Nintendo pulled an IPR no-no; it cost them $10.0M

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Nintendo penalized with $10 million verdict for poor choice in prior art reference during earlier IPR.

 

by: Jake Mace | September 3, 2017

A jury in the Northern District of Texas just delivered a verdict imposing $10 million in damages against Nintendo for infringement of a single claim of a single patent owned by iLife Technologies, Inc. (“iLife”). Nintendo had the chance to invalidate this patent during an earlier IPR, but chose the wrong reference back its invalidity contentions. Surprisingly, they were aware of a better reference that ultimately invalidated another of iLife’s patents with very similar claim language.

The jury’s verdict was based on claim 1 of the U.S. Patent No. 6,864,796, which is essentially directed to a sensor with an accelerometer that can generate and transmit tolerance parameters. iLife argued that Nintendo’s Wiimotes and WiiU Gamepad incorporated just such a sensor. The ‘796 patent, however, is just one of six related patents that iLife had asserted against Nintendo at the start of the case, and the only one to survive an onslaught of IPRs that Nintendo filed.

Here is a summary of the outcomes of the IPRs:

  • 6,703,939 – PTAB invalidates all claims challenged by Nintendo under § 103 over Unuma. Yasushi determined not to be prior art.
  • 7,095,331 – PTAB invalidates all claims challenged by Nintendo under § 103 over Unuma. Yasushi determined not to be prior art.
  • 7,479,890 – PTAB invalidates all claims challenged by Nintendo under § 103 over Unuma. Yasushi determined not to be prior art
  • 6,307,481 – PTAB invalidates all claims challenged by Nintendo under § 103 over Unuma or the combination of Unuma with another reference.
  • 7,145,461 – PTAB invalidates all claims challenged by Nintendo under § 103 over Unuma or the combination of Unuma with another reference.
  • 6,864,796 – PTAB declines to invalidate all claims challenged by Nintendo because Yasushi determined not be prior art.

Here’s the strange thing: in the IPRs for the ‘890, ‘331, and ‘939 patents both the Unuma and Yasushi references were presented as separate and independent challenges to the validity of the patents, but in the IPR for the ‘796 patent ONLY THE YASUSHI REFERENCE WAS USED. Why? There doesn’t seem to be a good reason for not also including the Unuma reference. The differences between the ‘481 claim, which was invalidated, and the ‘796 claim, which survived, are minimal (differences indicated with underlines):

Clearly, the only difference is the inclusion of a communications device with transmission capability, yet this appears to be disclosed in the combination of Unuma and Sellers used to invalidate the ‘481 patent. The PTAB even called out this connection when they invalidated the ‘481 patent:

“…Sellers and Unuma relate to similar systems, and that an ordinary artisan, reading both references, would have had reason to provide Seller’s ability to communicate information relating to “tolerance indicia,” e.g., information relating to a patient falling, through the Internet, as recited in claims 13 and 33, to the system of Unuma.”

Nintendo of America, Inc. and Nintendo Co., Ltd. v. iLife Technologies, Inc., IPR2015-00113, Final Written Decision at 34 (PTAB Apr. 28, 2016). It’s not much of a stretch to say that Nintendo had the ammunition to invalidate the one patent that ended up costing them $10 million.

Unfortunately for Nintendo, it’s probably too late to fix this error. Nintendo is estopped from raising an argument “on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” 35 U.S.C. § 315(e). Despite some unsettled ground with respect to IPR estoppels, it would be an improbable argument for Nintendo to say that it did not or could not have reasonably raised the issue of Unuma and Sellers with respect to the ‘796 patent when they certainly contemplated those references for several of the other patents in the same family.

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