Local Firm Tries to Block Wii in U.S.

By Zachary A. Goldfarb

A small local technology company, citing patent infringement, yesterday asked a U.S. trade panel to stop Japan-based video game giant Nintendo from importing its Wii system into the United States and filed suit in federal court for unspecified damages.

The Wii video game system, released in late 2006, became massively popular with a new kind of interface that lets a person swing a remote to play tennis and tilt a controller left and right to drive a car.

Hillcrest Labs, a seven-year-old Rockville company, claims it owns the patents to the technology underpinning the Wii.

Hillcrest's technology allows people to use a device to point at their television or computer screens to select movies they want to watch, browse the Web, control their cable box or otherwise interact with content -- not by pressing a button on a conventional controller but moving the controller left, right, up and down.

"While Hillcrest Labs has a great deal of respect for Nintendo and the Wii, Hillcrest Labs believes that Nintendo is in clear violation of its patents and has taken this action to protect its intellectual property rights," the company said in statement, adding it would not comment further.

A Nintendo spokesman declined to comment.

Even if Hillcrest's claims are valid, the likelihood that Nintendo will be forced to stop selling the Wii is small, said Samson Vermont, assistant professor of law at George Mason University and a patent expert.

"It could happen but the stakes would be so high that Nintendo wouldn't let it happen," Vermont said. "The reality of it is one of two things is going to happen: either there's no merit to [Hillcrest's] suit and they'll lose, or Nintendo will settle."

Patent lawsuits are fairly common, and the outcomes are mixed, experts said.

In 2005, Research in Motion Ltd., the Canadian maker of BlackBerry devices, paid $450 million to resolve a patent infringement case with NTP Inc. of Arlington. Just last month, Nintendo was dealt a setback when a U.S. court in East Texas ordered the video game maker to pay $23 million to resolve a patent infringement suit with another company. The court said Nintendo also had to stop selling several types of controllers. Nintendo has appealed.

The U.S. International Trade Commission, the panel with which Hillcrest filed its complaint, has the authority to block the import of products that infringe on U.S. patents. The suit was filed with the U.S. District Court in Maryland.

Hillcrest cites four patents dating back to 2004 or before describing functionality present in the Wii, such as the motion-sensing accelerometer in the remote control. The most recent of these patents was approved on Tuesday. Three of the patents relate to the design of the remote control and mention a number of possible uses, though not for video games. The fourth relates to the software that guides the on-screen interface and makes mention of several uses related to video games.

"You can describe multiple products in your patent application and the fact that you don't describe the exact same product, that's not the key," said Robert Sokohl, a patent attorney with Sterne, Kessler, Goldstein & Fox, a District law firm.

Hillcrest has licensed its technology to Logitech and to Universal Electronics Inc. The company has attracted $50 million in venture capital, including $25 million in January 2008, from investors including New Enterprise Associates, Grotech Ventures, AllianceBernstein and others.

* A Hillcrest demonstration of its technology on YouTube

By Zachary Goldfarb  |  August 20, 2008; 2:10 PM ET
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This is ridiculous. I've followed Hillcrest and know some people there--maybe if the company could actually ship a frickin' product, they'd have an actual business. They're burned through tens millions of dollars of VC money with nothing to show for it but vague promises of a product somewhere down the road. Wii beat them to market. Whose fault was that?

Posted by: Nuisance Suit | August 20, 2008 5:49 PM

The Wii has been on the market for nearly 2 years now in the US. My brother has had his for 1 1/2 years. Even if Hillcrest can block further imports, there are millions of models sitting in people's homes across the US.

Why did they wait so long to sue? Did they just hear about the Wii?

Their case sounds dubious and they are probably looking for a quick settlement for some easy cash. A very poor showing here.

Posted by: Wii Now? | August 20, 2008 6:54 PM

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