Philips and Nintendo have had an interesting relationship for more than 2 decades. In the early 90s, Philips released a computer system that was mostly marketed as a videogame console. As part of a development agreement between the two companies, the CD-i featured 4 games which were based on Nintendo franchises: 1 Mario and 3 Zelda games. The device was a massive commercial failure.
Skip ahead to 2006 and Philips has completely gotten out of the industry and Nintendo has a unique new console which will go on to sell over 100 million units: the Wii. Its motion-based controller attracted the attention of all sorts of people, including Philips executives.
As it turns out, Philips has a trio of patents that cover the paired use of a camera and motion sensor in a single device. This pairing is exactly how the Wii's motion controllers work. The end of the controller is an infrared camera that tracks the position of two infrared lights in the sensor bar.
Philips filed a patent infringement suit against Nintendo in several markets, including the UK and the US. This week a verdict was handed down in the UK case, and Nintendo did not come out as the winner, at least in two of the three patents.
The damages will be decided next month, but it is possible that Nintendo will have to pay a licensing fee for each console sold. Most likely the damages will be limited to UK consoles, but could be global. That would certainly not make Nintendo's current financial situation any better. In the US case, which is still ongoing, Philips is looking to block sales entirely, so at least a licensing fee is a little better.
It is unlikely that Nintendo will be barred from selling its hardware in the US, but this is a nasty precedent that could influence the decision here. This is the world's worst time for Nintendo to have a situation like this, what with having trouble selling their new console and losing money for the first time ever in the past few quarters.
Will Nintendo be able to recover from this loss, or will this be the move required for them to sell out? Let us know your thoughts in the comments.