Right. Lodsys thought that it was too risky for them, so they chose to drop the case. The amount that Lodsys would have gotten from licensing fees would have been more than the amount that it cost to bring the case to trial. So the only reason they would have to dismiss the case would be that they were worried that their patents were at risk. (Note: the risk could have been small, but still enough to worry them.)
They have no incentive to drop a case this far into it. Future targets now know that they just have to keep the case going and eventually Lodsys could just drop it.
> They have no incentive to drop a case this far into it.
If you think of their model as an exercise in gambling, they do have an incentive. Jury trials for patent cases are notoriously hard to predict, and they risked a very real, non-zero chance of reaching a decision that, even if it didn't kill their patents, could cripple their campaign, say, something like "Patents are valid, but iOS apps don't infringe."
(Note that jury verdicts in patent cases seldom seem to have much to do with the technical merits of the case.)
So their potential outcomes were:
A. Drop case: continue settling with small entities for Y revenue going forward with estimated revenue R.
B. Favorable decision with X in damages: nice bonus to go along with contiuing revenue R.
C. Unfavorable decision: 0 damages as well as very likely loss of continuing revenue R.
Say the outcome has probabilities P(A), P(B) and P(C). They likely just assumed some values for these probabilities (actually, lots of empirical data out there these days, and P(B) is quite low)and X and R, and ran the numbers, and they got an expected result that wasn't too favorable. So they chose to minimize their risks, along with the associated rewards.
> Future targets now know that they just have to keep the case going and eventually Lodsys could just drop it.
Right, but the catch is that for most defendants it's too expensive to even just keep going on. And that's why they'll keep suing left and right and dismissing if anybody gets too close to trial. I don't know if there's any way to stop this campaign unless they slip up.
(PS, I was mistaken about the Apple situation. Apple could not intervene because Lodsys settled the cases it was trying to intervene on -- essentially a tactical retreat like this one -- so it doesn't really speak to the exhaustion defense as such.)
Right. Lodsys thought that it was too risky for them, so they chose to drop the case. The amount that Lodsys would have gotten from licensing fees would have been more than the amount that it cost to bring the case to trial. So the only reason they would have to dismiss the case would be that they were worried that their patents were at risk. (Note: the risk could have been small, but still enough to worry them.)
They have no incentive to drop a case this far into it. Future targets now know that they just have to keep the case going and eventually Lodsys could just drop it.