Here’s another case that shows what’s wrong with the patent system. Nintendo of America has been ordered to pay $21 million to a small East Texas game company for infringing on a patent related to game controller design.
A federal jury found in favor of Anascape Ltd. Nintendo said it expects the award to be reduced significantly. The jury found that Nintendo infringed on Anascape’s patent while designing the Wii Classic, Wavebird, and GameCube controllers. (Wii Classic controller pictured.)
(GameCube controller pictured.) The devices look similar, but so do most video game controllers. Granting a patent that covers game controller design seems foolish, given the obviousness of the invention. The Wii controller is one of the most interesting innovations in recent video game history, but its real innovation is the motion-sensor technology, which the patent infringement didn’t cover.
In a statement, Anascape’s attorney, Doug Cawley of McKool Smith, said, “”We are extremely pleased with the jury’s verdict. Anascape may be a tiny company compared to Nintendo, but today’s verdict confirms that the company’s technology is second to none.”
The jury found that various controllers sold by Nintendo, including the GameCube controller, GameCube Wavebird controller, Wii Classic controller and Wii Remote, infringed Anascape’s patents, and awarded Anascape $21 million. Nintendo is one of the largest suppliers of game controllers and related equipment in the multi-billion-dollar video game industry. Nintendo said it would appeal the verdict and expects that any damages will be a fraction of the today’s award.
The company filed suit against Nintendo and Microsoft in 2006, alleging that both companies infringed on 12 patents from 1999 to 2005. Microsoft reached a confidential settlement with Tyler, Texas-based Anascape.
This kind of case is sure to fuel debate on patent reform. Major changes to patent law have been proposed by both big tech companies and pharmaceutical companies. But patent reform has apparently stalled for this election year.
(Wavebird pictured.) The federal courts in the Eastern District of Texas have been a popular venue for patent suits because the courts welcome such cases, as we wrote in a post on the Intellectual Property Symposium. In 2006 and 2007, there were 217 patent suits filed against Fortune 100 companies in the Texas court, compared to just 78 in California. Overall, the number of patent suits filed in 2006 was almost 3,000, compared to less than 1,000 in 1970.
Last week at the IBM Almaden Institute conference, UC Berkeley law professor Robert Merges said that bad-patent cases, mainly instigated by non-practicing patent trolls (those who don’t use the patents to make their own products) are hurting innovation.
“We must discourage rent seeking,” Merges said. “Troll litigation is annoying because you have to get permission to use something you created. It’s like a protection racket.”
Merges was not optimistic that patent reform would occur soon, but over 15 to 20 years, he believes it will happen. According to data gathered by IBM, about 50 percent of infringement suits against large companies are filed by non-practicing entities. In 2006 and 2007, Microsoft was sued 43 times, Verizon 29, Dell 28, and Hewlett-Packard 24. About 80 percent of patent suits are against large technology and financial companies.