Nintendo puts up $38 M to keep Wii in the game

Marilyn Tennissen Jul. 30, 2008, 10:17am

Nintendo of America was told last week that it had to stop making its Wii game controllers because the product infringed on the patents of a Texas game designer. Now Nintendo has put up more than $38 million in bonds to keep its popular device on store shelves.

On July 23, U.S. District Judge Ron Clark of the Eastern District of Texas, Lufkin Division, entered a final judgment in favor of Tyler-based Anascape Ltd.

Anascape sued Nintendo and Microsoft on July 31, 2006, claiming the companies used its patented concepts in their video game controllers.

Microsoft settled out of court, but Nintendo took the fight all the way to a jury trial.

On May 14, jurors awarded Anascape $21 million in damages and an additional $2 million in interest after finding that the technology used in Nintendo's Wii Classic with Remote, GameCube and Wavebird controllers did infringe the Texas designer's patents.

The jury did not find infringement of Anascape's patents in the Wii Nunchuk controllers.

After the jury verdict, Judge Clark denied Nintendo's motions for judgment as a matter of law and remittitur. However, he ruled that Nintendo's infringement was not willful and denied Anascape's claim for attorneys' fees.

Clark's final judgment included a permanent injunction banning Nintendo from selling the Wii, GameCube and Wavebird controllers.

But the judge but gave the company an option that would stay the injunction � deposit a percentage of the sales into an interest-bearing escrow account.

The account is to be derived from seven percent of the selling price of each GameCube, Wavebird Wireless and Wii Classic controller sold; and five percent of each Wii Remote, Clark wrote.

Proceeds are to be deposited from the sales of the products whether sold individually or bundled with another product. Deposits are to be made quarterly and a complete accounting of sales will be submitted to Anascape.

On July 29, Nintendo filed an appeal with the federal appeals court in Washington, D.C., which hears all patent infringement cases.

The same day, the company signed a supersedeas bond with Safeco Insurance Co. in the amount of $27,699,537 and a royalty payment bond for $10,366,956.

A supersedeas bond is a type of surety bond that a court requires from an appellant who wants to delay payment of a judgment until the appeal is over.

Nintendo's counsel includes Beaumont attorneys Larry Germer and Charles Goehringer Jr. of Germer Gertz LLP.

Nintendo is also represented by Park Avenue firms Wilmer Cutler Pickering Hale & Dorr LLP and Kaye Scholer LLP and Nixon & Vanderhye PC of Arlington, Va.

Anascape's team came from Marshall-based McKool Smith and Tyler's Parker, Bunt & Ainsworth.

Trial Court Case No. 9:08-cv-158-RC

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