Official PR: Bleem! Reacts to Sony Bullying

BLEEM ACCUSES SONY OF THREATENING RETAILERS, ASKS COURT TO ENJOIN SONY’S ATTEMPT TO BLOCK BLEEM! FROM STORES

PlayStation manufacturer accused of illegal activities aimed at eliminating competition

LOS ANGELES, CA (May 21, 2001) – bleem, inc. today announced it has filed a motion with the US District Court for the Northern District of California, seeking to enjoin Sony Computer Entertainment America (SCEA) from interfering with the marketing and sales of bleem’s new “bleem! for Dreamcast” (bleemcast!) product. In papers filed with the court, SCEA, maker of the PlayStation videogame console, is accused of threatening retailers with legal and market retaliation if they sell the bleemcast! product.

The bleem! for Dreamcast software allows consumers to play certain PlayStation-compatible games on the Sega Dreamcast console with graphics quality superior to that of the PlayStation or PlayStation 2. The first bleemcast! title, designed for use with Sony’s mega-hit Gran Turismo 2 game, was launched on May 2, 2001. Though it has received universally rave reviews and is in high-demand, consumers complain that the product has been virtually impossible to find in retail stores. bleem’s motion before the court states that SCEA is “exerting extraordinary pressure on retailers to try to force them to stop selling bleem! for Dreamcast.”

According to David Herpolsheimer, president and CEO of bleem, “Sony has already asked the judge to pull bleem! from the market in three separate motions, and each time, they’ve lost. This is nothing more than an end-run around the justice system – Sony is using its huge market power to force retailers into giving them what the courts won’t.”

The papers claim Sony has pressured Babbages, Etc. LLC, owners of Babbages, software, etc., Funcoland and GameStop stores, and Electronics Boutique Holdings Corp., two of the largest purveyors of videogame software in the United States. Sony’s PlayStation dominates the multi-billion-dollar videogame market by a margin of two-to-one, and a large portion of the retailers’ revenues is derived from the PlayStation platform and dependent on their relationship with Sony.

bleem’s motion claims Sony is unlawfully using its market power to strong-arm retailers via threats of legal action and harm to their business dealings with the company. The motion claims that as a result of Sony’s coercion, Babbages stopped distribution of bleemcast! to its stores and asked to return nearly all of its 7,000-unit initial order.

Electronics Boutique initially carried bleem! for Dreamcast, selling out of 11,000 units in barely a week. It quickly became the number-one best-selling product across all gaming platforms on the ebgames.com website, outselling even the highly-anticipated Gran Turismo 3 title and the PlayStation 2 console. However, pressure from Sony halted reorders and bleemcast! was temporarily removed from the site, leading to rumors that bleem! had cancelled the product.

“Sony knows that the most critical sales period for any new gaming product is in the first few weeks – even if they can’t kill bleemcast! outright, they can achieve the same effect just by limiting availability and slowing it down. Momentum is everything in videogames,” said bleem’s president and CEO, David Herpolsheimer.

bleem’s motion is the latest action in a bitter two-year court battle between the tiny company and Sony, who first sued bleem in April of 1999 for copyright infringement and other offenses. Sony attempted to enjoin sales of bleem! for PC through two motions for restraining orders and another for a preliminary injunction but was rebuffed each time, finally losing its copyright claims at summary judgment last year. After bleem obtained a restraining order preventing Sony from interfering with its exhibit at the 2000 E3 trade show in Los Angeles, Sony responded with a new lawsuit for patent infringement, which it is now using in its legal threats against retailers.

“Sony used similar tactics two years ago, when we first launched our bleem! for PC title and they sued us for copyright infringement. It took over a year to prove that their claims were completely baseless, but during that time, Sony was able to use that lawsuit to threaten retailers and try to scare them into pulling bleem!,” said Herpolsheimer. “Sony is misusing the protections afforded by US intellectual property law to conceal what is, at its core, an illegal attempt to force a competitor out of business. Without the lawsuit, Sony’s actions are pure antitrust; but with it, Sony can wrap itself in righteous indignation and claim to be ‘protecting its valuable intellectual property.’ Sony’s lawyers used that line a few too many times in the previous, baseless litigation. It simply isn’t credible anymore.”

bleem’s motion also asks the judge to lift the stay on its anti-trust counterclaims against Sony for violations of the Sherman Act, and to allow expedited discovery into the details of Sony’s most recent actions. The counterclaims had been bifurcated pending resolution of the original complaint. A hearing is set for Monday, May 21 at 3:00 p.m. before Judge Legge in the United States District Court for the Northern District of California in San Francisco.