Nuisance Suit, Nuisance Value

Lawsuit brought by a plaintiff who may not want to bring the suit to trial, but rather is willing to settle it for “nuisance value,” sometimes as an ambush claim (see below.) The amount of nuisance value can vary. At the low end it may simply seek a settlement for a number less than the cost of litigating the suit, both in terms of legal fees and business disruption.

At the high end, a nuisance suit may be seeking to take advantage of a timing problem to obtain an inflated settlement. For example, it may be an intellectual property claim brought, often with attendant publicity, against a technology company immediately pre-IPO, or just before a major transaction (e.g., a merger, rights offering or major borrowing), seeking a settlement that reflects the likely cost of a delayed transaction (or increased interest rate or lower issue price), rather than a fair settlement value. Indeed, one problem with this type of ambush is that it is often not practicable to effectively litigate liability (i.e., whether the claim is even legally valid), since commercial factors mean that the case needs to ‘go-away’ as soon as possible, even though the underlying legal case might under other circumstances be a ‘loser’ in court. This type of claim is often pejoratively analogised to a street robbery and called a ‘stick-up,’ ‘hold-up,’  ‘mugging’ or ‘ambush.’

Use of the strategy is not limited to patent trolls – the licensing departments of certain very large technology companies are notorious for bringing this type of carefully timed assertion as well as certain law firms. A taste for ambush claims tends over time to lower the quality of the preparation and analysis those who use this tactic engage in – use of ‘the gloss‘ becomes common, as well as self delusion about the quality of patent assertion claim charts, while the legal work of regular ambushers is often sloppy. A nuisance suit, especially one where the underlying claim is facially invalid, is potentially abuse of process.