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Microsoft settles suit with Immersion

The company will pay $26 million to settle a patent-infringement suit and acquire rights to use Immersion?s "haptic" technology in devices such as joysticks.

Microsoft has settled a patent-infringement suit and received the rights to use Immersion?s technology for providing tactile responses in devices such as joysticks.

Under the deal, Microsoft will pay Immersion $26 million for licensing rights and for a stake in the company, Immersion said Tuesday. Immersion also can borrow as much as $9 million more through a convertible debenture arrangement with Microsoft, the company said.

Immersion specializes in so-called haptic technology, which uses the sense of touch to expand interactions between humans and computers. For example, its technology can be used to build a joystick that shudders in a flight simulation game when a player's airplane is shot, or a mouse that thumps slightly so people with poor vision can tell when their cursor is hovering over a clickable button.

Microsoft uses haptic technology in its Force Feedback joysticks.

Immersion sued Microsoft and Sony for patent infringement in February 2002, over their use of haptic technology. Immersion said its suit against Sony still is in litigation.

"Microsoft recognizes the importance of haptic technology to consumers, the value of Immersion's patent portfolio in this space, as well as Immersion's role as a leading supplier of haptics," Barry Spector, Microsoft's director of business development, said in a statement.

Also Monday, Immersion announced a net loss of $4.4 million for the quarter ended June 30 on revenue of $4.1 million.

Shares of Immersion surged late Monday after the deal was announced. In after-hours trading, the stock climbed to $4.75, well above its closing price of $1.85 on the Nasdaq.