Top 5 reasons not to settle IP Litigation

Here are my top 5 reasons not to settle IP litigation from the IP owner’s perspective:

  1. The other side are not even close to offering a reasonable deal.
  2. A state sanctioned monopoly is worth a lot more to you, even after the costs of litigation.
  3. This is one of many similar actions currently ongoing and you need a precedent and to send a signal to (a) the market, and (b) the other infringers.
  4. Settling this one will create a cascade of difficulties across many jurisdictions.
  5. Your CEO just doesn’t get along with the person in charge of that other company (NOT).

Sadly, 5 or derivations of it, seems to operate more often than you’d hope.

7 Comments on “Top 5 reasons not to settle IP Litigation

  1. Not settling can be a good way for a company to win the patience and the sympathy of what might otherwise be critical shareholders when the IP right it is seeking to enforce is its principal asset.

  2. I know this is supposed to be top 5, but how about:
    6) If the number of litigants on the other side is high – negotiating terms would be difficult and if there’s more than one competitor entering the market then you may as well take your chances.
    7) If you are facing a jury or are in a court where random decisions are quite frequent.
    8) If you know the litigation will take an eternity to reach final judgement (not pointing any fingers at our Whisky-loving neighbours in the UK..)

  3. Thanks LeightonThese are all very interesting.7 – random decisions could cut both ways, so you may be more inclined to settle if you have a strong case to avoid a damaging anomaly.8 – absolutely, and it happens all the time.

  4. Ah yes, of course, perhaps I should have written:
    7. where you know you have a weak case but are facing a jury or are in a court where random decisions are quite frequent..

  5. Jeremy – great point.  Apologies, your comment only just came through the system, I suspect you may have not clicked on the ‘confirm’ button.  Sorry about that.It’s a great point, and, of course relies on a proper communication strategy so that shareholders fully understand the implications of settling.

  6. 1′. Might be better stated as neither side can present a settlement calculation methodology acceptable to the other side. “Close to offering a reasonable deal” implies that both sides have a sense of what “reasonable” would be. The practical implication is that using words like “reasonable” almost guarantees that you’ll have an extended fight on your hands. If you present the situation as “there is no agreed upon framework to structure a settlement” you take the inflammatory, “you’re being unreasonable,” element out of the equation. BTW, this point not only applies to the opposing side, but even in gathering the internal support for an offer to the other side. If the internal team doesn’t agree on a settlement model, how would one ever expect the opposing side to agree on a model.4′.  Settlement will be seen as a sign of weakness by other potential & actual litigants.

  7. Kent – great points, thanks, and welcome.I guess ‘reasonable’ is what’s being at least thought (if not said) internally – the framework is a (good) attempt at an objective standard of reasonableness – would you agree?

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