Judge Zings Sony's Lawyers Over $150K Payment to Inventor

April 24, 2009 -

Yesterday GamePolitics broke the news that a New Jersey inventor has sued Sony, PDP/Electro Source and several of the firms' attorneys, alleging that he was hoodwinked in a complex patent litigation deal.

One of the central issues in the case is a $150,000 payment made by PDP/Electrosource to the Plaintiff, Craig Thorner. While PDP/Electrosource negotiated the deal with Thorner, who had no attorney, Sony actually funneled the money to PDP. It's complicated, but both companies appear to have believed that acquiring an option on force feedback controller patents developed by Thorner would gain them an advantage in high stakes patent litigation involving Immersion, Corp. It certainly didn't help Sony, which suffered an $82 million judgment in the case.

If the deal sounds a little shady to you, U.S. District Court Judge Claudia Wilken, who presided over Immersion vs. Sony, apparently thought so, too. GamePolitics has obtained a partial transcript of a November, 2005 hearing in which she sharply questions Sony attorneys about the $150,000 payment to Thorner:

Judge: ...What money of Electrosource's went from Electrosource to Mr. Thorner in consideration for that license agreement?

Sony Attorney #1: ...if you're asking what money Electrosource paid above and beyond the amount that Sony paid...

Judge: ...$150,000 moved to... Mr. Thorner. That $150,000 was from Sony. That was Sony's money, correct?

Sony Attorney #1: ...I don't want to split hairs... Sony paid $150,000 to Electrosource. And in exchange Sony became a third-party beneficiary under the Electrosource/Thorner license...

Judge: Wait. Wait. Help me out a little bit here... $150,000 moves from Sony through Electrosource formally... to Mr. Thorner?

Sony Attorney #1: ...[Sony] felt it was highly beneficial to have Electrosource negotiate with Mr. Thorner because if Mr. Thorner was speaking to Sony directly, perhaps he would ask for a much, much higher number, which was the belief...

Judge: And Sony's incapable of saying no?

Sony Attorney #1:...As far as that transaction goes, it's an absolutely legitimate transaction for Sony. They would have - if they got sued, they would have paid 50 times more in legal fees alone...

Judge: So in this deal, Electrosource parts with none of its own money... and it gets this license agreement on very favorable terms... and Sony chooses to use this very oblique route to get this option on a license because Sony's afraid that Mr. Thorner's going to stick them up for a whole bunch more money?...

Sony Attorney #2: Your honor, this is like a huge win for lawyers to get for Sony this kind of option at this price. It's ridiculous.

Judge: Why didn't they write it down in a clear way... Look, this is a huge corporation supposedly getting something important to it, going through this strange process through arguably incompetent lawyers... They set themselves up for a fight... they set themselves up for litigation... and Mr. Thorner is going to make Sony in that fight pay a heck of a lot more than $150,000 to win... It's Sony's position that Mr. Thorner had no idea where the money was coming from?

Sony Attorney #2: Absolutely...

Judge: So the idea was to trick Mr. Thorner into a [patent licensing] commitment to Sony that Mr. Thorner sort of didn't know about or didn't fully grasp....

Sony Attorney #2: ....So this is one of the cheapest insurance policies - I'm doing this over 40 years - that I've ever seen gotten for a client...

 

GP: As Law.com reports, five months after this hearing Judge Wilkins would rule against Sony's motion to set aside Immersion's huge win. Her assessment that sleazy business was afoot is unmistakeable:

[Judge Wilkins ruled that]Thorner was an unreliable witness and that there was strong evidence -- supported by testimony and internal Sony documents -- that Sony paid $150,000 for Thorner's testimony.


Comments

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

While it's not ethical, I don't understand - what laws have been broken here? Thorner didn't retain a lawyer - and he should have known better. Pretty much a case of caveat emptor, isn't it?

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

If I'm reading it correctly (I could be wrong) and they didn't so much intend to fleece Throrner on the licensing deal as they intended to secure favorable testimony from him, let's see: witness tampering, obstruction of justice, perjury and suborning perjury (assuming his testimony was false and the laywers knew that it was false) for starters.

If I'm wrong and they were more interested in ripping him off, there's fraud and misrepresentaion.

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

I'm not so sure their intent was as much to screw Thorner over on his patent license than it was to get him on their good side so he would tesitfy favorably for them. He got a decent bribe, not a rotten deal.

Re: Judge Zings Sony's Lawyers Over $150K Payment to Inventor

The apparent attitude of the lawyers in this excerpt seems strange to me. It's as if they're crowing about Sony's shady dealings. To paraphrase it as I read it:

Judge: So, you admit that your client deliberately set out to mislead Mr. Thorner, using his lack of representation and general naivete, and succeeded.

Sony lawyer: Yep. What a rube!

Judge: In this egregiously underhanded deal, your client tricked Mr. Thorner into granting them rights at a "ridiculously"--your own word, counsel--low price. In effect, your client conspired with Electrosource to defraud Mr. Thorner.

Sony lawyer: Oh, yeah--it was epic. I've never seen anyone get taken so bad.

 

Merits and legality of the deal aside...these guys were arguing for Sony?

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

There's another way of looking at it.

Thorner was a businessman as well.  Just not as good a one as might be expected. 

Thorner would most likely try to fleece as big a company as Sony for as much as he could get.  It's in Sony's interests to keep the amount down.  There's nothing wrong with either of these positions.  All negotiations are based on this conflict.  The trick is to obscure the minimum you're willing to accept and bluff the other party into thinking it's much higher. 

Sony's lawyers are being perfectly honest about it because they're genuinely proud of their clever negotiation, and while there may be some reservations about the ethics, but legally they're of the opinion they did absolutely nothing wrong.  They may be right. 

Re: Judge Zings Sony's Lawyers Over $150K Payment to Inventor

It does seem a little strange, but I think I understand what they were getting at. They were saying, "Yeah, look at what a good deal we got, we kinda pulled one over on him!" What they were implying was, "But we're sure that we would have never got that sweet of a deal if we were dealing directly with the patent holder."

Re: Judge Zings Sony's Lawyers Over $150K Payment to Inventor

exactly right, and i would add with the caveat that sony intentionally involved a third party in order to deceive thorner, who sounds like he might not've even known he was dealing with sony.

the worst part is they might've gotten away with it except that they got greedy and apparently none of the money ever made it to the guy.

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

I think they're trying to play up the deal as negotiating tactics, where in reality its kinda fraud, due to the misleading nature of it all.

www.20sidedwoman.blogspot.com

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

Ya that's kinda what I got out of it too, particularly with lawyer two.  All seemed very odd.

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

And he seemed proud of himself for it. "We screwed this dolt gewd!" Sony has no problem admiting they took him for a ride. To me, it seems almost (forgive me if I'm oversimplifying) they're arguing whether to blame Sony's underhandedness or Thorner's stupidity.

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

What I don't get is that Thorner's documents explicitly state Sony would have an option to license on the same terms as Electrosource.  It wasn't like they were hiding that Sony would be taking the option.

Re: Judge Zings Sony's Lawyers Over $150K Payment to Inventor

And Sony's incapable of saying no?

Maybe, maybe not. But they sure are incapable of saying 'Uncle'

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

Re: Judge Zings Sony's Lawyers Over $150K Payment to ...

Judging by their treatment of their products, I'd put my money on "not."

They're the perfect example of Yahtzee Croshaw's "dick in the pudding" analogy.

 
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