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Red Hat CEO On Patent Trolls: Just Pay Them Off 167

jbrodkin writes "Although Red Hat fights patent lawsuits when it deems it necessary, CEO Jim Whitehurst says it's often just better to pay the trolls to make them go away. 'When it's so little money, at some point, bluntly, it's better to settle than fight these things out,' Whitehurst said. Red Hat has been forced to pay out claims to the likes of FireStar Software and Acacia, and Whitehurst indicated Red Hat has paid off various other companies behind closed doors. 'Some of them are [public] but we often seal them in settlement,' he said."
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Red Hat CEO On Patent Trolls: Just Pay Them Off

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  • Rudyard Kipling (Score:2, Interesting)

    by Anonymous Coward on Thursday May 05, 2011 @05:09PM (#36041172)

    We never pay any-one Dane-geld,
    No matter how trifling the cost;
    For the end of that game is oppression and shame,
    And the nation that plays it is lost!

  • Re:This is (Score:3, Interesting)

    by The Dawn Of Time ( 2115350 ) on Thursday May 05, 2011 @05:16PM (#36041284)

    It's entirely possible that he, as the CEO, understands that his company is indeed in violation of these patents and sees this as a cheaper solution than trying to rewrite 200 years of law or fight a battle he knows he will lose.

    I don't know for certain, of course. I'm no more privy to his thought process than you are.

  • Re:This is (Score:4, Interesting)

    by d'fim ( 132296 ) on Thursday May 05, 2011 @05:50PM (#36041720)

    He just told trolls "Come and get it!", how is that maximizing value?

    It isn't.

    The strategy was smart; announcing it to the world was stupid.

  • Re:This is (Score:5, Interesting)

    by Firethorn ( 177587 ) on Thursday May 05, 2011 @05:57PM (#36041772) Homepage Journal

    This sort of thinking is what led to the lawsuit-crazy period in the '90s. People would find some 'standing' to sue, pretty much irregardless of merit. Then they'd offer to settle for some fraction of the court costs (like $500). The accountants did the make, figuring it'd cost $5k to win the court case, but only $500 to make them go away.

    HOWEVER, if you get a reputation for paying off, you attract MORE trolls. This would be known as a 'second order effect'. IE if you don't have a rep for settling, you might get sued once a year. Get a rep for settling, and you might get 100.

    1x $5k is cheaper than 100x $500.

    So settling with a patent troll may be, on first glance, cheaper. But if it results in more patent trolls threatening to sue you, the overall expense can actually flip.

    It's this sort of reasoning behind why Walmart and a number of other companies will fight ANY settlement tooth and nail. It's to have a tough-guy rep to prevent others from suing in the first place.

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