Nintendo will pay an ongoing royalty of 1.82 percent on the wholesale price of every 3DS after losing a patent infringement suit in March of last year. In mid-December, New York district judge Jed Rakoff officially set the amount the company must send to Tomita Technologies, which was found to have invented parts of the glasses-free 3D technology that the handheld console relies on — though Nintendo argued that the patent was merely ancillary to its design, a jury disagreed, and an attempt to get the patent ruled invalid failed.
The decision, however, is hardly an unalloyed victory for Tomita. Since winning the case, it's seen the original $30.2 million damage award slashed in half, and while Nintendo asked to pay only 1.36 percent in royalties, Tomita didn't want a percentage figure at all: it pushed for a flat fee of $4.45 per unit, well over 2 percent of the wholesale price.
Rakoff, however, thought a long-term flat fee was excessive. "Whether the ongoing royalty is expressed as a percentage of sales or on a per-unit basis would have no impact on Nintendo's payment to Tomita so long as the price of the 3DS never changes," he said. As with most electronics, though, that's unlikely to happen. And if the price dropped, "Tomita would capture an increasingly large proportion of each sale as the price falls, even as the technology's reliance on the infringed patent remains constant. This would result in an unearned windfall."