While Immersion may have closed its books on its legal
battle with Sony over the patent rights to force feedback controllers, its
chapters with Microsoft on the matter are about to be reopened. Microsoft said
on Monday that has filed suit against Immersion for contract breach as a result
of the Immersion-Sony settlement.
"We entered into a binding licensing agreement with
Immersion and are seeking to have that agreement honored," Microsoft
Associate General Counsel Steve Aeschbacher said to
CNET
in a statement. "Microsoft licenses technology both in and out and relies
on these agreements to be honored and enforced. 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."
During 2002 to 2003, Immersion was in legal battles with
Microsoft and Sony over its vibrating controllers. While Sony fought and
eventually lost the case (and later came to an agreement), Microsoft negotiated a royalty
payment program with Immersion. As part of Microsoft’s deal, Immersion will pay
Microsoft should a settlement with Sony be reached.
The lawsuit
(PDF), as noted by Seattle P-I’s Microsoft
blog, details Immersion’s financial commitment:
"In particular, it provides that if Immersion settles
the Sony Lawsuit ... for an amount up to $100,000,000, Immersion shall pay
Microsoft the sum of $15,000,000. If Immersion settles the Sony Lawsuit for an
amount between $100,000,000 and $150,000,000, Immersion shall pay Microsoft an
additional amount equal to 25% of the amount of the settlement in excess of
$100,000,000. If Immersion Settles the Sony Lawsuit for an amount in excess of
$150,000,000, Immersion shall pay Microsoft an additional amount equal to 17.5%
of the amount of the settlement in excess of $150,000,000."
Immersion acknowledges its agreement with Microsoft in its Form
10Q filing, but deflects any form of payment obligations:
"The Company has determined that the conclusion of its
litigation with Sony Computer Entertainment does not trigger any payment
obligations under its Microsoft agreements. However, in a letter sent to the
Company dated May 1, 2007, Microsoft disputed the Company's position and stated
that it believes the Company owes Microsoft at least $27.5 million. If
Microsoft brings a lawsuit to further dispute the Company's position, the
Company intends to oppose Microsoft's claims and vigorously defend the
Company's position."
Immersion’s contract with Microsoft outlines a payment
should a settlement be reached with Sony, which Immersion believes that it
hasn’t as it terms the recent deal as a business agreement. In its annual report,
Immersion did spell out to its shareholders that Microsoft could pursue legal
action as a result of its agreement with Sony:
"The
Company believes that it is not obligated under its agreements with Microsoft
to make any payment to Microsoft relating to the conclusion of the patent
litigation with Sony Computer Entertainment. However, it is uncertain that
Microsoft will accept the Company's position or that the Company will
ultimately prevail with its position... In the event that Microsoft were to
prevail, the Company would be obligated to pay Microsoft a minimum of $15.0
million for any amounts received from Sony up to $100.0 million, plus 25% of
any amounts over $100.0 million and up to $150.0 million and 17.5% of any
amounts over $150.0 million."
Immersion has yet to publically respond to the Microsoft
lawsuit.