Nintendo Adds to Companies Defeating Royalty Demands

Nintendo Adds to Companies Defeating Royalty Demands

Nintendo Co. (7974) fended off a second U.S. patent-infringement case this month against its Wii video-game system, adding to a trend of companies fighting royalty demands and winning.

Nintendo didn’t infringe licensing company Copper Innovations Group LLC’s patent for a way a computer interacts with a device such as a joystick, the Court of Appeals for the Federal Circuit in Washington ruled today. On May 13, the court said the Wii didn’t infringe a different licensing company’s patent for a system to track a game user’s position.

Companies including Kyoto, Japan-based Nintendo, discount retailer Overstock.com Inc. (OSTK) and electronics seller Newegg Inc. are winning cases brought by patent owners who rather than using their inventions to make products, are seeking royalties from those that make devices or provide services.“Our policy is if you come after us with spurious claims, we’ll fight you because we’re not settling,” said Mark Griffin, general counsel for Salt Lake City-based Overstock.com. (OSTK) “Bullies need to have their noses bloodied once in a while.”

Olivia Luk, a lawyer at Niro, Haller & Niro in Chicago who argued the May 6 appeal on behalf of Copper, declined to comment on the case. Copper was founded by the inventor, Jack Copper, who made 2,000 devices based on his invention before going out of business, she said.

It’s not always the patent owner that gets bloodied. Nintendo lost a jury verdict in March in a case brought by a former Sony Corp. engineer over three-dimensional images in Nintendo’s 3DS gaming system. Nintendo is seeking to have the $30.2 million verdict overturned. In 2010, it won reversal of a $21 million verdict it lost over game controllers.

Overstock, Newegg

Officials with the electronics company didn’t have an immediate comment on today’s ruling. In a statement following its May 13 victory against Motiva LLC, Richard Medway, Nintendo of America’s general counsel, said, “Nintendo has a passionate tradition of developing innovative products while respecting the intellectual property rights of others.”

“We vigorously defend patent lawsuits when we firmly believe that we have not infringed another party’s patent,” he said.

Overstock.com and Newegg, based in City of Industry, California, won a May 15 decision from the Federal Circuit that an Alcatel Lucent SA patent on online shopping was invalid. In a separate case over e-commerce patents, Newegg won a January appeals court ruling invalidating patents that had also been asserted against Oracle Corp. and EBay Inc.

Also this month, the appeals court sided against patent-licensing firms in cases against mobile-phone companies including Verizon Wireless and Sprint over telephone marketing, against Barnes & Noble Inc. over its Nook e-reader and against Bayerische Motoren Werke AG over its financial services unit.

‘Litigation Abuses’

Yesterday, the Federal Circuit reversed a jury’s infringement finding against IDT Corp. in a case over prepaid phone cards, while upholding a judge’s decision to find infringement on some systems as a sanction for violating court rules.

Google Inc.’s Motorola Mobility unit won a jury trial on May 16. A federal jury in San Antonio said the company didn’t infringe licensing firm Effingo Wireless Inc.’s patent for a wireless earpiece and determined it was invalid.

“We make it a policy to fight frivolous patent claims and litigation abuses,” Matt Kallman, a spokesman for Google, said after the verdict.

Based on complaints from technology companies like Mountain View, California-based Google, Congress is looking at proposals including ones that would create a new review system for certain types of software patents, force a patent owner who loses a case to pay the other side’s legal fees, and require patent owners to make clear who benefits financially from litigation.

‘Real Dollars’

It’s expensive to fight patent-infringement claims. Even a relatively small case, in which less than $1 million is at risk, can cost $650,000 in legal fees. That cost can rise to $5 million or more for bigger cases, according to a 2011 study by the American Intellectual Property Law Association in Arlington, Virginia.

“We’ve spent real dollars to save dimes,” Griffin said. “I’d like to see a lot more people in Newegg and Overstock’s camp, as part of a long-term strategy to get rid of this litigation. We have stellar litigators and we’d rather feed them than feed the trolls.”

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net