The Channel Wire

August 27, 2008

Ending a seven year-old do-si-do, Immersion, a maker of digital touch technology for video games and consumer electronics, has agreed to pay Microsoft $20.75 million settling a lawsuit filed in U.S. District Court for the Western District of Washington.

In a nutshell, Immersion sued Microsoft and Sony for violating patents. Immersion later settled with the companies, but allegedly did not honor its agreement to give Microsoft money from its settlement with Sony.

Following the announcement of the settlement, Immersion president and CEO Clent Richardson said in a statement, "We are pleased to resolve our outstanding dispute with Microsoft and to put this litigation behind us. We now have our full attention and focus devoted to working with innovative companies around the world, including Microsoft, to accelerate and rapidly achieve global adoption of our haptic technology in gaming, consumer electronics, mobility, and medical products."

The complex case began in 2002 when Immersion accused Microsoft and Sony of violating patents held by Immersion's involving its technology that was used in Sony Play Stations and Microsoft's Xbox 360 game controllers. Immersion's "rumble" technology provides a tactile feeling of shaking in online gaming. Subsequently, Immersion brought suit against the companies in 2002.

In 2003, Immersion settled its claims with Microsoft. According to court papers, as part of the settlement, Immersion and Microsoft entered into a series of agreements that granted Microsoft a worldwide royalty-free, irrevocable license to Immersion's portfolio of patents in exchange for a payment of $26 million, and provided Microsoft with sublicense rights.

In September 2004, Immersion settled its lawsuit with Sony, which was originally ordered to pay $82 million. Subsequently after more court battles, Sony was ordered to pay Immersion $90.7 million.

In March 2005, the court in the Sony lawsuit issued a permanent injunction against Sony, "prohibiting it from manufacturing, using and selling or importing into the U.S. the infringing Sony Play Station system, including its consoles.

After Sony filed an appeal in February 2006, the companies reached a settlement agreement, Immersion provided Sony with a license after it agreed to pay Immersion $22.5 million for the rights provided under the agreement. The case was officially closed in March 2007.

Finally, in 2007, Microsoft claimed that "despite the demand to do so, Immersion has failed to make any payment under the SLA (service license agreement) to Microsoft following Immersion's settlement with Sony."

Microsoft said that Immersion was obligated to "pay Microsoft a minimum of $15 million for any amounts received from Sony up to $100.0 million, plus 25 percent of any amounts over $100 million up to $150 million, and 17.5 percent of any amounts over $150 million.," according to a Immersion press release.