Settlement Negotiations–Include the Real Party in Interest

Settlement negotiations are your pathway to revenue–the more licensing deals you close, the more revenue you generate.

To increase your odds of closing a deal, ensure the real party in interest is at the table–not just an intermediary (e.g. outside counsel).  When you exert leverage during negotiations, the real party in interest will be receptive and feel the and pressure–not the intermediary.

Specifically, make sure the potential licensee’s in-house representative (e.g., in-house counsel or member of the company’s business unit) is present at the meeting.  This is the real party in interest.


Because the in-house representative will be accountable for the litigation and internal recommendation whether to litigate or settle.  If the in-house representative recommends to continue litigating, he or she will be held accountable if the company is found to infringe and responsible for huge damages liabilities.

This accountability will ensure the in-house representative will be receptive to your case regarding the potential license’s exposure.

The potential licensee’s outside counsel, on the other hand, will not directly feel the pressure.  To put it bluntly, outside counsel bills its client by the hour and will get paid regardless of the outcome of the litigation.  Moreover, outside counsel has an incentive to continue litigating, because if the case settles, then outside counsel’s work dries up.

To be clear, I’m not implying that defense attorneys engage in malpractice by not acting in the best interest of their client.  But recognize that your (the patent holder’s) interest in settling the case diverge from the potential licensee’s outside counsel interest continue litigating the case.

Bottom line–when engaging in settlement discussions, always ask for the potential licensee’s in-house representative to be present.


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