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, 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 ridiculous 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.
[Update: clarified Microsoft's "settlement" and fixed a plethora of typographical errors that should never have made it published. Sorry about that.]