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.
Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: patent trolls, patents, settlements
Companies: red hat

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. identicon
    Mike, 6 May 2011 @ 9:56am

    First, getting a "reputation" of taking every case to the mat has not panned out for advocates of such strategy. It has been largely debunked. The flaw is to assume that patent holders will blindly assume past behavior is a predictor of future behavior when the facts and circumstances of each case is different including, among other things (i) breadth of claims; (ii) success of previous litigation licensing; (iii) perceived "value" of the patent; (iv) perceived validity of a particular patent... and so on and so forth.

    Second, the idea of "taking one for the team" doesn't make much commercial sense either. At some level, it is rational for a competitor to cut its losses especially if that means greater costs down the road for its competitors.

    Third, taking a "loser" of a case to trial is expensive and risky.

    Fourth, big, public companies are accountable to shareholders and board members who may not share their "principles" if it meant saving the company millions in legal fees and potential damages claims.

    Fifth, proving invalidity of even the most "obvious" patents is expensive and time consuming and far from a sure thing when put to a lay judge/jury or even if bringing it back to the PTO in reexam. It can take a long time for a court to get to rule on invalidity and a significant chunk of invalidity questions are not resolved at summary judgment but at trial. It's usually easy for a patent owner to create some issue of fact regarding invalidity to preserve it for trial.

    Finally, patent cases are not unique. Product liability, discrimination cases, and "nuisance" suits are frequently settled even if the case is weak. Such behavior is a function of the system itself.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Follow Techdirt
Special Affiliate Offer

Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it

Email This

This feature is only available to registered users. Register or sign in to use it.