Tech firms are often confronted by nonpracticing entities (NPEs) that threaten them with dubious patents in hopes of reaching quick “cost of defense” type settlements. Because NPEs (by definition) do not practice the patents themselves—or even offer any product beyond a license to their patents—discovery and all its costs are essentially a one-way street.
Settling with NPEs is both tempting and dangerous. Settlement is tempting because it eliminates disruptions to the business, provides certainty and is often less costly than hiring expensive attorneys to defend you. Even if you feel that the patents are absolutely invalid, often the time and expense in proving them invalid is difficult to justify. On the other hand, settle for too much and too often and you could find your company developing a reputation of paying out.