Sony Ordered To Stop Selling PlayStation Consoles

Just days after the hugely successful North America release of its PlayStation Portable (PSP), Sony (NYSE: SNE) was dealt a blow by a U.S. federal court, which ordered the company to stop selling PlayStations and to pay US$90.7 million to Immersion Corp. (Nasdaq: IMMR) in a patent infringement suit.

Immersion filed suit in 2002 claiming that the technology Sony Computer Entertainment, the company's gaming division, uses to make its game controllers vibrate in time to a game's action is covered under its patents.

Sony denies that it is infringing on any patent and said it would appeal the decision, which means that in the meantime it will continue to the sell PlayStation and PlayStation 2 consoles, DualShock controllers and 47 games mentioned in the suit. The games are not necessarily published by Sony, but they do incorporate the technology.

Licensing Fee Ordered

The U.S. District Court for the Northern District of California confirmed a jury verdict reached in September that awarded Immersion, a developer of digital touch technologies, $82 million. The higher amount of $90.7 million includes interest accrued since that time. Sony was also ordered to pay a licensing fee while the case plays out.

Immersion had also sued Microsoft (Nasdaq: MSFT), but the software giant chose to license the haptic, or touch, feedback system for its Xbox consoles in 2003. Immersion did not respond to requests for a comment, but CEO Victor Viegas said in a press release: "We have always believed, and continue to believe, in the strength of our intellectual property. We remain confident of our position in the appeals process."

While he could not comment on the merits of the case, Van Baker, vice president and research director for Gartner (NYSE: IT), said, "I would imagine that it would be better for both parties if this could be settled outside of the courts."

Midnight Madness

Meanwhile, Sony's marketing machine created midnight events last Thursday in New York and San Francisco around the 12:01 a.m. U.S. launch of the PSP. The initial shipment of 1 million of the hand-held gaming devices was expected to sell out within a few days. Baker said that EB Games, a computer and video game store, sold out its entire allotment in pre-orders.

"The units are supposedly in very short supply now, indicating that they sold the majority of the first million units very quickly," he said. Sony has already been forced to answer criticism about dead pixels in the LCD screens. The complaint initially surfaced in December, when the PSP was released in Japan. A dead pixel is one that is permanently light or dark.

Sony said the problem is a common one with LCD screens and should not affect the quality of game or movie visuals. The company said it would work with consumers who are dissatisfied with their screen quality.