Just to bring you up to speed: Immersion, a company specializing in haptic technology, in 2003 sued both Sony and Microsoft for patent infringement, claiming both companies used Immersion's intellectual property (IP) in their console's controllers. Microsoft settled out of court, but Sony fought on. Sony lost, and following the Judge rule that Sony must suspend the sale of "Playstation consoles, Dualshock controllers," and a few dozen games, including Vice City, Final Fantasy X, and Metal Gear Solid 2. Sony filed for appeal, and has been allowed to sell all aforementioned products while the decision is under appeal.
The Wall Street Journal this morning reports that a federal judge rejected Sony's appeal and upheld the earlier decision (which also includes a $90.7 million payment by Sony to Immersion). Sony argued that Craig Thorner, a former paid consultant to Immersion who submitted testimony on Sony's behalf. However, US District Judge Claudia Wilken noted that Thorner was an "unreliable" witness, citing "strong evidence" that suggest Thorner's testimony was directly affected by the $150,000 Sony had paid him as "advance royalty" to license Thorner's patents in the future.
It seems very incredulous that Sony would have to halt production on its flagship console, as well as most of the company's best-selling titles, but that may very well be the case here. Could this be a reason for Sony's (conceptual) "boomerang" PS3 controller? If the PlayStation 3 cannot utilize its force feedback technology from the past, how is this going to affect backwards compatibility? Chalk this up as another issue for Sony, alongside Cell processor issues, Blu-ray issues, delay rumors, and more than a few ad campaigns that have backfired.