Litigation - The Costs and the Benefits

Today's news on trade secret litigation applies to more than trade secret litigation. The following stories have a good deal to say about what I call the cost-benefit analysis of litigation. At what point does even successful litigation become unprofitable for the business? Remember there are always two ways to view a lawsuit: from the narrow viewpoint of the law of the case and the broader one of the business.

TSMC reaches settlement with UniRAM Technology:

"Taiwan Semiconductor Manufacturing Company (TSMC) has reached a settlement agreement with UniRAM Technology to settle a dispute regarding trade secrets alleged by UniRAM, according to a TSMC filing with the Taiwan Stock Exchange (TSE). No financial details were disclosed.

Last year, a jury returned a verdict in which it concluded that TSMC had misappropriated trade secrets relating to embedded DRAM technology from UniRAM, TSMC's former customer. The jury awarded UniRAM US$30.5 million.

In May 2008, the United States District Court for the Northern District of California made another judgment in favor of UniRAM, and although TSMC appealed, the judgment will now be vacated and all the trade secrets claims asserted by UniRAM are fully and finally settled, according to the new settlement agreement.

Both TSMC and UniRAM are pleased that this matter is amicably resolved, TSMC noted."

What would make both companieshappy? I suspect that there was less money paid by the loser in exchange the winner did not incur any more attorney fees or the risk of losing its judgment on appeal.

Now, check out the last paragraph of NTT Settles Suit with U.S. University, Canadian Firm:

Tokyo, Oct 6, 2008 (Jiji Press) - Nippon Telegraph and Telephone Corp. <9432> said Monday it has settled a suit filed by the University of Texas and a Canadian firm over NTT's alleged misuse of trade secrets related to rechargeable batteries.

In the out-of-court settlement, NTT will pay 30 million dollars to the university and Hydro-Quebec, a Canadian energy firm, and grant an exclusive license for its patented lithium rechargeable battery technology to the plaintiffs.

But the Japanese telecommunications firm denied any wrongdoing.

In the suit, filed with a Texas state court in 2001, the plaintiffs claimed that a former NTT researcher who was sent by the company to study at the University of Texas misappropriated trade secrets on rechargeable battery technology held by the university.

NTT obtained Japanese patents on the technology in 2003.

NTT agreed to settle the suit after giving consideration to such factors as the cost of continuing court proceedings and the uncertainty of jury trial outcomes, the company said.