After months of deliberation on the matter, a judge in the US presiding over a patent case in the US District Court in Manhattan, New York where a Japanese company sued Nintendo beginning in 2011 to recover damages for the use of its stereoscopic display technology without permission has won its case.
The judge has set the royalty rate for each Nintendo 3DS unit sold at the wholesale level and the display technology in question allows stereoscopic images to be viewed with the naked eye and was the crux of Tomita asserting its patents on the technology in the case. The patents owned by Tomita were granted in 2008 after first being filed in 2003. Tomita Technologies International Ltd is now set to earn 1.82% of the wholesale price of every Nintendo 3DS sold for the life of the console, at $3.09 per unit, instead of a flat dollar rate that would have awarded the company an unearned windfall, in the eyes of the judge.
The judge presiding over the case had also cut the previous damages amount awarded by the jury in the case in half to $15.1 million last August, citing the jury going overboard with the initial award amount due to "improper factors" being taken into account such as basing the amount on the games sold, which had no bearing on the patent in question and the profitability of the console itself.
The original amount based on the previous damages award by the jury was set to be 2.73 percent of the wholesale cost or $4.64 per unit, while Nintendo requested a 1.36 percent rate at $2.31, with the judge ultimately deciding that the 1.82 percent rate was the best compromise for both sides, owing to the rapid decrease in costs for the technology over time and a flat dollar amount again being deemed inapproriate due to constant price fluctuations in the marketplace outside of expected cost reductions.
With this development, Nintendo will be earning less profit per 3DS unit sold over the life of the console, which will put a sizable dent in it its profit forecasts for the foreseeable future. Nintendo will also be forced to pay supplemental damages and prejudgment interest of $241,231. While the victory for Tomita doesn't mean that Nintendo will lose money on 3DS sales, $3 per unit is enough to make a company think twice about implementing technologies without negotiation.