The Patent War enters the Video Game Industry

[SirFozzie]

Apparently the winner of the console wars will not be settled by systems, or games, but by patents.

Link to article


Following on from news earlier this week which saw Sony lose a key IP case and almost had all PlayStation products withdrawn from sale in the US Immersion Corp CEO Victor Viegas has spoken exclusively to SPOnG about the case.

There were two key issues we wanted outlining, not least the fact that Nintendo has never been mentioned in the case(s) Immersion Corp brought against Sony and Microsoft. Given that Nintendo executives have stated, on the record in the public domain for years that rumble functionality was their innovation, an innovation subsequently plagiarised by both Sony and Microsoft, it seems strange that they were never implicated in any case.

Why is this? “Well, Sony’s PlayStation and Microsoft’s Xbox pads work in very similar, almost identical ways,” explained Viegas, “so it made sense to pursue both companies that were infringing our patents, using dual motors in unison. It was a total of, I think, 16 claims across two patents.” Yes, it does make sense, but again, why not include Nintendo, especially given the fact that Nintendo claims the feedback technology employed in all modern games controllers is its own?

“We never analysed Nintendo products.” Is the more-than surprising answer offered. “There is, I believe, a difference in the technologies used but we never investigated those of Nintendo.”

And on to a well-grounded conspiracy theory that has been brewing in SPOnG’s collective thoughts for some weeks now. A conspiracy that sees a Microsoft masterstroke which cripples its key opponent, sees it take the moral high-ground and net around $15 million profit in the process.

On February 11, 2002, Immersion filed a complaint against Microsoft Corporation, Sony Computer Entertainment, Inc., and Sony Computer Entertainment of America, Inc. in the Northern District Court of California alleging infringement of U.S. Patent Nos. 5,889,672 and 6,275,213

Then on July 25, 2003, Immersion contemporaneously executed a series of agreements with Microsoft that:

1. Settled Immersion’s lawsuit against Microsoft
2. Granted Microsoft a worldwide royalty-free, irrevocable license to Immersion’s portfolio with Microsoft splashing out around $6 million on a 10% stake in Immersion
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 Immersion.

At this point, Microsoft decided to play its hand. It relented to Immersion’s assurances that technologies employed within the Xbox controller, hardware and related software infringed on established patents. It was stung for just short of $20 million in retrospectively applied licensing fees, an unavoidable consequence of setting a legal precedent that potentially has the ability to bring its key rival to its knees.

In doing this, Microsoft effectively made it’s settlement with Immersion a test case, a case that would then be used against Sony. What’s more, it put itself in a position to demand payments from Sony on all PlayStation hardware, peripherals and software sold, on an ongoing basis. This weeks ruling saw Microsoft net around $8 million. The shares in Immersion have also jumped, with a return of around $6 million.

It seems beyond the realms of possibility that Microsoft didn’t have this roadmap into the very fabric of the PlayStation business model mapped-out from the start. When this was put to Viegas he simply said, “I cannot argue with the logic in what you say. Microsoft took full advantage of the opportunity offered to it and was fair in its dealings with us throughout.”

To recap, Immersion, backed by Microsoft will have the right to demand royalties from Sony on every single PlayStation product that makes use of DualShock, an astoundingly astute move resulting in a case that Sony simply must win.

So onto the dealings with Sony. Is there a chance that a settlement will be reached? Given what has been outlined above, it is understandable that Sony will not want to relent in any way and must be running scared. The idea of paying Microsoft’s Xbox division a royalty on all PlayStation sales if perhaps only second in the list of Thing That Officially Must Never Happen to having all SCE products suspended from sale altogether, a catastrophe narrowly avoided earlier this week.

“We are prepared for a long and drawn out fight,” said Viegas in closing. “We are hoping for the best but are prepared for the worst with Sony. We would rather a compliant licensee agreement was reached with them. As to whether that’s likely I have no idea."

[Anthony]

anyone else hear a "begun....the Patent Wars have" voice in their heads when reading the title?

[SirFozzie]

I think I already used that joke, HA. Can't find it tho in search

[Ragone]

I knew i should have patented my idea for a home entertainment system back when pong came out.. instead i went with pet rocks.. damn

[cody8200]

This looks like bad news for Sony. Gates and Microsoft sure sound like they played their cards right...like usual. I wonder how much a settlement would bring per PSX, PS2, PS3, etc? It could be a tremendous amount of money.

[SirFozzie]

I think the numbers being thrown around was roughly $98 million

[Raiders Army]

Who has the patent for vibrators? These are the guys who really got screwed (no pun intended). Think about it. I make a product that vibrates for horny women. Someone steals my idea and makes a product that vibrates for horny boys. Mr. vibrator patent just got SCREWED!!!

[Mr. Wednesday]

I think the article overstates things. Yes, as a 10% owner of Immersion, Microsoft will (indirectly) get a cut of royalties should Sony wind up licensing the patents, but the money is certainly not going directly MS. And depending on what Immersion is asking for a license agreement (particularly compared with the X-Box), saying that Sony must win the case may well be an overstatement as well.