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. icon
    sheenyglass (profile), 6 May 2011 @ 8:48am

    RedHat's strategy can be reasonable

    I think it depends. BS lawsuits are filed hoping for a payoff settlement. If you are consistently fighting lawsuits under a certain threshold of BS, then you are creating a disincentive to file similar lawsuits. For lawsuits above that threshold, where they have a chance at actually winning, the disincentive created by fighting is weaker. So assuming the fight/settle threshold is set correctly, I don't think you inevitably make more trouble for yourself in the long run.

    Perhaps with unlimited legal resources, one could create the strongest disincentive to trolling. With limited resources however, a choice has to be made - is the ROI on the disincentive to troll greater than the ROI on development. Put another way, RedHat could get a reputation as a company that you should never sue because they will always fight, but without better products that reputation will do them little good.

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