What makes parties settle before trial? When do they normally settle? What is the driver for settlement?

There are loads of statistics when it comes to settlement.
For example data shows that 95-97% of all cases settle before trial !

Threat of injunction is by far the main driver for settlement. An injunction is a legal order issued by the court that requires a party to stop using, making, selling, or importing a product or process that infringes on a valid patent. In other words, a patent injunction is a court order that prohibits a party from continuing to engage in activities that infringe on a patent owner’s exclusive rights.

This is what you ultimately risk as defendant, which would be catastrophic.
However, in the end, most patent litigation is about money, and if you put up enough money, you will get a settlement. Question is how much money?

District courts can issue these injunctions, if the plaintiff have a competing business and risk irreparable harm if the defendant is allowed to continue its infringing activities. Irreparable harm is when it would not be adequately compensated by monetary damages.

However the recent trend though is that not even operating companies are getting injunction orders against defendants.
And NPEs (Non-Practising Entities) never gets injunctions, since they “only” risk royalties, not having their own operating/competing business at risk.

The alternative; ITC, fast, but very expensive.
In US there is an alternative to district courts when it comes to patent litigation. You can file a complaint to the ITC (International Trade Commission), and they only issue injunctions (import stop), no monetary damages.

If the ITC finds that a violation has occurred, it may issue an exclusion order prohibiting the importation of the infringing products into the United States.

ITC proceedings can be relatively fast compared to other legal proceedings. The ITC has strict procedural rules and timelines to ensure that investigations are completed in a timely manner. Typically, an ITC investigation will be completed within 12-18 months from the date of filing.

You could wonder why Aequitas never used that venue?


Why do you settle closer to trial?

The closer you get to trial, the more nervous both parties get. Do you dare risk having a trial with a jury you have no idea how they will think… ? Which side to take?

There are several reasons to settle before trial;

• Cost: Trials can be expensive, and the costs can add up quickly as the case proceeds. Companies may choose to settle to avoid the cost of going to trial, which can include legal fees, expert witness fees, travel expenses, and other costs associated with preparing and presenting evidence.
• Uncertainty: Going to trial is inherently risky, as the outcome is uncertain and can depend on a variety of factors, such as the strength of the evidence, the arguments made by each side, and the decisions of the judge or jury. Companies may choose to settle to avoid the risk of an adverse outcome at trial.
• Reputation: Legal disputes can be damaging to a company’s reputation, regardless of the outcome. Companies may choose to settle to avoid negative publicity and the potential harm to their brand or image.
• Certainty: Settlements provide a degree of certainty and finality to a legal dispute, as the parties can agree on the terms of the settlement and avoid the uncertainty of a trial outcome.

Having said this, settlement (if any) normally comes after Markman hearing. It is first at that moment you know how the court looks at the case, how each element in the patent claim will be interpreted. Before that it is up for individual interpretation
[like in my previous posts Take1 and Take2]

I think settlement IS possible in the Neonode case(s), but since injunction will not be available I fear that both Samsung and Apple will play this game to the bitter(?) end, i.e all the way through appeals.