Patent infringement award against Nintendo cut in half

by Charles Miller

Earlier this year, a jury awarded Tomita Technologies more than $30 million in damages for its claims that the Nintendo 3DS gaming console created and sold by Nintendo infringed on a patent owned by Tomita, U.S. Patent No. 7,417,664 (the “‘664 patent”). Following the verdict, Nintendo filed motions seeking judgment as a matter of law or a new trial as to liability or, alternatively, remittitur or a new trial as to damages. The federal judge overseeing the case has now granted Nintendo’s motion for remittitur or a new trial on damages. By August 23, 2013, Tomita must inform the court in writing of its choice whether to accept a $15.1 million damage award or whether to proceed to a new trial on damages.

Tomita’s patent relates to technology developed for providing 3-D images without the need for 3-D glasses. Tomita alleged that Nintendo uses the ‘664 patent’s technology in the 3DS’s game console’s two outer cameras. Thus, only the 3DS’s camera application (which allows the user to take and view 3D photos and videos) and the augmented reality game card application (which allows some games to be superimposed over realworld images captured by the 3DS’s cameras) are at issue. The 3DS’s other applications, including its 3D display, do not rely on the ‘664 patent.

The court concluded that the jury’s $30.2 million damages award was “intrinsically excessive” and unsupported by the evidence presented at trial. Although the jury’s award amounted to a royalty rate of just under three percent of the sale price of the 3DS, which is less than that paid to Tomita under the licensing agreement presented to the jury as a “comparable” agreement, the court ruled “there are special circumstances relating to the 3DS that strongly suggest that such a royalty rate is excessive this context.” In its August 14, 2013 Order, the court wrote:

To begin with, the evidence at trial showed that the 3DS console is not itself profitable. … Although Tomita’s expert testified that Nintendo derives substantial profits from the sale of games designed solely for the 3DS and therefore those profits should be considered determining the profitability of the 3DS gaming system as a whole, the evidence at trial also established that the vast majority of games designed for the 3DS do not require or even utilize the technology covered by the ‘664 patent. … Thus, it seems that the jury, in coming to such a substantial damages award, likely weighed too heavily the somewhat unrelated profit that Nintendo earns on games for the 3DS.

The court found that “it surpasses reasonable belief that Nintendo would, in a hypothetical negotiation, agree to a reasonable royalty payment anywhere near as large as that awarded by the jury.” The court found that the jury’s damages award was “at least twice as large as the amount a reasonable jury could have awarded based on the evidence presented at trial.”

As noted, the court gave Tomita the choice between accepting either a remittitur of the damages award from $30.2 million to $15.1 million or undertaking a new trial on damages. The court denied other requests from Nintendo, including overturning the jury’s verdict or granting a new liability trial.

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by Charles Miller

Charles Miller is a licensed attorney and a partner at Heygood, Orr & Pearson. Charles focuses his practice on areas of complex commercial litigation and personal injury litigation.