Microsoft’s $20 Million XBox Legal Deal

Microsoft has finally settled a six-year legal battle with Immersion over XBox controllers. Yes, Xbox controllers. It may seem irrelevant, but there are big bucks when it involves a device sold with every videogame console.

Immersion develops haptic feedback technology, called TouchSense, which makes videogame controllers shake violently in your hands to simulate action on screen. The company filed patent infringement suits against Microsoft and Sony, maker of the PlayStation 2 (at the time).

Microsoft agreed to settle in 2003 and paid $35 million to Immersion, $26 million of which was settlement, in return for licensing rights and equity. They also agreed that should Immersion settled with Sony, Immersion would pay Microsoft a minimum of $15 million for any amount received from Sony up to $100 million, plus 25 percent of any amount over $100 million up to $150 million.

Well, Immersion hit the jackpot with in 2006 when it settled the suit with Sony for a hefty $150.3 million, since it was getting a piece of the action for every controller and the PlayStation 2 was a monumental success, with 140 million units sold. Sony agreed to use Immersion’s technology in its products as well.

Microsoft wanted Immersion to keep its end of the bargain and sued the company in July 2007. Immersion countersued, saying Microsoft had breached the confidentiality agreement of the settlement by suing.

As part of the settlement, Immersion pays back Microsoft $20.75 million of the $26 million settlement, and Immersion joins Microsoft’s Partner Program. “We are pleased to resolve our outstanding dispute with Microsoft and to put this litigation behind us,” said Immersion president and CEO Clent Richardson in a statement.