Nintendo Joins Firms Beating Patent ‘Bullies’ in Court

Nintendo Co. (7974), the world’s biggest video-game maker, won a second U.S. patent-infringement case this month, successfully defending its Wii system and adding to a trend of companies fighting royalty demands and winning.

Nintendo didn’t infringe Copper Innovations Group LLC’s patent for a method of interaction between a computer and a device such as a joystick, the Court of Appeals for the Federal Circuit in Washington ruled yesterday. On May 13, the court said the Wii didn’t infringe a system to track a player’s position.

Corporations such as Kyoto, Japan-based Nintendo, discount retailer Overstock.com Inc. (OSTK) and electronics seller Newegg Inc. are prevailing against claims from licensing companies that own patents and seek royalties from manufacturers and service providers that use similar methods or technology.

“Our policy is, if you come after us with spurious claims, we’ll fight you because we’re not settling,” said Mark Griffin, general counsel for Salt Lake City-based Overstock (OSTK). “Bullies need to have their noses bloodied once in a while.”

Olivia Luk, a lawyer at Niro, Haller & Niro in Chicago who argued Copper’s appeal on May 6, declined to comment. Copper was started by Jack Copper, who made 2,000 devices based on his invention before going out of business, she said.

Nintendo Bloodied

It isn’t always the patent owner that gets bloodied. Nintendo lost a jury verdict in March in a case brought by a former Sony Corp. engineer over three-dimensional images in Nintendo’s 3DS system. Nintendo is seeking to have the $30.2 million verdict overturned. In 2010, it won a reversal of a $21 million judgment in a case it lost over game controllers.

“Nintendo is very pleased,” the company said in a statement about yesterday’s ruling.

“Nintendo has a passionate tradition of developing innovative products while respecting the intellectual-property rights of others,” Richard Medway, Nintendo of America’s general counsel, said in a statement following its May 13 victory against Motiva LLC, a patent holder.

“We vigorously defend patent lawsuits when we firmly believe that we have not infringed,” he said.

Two other licensing companies are trying to revive infringement claims they lost to Nintendo. The appeals court in Washington heard arguments last month in a dispute involving computer memory and is set for a June 6 hearing over video-game control technology. In the latter case, Nintendo also was awarded almost $236,100 in legal fees against the patent owner.

Overstock, Newegg

Overstock and Newegg, based in City of Industry, California, won a May 15 appeals court decision in Washington that invalidated an Alcatel-Lucent SA patent on online shopping. In a separate e-commerce patent case, Newegg won a January ruling over claims asserted against it, as well as companies such as Oracle Corp. and EBay Inc.

Also this month, appellate judges in Washington sided against patent-licensing firms in cases against mobile-telephone companies, including Verizon Wireless and Sprint Nextel Corp., over marketing techniques. Barnes & Noble Inc. (BKS) won over claims against its Nook electronic readers and BMW carmaker Bayerische Motoren Werke AG (BMW) prevailed in a case involving its financial-services unit.

On May 20, the Washington appeals court reversed a jury’s infringement finding against IDT Corp. (IDT) involving prepaid phone cards, while upholding a judge’s decision to sanction IDT for violating court rules.

Google Wins

Google Inc. (GOOG)’s Motorola Mobility unit won a jury trial on May 16. A federal jury in San Antonio said the company didn’t infringe licensing firm Effingo Wireless Inc.’s patent for a wireless earpiece and determined the patent was invalid.

“We make it a policy to fight frivolous patent claims and litigation abuses,” Matt Kallman, a Google spokesman, said after the verdict.

Based on complaints from technology companies including Mountain View, California-based Google, Congress is considering proposals such as creating a new review system for certain types of software patents, forcing a patent owner who loses a case to pay the other side’s legal fees, and requiring patent owners to make clear who benefits financially from litigation.

It’s expensive to fight patent-infringement claims. Even a relatively small case, in which less than $1 million is at risk, can cost $650,000 in legal fees. That cost can rise to $5 million or more for bigger cases, according to a 2011 study by the American Intellectual Property Law Association in Arlington, Virginia.

“We’ve spent real dollars to save dimes,” Griffin said. “I’d like to see a lot more people in Newegg and Overstock’s camp, as part of a long-term strategy to get rid of this litigation. We have stellar litigators and we’d rather feed them than feed the trolls.”

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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