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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

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Back in July 2012, I <a href="http://www.wassom.com/tomita-v-nintendo-the-first-augmented-reality-patent-infringement-case.html" target="_blank" rel="noreferrer noopener">reported</a> on what appeared to be the first augmented reality patent infringement lawsuit: <em>Tomita v. Nintendo</em>. &nbsp;That case has since gone to trial, with some interesting results.

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Plaintiff Tomita&nbsp;<a href="http://www.google.com/patents?id=ngetAAAAEBAJ&amp;printsec=frontcover&amp;dq=7,417,664&amp;source=bl&amp;ots=AM_9Blo2GP&amp;sig=wYY0eFi8aAbW32MTMYTkub0DbnA&amp;hl=en&amp;sa=X&amp;ei=vqf-T83yE4jLqgHtt8SKCQ&amp;sqi=2&amp;ved=0CDMQ6AEwAA" target="_blank" rel="noreferrer noopener">U.S. Patent No.&nbsp;7,417,664</a>, issued in August 2008 and titled “Stereoscopic image picking up and display system based upon optical axes cross-point information.” &nbsp;As described by the court, “the ’664 patent attempts ‘to provide a stereoscopic video image&nbsp;pick-up and display system which is capable of providing the stereoscopic video image having natural&nbsp;stereopsis even if the video image producing and playback conditions are different.’” Tomita alleged that the 3DS infringes this patent, because the unit’s 3D depth adjustment switch allows users to adjust the 3D image they see while in “AR Games” mode.

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On March 13, 2013, a jury in the Southern District of New York returned a verdict in Tomita's favor, and awarded it $30.2 million in damages--although the judge in the case decided as a matter of law that Nintendo had not infringed the patent willfully. &nbsp;Both sides filed motions seeking to adjust these rulings.

Nintendo prevailed on one important argument--the amount of the damages award, which was based on the estimated value of a reasonable royalty payment by Nintendo to Tomita for use of the technology. &nbsp;The jury had apparently based its figures on the testimony of Tomita's expert, who&nbsp;used&nbsp;the "entire market value" of the 3DS as the royalty base&nbsp;for calculating the reasonable royalty rate. &nbsp;This led the jury to a rate of just under 3% of the 3DS's sale price.

In <a href="http://www.wassom.com/wp-content/uploads/2013-SDNY-Tomita-Techs-AR.pdf" target="_blank" rel="noreferrer noopener">an August 14, 2013 opinion</a>, the judge found this rate "intrinsically excessive," for a number of reasons. &nbsp;For one thing, the 3DS itself is not profitable. &nbsp;Nintendo makes its money on the sale of 3DS games, but the evidence showed that "the vast majority of games designed for&nbsp;the 3DS do not require or even utilize the technology&nbsp;covered by the '664 patent."

It also struck the judge as unfair to consider the entire value of the 3DS game market when "the '664 patent's technology was used only in two&nbsp;features -- the 3D camera and the AR games application&nbsp;-- and thus was in some sense ancillary to the core&nbsp;functionality of the 3DS as a gaming system." &nbsp;In other words, the court found as a matter of law that any AR functionality in the 3DS is an add-on, rather than a core feature, of the console.

As a result, the judge gave Tomita two choices--either accept a 50% cut in the jury's award, reducing it to $15.1 million, or else conduct a whole new trial on damages. &nbsp;In the legal world, this is called "remittur." &nbsp;No word yet on which option Tomita will take.

So if there were any lingering hopes out there that the Nintendo 3DS would lead the expansion of AR gaming, you may be in for a disappointment. &nbsp;It's important to remember, though, that this particular patent only covered one narrow aspect of the 3DS's specific approach to AR gaming; AR itself is a much, much broader concept than that.

Of course, there are also a whole lot of other patents out there.

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Brian D. Wassom

Information Technology Transactions

Judge Scales Back Jury's Award in First AR Patent Infringement Verdict

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Judge Scales Back Jury's Award in First AR Patent Infringement Verdict

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