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Item 1. Legal Proceedings

2024-08-19 compared with 2024-05-08 · 123 added, 110 removed, 22 unchanged (91% of the section changed)

1 unchanged sentence

Immersion Corporation vs.

On May 26, 2022, we filed a complaint against Meta in the United States District Court for the Western District of Texas.

The complaint alleges that Meta’s augmented and virtual reality (“AR/VR”) systems, including the Meta Quest 2, infringe six of our patents that cover various uses of haptic effects in connection with such AR/VR systems.

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

The complaint against Meta asserts infringement of the following patents:

“System and method for providing complex haptic stimulation during input of control gestures, and relating to control of virtual equipment”

“Context-dependent haptic confirmation system”

“ Haptically enhanced interactivity with interactive content”

“System with wearable device and haptic output device”

“ Haptically enhanced interactivity with interactive content”

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.

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.

On August 2, 2023, Meta filed a mandamus petition asking the Federal Circuit to reverse the district court’s order on Meta’s transfer motion.

Fact discovery closed on October 6, 2023.

The Federal Circuit denied Meta’s mandamus petition on October 30, 2023.

On November 10, 2023, Immersion filed a separate action in the Western District of Texas against Meta directed to its newly launched Quest 3 product, asserting the following patents:

“System and method for providing complex haptic stimulation during input of control gestures, and relating to control of virtual equipment”

“ Haptically enhanced interactivity with interactive content”

“System with wearable device and haptic output device”

“ Haptically enhanced interactivity with interactive content”

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 filed its response to IPR2023-00942 and IPR2023-0094 on September 8, 2023, and to IPR2023-00944 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 Patent Trial and Appeal Board instituted review of IPR2023-00942 on December 6, 2023;

IPR2023-00943 on December 6, 2023;

IPR2023-00944 on December 7, 2023;

IPR2023-00945 on December 6, 2023;

IPR2023-00946 on December 8, 2023;

and IPR2023-00947 on December 6, 2023.

On January 16, 2024, Immersion and Meta jointly moved to stay all deadlines in district court because they had arrived at a settlement in principle.

On January 17, 2024, the Court stayed all deadlines.

Under the Court’s order, the parties were to either move to dismiss the proceedings if they finalized the settlement agreement, or alternatively they were to provide the Court with a status update, by January 31, 2024.

On February 9, 2024, Immersion entered into a Patent License and Settlement Agreement (the “License and Settlement Agreement”) with Meta, pursuant to which the parties have agreed to terms for resolving the litigation matters described above (the Litigation”) and Meta will license, on a non-exclusive basis, Immersion’s patent portfolio for use in its products.

Under the License and Settlement Agreement, in consideration for the license and releases granted therein, Immersion received approximately $17.3 million, after deducting for legal fees related to the Litigation (and other pending litigation) and other liabilities.

Pursuant to the License and Settlement Agreement, Immersion and Meta agreed to terms for dismissal by them of the outstanding Litigation and the IPRs.

On February 16, 2024, the parties dismissed the district court actions and requested permission from the Patent Trial and Appeal Board to dismiss the IPRs.

The Patent Trial and Appear Board dismissed the IPRs on February 27, 2024.

The description of the License and Settlement Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the License and Settlement Agreement, which is attached to the Quarterly Report on Form 10-Q as Exhibit 10.1 and is incorporated herein by reference.

Immersion Corporation vs.

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

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

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

Immersion is seeking injunctions that would allow Immersion to prohibit 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:

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

EP 2 463 752 B1 (French part) titled “ Système de rendu haptique avec stockage d’effets ”

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, Mr.

Siddharth Mathur.

The application seeking interim injunction was set to be heard on March 21, 2024, but has been reset by for the Court to be heard on July 22, 2024.

On March 21, 2024, Xiaomi indicated that it would bring a counter claim to invalidate the Indian patent.

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.

Immersion replied on October 27, 2023, and received Xiaomi’s response on February 2, 2024, with a decision expected sometime before August of 2024, and a hearing has been set for November 13, 2024.

In the German infringement proceeding, Xiaomi’s statement of defense was due on October 25, 2023.

Immersion’s reply was due on February 26, 2024.

Xiaomi’s rejoinder is scheduled for July 25, 2024.

The oral hearing is scheduled for August 29, 2024.

The next case management hearing in the French proceeding is scheduled for June 6, 2024.

The complaints alleged that the Xiaomi-Group’s devices, including the Xiaomi 12, infringed Immersion's patents that cover various uses of haptic effects in connection with such devices.

On June 12, 2024, the Company entered into a Patent License Agreement (the “Xiaomi License Agreement”) with the Xiaomi Group, pursuant to which the parties have agreed to terms for resolving the Xiaomi Litigation and the Xiaomi Group will license, on a non-exclusive basis, the Company’s patent portfolio for use in its products.

Pursuant to the Xiaomi License Agreement, the Company and the Xiaomi Group have agreed to terms for dismissal by them of the outstanding Xiaomi Litigation.

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 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 2017 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, 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 Company had a hearing on April 27, 2023, and the Korea Administrative Court rendered a decision on this matter on June 8, 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 Seoul High Court to seek the cancellation of the lower court’s decision.

The appellate case is in progress at the Seoul High Court and the first hearing and the hearing took place on November 30, 2023 and February 1, 2024, respectively.

However, the next hearing will be set at a later date.

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.

On August 7, 2023, the Korean tax authority submitted its answer against the tax appeal.

On September 8, 2023, on behalf of LGE, the Company submitted its rebuttal brief in response thereto.

On September 25, 2023, the Korean tax authority, on behalf of LGE, the Company submitted an additional response brief, and on November 23, 2023, the Korea Tax Tribunal rendered a decision against LGE, dismissing the claims of the Company on the grounds that its claims are without merit.

In response thereto, on behalf of LGE, the Company filed an appeal with the Korea Administrative Court on December 29, 2023.

The next hearing date has not yet been set.

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 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

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 2017 period.

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, 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 Company had a hearing on April 27, 2023, and the Korea

Administrative Court rendered a decision on this matter on June 8, 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 Seoul High Court to seek the cancellation of the lower

court’s decision.

The appellate case is in progress at the Seoul High Court and

the first hearing and the hearing took place on November 30, 2023 and

February 1, 2024, respectively.

However, the next hearing will be set at a

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.

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.

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.

On August 7, 2023, the

Korean tax authority submitted its answer against the tax appeal.

8, 2023, on behalf of LGE, the Company submitted its rebuttal brief in response

On September 25, 2023, the Korean tax authority, on behalf of LGE, the

Company submitted an additional response brief, and on November 23, 2023, the

Korea Tax Tribunal rendered a decision against LGE, dismissing the claims of

the Company on the grounds that its claims are without merit.

In response thereto, on behalf of LGE, the Company filed an appeal with the

Korea Administrative Court on December 29, 2023.

On July 25, 2024, the

Korea Tax Tribunal rendered a decision against LGE, and the deadline for the court

appeal of the local income claim is October 21, 2024.

In addition, the Korea

Administrative Court scheduled a hearing date of August 29, 2024.

Immersion Corporation vs.

11 unchanged sentences

“Systems and Methods for Proximity-Based Haptic Feedback”

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

Valve re-noted its motion, which changed Immersion’s response deadline from August 14, 2023 to August 21, 2023.

Valve responded to the complaint on July 24,

2023, with a motion to dismiss.

Valve re-noted its motion, which changed

Immersion’s response deadline from August 14, 2023 to August 21, 2023.

Immersion timely filed its response, and Valve filed its reply on August 25,

The Court heard arguments on Valve’s motion on February 8, 2024.

The Court entered a case schedule on November 21, 2023.

The case schedule did not include a trial date but set the pretrial conference for May 30, 2025.

Valve filed inter partes reviews (“IPRs”), IPR2024-00477 and IPR2024-00478 on January 19, 2024.

These are directed to U.S.

7,336,260 and 9,430,042 respectively.

The Company’s response is due April 26, 2024, and April 29, 2024, respectively.

Valve filed IPR2024-00508 on January 30, 2024, which is directed to U.S.

The Company’s response is due May 9, 2024.

Valve filed IPR2024-00556 and IPR2024-00557 on February 7, 2024.

These are directed to U.S.

8,749,507 and 10,665,067, respectively.

The Company’s responses are due on May 15, 2024.

Court entered a case schedule on November 21, 2023.

The case schedule did not

include a trial date but set the pretrial conference for May 30, 2025.

Valve filed inter

partes reviews (“IPRs”), IPR2024-00477 and IPR2024-00478 on January 19, 2024.

These petitions are directed to U.S.

7,336,260 and 9,430,042

respectively.

The Company filed its patent owner preliminary responses to these

petitions on April 26, 2024, and April 29, 2024, respectively.

The Patent Trial

and Appeal Board issued a decision, granting institution of these petitions on

July 24, 2024, and July 25, 2024, respectively.

The Company’s patent owner

responses to these petitions are due on October 15, 2024 and October 17, 2024,

respectively.

Valve filed IPR2024-00508 on January 30, 2024, which is directed

The Company elected not to file a patent owner

preliminary response to this petition.

The Patent Trial and Appeal Board issued

a decision, granting institution of this petition on August 6, 2024.

Company’s patent owner response to the petition is due on October 31, 2024.

Valve filed IPR2024-00556 on February 7, 2024, which is directed to U.S.

The Company’s response is due June 27, 2024.

The Company filed its patent owner preliminary response to this

petition on May 15, 2024.

The Patent Trial and Appeal Board issued a decision,

granting institution on August 6, 2024.

The Company’s patent owner response to

the petition is due on October 31, 2024.

Valve filed IPR2024-00557 on February

7, 2024, which is directed to U.S.

The Company filed its

patent owner preliminary response to this petition on May 15, 2024.

Trial and Appeal Board issued a decision, granting institution on August 13,

Valve filed IPR2024-00582 on February 16, 2024, which is directed to U.S.

The Company filed its patent owner preliminary response

to this petition on June 27, 2024.

The Patent Trial and Appeal Board’s decision

on whether to institute the petition is expected to issue around September 27,

Valve filed IPR2024-00714 on March 22, 2024, which is directed to U.S.

The PTAB has not yet set a response due date.

The parties submitted their joint claim construction statement and respective positions on March 29, 2024.

On March 14, 2024, Valve filed a motion to stay the district court case pending the PTAB’s decisions on the IPRs.

Immersion opposed the motion on March 25, 2024, and Valve filed its reply brief on March 29, 2024.

The Company filed its preliminary patent owner preliminary

response to this petition on July 30, 2024.

The Patent Trial and Appeal Board’s

decision on whether to institute the petition is expected to issue around

October 30, 2024.

The parties submitted their joint claim

construction statement and respective positions on March 29, 2024.

On March 14, 2024, Valve filed a motion to

stay the district court case pending the PTAB’s decisions on the IPRs.

Immersion opposed the motion on March 25, 2024, and Valve filed its reply brief

on March 29, 2024.

The Court granted Valve’s motion to stay on April 4, 2024.

In connection with that order, the Court struck Valve’s motion to dismiss with leave to refile at a later date.

There have been no material changes to the risk factors disclosed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 , filed with the SEC on March 11, 2024.

In connection with that order, the Court struck Valve’s motion to dismiss with

leave to refile at a later date.

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