Thursday, March 10, 2011

LG achieved seizure of 300,000 PlayStations, wants $150-180 million for Sony's past infringement of Blu-ray patents, but ORDER IS LIFTED!

Today's court session in The Hague, Netherlands over the PlayStation 3 dispute between LG and Sony has revealed some mind-boggling facts and figures and produced a major surprise. [Update] According to as well as Dutch newspaper De Telegraaf and an independent source I have talked to, Sony has won this round and the court has lifted the prejudgment seizure order. reports that all seized PlayStations will have to be released, no more seizures will take place, and LG has to pay legal fees amounting to €130,000 (approximately US$180,000). For each day that LG fails to comply, it will be fined at a rate of €200,000 (approximately US$275,000).

I have learned that the key reason for the court to lift the seizure order was that this kind of measure didn't seem fair given the history of negotiations between the parties. The ruling didn't only overturn the prejudgment seizure order but also told LG to inform the Dutch customs authority and ensure that no further confiscations would happen.

This is only related to the prejudgment seizure order: Sony can resume the distribution of PlayStations across Europe for now, but there will still be a full-fledged legal proceeding to determine whether there is an infringement (and if so, how much money Sony owes LG). But Sony's most pressing problem has been solved.

Knowing that the dispute will continue, some numbers are interesting to look at. They were previously reported by Dutch websites and, and I have double-checked on everything with an independent source who is in telephone contact with people attending the court hearing. These are the key data points:

  • Approximately 300,000 PlayStation 3s were seized in the Netherlands. The estimated value (for customs purposes) is €43 million (approximately US$60 million at today's exchange rate).

  • Nine more shipments of 15,000 to 20,000 units each -- a total of up to 180,000 more units -- are on their way to the Netherlands. Those shipments would also have been seized if the court hadn't lifted the seizure order.

  • LG wants to receive a patent royalty between $2.50 and $2.55 for each Blu-ray device sold by Sony. Sony has already sold more than 47 million PS3s, and there are other Sony products implementing the Blu-ray Disc standard. In the total of PS3 and other Blu-ray product sales, LG estimated that Sony already owes it patent royalties amounting to $150-180 million for past infringement, plus more money for future sales. Reportedly, LG wants a bank guarantee over a total of $350 million to cover the aforementioned amount as well as estimated payments to be made in the future.

  • As I reported in my previous post, it seems that LG's focus is on getting paid for its Blu-ray patents while Sony wants a comprehensive settlement of all disputes between the parties. In addition to lawsuits between Sony and LG there is also a lawsuit in the Eastern District of Texas that was brought by Zenith, an LG subsidiary, against Sony over eight digital TV patents. Apparently Sony wants all disputes with LG, including the Zenith case, settled at the same time. This includes Sony's own claims against LG. In particular, it claims many LG smartphones infringe some of Sony's patents.

  • also says that Sony's lawyer said they are willing to negotiate "but not with a knife at the throat", apparently a reference to the situation in which Sony found itself after the prejudgment seizure order.

  • Today's court session was just an emergency hearing following Sony's appeal against the prejudgment seizure order obtained by LG. After this there will be lengthier full-fledged proceeding to determine whether Sony infringes valid patents held by LG. The first court session in that proceeding has apparently been scheduled for November 18.

Sony's winning lawyer was Mr. Bart van den Broek of the Hoyng Monegier firm.

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