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This week, the Federal Circuit Court of Appeals said "game over" to an infringement claim filed against Nintendo. The action was brought by Motiva, an American company that claimed to have beat Nintendo to the technology used in the Wii gaming console.
Motiva filed a complaint with the International Trade Commission (ITC), claiming Nintendo had infringed its patents to track a game user's movements. The Commission rejected the claim, holding that Motiva hadn't taken affirmative steps to capitalize on the technology. On Monday, the Federal Circuit affirmed the Commission's finding.
Motiva was founded in 2003 to develop a product that would combine video games with fitness through the use of motion-detection technology. While the company holds two patents for its motion-detection gaming system, it was unsuccessful in getting a product to market.
When Nintendo introduced the Wii in 2006, Motiva likely saw an opportunity to capitalize on its inventions. It first sued Nintendo for infringement in 2008 in federal court, but the case was put on hold while the U.S. Patent and Trademark office reviewed the validity of the company's patents. Motiva then filed an ITC complaint in 2010.
The ITC helps patent owners protect their interests in the U.S. market from infringing or unfair practices. One of the key requirements of a Section 337 action is that a "domestic industry" for the patent must exist in the United States. Generally, that requires a showing that the patent owner:
Nintendo argued that Motiva's domestic activities failed to satisfy this requirement, since it had neither produced a commercially viable product nor licensed the technology to any other companies. The Commission agreed, noting that Motiva hadn't made any substantial investments to commercialize the product since 2007.
The ITC's Decision
The ITC found that Motiva's litigation costs weren't relevant to the "domestic industry" requirement either, since the Wii had no effect on Motiva's ability to commercialize its product. First, Motiva's technology was not even close to being "production-ready," the court noted. Second, the Wii and Motiva's potential product catered to completely different markets: The Wii is affordable and marketed to the average consumer, while Motiva's technology is expensive and more appropriate for "athletic performance training, physical therapy, and research."
Motiva appealed the Commission's decision. The Federal Circuit court focused on evidence that "the presence of the Wii in the market had no impact on Motiva's commercialization efforts." Instead, the court suggested, Motiva likely had ulterior motives for filing the ITC claim. "The evidence demonstrated that Motiva's litigation was targeted at financial gains, not encouraging the adoption of Motiva's patented technology," the court stated. As a result, the Fifth Circuit court affirmed the ITC's finding that no Section 337 violation had occurred.
Motiva is far from an isolated case. Countless patent licensing firms have used the threat of an ITC claim to force legal settlements with other companies. The Federal Circuit's ruling will likely make it a lot harder for these firms to squeeze other companies for royalties through the use of ITC claims.