To settle or not to settle: What would you do?

Merpel asks "What if"...
Like any curious Kat, Merpel spends her day contemplating "What if…". The game is often best played with multiple players whose views on risk and probability can impact the eventual path taken. So over dinner recently, when a hypothetical story was posited into her lap with a meaty "What if…" question, she wanted to extend the game to the Kat's readership to see if their wise brains could conjure up any inventive answers. The question is as follows:

During patent infringement proceedings, the patentee (who is an SME and not in a dominant position) comes across a killer piece of prior art that would destroy the patent. Assume that the defendant, a huge multi-national, will not find it (e.g. because it is a prior use by the patentee that no-one remembers), that there is no obligation to give disclosure and that the defendant will not obtain a disclosure order. The patent has only a few years left on its life but winning the case is vital to the company’s survival. If the defendant loses, it will have no material effect on its business. Assume that no settlement is possible apart from walking away from the action with no order as to costs.

If you were the patentee company, what would you do?

Merpel is eager to hear your feedback by voting above or writing to her or the AmeriKat (ideally the latter, as Merpel doesn't get out of her heated Kat bed for just any answer). The most inventive answer received by 4PM today, will receive a Katpat (and possibly something extra) from Merpel and the AmeriKat.
To settle or not to settle: What would you do? To settle or not to settle: What would you do? Reviewed by Annsley Merelle Ward on Thursday, November 15, 2012 Rating: 5


  1. Assume that your assumptions are wrong....

    There's always a disgruntled ex- partner, -employee, -wife, etc. waiting to spill the beans.

  2. More tricky if you are counsel because you can't lie to the court. Could make life difficult depending on how the proceedings panned out.

  3. I suspect an awful lot of companies in that position would keep quiet, not tell their own lawyers (because they can see how that would end up), and then be destroyed anyway after their case collapses under cross-examination at trial - with a huge costs order to add to their problems.

    Even if it works, there's been plenty in the news recently to remind people that those grubby little moral shortcuts never go away entirely, as Anonymous has also observed above.

    Maybe the lesson is: "Try not to build a business that is entirely dependent on the validity of a single piece of IP".

  4. You're impossibly lucky that you can settle with no order for costs. The first anonymous is right, you can't do a cover up and you certainly can't if you have got a duty to the Court. Sometimes a situation arises like this when the client comes to the patent attorney and wants to file a patent application despite his disclosure on the basis that no one will ever know. It's a hostage to fortune to take such instructions. We need to make it plain to all student patent attorneys that this should never be done. On the other hand if you want to campaign for a grace period that would be a very laudable activity.

  5. Is the 'show results' button working?

  6. Yes it is but not on some handheld devices where they cut off the results. As of now the results are 85% would keep litigating and 15% would settle.

  7. If I understood the situation right, this 'what if' poll is not meant to be a strategic brainstorming session. Based on the facts described, it's a pure matter of conscience. Given that 1) the SME started the lawsuit in bona fide (no troll behaviour), 2) it is morally responsible for its employees' well-being (responsible corporate management), and 3) the defendant would be most likely to do the same in its place ('what if' equality), not disclosing for the survival of many households (and eventually for the public interest) largely outweighs disclosing for the benefit of the party who would not mourn over some loss of money. I would tell the SME demand damages just enough for its survival (but not more!). Talking about conscience, who can throw a stone at a mother who stole food for her children?

  8. There are a couple of other questions that I'd want to know the answer to before dancing on the head of this particular pin:

    (1) Is this the first time the patent at issue has ever been asserted against another entity? If not, how was that resolved... and would this revelation have any impact on the prior situation?

    (2) How long does the current patent have before expiration?

    I'm not sure how either of these would change my result (I'd tend toward disclosure)... but they'd certainly influence the reasoning, and the availability of third-alternative pathways.

  9. Could you clarify why "winning the case is vital to the company’s survival"? And does this mean that the company is going to die anyway, when the patent runs out in a few years' time?

  10. I believe finally this all nails down to:
    "even if you own a key patent: never forget that crucial to your continued success is that you keep manufacturing the better product at a competitive price".
    Because not everybody has the "connections" of a James Watt, and because that way you don't have to decide whether honesty or the slightly prolonged employment of your staff are the greater ethical value..
    Besides when the product has a market the succesful competitor may than have a need for trained workers..


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