Liability to Seller, not to Buyer [LWN.net]

Liability to Seller, not to Buyer

Posted Jul 11, 2006 16:08 UTC (Tue) by AnswerGuy (guest, #1256)
In reply to: Open source IP case puts spotlight on patents (SearchOpenSource) by kirkengaard
Parent article: Open source IP case puts spotlight on patents (SearchOpenSource)

The point of this escrow account is that it's spent money to RH Inc. It
either goes to the sellers (from whom RH bought JBoss) or to handle any
of these sorts of liabilities.

So, from the perspective of RH Inc's management it doesn't cost any more or less if they use this 43 mil to pay off one patent troll.

(However, they might not be able to use the $43M to pay legal fees for defending it --- don't know for sure).

Now, as the article points out, there are the longer term strategic considerations. Obviously if you pay off one troll, you make yourself a more attractive target for the rest of them. (This is a corollary to a "no negotiations" policy with host takers; it might cost a few lives at first --- but it will rapidly make hostage taking very unattractive. It makes the prospect into the logical equivalent of a murder/suicide --- with no upside potential).

Another, less dramatic, strategic concern would be a matter of customer perception. RH Inc may want to discreetly survey a small and carefully selected sample of their customer base to find out how settling might affect customer perception. This factor might cost them alot more than 40 million ... perhaps an order of magnitude more over the course of the next five years or so. (Beyond five years it probably wouldn't have any effect either way -- this particular case will be a distant memory by then).

JimD

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