Winning Wii Strategies
By Marc S. Cooperman -- Gifts and Dec, 8/1/2008 12:00:00 AM
Your kids and their friends aren't the only ones spending time with Nintendo's Wii. Recently, a federal jury in Texas had a chance to “play” with the Wii, too. In a patent infringement suit brought against Nintendo over several of the controllers used for the game, a jury issued a verdict of more than $20 million against the video game maker. Though it may appear that the company ran out of lives in this contest, in actuality, Mario and company may be off celebrating in some secret level.
How could a $20 million verdict be considered a victory? Consider what the plaintiff, Anascape Ltd., was seeking from Nintendo. By accusing Nintendo's GameCube controller, wireless Wavebird controller, Nunchuck controller, Wii Classic controller and Wii remote controller of infringement, Nintendo had over $1 billion in sales at stake. Anascape's damages expert told the jury that a royalty to compensate for the alleged infringement was at least 5 percent of sales, or more than $50 million in damages.
Nintendo used an interesting strategy in responding to this damages theory—it essentially ignored it. Rather than putting on its own expert to give a much lower damages number, Nintendo chose not to present any damages theory at all. Instead, Nintendo focused on convincing the jury that its accused game controllers did not infringe in the first place. Of course, this strategy, if fully successful, would have resulted in Nintendo paying nothing. The calculated risk Nintendo took was that the jury would not hear from an expert with a different damages number—in essence, presenting the jury with a potential all-or-nothing scenario.
In reality, Nintendo worked hard at trial to prove that its big selling Nunchuck controller did not infringe. Nintendo also pressed hard on a trial theme that Anascape had, in fact, copied Nintendo, rather than the other way around. These efforts were, at least, partly successful. The jury concluded that the Nunchuck did not infringe. And the end result was a verdict that was less than half of what Anascape was seeking from Nintendo.
In litigation, as in video games, it's important to develop and implement the right strategies in light of the strengths and weaknesses of your particular situation. Some lawyers advise “scorched earth” tactics that leave no stone unturned, and no argument un-rebutted. Don't accept that approach without careful consideration. Often—in fact, usually—that is not the best approach. Here, Nintendo's strategy, which largely ignored the damages portion of the case, paid off.
Marc S. Cooperman is a partner with Chicago's Banner & Witcoff Ltd. He specializes in IP litigation. He can be reached at mcooperman@bannerwitcoff.com.
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