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What the LG vs Sony lawsuit means for you

The possible repercussions of the PS3 ban

Is There a Loophole for Sony?

Some press reports suggested that there is a loophole for Sony, ie the temporary ban applies only to Holland and therefore Sony could simply get the PS3s into Europe through other ports. This is technically correct legally because the current ban only applies to Holland, but I suspect a 'loophole' is unlikely in reality:

(1) It is much easier said than done for Sony to change its entire European distribution network. It takes weeks for container ships to reach Europe, then they have to be sent to the right kind of port, which also has to have on-shore distribution facilities. All of that is currently set up in Holland and it can't be easily replicated elsewhere. I suspect it would be difficult to fly substantial amounts of PS3s into Europe on any economic scale.

(2) In any event, even if Sony was able to make alternative temporary distribution arrangements, that would be treating the symptom (the Dutch ban) not the cause (the dispute with LG). LG could potentially just go to each European port and seek a similar ban (albeit we don't know if they would have the same success). One last point: the Daily Mail reported yesterday that the PS3 importation ban has been extended to the UK, but that has not been corroborated so far as I'm aware by HMRC, Sony or LG.

So What's Next?

It's impossible to predict the twists and turns a lawsuit can go through, but some things are clear:

  • The case may or may not settle at any time of course, if the parties are able to resolve their differences.
  • If it doesn't, Sony and LG will need to go back before the Dutch legal authorities regarding the current ban there in the next few days.
  • If LG wants to pursue its patent infringement case in Europe further, it will likely need to do so in each European country - there isn't a simple pan-European patent framework for it to rely upon.
  • The legal action in the US is ongoing and could catch up with Europe at any time - which could cause headaches for both LG and Sony.
  • If the lawsuit does drag on, and if stocks of PS3s are affected, then it could quickly affect everyone in the PS3 supply chain - from Sony to its developers to the consumer.

Key Points for the Games Industry

  • Hardware manufacturers should pay attention to this case and consider how well their intellectual property rights, particularly their patents, are protected.
  • Don't just look at your home market(s) - issues in other European countries can quickly affect you too.
  • Don't assume that your legal issues will occur just within the games industry itself.
  • Everyone should be aware that these kinds of bans/freezing orders aren't restricted to patent infringement - they can in principle be obtained where there has been other IP infringement or possibly even if there is just a contract dispute.
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GamesIndustry International is the world's leading games industry website, incorporating GamesIndustry.biz and IndustryGamers.com.

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