Warren Meyer points us to an amazingly well written business letter. I would encourage you to read the whole thing, though it’s a bit lengthy and technical. I could understand not getting the kick out of it that I do. Then again, I’ve written a lot of letters in response to legal threats over the years, so this is "near & dear." At any rate, here’s the three real money paragraphs, near the end.
I have seen Monster Cable take untenable IP positions in various different scenarios in the past, and am generally familiar with what seems to be Monster Cable’s modus operandi in these matters. I therefore think that it is important that, before closing, I make you aware of a few points.
After graduating from the University of Pennsylvania Law School in 1985, I spent nineteen years in litigation practice, with a focus upon federal litigation involving large damages and complex issues. My first seven years were spent primarily on the defense side, where I developed an intense frustration with insurance carriers who would settle meritless claims for nuisance value when the better long-term view would have been to fight against vexatious litigation as a matter of principle. In plaintiffs’ practice, likewise, I was always a strong advocate of standing upon principle and taking cases all the way to judgment, even when substantial offers of settlement were on the table. I am "uncompromising" in the most literal sense of the word. If Monster Cable proceeds with litigation against me I will pursue the same merits-driven approach; I do not compromise with bullies and I would rather spend fifty thousand dollars on defense than give you a dollar of unmerited settlement funds. As for signing a licensing agreement for intellectual property which I have not infringed: that will not happen, under any circumstances, whether it makes economic sense or not.
I say this because my observation has been that Monster Cable typically operates in a hit-and-run fashion. Your client threatens litigation, expecting the victim to panic and plead for mercy; and what follows is a quickie negotiation session that ends with payment and a licensing agreement. Your client then uses this collection of licensing agreements to convince others under similar threat to accede to its demands. Let me be clear about this: there are only two ways for you to get anything out of me. You will either need to (1) convince me that I have infringed, or (2) obtain a final judgment to that effect from a court of competent jurisdiction. It may be that my inability to see the pragmatic value of settling frivolous claims is a deep character flaw, and I am sure a few of the insurance carriers for whom I have done work have seen it that way; but it is how I have done business for the last quarter-century and you are not going to change my mind. If you sue me, the case will go to judgment, and I will hold the court’s attention upon the merits of your claims–or, to speak more precisely, the absence of merit from your claims–from start to finish. Not only am I unintimidated by litigation; I sometimes rather miss it.
I have two primary rules about how I treat legal issues in business:
- Never, under any circumstances, permit a mediation, arbitration, or "loser pays attorney fees" clause in your contracts. The latter is the most important. No potential plaintiff litigant commences by thinking they are going to lose. Quite the opposite, and the prospect of having their substantial fees paid just adds fuel to the fire. Know how I learned this? By watching attorneys. The attorney fee provision is the first thing they check when you bring an issue to their attention. When both sides know they are going to bear substantial time and expense, win or lose, it tends to quell fires. And, thus…
- When someone threatens me with litigation, I always and immediately call them out, along with the admonition that I will under no circumstances settle, ever.
Granted, most of the disputes I’ve ever dealt with would be in the five figures, sometimes six. When you get into the high sevens and eights, I’d imagine it doesn’t much matter because even millions in legal fees might be only a small percentage of the total deal. That’s where you get into territory my friend Chris calls "the true sport of kings."