Majesco Entertainment Shares Got Crushed: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of video game developer Majesco Entertainment (Nasdaq: COOL  ) certainly cooled down this morning, falling as much as 12.1% on pretty average trading volume.

So what: Privately held Impulse Technology just filed a patent infringement lawsuit against six game developers for controlling in-game actions by manipulating a Wii Remote or Wii Balance Board. The technology is the heart and soul of Majesco's chart-topper Zumba Fitness, so it's understandable if investors see a threat in this legal action.

Now what: That being said, Majesco hardly stands alone. Co-defendants include resource-rich giants Electronic Arts (Nasdaq: ERTS  ) and Konami (NYSE: KNM  ) , and of course Nintendo (OTC: NTDOY) itself. Nintendo has slapped away at least three lawsuits similar to this one and is likely to defend the honor of its Wii innovations again. But you can't blame Impulse for trying -- the patent in question expires in 2014, so the time to extract value from it would be right now. In short, this lawsuit isn't likely to hurt Majesco beyond the cost of lawyering up.

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