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Tuesday, January 7, 2014

Nintendo Ordered To Forfeit a Percentage of 3DS Sales Due to Lawsuit






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After being found guilty of patent infringement and being ordered to pay millions of dollars in damages, Nintendo must now also pay an ongoing royalty to the patent's owner, Tomita Technologies.

When Nintendo was initially found guilty of violating the patent, which involves stereoscopic 3D display technology, a jury awarded $30.2 million in damages to Tomita. That amount was later reportedly cut in half to about $15 million due to factors like the technology, used as part of the system's 3D cameras, not being a core part of the 3DS.

On top of those damages being awarded, a U.S. District Court then had to decide whether Nintendo would pay Tomita a percentage of 3DS sales or a flat rate on each system sold. In early December, U.S. District Judge Jed Rakoff chose the former, according to Law360, because awarding the fixed fee of $4.45-per-device that Tomita was seeking would fail to account for the falling price of 3DS. In other words, as the wholesale price of 3DS dropped, Tomita would be awarded a larger and larger portion of its sales.

"If, as Tomita suggests, the ongoing royalty rate were expressed as a flat dollar amount per unit sold, Tomita would capture an increasingly large proportion of each sale as the price falls, even as the technology's reliance on the infringed patent remains constant," Judge Rakoff wrote in his decision. "This would result in an unearned windfall for Tomita, and, accordingly, the court prefers an ongoing royalty rate expressed as a percentage of wholesale price."
What this now means is that, for each 3DS sold, Nintendo must pay 1.82 percent of that system's wholesale price to Tomita.


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