Microsoft settles with Immersion, buys stake

Microsoft Corp. has licensed patents on technology from Immersion Corp. that lets a user interact with a computer through the sense of touch, and invested in the company as part of a legal settlement, the companies said Tuesday.

Redmond, Washington-based Microsoft will pay Immersion of San Jose, Calif., US$20 million for a perpetual patent license and invest $6 million in the company, said Immersion President and Chief Executive Officer Victor Viegas in an interview. The investment gives Microsoft a stake of just under 10 percent in Immersion, he said.

Additionally, as part of the settlement Immersion has the right to take out a $9 million loan from Microsoft and pay that back in shares, Viegas said.

Immersion sued Microsoft and two Sony Corp. subsidiaries in February last year over their alleged use of Immersion's "haptic" technology in Microsoft's XBox and Sony Computer Entertainment Inc.'s PlayStation and PlayStation 2, as well as associated games and devices.

Haptic technology lets users receive touch feedback from devices such as game controllers. Immersion licensees include Logitech Inc. and Apple Computer Inc., as well as companies in other industries, such as car manufacturer BMW AG, Immersion said.

The settlement is part of Microsoft's effort to get its legal woes behind it, said Microsoft spokesman Jim Desler. "We contended all along that we developed our own technology in this area. However, we wanted to avoid the uncertainty and risks of the legal process," he said.

Immersion's case against Sony Computer Entertainment Inc. and Sony Computer Entertainment of America Inc. continues and is scheduled to go to trial unless it is settled before then, Viegas said. A jury trial in the case has been set for April 12, 2004, in the U.S. District Court for the Northern District of California in Oakland, he said.

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