At this point, I think every gamer in existence has heard about how Sony has lost a lawsuit against Immersion Corporation, over the use of rumble features. Further, most are aware of the injunction levied by the United States Federal Court, District of Northern California, which bars Sony from selling any disputed products permanently. This provision is stayed pending an appeal, which Sony has publicly stated will come. But really, gamers all over seem to know very little about the details, whether or not this is good or not, and what’s going to happen to Sony after this is over. So I’m here to break things down for everyone. And this involved reading about 25-30 pages of legal documents, so I don’t want to hear any complaining from you guys.
First, thanks to both Elizabeth Conrady of A&R Partners for providing the court documents, and Victor Viegas, President and CEO of Immersion Corporation for discussing the case with me and explaining some of the finer points of the decision. There’s been quite a bit of misinformation about Immersion going around, and they helped clear it up immensely.
This case actually extends way back to 2002, which is when Immersion first filed suit against Sony Computer Entertainment, Inc., Sony Computer Entertainment of America, and Microsoft Corporation. There have been numerous judgments in the case; the recent news is just a judgment on Sony’s last round of arguments. These arguments state that the vibration functions of the Playstation, via the Dual Shock controller, were based off of a previous patent from Logitech that Sony had the rights to use and that they had the right to use them. This argument was rejected, and Sony was held liable for the $82 million judgment originally made in September 24, 2004, in addition to $8.7 million worth of interest on the previous judgment.
Of course, all of this will take some time to go into effect, so what’s important is what will happen until the Federal Court of Appeals makes a final decision in the case, something that Mr. Viegas anticipates as happening in around 12-18 months. As the court order says, there won’t be any sort of recall. Any Sony product you already have is yours to keep, no further charges asked for. However, the court does put a preliminary licensing fee in place, so Sony is currently paying Immersion for every PS2, Dual Shock controller, and appropriate software going out the door. I don’t think the fee is very high; Sony is not about to use this as justification to jack up prices on us. Or if they did, people would call them out on it quickly.
There is, of course, the topic of Sony’s rivals in the console market, and how this affects them. Microsoft was, after all, initially listed as a co-defendant in this case. However, Microsoft felt they had no shot at winning the case, and negotiated a settlement in July of 2003. They paid a settlement (approximately $36 million), and came to a licensing agreement in exchange for not getting into courts even more. They’re now licensing Immersion’s patents and aren’t affected by any judgments in the case – unless, of course, Sony fails and they can’t sell any more consoles in the U.S., which obviously is a good thing for their competitors.
Nintendo is another matter. Immersion has never had any dealings with Nintendo, according to Mr. Viegas. Moreover, Nintendo holds their own patents for their rumble devices, and so far there have been no inquiries as to whether these patents are close enough to cause conflict between the two companies (according to some on Slashdot, Nintendo builds the motors differently, so the same result is produced through a different method). Immersion won’t comment on whether or not they’ll pursue future action against Nintendo, but Nintendo has nothing to worry about should the status quo prevail. In fact, they stand the most to gain – they already don’t pay licensing fees, and they have a solid foothold in both Japan (Sony will be unaffected there, and MS has never dented the market) and North America (where Sony would be shut out). Nintendo could leverage this to regain the top spot in the video gaming world.
However, if this ruling is held up, Sony can expect their lives to become a huge pain. The obvious problem would be the inability to sell the PS2 and the Dual Shock controller in the United States (although this could provide a huge boost to malls and electronics stores in Canada and Mexico). However, at this point in the console’s life, Sony is not expecting huge numbers of those to run out the door. The problem is the scope of the court’s injunction. The court’s injunction is quite broad; it only specifies the two Playstation consoles, the Dual Shock controllers, and 47 games (this column is bloated enough as is; read another source for the list of games). However, the court order says that Sony is barred from domestic release of all hardware and software violating those patents, including the products I’ve previously mentioned. Moreover, Sony applied to have the injunction limited to just the products mentioned in the court order and was turned down.
In layman’s terms, this means everything, except for stuff released by companies with a license (such as Logitech) that uses the rumble feature in the Playstation family is covered by the injunction. Just running a quick check of my own PS2 game collection, I count that only 10 games (out of 46) are rumble-free, and I’d expect that this ratio would carry out across the entire Playstation 2 product line. Think, over 75% of the games couldn’t be released (and that includes some odd titles – did you know DDR Max 2 uses vibration?). And all games that include vibration would go off the market. That’s in addition to no new consoles.
That last part is, again, all-inclusive. We’re talking about more than no new Playstation One or PS2 units. If Sony plans on using the same technology for the Playstation 3 (which is the presumed outcome), then they couldn’t release that platform domestically. Well, they could if they either settle the suit (which may take at least a year), build off of patents they already have the rights to (which by all indications would be more awkward than Windows 95 on a 50 MHz machine), or pay the licensing fee to the other rumble patents (owned by Nintendo, who would salivate at the prospect). Given the rising importance of the video game unit to Sony of America’s profit margins, the company faces a serious crisis if they’re effectively absent from the shelves for a serious length of time. Compared to how much this could represent, the $90 million is chump change.
So, as things currently stand, Sony stands on the brink of being barred from releasing any consoles past or future, vibrating controllers, or over three quarters of their entire gaming catalog (unless people want to take out rumble features, which I imagine most game studios are loathe to do). Here’s the question: how is this going to affect gamers? In the United States, this would be a huge boost for both Nintendo and Microsoft, as they would just start focusing on each other for the North American market (not to slight Canada and Mexico, but the United States is the prime jewel of the market). The lineups for both consoles would be strengthened, but we would probably have to deal with rising game costs (I’ve found the Playstation 2 is where to find the best deals on game prices). Of course, both companies could prove me wrong by starting a price war to take over the American market – wouldn’t we all love to see Nintendo and Microsoft drive prices down in order to eliminate the other? And, of course, the PSP doesn’t use any sort of rumble feature, so it’s immune to the ruling. The impact on consumers is, truthfully, difficult to determine. But we will still have legitimate competition still in the console market for the foreseeable future.
As to what should we think? Sony fanboys are weeping; MS and Big N fanboys are celebrating. Myself, I just think Sony has been proven to be a large hypocrite. Really, patent rights are no different from intellectual property rights. One concerns technical creations, and one concerns artistic creations, but they’re really quite similar. I find it interesting that Sony has fought tooth and nail to keep people from modifying their systems, emulating their hardware (I bet they still have nightmares about the Bleem! case), and otherwise preventing people from making copies of their products even for legitimate purposes. However, they’ve been trying to violate another company’s legally protected rights for years. I find it very difficult, under the circumstances, to feel pity for Sony. They call out people for having their hands in the cookie jar when they’ve been trying to swipe the pie on the windowsill.
Reading over the entire mass of documents, I think Immersion is in the right on this one. Their patents are sound and I don’t think Sony has a prayer of prevailing. I really hope Sony gets their act together; while I find them hypocritical and sanctimonious, I think the video gaming industry needs their presence. I say that not just because nature abhors a vacuum (even in the financial realm), but because the competition is healthy and promotes better gaming. I could also hope that companies, particularly Sony, would start being more sympathetic towards the mod community, but I’m not going to kid myself. Why should Sony act any less hostile to people who effectively act as they do? If there’s anything modern business tells us, it’s that hypocrisy is the surest path to profit.
