Settlement or Else?|
Forward Software, Inc. is a software company potentially facing a copyright infringement lawsuit. The spreadsheet product Forward sells includes an optional menu navigation system identical to that of Focus Software, the original developer of the menu system. Forward’s spreadsheet product currently dominates the market. Focus Software is currently suing a smaller software company that has also used this identical menu system in their spreadsheet software. It is believed that based on the outcome of this pending lawsuit, Forward Software, Inc. may also be sued. Forward has to decide between offering Focus an unsolicited settlement prior to the pending trial’s conclusion or waiting for the outcome and possibly facing litigation. To do this, Forward needs to determine the optimal decision strategy to take and how much the strategy is expected to cost. The hiring of an outside law firm that may be able to provide a prediction of the company’s success in winning a trial must also be considered, as well as the maximum that should be paid for that service. Savings associated with hiring the firm need to be determined and analysis of the best decision strategy will also need to be done.
SUMMARY OF RESULTS
Based on our analysis, the best strategy is to wait until the outcome of the pending lawsuit. If Focus wins that lawsuit and files a lawsuit against Forward, Forward should hire the law firm to conduct the proposed study for the lawsuit. Based on the law firm’s findings (predicted win, predicted loss, can’t predict) Forward will have to decide to go to trial or settle out of court. The results show that unless the firm can make the prediction that Focus would likely win the lawsuit, Focus should settle out of court. The expected costs of this strategy range between $9 - $12.8 million dollars. This includes expected costs associated with hiring the...