Wiimote lawsuit analysis

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posted 12/19/2006 by Charles Husemann
other articles by Charles Husemann
One Page Platforms: Wii
GamingNexus: So really it only pertains to part of the Wiimote and not really the entire thing and the case really doesn’t seem to have that much water then?
Steven Rubin: Certainly I don’t think the case appears to have that much water. I don’t know every detail obviously but from what I’m seeing here I’m confused and I’m scratching my head. I think there are issues of both validity and infringement. With respect to your first question, it is certainly not the features of the Wiimote that are giving Nintendo its marketplace. It’s not the motion sensitivity, the question is simply does Nintendo have a place where the user can hold on to it easily. It is features that no one is really that excited about and if they had to Nintendo could design around it. 
 
GamingNexus: Are you familiar at all with the Sony vs. Immersion case from last year?
Steven Rubin: A little bit, that’s why I thought this case would get a lot more publicity. That’s a case where Sony lost a patent case and had an injunction issued against them. Sony lost, had an injunction against them and they don’t have any force feedback in their controllers. Obviously there is a concern here for that. Interlink is asking for an injunction against Nintendo and if Nintendo loses there will be an injunction against their Wiimote. The bottom line is in every patent case, well pretty much every patent case, is going to ask for an injunction. When you print out a patent form complaint, it’s going to have a request for an injunction in there. Then the question is will an injunction issue and I think it’s very unlikely for a couple of reasons. 
 
One, there was a recent Supreme Court decision talking about the standard for an injunction in patent cases. An injunction is what you call equity, which means the concept of fairness. The plantiff has to show that there’s no way to quantify its damage. They are damaged in such a way that you have to shut down the defendant. You cannot just give me enough money as it wouldn’t be enough. I think it’s going to be very difficult to show that Interlink, which is in the business of making wireless mice, is so damaged by Nintendo’s Wiimote. How are you going to show diversion of sales?
 
GamingNexus: From what I’ve read Interlink is suing because they are losing licensing money that they would have made if Nintendo has licensed the technology from Interlink.
Steven Rubin: Does that make any sense? It doesn’t make any sense to me.
 
GamingNexus: Not really.
Steven Rubin: That’s a logical argument in patents infringement cases but it doesn’t make sense in this marketplace. When I go to the store I’m not thinking if I should buy an Interlink mouse or a Nintendo Wii. It’s not a choice there. People are in the market for one or the other. Certainly there does not appear to be diversion of marketplace. People haven’t stopped buying wireless mice because they have a Wiimote? I just don’t see that happening.
 
GamingNexus: One of the things about the Wiimote is that people have created software hacks that have allowed them to use the Wiimote with their PC and even with Macs. Does that change the situation at all?
Steven Rubin: Yeah, that does change the injunction analysis. Now it does look like perhaps Interlink is losing sales to Nintendo. But again when you talk about injunctions you have to show that there is no adequate remedy at all. That you can’t look at Nintendo’s sales and say “You know what? Of their sales we can attribute five percent to this infringing activity, let’s come up with a number for that” and give Interlink that number. An injunction is issued when you can’t do that analysis as the numbers are too messy and you can’t figure out or pull it apart. A good example is Interlink can’t enter the marketplace and can’t sell anything because Nintendo is overwhelming everyone with their infringing activity. Maybe they are selling it for much cheaper; maybe they are just overwhelming the marketplace and Interlink can’t do anything. That’s just not the case here. You could easily find a number to attribute to Nintendo’s infringement, which I don’t think there is, and then Interlink could get paid for that. 
 
GamingNexus: Since Nintendo is marketing this only as a console device and not a PC control device does have any impact on the suit?
Steven Rubin: I think it will affect damages. Injunctions again are equity, it’s all about fairness. So Nintendo is going to come to the table with what’s known in the industry as “clean hands”. It’s not like we are trying to compete with you , it’s not like we are trying to push you out of the business. People are doing this strange stuff [hacks], what do you want us to do? Its software I don’t think we have anything to do with [PC] software . So I think it will affect the damage calculation and I think it impacts the injunction analysis. 
 
One thing that I had on my list that you may have on your list is the issue of counter-claims.   There is a lot of media about patent trolls, people who have no business and go out and sue on patents. If this was a company that had no product, if Interlink had no product it would be a much more difficult issue for Nintendo. However, Interlink does have a product, they have an entire business. They sell wireless mice. So Nintendo just got sued for patent infringement, what they are likely going to do is dust off theirown patent portfolio, which is going to be much larger than Interlinks, and they are going to counter sue for patent infringement. Now Interlink is going to be faced with the issue of injunctions and damages and instead of one patent it’s going to be dozens of patents fired back by Nintendo. 
 
GamingNexus: So really Nintendo could turn this around and really go after Interlink hard.
Steven Rubin: Yes. This kind of lawsuits surprises me as you generally don’t pick on a giant like that for exactly this reason. If Interlink was in a different business, let’s say the sneaker business, where Nintendo clearly doesn’t have any patents. OK, maybe. But it’s like a software company suing Microsoft, it’s just a bad idea.
 
GamingNexus: Bill Gates doesn’t make money by writing checks…
Steven Rubin: Exactly and this is why you don’t see Sony and Nintendo suing each other. They probably could right? If you sue me for your ten patents, I’ll sue you for my twenty. It’s silly, it’s mutually assured destruction. It’s one of the ways the patent system is supposed to work. I build up a patent portfolio so that no one in my industry is going to sue me because they don’t want to sue me back. Again it makes me scratch my head and wonder what Interlink is thinking. 
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