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

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.

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