Nintendo to pay royalties on every 3DS

I love patent and intellectual property law. It’s awesome to think that an idea can be owned, and someone else can make money if you dare to steal their idea. Who said there were no new things under the sun? Well, a court has now ruled that Nintendo stole another company’s genius idea, and now they will have to pay.

US Federal Judge, Jed Rakoff determined that Nintendo owes Tomita Technologies for using Tomita’s patented camera technology. Initially, Tomita wanted Nintendo to pay a flat fee per unit sold, but Rakoff decided on a percentage instead – 1.82% of the wholesale price of each 3DS sold will go to Tomita.

As the judge explained:

If, as Tomita suggests, the ongoing royalty rate were expressed as a flat dollar amount per unit sold, Tomita would capture an increasingly large proportion of each sale as the price falls, even as the technology’s reliance on the infringed patent remains constant. This would result in an unearned windfall for Tomita, and, accordingly, the court prefers an ongoing royalty rate expressed as a percentage of wholesale price.

Based on current prices, Nintendo is looking at about $3 or R32 per 3DS sold. It will certainly set them back a pretty penny – not something they need right now considering the poor sales of the Wii U. The royalty rate does not apply to the 2DS, though, so at least those sales are safe. Still, the 3DS is a major money maker for Nintendo, helping to keep their coffers full despite the less-than-stellar sales of the Wii U; this royalty set-up will cut into the profits, but I doubt it will cause any major problems for the company. With so many handheld devices sold, Nintendo can afford to pay for stolen technology.

Last Updated: January 7, 2014