Patents

by Mike Masnick


Filed Under:
patent trolls, patents, settlements

Companies:
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. identicon
    Anonymous Coward, 6 May 2011 @ 8:28am

    This is a collective action problem, where litigating would produce positive externalities that are not easily internalized.

    If RedHat fights, it pays more in legal fees, and yet the benefits of deterring future trolls accrues to the entire industry (including competitors). Moreover, in some of those cases, RedHat could be enjoined from distributing software, which is the commercial equivalent of the death penalty.

    So they settle, and hope the trolls sue your competitors. The trolls are counting on the same thing. That's why they fought against patent reform in Washington.

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