Avoid Suicide by Litigation: Learning Lessons from SCO and Intel - Page 2

Rob Enderle

Intel's Cross-License Storm


Intel appears to be stepping out from under its cross-license agreements, first with AMD and most recently with NVIDIA. It was already engaged with AMD in what Intel has identified as the most expensive litigation of its type in history. Cross licensing is a practice designed to be a defense against excessive litigation. When used properly, it focuses the competitors involved into competing on product and typically takes litigation off the table as either an offensive or defensive competitive weapon. It is a tactic that also focuses the companies involved on the expertise they have and allows them to play the game for which they were trained. When these agreements break down, as they are around Intel, the result is typically massive and complex litigation until either one party fails or management again comes around to the idea that this method of competing is counterstrategic and excessively expensive for the likely benefits achieved. Part of the expense is that instead of focusing the market on the firm's products and/or services, it focuses it on the litigation. At best, it creates a drag on sales. At worst, it can delay product and, should the litigation go in an unexpected direction, result in a long-term adverse effect on image and profitability.


Wrapping Up


Litigation is a weapon that should largely be used defensively, managed by experts, and only as a final resort. There are few firms that do it offensively well and even the strongest, like Oracle, use it sparingly. Cross licensing has a purpose: assuring the right focus for the firm. Companies that forget this tend to regret it. As economic conditions degrade, litigation will appear more attractive. I'm suggesting that you avoid the seductive call of this seemingly easy path. It's not easy and it could have the exact opposite outcome from the one you want. Just remember SCO effectively committed suicide by litigation.

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Add Comment      Leave a comment on this blog post
Mar 28, 2009 2:43 PM Anonymous Insider Anonymous Insider  says:

In the case of SCO, it seems as the management didn't take into account the Amiga syndrome, see http://www.krsaborio.net/research/1990s/96/02_d.htm .

Many serious journalists learned too late about that rage in Amiga, OS/2, and Linux users, see http://www.krsaborio.net/research/linux/advocacy.htm .

Could SCO have handled things differently?

Well, it was a tricky thing to accomplish even to the most expert on Amiga syndrome issues.

SCO had to protect its IP at all costs as IBM was eating not only their lunch, but also their breakfast and dinner.

But how to protect their IP without enfuriating Amiga, OS/2 and Linux users?

Maybe that's why Microsoft decided to distance itself from Unix in the late 80s.

Microsoft was one of the first companies to adopt Unix in the early 80s, even ahead of Sun Microsystems, see http://www.krsaborio.net/research/1980s/81/8106_a.htm .

Nevertheless, during the fight for Unix standards in the late 80s, Microsoft decided to distance itself from such a distraction and instead, decided to embrace a technology developed at DEC. Outstanding gamble with great benefits today!

SCO instead kept its Unix strategy and today is suffering the consequences of such a decision.

Mar 28, 2009 5:15 PM Anonymous Insider Anonymous Insider  says: in response to Anonymous Insider

OK, I found Bill Gates' quote about the distraction in the late 80s on the quest for Unix standards:

"With so many different (Unix) versions, said Bill Gates, chairman of Microsoft Corp., 'There's always been Tower of Babel sort of bickering inside Unix, but this is the most extreme form ever. . . . This means at least several years of confusion.'"

Link: http://www.krsaborio.net/research/1980s/88/880518.htm

Today, with so many incompatible Linux kernel versions and different distros, the several years of confusion quoted by Gates, could easily transform in decades of confusion for Linux.


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