Sony Ordered to Halt PlayStation Sales

2 hours, 36 minutes ago U.S. National - Reuters

NEW YORK (Reuters) - Sony Corp (news - web sites). (6758.T) said on Monday it was ordered by a U.S. court to halt sales of its blockbuster PlayStation consoles in the United States and pay $90 million in damages to a California tech company, Immersion Corp. (Nasdaq:IMMR - news), whose shares jumped more then 5 percent.

Sony Computer Entertainment (SCE), Sony's gaming unit, said it would appeal the decision by a California federal court in the patent infringement case.

For the time being, Sony will keep selling PlayStations as the order -- which covers the PlayStation and PlayStation 2 (news - web sites), two game controllers and 47 software titles -- will not go into effect before the appeal, an SCE spokeswoman said. Sony will be paying compulsory license fees to Immersion, she added.

Games have been Sony's profit driver in recent years, accounting for 44 percent of the company's group operating profit from October to December, as it struggles with price declines at its electronics division.

Sony in January cut its operating profit estimate for this business year 31 percent, citing sharply falling prices of televisions, DVD recorders and other key products and weak demand for chips.

Immersion, a small, California-based developer of digital touch technologies, claimed Sony Computer Entertainment infringed on its technology that makes a game controller vibrate in sync with actions in games, the Japanese game maker said.

The $90 million awarded by the court is more than triple Immersion's total revenues of $23.8 million in 2004 and represents two-thirds of the company's current market value of around $135 million.

The court's decision confirmed a ruling by a California jury last year that ordered Sony to pay $82 million in the case. The amount was raised to slightly more than $90 million due to interest.

Immersion's stock rose 36 percent to $7.85 on the Inet electronic exchange, from its $5.75 close on Thursday.

Shares in Sony closed down 0.23 percent, underperforming the Tokyo stock market's electric machinery index (.IELEC.T), which rose 0.32 percent.

In another intellectual property-related lawsuit between Japanese and U.S. technology companies, Toshiba Corp. (6502.T) was ordered by a California jury last week to pay $465 million in punitive and other damages to Lexar Media Inc. (Nasdaq:LEXR - news) for stealing trade secrets. Toshiba, the world's seventh-largest chip maker, suggested it would appeal the decision.

Toshiba shares were down 0.22 percent at 446 yen, extending Friday's 0.45 percent slide.