by Mike Masnick

Filed Under:
patent trolls, patents, settlements

red hat

Why Red Hat Is Wrong That It's Better To Just Pay Patent Trolls Sometimes

from the that's-why-you-get-more dept

Last year, people got reasonably upset when it came out that Red Hat had settled one of many patent lawsuits filed against it, this time from patent troll giant Acacia. People were upset both at the decision to settle and then to keep the terms secret. Red Hat, after all, has spoken out many times against software patents and patent trolls. Slashdot points us to the news that Red Hat's CEO has explained that sometimes it's just easier to pay up. It's clear that he really doesn't want to and thinks the whole practice is distasteful, but there are times when he recognizes it's just cheaper to pay up:
"When it's so little money, at some point, bluntly, it's better to settle than fight these things out."
He does say that they fight on bigger cases or cases they feel are especially ridiculous. But, in others, it's just cheaper and easier to settle. I certainly understand the reasoning. And I definitely understand the short-term cost-benefit analysis. If you can pay off the patent holder for less than it'll take to fight the case, even if you win, that seems like a good deal. Except... in the long run, this may be penny-wise and pound-foolish, because as you build up the reputation as a company who will fold as long as the settlement demands are under a certain level, then all you do is encourage more trolling behavior, leading to more new lawsuits with more patent holders demanding a handout.

Again, I can certainly understand the basic reasoning for settling, and can't really begrudge any company that decides to settle to avoid a lawsuit, but it is a little disappointing that this just perpetuates the problem.

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  1. icon
    Hulser (profile), 6 May 2011 @ 7:41am


    Deciding whether to settle out of court with a patent troll is similar to deciding whether to pay a ransom to a kidnapper. In both cases, you know that what you'd be doing would contribute to the overall problem, but you're balancing that abstract, overall, long-term negative against the immediate, personal, short-term benefit.

    The difference, I think, with settling with a troll is that you're not just making it worse for your fellow citizens, but for yourself. As Mike pointed out, settling with trolls may be good in the short term, but you're setting yourself up for being sued for the lifetime of your company.

    I know that it's the nature of people (and corporations) to focus on short term gains, but I still don't see why companies don't draw a line in the sand and say "No, we will never settle with anybody, ever over a frivolous patent lawsuit." Sure, there'd be some additional costs up front, but eventually the trolls would just move onto easier targets i.e. companies that were stupid and shortsighted enough to actually give into the demands of the trolls.

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