" the defendants know about the costs of discovery and if one assumes even an unrealistic probability, as of this moment, that their chances of winning is 50% the total expected cost should be considerable. For smalled probabilities of their winning the cost will be even hogher by far. My guess is still that they will settle before of the Markman for amounts close to what DM is asking for."
Here's how I see it. DM is having settlement discussions with each of the defendants while preparing for the Markman Hearing. Our demand from Nokia and Panasonic is considerably larger than our demand from one of the smaller defendants. Discovery costs will depend on the number of infringing products sold by the defendant company. Again, I would think that Nokia would have greater discovery costs than one of the smaller defendants. That said, all defendants will expect their costs to be significant.
If, for example, our original demand from Nokia was for $50 million and DM was holding firm at $30 million during settlement discussions then they may be willing to spend $3 million to prepare for markman. $3 million to them is a drop in the bucket.
If you are a small defendant and you are looking at $2 million in attorney fees to prepare for markman and our original demand was for $5 million but through settlement discussions you can get out of this for $2.5 million you would probably take the deal and be done with it.
It's about leverage and risk tolerance. $2 million in attorney fees means more to a smaller company than it does to Nokia. Add to the $2 million another $5 million (original demand) after a loss at markman and for the small company you are now staring at a risk of $7 million versus the settlement of $2.5 million.
A company as large as Nokia has a much higher risk tolerance and may see a of risk $53 million ( $3 million in attorney fees plus a $50 million verdict) as one worth taking. Throw in treble damages and it might not be worth it however.
Even though the companies are working together on a common defense, they are all interested only in their own interest. The longer this goes on without additional settlements the more convinced I become that the stakes really have been raised. That doesn't mean we should expect $10 or $20 million settlements from each defendant but we should expect more than we've seen in the past relative to the size of each company.
It all comes down to the price of our IP times the number of infringing units BY COMPANY
