Sony, Immersion Settle PlayStation Suit

SAN JOSE, Calif. - Sony Corp. and Immersion Corp. said Thursday they have settled their long-simmering patent dispute over the vibration technology that shakes video game controllers, and will work together to bring the so-called "rumble" function back to PlayStation products.

The litigation threatened to halt Sony's U.S. sales of PlayStation and PlayStation 2 consoles, controllers and games that use Immersion's "vibro-tactile" technology. The patented technology adds a sense of realism to videogame play by jolting the player's hands whenever there's gunfire, explosions, crashes or other dramatic on-screen events.

Immersion's shares jumped nearly 32 percent in after-hours trading, while Sony's stock plunged 6.2 percent to 5,830 yen ($49.36) in Tokyo Friday.

Immersion sued Sony Computer Entertainment and Sony Computer Entertainment America in 2002 seeking $299 million in damages.

A federal court jury found in 2004 that Sony violated two of Immersion's patents, and a judge the next year ordered Sony to pay hefty damages and stop selling products with the patented technology. The court issued an immediate stay until Sony's appeal could be resolved.

The companies said in a joint statement Thursday that the settlement resolves all pending litigation between them surrounding the patented technology.

As part of the truce, Sony will pay San Jose-based Immersion $97.2 million in damages and interest, as stipulated in the original court award that Sony was appealing. Sony will also pay $22.5 million in licensing payments through 2009 plus an unspecified amount of fees and royalties.

In total, Sony will cough up at least $150.3 million to settle the litigation, when factoring in $30.6 million in compulsory license payments the Japanese company has already paid.

In return, Sony will get unspecified rights to some of Immersion's patents and will explore ways to include the technology in future PlayStation products. No further details of the business arrangement or terms of the deal were disclosed.

Sony, which did not include the vibration function in the new PlayStation 3 hardware, said the conclusion of the litigation would not have a material impact on its earnings forecast released on Jan. 30.

Immersion's shares jumped $2.30, or nearly 32 percent, to $9.53 in after-hours trading after settlement was announced and the company reported a narrower loss for the fourth quarter. Immersion's shares were down 7 cents during the regular session on the Nasdaq Stock Market.