What changed in this filing

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Item 1. Legal Proceedings

2023-08-11 compared with 2023-05-11 · 64 added, 29 removed, 23 unchanged (80% of the section changed)

12 unchanged sentences

“Haptically enhanced interactivity with interactive content”

Meta responded to our complaint on August 1, 2022.

Meta responded to the Company’s complaint on August 1, 2022.

On September 12, 2022, Meta filed a motion to transfer the lawsuit to the Northern District of California or, in the alternative, to the Austin Division of the Western District of Texas.

Meta’s motion remains pending, and a hearing on the transfer motion occurred on January 23, 2023.

In the meantime, claim construction briefing is closed, and fact discovery opened on February 7, 2023.

The claim construction hearing was scheduled for March 6, 2023, but had been rescheduled by the Court for April 24, 2023, and again rescheduled to May 11, 2023.

The Court denied Meta’s motion on May 30, 2023, and held the claim construction hearing on the same day.

The Court adopted certain claim constructions during the hearing, and issued a formal claim construction order consistent with those constructions on July 7, 2023.Fact discovery is ongoing, and is set to close on September 6, 2023.

In addition, Meta filed inter partes reviews (“IPRs”), IPR2023-00942;

IPR2023-00943;

and IPR2023-00944, on May 25, 2023.

These are directed to U.S.

and 10,269,222, respectively.

The Company’s response to IPR2023-00942 and IPR2023-0094 is due on September 8, 2023, and to IPR2023-00944 is due on September 12, 2023.

Meta filed IPR2023-00945;

IPR2023-00946;

and IPR2023-00947 on May 26, 2023.

These IPRs are directed to United States Patent Nos.

and 10,248,298, respectively.

The Company’s response to IPR2023-00945 is due on September 8, 2023, and to IPR2023-00946 and IPR2023-00947 is due on September 12, 2023.

On August 2, 2023, Meta filed a mandamus petition asking the Federal Circuit to vacate Judge Albright’s May 30, 2023 order denying transfer of the litigation from the Waco Division of the Western District of Texas to the Northern District of California and instead transferring the case to the Austin Division of the Western District of Texas.

The Federal Circuit has set a response deadline of August 11, 2023 for us, and a reply deadline of August 14, 2023 for Meta

Immersion Corporation vs.

On or about March 3, 2023, we initiated patent infringement lawsuits against several companies of the Xiaomi-Group (the “Xiamoi-Group”) in Germany, France and India.

We initiated lawsuits against Xiaomi-Group companies and their agents in the Düsseldorf Regional Court in Germany, the Tribunal judiciaire de Paris (Paris First Instance Civil Court) in France, and the High Court of Delhi, at New Delhi, in India.

The complaints allege that the Xiaomi-Group’s devices, including the Xiaomi 12, infringe our patents that cover various uses of haptic effects in connection with such devices.

We are seeking injunctions that would allow us to prohibit the Xiaomi-Group from selling the infringing devices in Germany, France and India, as well as costs and damages as compensation for such infringement.

The complaints against the Xiaomi-Group assert infringement of the following patents:

On or about March 3, 2023, the Company filed patent infringement lawsuits against several companies of the Xiaomi-Group in Germany, France and India.

Immersion filed complaints against Xiaomi-Group companies and their agents in the Düsseldorf Regional Court in Germany, the Tribunal judiciaire de Paris (Paris First Instance Civil Court) in France, and the High Court of Delhi, at New Delhi, in India.

The complaints allege that Xiaomi’s smartphones, including the Xiaomi 12, infringe Immersion’s patents that cover various uses of haptic effects in connection with such smartphones.

Immersion is seeking injunctions that would allow Immersion to prohibit Xiaomi from selling the infringing smartphones in Germany, France and India, as well as costs and damages as compensation for such infringement.

The complaints against Xiaomi assert infringement of the following patents:

• EP 2 463 752 B1 (German part) titled “ Haptisches Feedback-System mit gespeicherten Effekten ”

1 unchanged sentence

• IN 304 396 (India) titled “ Haptic Feedback System With Stored Effects”

On June 19, 2023, Xiaomi filed an initial response to the Company’s lawsuit in India.

On July 7, 2023, the Indian litigation was listed before the Learned Joint Registrar (“JR”), Mr.

Siddharth Mathur.

Immersion’s preliminary response to Xiaomi’s initial response is due on August 11, 2023.

On July 11, 2023, in the German proceeding Xiaomi filed its nullity action in the German Federal Patent Court, which was served on Immersion on July 27, 2023.

LGE Korean Withholding Tax Matter

On October 16, 2017, we received a letter from LG Electronics Inc.

(“LGE”) requesting that we reimburse LGE with respect to withholding tax imposed on LGE by the Korean tax authorities following an investigation where the tax authority determined that LGE failed to withhold on LGE’s royalty payments to Immersion Software Ireland, a subsidiary of the Company, from 2012 to 2014.

Pursuant to an agreement reached with LGE, on April 8, 2020, we provided a provisional deposit to LGE in the amount of KRW 5,916,845,454 (approximately $5.0 million) representing the amount of such withholding tax that was imposed on LGE, which provisional deposit would be returned to us to the extent we ultimately prevail in the appeal in the Korean courts.

In the second quarter of 2020, we recorded this deposit as Long-term deposits on our Condensed Consolidated Balance Sheets .

On November 3, 2017, on behalf of LGE, we filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes.

(“ LGE ”) requesting that we reimburse LGE with respect to withholding tax imposed on LGE by the Korean tax authorities following an investigation where the tax authority determined that LGE failed to withhold on LGE’s royalty payments to Immersion Software Ireland Limited from 2012 to 2014.

Pursuant to an agreement reached with LGE, on April 8, 2020, the Company provided a provisional deposit to LGE in the amount of KRW 5,916,845,454 (approximately $5.0 million) representing the amount of such withholding tax that was imposed on LGE, which provisional deposit would be returned to us to the extent we ultimately prevail in the appeal in the Korea courts.

On November 3, 2017, on behalf of LGE, we filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes related to the 2012 to 2014 period.

The Korea Tax Tribunal hearing took place on March 5, 2019.

On March 19, 2019, the Korea Tax Tribunal issued its ruling in which it decided not to accept our arguments with respect to the Korean tax authorities’ assessment of withholding tax and penalties imposed on LGE.

On behalf of LGE, we filed an appeal with the Korea Administrative Court on June 10, 2019.

On behalf of LGE, the Company filed an appeal with the Korea Administrative Court on June 10, 2019.

The Company has had numerous hearings before the Korea Administrative Court in the years 2019 through 2022.

The Korea Administrative Court had indicated that it expected to render a decision on this matter by December 31, 2022, but had subsequently updated the parties to indicate that a decision on this matter is expected by February 16, 2023.

On February 15, 2023, we were informed that the Korea Administrative Court had scheduled another hearing for April 27, 2023 due to a change in the main judge for this matter.

We had a hearing on April 27, 2023, and the Korea Administrative Court indicated that it expects to render a decision on this matter by June 8, 2023.

On April 25, 2023, we received notice from LGE requesting us to reimburse LGE with respect to withholding tax imposed on LGE by the Korean tax authorities following a recent tax audit of LGE for the years 2018 through 2022 in the amount of KRW 3,025,251,775 (approximately $2.3 million).

We are currently evaluating our next steps with respect to the reimbursement of such withholding taxes in accordance with our obligations pursuant to the license agreement with LGE.

As of March 31, 2023, we have accrued $0.3 million of withholding taxes, interest and penalties related to the 2018 to 2022 period for which the Korean tax authorities have recently assessed LGE.

The additional income tax is accrued in Other Current Liabilities in our Condensed Consolidated Balance Sheets.

Based on the developments in these cases, we regularly reassess the likelihood that we will prevail in some or all the claims from the Korean tax authorities.

To the extent that we determine that it is more likely than not that we will prevail against the claims from the Korean tax authorities, then no additional tax expense is provided for in our Condensed Consolidated Statements of Income and Comprehensive Income .

In the event that we determine that it is more likely than not that we will not prevail against the claims from the Korean tax authorities, or a portion thereof, then we would estimate the anticipated additional tax expense associated with that outcome and record it as additional income tax expense in our Condensed Consolidated Statements of Income and Comprehensive Income in the period of the new determination.

If the additional income tax expense was related to the periods assessed by Korean tax authorities and for which we recorded in Long-term deposits on our Condensed Consolidated Balance Sheets , then the additional income tax expense would be recorded as an impairment in the Long-term deposits .

If the additional income tax expense was not related to the periods assessed by Korean tax authorities and for which we recorded a Long-term deposits on our Condensed Consolidated Balance Sheets , then the additional income tax expense would be accrued as an Other current liabilities .

We cannot predict the ultimate outcome of the above-mentioned actions that are pending, and we are unable to estimate any potential liability we may incur.

Please also refer to our disclosures in Note 5.

Contingencies of the Note to the Condensed Consolidated Financial Statements.

The Company had a hearing on April 27, 2023, and the Korea Administrative Court rendered a decision on this matter on June 7, 2023, in which it ruled that the withholding taxes and penalties which were imposed by the Korean tax authorities on LGE should be cancelled with litigation costs to be borne by the Korean tax authorities.

In connection with the Korea Administrative Court’s decision, the Korean tax authorities filed an appeal on June 28, 2023 with the Korea Administrative Court to seek the cancellation of the court’s decision.

On April 25, 2023, the Company received notice from LGE requesting the Company to reimburse LGE with respect to withholding tax imposed on LGE by the Korean tax authorities following a recent tax audit of LGE for the years 2018 through 2022.

Pursuant to an agreement reached with LGE, on June 2, 2023, the Company provided a provisional deposit to LGE in the amount of KRW 3,024,877,044 (approximately $2.3 million) representing the amount of such withholding tax that was imposed on LGE, which provisional deposit would be returned to the Company to the extent the Company ultimately prevails in the appeal in the Korean courts.

On June 29, 2023, on behalf of LGE, the Company filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes related to the 2018 to 2022 period.

Section 220 Demands

On March 14, 2022, we received a stockholder demand (the “ Franchi Demand ”) to inspect our records pursuant to Section 220 of the Delaware General Corporation Law from Anthony Franchi, a purported stockholder of the Company.

On March 21, 2022, we responded, noting deficiencies in the stockholder demand, but agreeing to produce certain requested documentation, subject to the execution of a confidentiality agreement relating to the confidentiality of such requested documentation.

On April 29, 2022, the parties executed a confidentiality agreement covering such requested documentation.

We produced documents in response to the Franchi Demand in May 2022 and since then has heard nothing further regarding the Franchi Demand.

We also received a demand for the inspection of books and records under Section 220 on behalf of Interlink Electronics, Inc.

(“ Interlink ”) dated May 9, 2022 (the “ Interlink Demand ”).

Interlink is a purported beneficial owner of 1.2 million shares of our common stock.

The Interlink Demand seeks to inspect certain our books and records.

It contends that Interlink requires the books and records in order to investigate a series of transactions and actions that the Company’s board of directors and management effected in 2021 and 2022.

On May 19, 2022, we responded to the Interlink Demand by objecting that it failed to meet the requirements of Section 220.

However, we agreed to permit Interlink to inspect certain books and records subject to a confidentiality agreement.

We most recently provided a draft confidentiality agreement to Interlink in August 2022 and since then has heard nothing further regarding the Interlink Demand.

Immersion Corporation vs.

Valve Corporation

On May 15, 2023, we filed a complaint against Valve Corporation (“ Valve ”) in the United States District Court for the Western District of Washington.

The complaint alleges that Valve’s AR/VR systems, including the Valve Index, and handheld Steam Deck, infringe seven of our patents that cover various uses of haptic effects in connection with such AR/VR systems and other video game systems.

We are seeking to enjoin Valve from further infringement and to recover a reasonable royalty for such infringement.

The complaint against Valve asserts infringement of the following patents:

“Method and Apparatus for Providing Tactile Sensations”

“Systems and Methods for Adaptive Interpretation of Input from a Touch-Sensitive Input Device”

“Virtual Detents Through Vibrotactile Feedback”

“System for Haptically Representing Sensor Input”

“Position Control of a User Input Element Associated With a Haptic Output Device”

“Systems and Methods for Integrating Haptics Overlay in Augmented Reality”

“Systems and Methods for Proximity-Based Haptic Feedback”

Valve responded to the Complaint on July 24, 2023 with a motion to dismiss.

Immersion’s response to the motion is due on August 14, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings