it is interesting that Microsoft was smart enough to settle out of court, but Sony had to have the big cajones to take them on.

The interesting thing between Sony and Microsoft is that even though the Playstation division keeps Sony afloat, they view that section of the company as a red-headed stepchild.  With Microsoft, even though the section loses money (well, they just posted a profit for the first time since the Xbox came out) they are treated as an important part of Microsoft as a whole.

Anyway, Sony is in deep doo-doo and they should have settled instead of taking it through the courts.  Microsoft was smart this time around, they will usually go through the courts, but they must have seen they'd lose and they paid up.

They can keep selling the stuff in the meantime while the stay is in effect, but we shall see what ultimately happens.  If Sony was smart they'd pony up the money now and settle it out of court...granted for far more than Microsoft paid ($26 million).
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« Reply #7 on: March 28, 2005, 10:14:12 PM »

I applaud Sony for letting the issue get to court.  This entire case smacks of a mewling dead-end company crying and pointing at IP law against two of the big boys in hopes of intimidating them into a cash handout.  Microsoft balked, but upon realizing they balked, began the process of buying out Immersion.  Sony, on the other hand, told Immersion to f!ck themselves.

I wonder if Microsoft is funding some better lawyers for Immersion to ensure the little bitches win, or at very least, throw Sony into a string of appeals.
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Calvin
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« Reply #8 on: March 28, 2005, 10:31:00 PM »

Quote from: "-Lord Ebonstone-"
I applaud Sony for letting the issue get to court.  This entire case smacks of a mewling dead-end company crying and pointing at IP law against two of the big boys in hopes of intimidating them into a cash handout.  Microsoft balked, but upon realizing they balked, began the process of buying out Immersion.  Sony, on the other hand, told Immersion to f!ck themselves.

I wonder if Microsoft is funding some better lawyers for Immersion to ensure the little bitches win, or at very least, throw Sony into a string of appeals.


Tell us how you really think! Dont sugar coat it!  Cool
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AgtFox
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« Reply #9 on: March 28, 2005, 10:32:17 PM »

Ultimately if Immersion wins the case though all sales of PS2s would stop as would games.  Sony would have to pay a licensing fee on the PS2 and the games to Immersion in order to sell them, thereby making this deal worth far more than the $90 million currently.  I don't know if I applaud Sony in this case, but I can see where you are coming from.

I still say the risk far outweighs everything if Sony continues with the lawsuit.
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« Reply #10 on: March 28, 2005, 11:31:25 PM »

Anyone know anything about Immersion?  What kind of company is it?

It just seems there's been a plethora of shady companies patenting stuff, then waiting until someone big uses a similar idea and jumps on them with some rabid lawyers.

If Sony and MS did really steal their idea, then yes, Immersion should get paid for it.  But, if they're just blanketing the whole market with tech patents, it's just a bit shady.

The US patent office is something of a big sham these days.
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stiffler
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« Reply #11 on: March 28, 2005, 11:41:24 PM »

Quote from: "Turtle"
Anyone know anything about Immersion?  What kind of company is it?

It just seems there's been a plethora of shady companies patenting stuff, then waiting until someone big uses a similar idea and jumps on them with some rabid lawyers.


Other companies have had long-standing licensing agreements with Immersion.  Here is one such agreement that Logitech signed to work with some of Immersion's technology (from 1998).  From what I have read elsewhere, Logitech has paid licensing fees to use Immersion patents in their force feedback devices for a long time.

As for the company itself, the latest earnings aren't exactly the most compelling.  The $90 million award equals nearly 2/3 of the company's market cap.

You can also check out http://www.immersion.com/ to check them out.
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Dafones
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« Reply #12 on: March 28, 2005, 11:41:58 PM »

I wish the article explained the infringement. It better be something more than, "our controllers go rumbly, so you can't make anything that goes rumbly. Give me money, I need more cocaine." Or something along those lines.
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AgtFox
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« Reply #13 on: March 29, 2005, 01:06:17 AM »

I'm just guessing here, but I think Immersion made the hardware technology that makes force feedback rumbling rumble harder and softer.  I also believe they made the software that makes the rumble do its thing when it needs to do it.  I am going to guess Sony and Microsoft used the code as a foundation or something...once again, just a guess.
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Dafones
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« Reply #14 on: March 29, 2005, 02:09:15 AM »

And yet Nintendo stayed away from such technology when they came up with their rumble feature?
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Tebunker
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« Reply #15 on: March 29, 2005, 02:12:53 AM »

I was allways under the impression that Nintendo created rumbling with the rumble pack, but I don't think that theirs was or is as complicated as this, that or they created everything in house. I also don't think that Nintendo's rumble works the same as Sony and MS.
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« Reply #16 on: March 29, 2005, 02:31:11 AM »

Only on Console Gold, ladies and gentlemen: normal, intelligent adults having an impassioned debate on various types of rumbling.
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AgtFox
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« Reply #17 on: March 31, 2005, 01:43:54 AM »

More to this story: a Q&A with Immersion's CEO (from Gamespot)

Sounds to me like they aren't quite a "mewling dead-end company crying and pointing at IP law against two of the big boys in hopes of intimidating them into a cash handout" as LE said.  In fact, it sounds like they have licensing deals with lots of companies including Apple, Microsoft, Logitech, Intec and Mad Catz as well as Samsung (cell phone) and medical companies.

I think Sony is going to be on the losing end of this and it will cost them dearly if they don't settle.
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Kevin Grey
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« Reply #18 on: March 31, 2005, 01:47:59 AM »

Quote from: "AgtFox"
More to this story: a Q&A with Immersion's CEO (from Gamespot)

Sounds to me like they aren't quite a "mewling dead-end company crying and pointing at IP law against two of the big boys in hopes of intimidating them into a cash handout" as LE said.  In fact, it sounds like they have licensing deals with lots of companies including Apple, Microsoft, Logitech, Intec and Mad Catz as well as Samsung (cell phone) and medical companies.

I think Sony is going to be on the losing end of this and it will cost them dearly if they don't settle.


Actually, it looks like Sony may already be ahead.  Immersion initially demanded $300 million for Sony.  Even if the $90 million verdict is upheld they still get off better than Immersion's initial demands (whether that's more than they could have settled for at the outset only Sony and Immersion know).  MS settled for $26 million and if the demands are based on number of units sold, Sony's four-fold lead over MS would match the approx $100 million verdict.
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Tebunker
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« Reply #19 on: March 31, 2005, 01:56:18 AM »

But that's 90 millions PLUS royalties on every system and game sold using their patents...

MS didn't have to deal with any of that...
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AgtFox
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« Reply #20 on: March 31, 2005, 01:57:11 AM »

Yes, but you have to look beyond the deal.  If Sony loses they can no longer sell anything Playstation that deals with Immersion technology (so PS2s with the Dual Shock controller are out) or games that deal in Immersion technology (any game with vibration in it) because they would basically be using pirated technology that they don't pay a license for.

I am guessing Microsoft paid $26 million, but currently also pays a royalty on every game and system sold that uses vibration.  That's what I get from it all.

So, I'm not sure where you see Sony as ahead in this situation...their console videogame future may hang in the balance (PSP as far as I know doesn't have vibration technology, so that's safe probably).
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« Reply #21 on: March 31, 2005, 02:08:17 AM »

I really wish someone with a law background would take a look at the actual documents.  I've seen this written and interpreted in many different ways.

At least one of the links I read said that Sony must pay $90 million or stop selling the PS2 and all related equipment and must pay royalties thereafter which would seem to be similar to the MS deal.

If the verdict is truly "Sony has to pay $90 million and stop selling PS2's" (which is GS seems to be reporting) then something is fundamentally wrong here.  Sony wouldn't take that risk- they would just settle for whatever it took.  

Anyone know what Sony's stock has done since this is announced?  If the $90 plus stopping all PS2 sales is true then I would expect Sony's stock to have plummeted.
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AgtFox
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« Reply #22 on: March 31, 2005, 02:13:49 AM »

If you're to believe Immersion's PR on the judgement, it basically is $90+ million, plus royalties from then on, plus the permanent stoppage of the selling of things with the technology in them.
Quote
On September 21, 2004, the jury returned a verdict favorable to Immersion and awarded past damages in the amount of $82.0 million based on sales of infringing products through June 30, 2004. The Court's judgment on March 24, 2005 awarded Immersion the $82.0 million in past damages, plus pre-judgment interest in the amount of $8.7 million, for a total of $90.7 million.

The Court also issued a permanent injunction against the manufacture, use, sale, or import into the United States of the infringing Sony PlayStation system including PlayStation consoles, Dual Shock controllers, and the 47 games found by the jury to infringe Immersion's patents. The Court stayed the permanent injunction pending appeal to the United States Court of Appeals for the Federal Circuit. The Court further ordered Sony to pay a compulsory license fee for the duration of the stay of the permanent injunction at the same rate and conditions as previously awarded in its January 10, 2005 and February 9, 2005 Orders. Sony made a payment to Immersion pursuant to those Orders on February 15, 2005 for the July 1, 2004 through December 31, 2004 period; however, Sony has appealed these Orders.

As for stock price, Sony has been in a downfall, which is why they changed upper management just recently.  Here is the CNN ticker for Sony.  If you do a 1 year look you'll see the stock dropped each time an Immersion judgement was made via the above PR.  It may not have hit hard, but they are feeling it.  Although as I said above, even though the Playstation section makes money, Sony treats it as a red-headed stepchild.
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« Reply #23 on: March 31, 2005, 02:17:29 AM »

Quote from: "Kevin Grey"
Sony wouldn't take that risk- they would just settle for whatever it took.


Perhaps if they didn't want to pay a licensing fee on all the new games/hardware they sell that includes this feature they might risk it.

I agree, it sounds like a risk, but it wouldn't have made it this far if Sony didn't think they had either a good case or the hope they could out-lawyer them.

At least the stoppage isn't in effect while Sony appeals.  Now THAT would hurt!
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AgtFox
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« Reply #24 on: March 31, 2005, 02:21:47 AM »

Oh yes, I would guess if Sony agreed to a licensing fee the stoppage would probably not happen, although I am sure Sony doesn't want to pay a licensing fee on the technology and are taking the route that they created their own vibration technology and did not use any of Immersion's patents.
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« Reply #25 on: March 31, 2005, 02:26:00 AM »

Quote from: "AgtFox"
If you're to believe Immersion's PR on the judgement, it basically is $90+ million, plus royalties from then on, plus the permanent stoppage of the selling of things with the technology in them.


Right but that's where its confusing.  How do you make further royalties if its also ordered to stop selling the product thats generating the royalties?

Quote from: "AgtFox"
As for stock price, Sony has been in a downfall, which is why they changed upper management just recently. Here is the CNN ticker for Sony. If you do a 1 year look you'll see the stock dropped each time an Immersion judgement was made via the above PR. It may not have hit hard, but they are feeling it. Although as I said above, even though the Playstation section makes money, Sony treats it as a red-headed stepchild.


Right, but if this PS2 stoppage has any realistic shot at happening, the stock would have plummeted in the last week.  Investors aren't going to like $90 million judgements and the stock will reflect that but the actual stopping of PS2 production would be far more disasterous.  The PS2 is still Sony's primary platform for two more years and will likely remain incredibly viable even after the introduction of the PS3 if PSOne's sales are any indication.  Stopping those sales would be catostrophic to the company and I just haven't seen that level of ramification felt in the industry or business markets.
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AgtFox
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« Reply #26 on: March 31, 2005, 02:28:01 AM »

Well, I would guess if the judgement wasn't stayed you probably would have seen a large drop in the stock price.  Maybe shareholders know how long it will be before the appeal is heard roughly and will jettison out then...I really don't know.
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« Reply #27 on: March 31, 2005, 09:27:46 PM »

Quote from: "-Lord Ebonstone-"
I applaud Sony for letting the issue get to court.  This entire case smacks of a mewling dead-end company crying and pointing at IP law against two of the big boys in hopes of intimidating them into a cash handout.  Microsoft balked, but upon realizing they balked, began the process of buying out Immersion.  Sony, on the other hand, told Immersion to f!ck themselves.

I wonder if Microsoft is funding some better lawyers for Immersion to ensure the little bitches win, or at very least, throw Sony into a string of appeals.


One thing you may not consider is the litigation costs in patent infringement cases are absolutely immense.

For example, if between 1-25 million dollars is at stake, the median cost of litigation (ie hiring a patent litigation firm) was 1.5 million.  Per side.  That means 3 mill on average for a low yield case.  If it's 25-40 million, the average litigation costs are 3.5 million per side.  Successful or not, you're paying that.

For one case involving satellites and the US, just the litigation costs ran into the hundreds of millions....and the damage award wasn't enough to cover the litigation cost for Hughes.

Plus, there's the chance your patent could be held invalid (which negates all protection around your technology), or that you could be held as a willful infringer (treble damages awarded...), etc.

it's one scary prospect.  People used to look at mass tort cases being the big money winners, not anymore.  It's patent infringement litigation, where multi-hundred million dollar awards are common, and you even see billion dollar awards.

As for MS, being tagged as willful infringers, they were looking at a multi-hundred million dollar damage award.  I think they settled because doing a risk/reward analysis they knew it wasn't worth it.  And Immersion settled because they probably couldn't afford to throw millions away on litigation, which MS can.  MS's patent litigation warchest is massive.
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Eightball
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« Reply #28 on: March 31, 2005, 09:32:02 PM »

And here's what I've gathered from the documents.

Sony has to pay the damages.  They were also slapped with an injunction halting sales of their PS2s (I'm assuming until they could produce controllers without the rumble technology patented by Immersion, and any Sony produced game using rumble technology either rewritten or stop being produced).  

However, Sony appealed the ruling, so they can continue to sell as normal (paying Immersion a standard royalty, probably set by prior licensing agreements or industry wide ones), until the appeal is looked at by the Federal Circuit, probably later this year or partly into next year.  If the District Court decision is held as valid, Sony is permanently banned from selling any technology that incorporates the infringed patent, and will have to pay the damages.

Better article with some economic analysis Here.
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