Microsoft to Immersion: "You owe us for the Sony settlement"

[VG Aficionado]

:huh:

Microsoft to Immersion: you owe us for the Sony settlement (http://arstechnica.com/news.ars/post/20070618-microsoft-to-immersion-you-owe-us-for-the-sony-settlement.html)

By Ken Fisher | Published: June 18, 2007 - 07:25PM CT

Immersion has been in the news in recent years largely on account of their legal beatdown of Sony. The haptics feedback company took both Microsoft and Sony to court over the presence of haptic feedback technology in their controllers back in 2002, and Microsoft settled for $26 million and a few surprises (more on that in a minute). Sony, on the other hand, defended their PlayStation 2 DualShock controller, but once the smoke and appeals cleared, Sony was on the hook for more than $90 million.

When Sony claimed that the lack of haptic feedback in the PS3 controller was due to "rumble" being "last-gen," we pointed to the lawsuit as evidence that bad blood was ultimately fueling the decision. Curiously, once the settlement was in place, Sony said that they "look forward to exploring with Immersion exciting new ways to bring the largest and best range of gameplay experiences to our customers." As it turns out, some gamers like rumble, and it looks like rumble may be returning to the PS3.

The bad blood may have been cleared up between Sony and Immersion, but there's a new fight brewing between Microsoft and Immersion. The company is suing Immersion for breach of contract, having failed to pay proper consideration to Microsoft for a very interesting agreement between the two parties.

"We entered into a binding licensing agreement with Immersion and are seeking to have that agreement honored," said Microsoft Associate General Counsel Steve Aeschbacher in a statement. "Our request to the court is that all companies and industry partners should play by the same rules and that the binding agreement we signed with Immersion be honored."

Just what hasn't been honored? The complaint details the Sublicense Agreement (SLA) that Microsoft and Immersion entered into in 2003, following the settlement between the two parties. According to the complaint, the SLA entitles Microsoft to a minimum $15 million payment as a result of Immersion's settlement with Sony. Microsoft and Immersion apparently agreed to share the bounty that would stem from a court battle with Sony, and Microsoft says they have yet to be paid. In fact, Microsoft had a stepped arrangement which provided that additional compensation should be paid to the company if the total settlement amount surpassed $100 million, which Microsoft believes it has. How can that be true if the Sony settlement was for just $90 million?

Microsoft accuses Immersion of having failed to promptly disclose the full terms of their settlement with Sony, and they also accuses the company of "actively attempting to characterize its agreements with Sony as something other that [sic] what they are - a settlement." The accusation is that Immersion categorized part of the settlement as "licensing" of new technology. Microsoft sees any licensing stemming from the suit as being part of the settlement proper, and they want their cut.

Thus Microsoft says that in addition to the original $15 million "base obligation" owed as a result of the SLA, the agreement also entitles Microsoft to compensation for an additional amount to be determined at trial.

Immersion had not responded to our inquiry by the time of publication.

:shrug:

[masteratt]

This really doesn't me, unlike the Sony case which did because of Rumble.

This is just MS not getting their money, who cares.

[Applefiend]

They should threaten Immersion with the Death Star.

Yeah, wait, don't care either. :)

[TheGreenElf]

Sony and MS both deserve to shove a rod up their ass over this whole Immersion thing. It's become childish.

[VG Aficionado]

Freakin' Immersion... why do you have to exist to begin with?

[koten]

Because Microsoft needs money like a hooker needs to get laid.

[cliffbo]

i don't get this! how is it that Immersion owe MS anything if they settled with Sony? unless there was a contract of words between MS and Immersion, i can't see the logic of this. two questions springs to mind: where did Immersion get the money to pursue Sony so vigorously in the courts? would those that footed the bill be pissed off that Sony and Immersion have settled?

[Coded-Dude]

wow, microsoft holding a gun to the head of their partners to get what they want.......
since when is this news?

[Viper]

cliff, that's exactly it. MS settled with Immersion in the suit and part of the settlement as MS was given a small share of Immersion Corp along with % of the outcome between the Sony portion of the original lawsuit.

Sony and Immersion have somehow altered the payment method of the lawsuit from being a simple pay of $90 million to a licensing agreement for rumble in the PS3. Because of the agreement between Immersion and MS, Immersions owes MS $15 million and now whatever this licensing thing does. Sony may indirectly end up paying MS for rumble in the PS3.

While it may seem ridiculous, if someone owed you $15 million, you'd be pretty pissed too.

[Coded-Dude]

either MS is worried they are not gonna get a dime period, or that they can get more by doing this(lawsuit)......either way I am sure this is not a case of Immersion trying to give MS the high hard one.

Lets get past the power trip and do some service to us, the consumers!

[Khaos]

So glad Nintendo isn't affiliated with Immersion...


(Or are they?)

[Viper]

No. Immersion did work with N on things such as the rumble tech in the gameboy rumble games but not he consoles. Those have all be developed and patented in house.

[woundingchaney]

Once again very standard. It sounds as if Immersion may have even used MS's settlement to fund their lawsuit with Sony, if so that would make it very clear as to why they receive a minimum of 15 million from the settlement with Sony and/if Sony won I doubt MS would see a dime.

[Carlos]

Sony may indirectly end up paying MS for rumble in the PS3.
You know, I didn't read the article that way, but now that you mention it. It DOES seem that way.

Damn. Smart move, M$. I dunno how, but that's clever.

[Sephiroth_VII]

Maybe it's just me, but isn't 15 million just small change for MS? This is the company that threw 7 billion in a big black hole called Xbox 1 and didn't even blink, so why should we care much? It's not like it'll have a big influence on their financial situation.

[=NukeBlaze=]

Horrah for worthless and archaic patent law!

[Viper]

Maybe it's just me, but isn't 15 million just small change for MS? This is the company that threw 7 billion in a big black hole called Xbox 1 and didn't even blink, so why should we care much? It's not like it'll have a big influence on their financial situation.

Despite the relative insignificance compared to their overall annual revenue, $15 million is a huge chunk of change.

Say you have 1,000 employees in your division (they probably have more but bear with me) and $15 million going towards bonuses. That's $15,000.00 each.
not so insignificant anymore. Point being a lot can be done with $15 million and imagine their shareholder outrage if they knew MS could get $15 million and didn't pursue?

[masonite]

cliff, that's exactly it. MS settled with Immersion in the suit and part of the settlement as MS was given a small share of Immersion Corp along with % of the outcome between the Sony portion of the original lawsuit.

Sony and Immersion have somehow altered the payment method of the lawsuit from being a simple pay of $90 million to a licensing agreement for rumble in the PS3. Because of the agreement between Immersion and MS, Immersions owes MS $15 million and now whatever this licensing thing does. Sony may indirectly end up paying MS for rumble in the PS3.

While it may seem ridiculous, if someone owed you $15 million, you'd be pretty pissed too.


What exactly did sony do? i very much doubt that sony changed anything in order to affect the scenario - other than try and get themselves the best deal independent of the agreements between immersion and microsoft. Its immersion that has tried to classify part of the settlement as a licensing agreement - which is hard to deny, as it seems that part of the settlement was that sony would use immersion products in the future.

That sounds like a licensing agreement to me.

However immersion definately should pay the initial 15 million - its hard to say that the whole 90 million is licensing...

the funny thing is that microsoft is now effectively suing a company that they own shares in - so sony is paying a company who is partly owned by microsoft who is paying microsoft who is suing the company for not paying them what they own, and in effect suing (a small part) of themselves..... what a dogs breakfast.

[Viper]

What exactly did sony do? i very much doubt that sony changed anything in order to affect the scenario - other than try and get themselves the best deal independent of the agreements between immersion and microsoft. Its immersion that has tried to classify part of the settlement as a licensing agreement - which is hard to deny, as it seems that part of the settlement was that sony would use immersion products in the future.

That sounds like a licensing agreement to me.
What kind of one way street negotiation is that? You really think Sony wanted to cough up $90 million? hells no. Together they figured out a way to end the litigation, get rumble in the PS3 and both profit. You can't do all that without Sony having some kind of input on it and agreeing to he deal. You make it sound like Immersion forced it all upon Sony and/or changed the court order from a payment of $90 million into a licensing deal.

[masonite]

What kind of one way street negotiation is that? You really think Sony wanted to cough up $90 million? hells no. Together they figured out a way to end the litigation, get rumble in the PS3 and both profit. You can't do all that without Sony having some kind of input on it and agreeing to he deal. You make it sound like Immersion forced it all upon Sony and/or changed the court order from a payment of $90 million into a licensing deal.

oh no, i agree that it was sony and immersion working together to come to a solution, but i doubt immersion and sony conspired together to come to a conclusion that stopped microsoft from getting what they wanted out of their deal with immersion -

as i already said in the previous post:

i very much doubt that sony changed anything in order to affect the scenario - other than try and get themselves the best deal independent of the agreements between immersion and microsoft

[Viper]

That's exactly what I said. I never implied it was for the purpose of halting MS payday. Notice I also said, 'because of the agreement' which implies as a result of the new agreement, it impacted the deal with MS. I never meant nor implied any conspiracy theory here.

[Coded-Dude]

"They're on a different floor than us....." (http://www.youtube.com/watch?v=pv8YgrqUCVU&mode=related&search=)

[masonite]

That's exactly what I said. I never implied it was for the purpose of halting MS payday. Notice I also said, 'because of the agreement' which implies as a result of the new agreement, it impacted the deal with MS. I never meant nor implied any conspiracy theory here.

yeh, i re-read it, my mistake, sorry :duh: it just came across that way when i first saw it.

im tired, and hungover, and in a sh*t mood...

[TheGreenElf]

So glad Nintendo isn't affiliated with Immersion...


(Or are they?)

Nintendo developed their own method for rumble.

[Kabbage]

Sounds like some haters to me :whip:

[Segitz]

Nintendo developed their own method for rumble.

The "difference" is, that Ninty afaik uses only one motor and Immersions patent encompasses two motors.

Thats about it (thats also why Sony was never sued for the PS1 Shock pad, as it afaik only contained one motor).

What I dont get (a bit) is, patens have a "best before" date... In Europe this is 20 years. Stuff like rumble and force feedback was used AGES ago at by arcade machine makers like Sega. Outrun 1 (released 1986) had both, a rumbling wheel AND force feedback, yet now there is Immersion Corp (founded in 1993) with patents filed in mostly 2000 and 2001 (some dating back until 1995, but those were "parent" applications) and sues Sony (Nintendo has its own patent on Rumble, also filed in 1995).

I am no patent lawyer, but those patents themselves reek of prior art (Segas Outrun and several other haptic input devices such as Operation Wolfs machine pistol etc... all being produced well in the 80s, ~10 yrs before Immersion was founded). I dont know why Sony didnt countersue for exactly this (maybe their lawyers know better than me :D)

Now onto this MS matter...

MS sueing for 15mil? Sounds strange for a contract thing (even lawyers with lost pants sue for more), especially as a bigwig like MS does this. What does MSs contract with Immersion encompass? We cant tell, as we cant read it. But what we do know is, that MS surely isnt happy with Sonys outcome of their lawsuit (Rumble was a differentiating factor between the two consoles, even it was a minor one), as they now will surely sell rumble enabled controllers in due time (I am sure, they will before XMas this year, even if no PS3 game supported it, BC still does).

[woundingchaney]

MS sueing for 15mil? Sounds strange for a contract thing (even lawyers with lost pants sue for more), especially as a bigwig like MS does this. What does MSs contract with Immersion encompass? We cant tell, as we cant read it. But what we do know is, that MS surely isnt happy with Sonys outcome of their lawsuit (Rumble was a differentiating factor between the two consoles, even it was a minor one), as they now will surely sell rumble enabled controllers in due time (I am sure, they will before XMas this year, even if no PS3 game supported it, BC still does).


They arent only suing for the original 15 million associated with the agreement.

Thus Microsoft says that in addition to the original $15 million "base obligation" owed as a result of the SLA, the agreement also entitles Microsoft to compensation for an additional amount to be determined at trial.

This additional amount could also encompass and account for various circumstances, court fees, lawyer fees, interest, etc or additional fees could be associated with the case outside of the larger suit (which would need be ruled on as a separate issue within the same trial).

In the end I doubt MS is overly concerned with whether or not Sony does or doesnt receive rumble as from a sales standpoint this most likely wouldnt put Sony in a different position what so ever. Its most likely a matter of breech of contract.

[NeoPlayStation]

Immersion responds to Microsoft suit (http://arstechnica.com/journals/thumbs.ars/2007/06/20/immersion-responds-to-microsoft-suit-where-will-sonys-money-go)

[woundingchaney]

Very interesting.

Smacks of a play on words.

Our net income was $122.4 million for the three months ended March 31, 2007 compared to a net loss of $2.9 million for the three months ended March 31, 2006 and was our first profitable quarter as a public company. The increase in net income was primarily due to the litigation conclusion and patent license from Sony Computer Entertainment of $119.9 million and the extinguishment of the liability to Microsoft of $15.0 million.

If they included their patent license into the settlement there could be no inherent way of dividing the two to determine what cost Sony in settlement or patent licensing. (good play)

This would also suggest that they have either paid MS 15 million or attempted to pay MS 15 million in the terms of their contract as it is stated to be "extinguished". Although with the looming lawsuit one would imagine that MS has denied the initial 15 million.

[LiquidEagle]

:laugh: @ Microsoft, that's all I can say. Putting those kinds of terms into the original contract shows what a piece of shit, money-hungry competitor they are. Also, it looks like Immersion already payed them?