American History 1988
Chapter 147 - 141 Plan B

Chapter 147: Chapter 141 Plan B

"Boris, of course it would be best if we had a Plan B, but please don’t keep everyone in suspense any longer. You know, everyone is worried about this."

Upon hearing the term Plan B, it seemed as though everyone breathed a sigh of relief, but David Morgentaler still urged him not to tease and to focus on the matter at hand.

"OK, this good news is also thanks to you, Dean, for your foresight."

Facing everyone’s curious gazes, Dean shrugged uncertainly, "Me?"

"Yes~" Boris Feldman then pulled a promotional flyer for Teams 2.0 out of his bag, "Our new model might really come in handy."

After his reminder, Dean seemed to realize something. "So, Attorney Feldman, the good news comes from the new standard-definition mode we launched? It’s another audio codec algorithm we’ve developed."

"Exactly," nodded Boris Feldman appreciatively, "I found yesterday while doing research that Teams 2.0 employs a new acquisition and expansion scheme.

While it still has intricate connections with G.722, it’s our algorithm, it’s a technology unique to Byte Software.

The ADPCM technology patent that Bell South is alleging only covers a part of the G.722 standard, not all of it. This gives us room to maneuver."

"What steps can WSGR take? Can we invalidate Bell South’s allegations?" David Morgentaler hoped to hear some good news.

"A conservative estimate," said Boris Feldman as he took out the plan he had written up late into the night, "is that we will be in a protracted legal tug-of-war with Bell South, during which Byte Software can still carry out normal business operations.

However, to avoid possible subsequent claims, Teams can only launch voice calls in standard definition, which might be somewhat unfavorable for Byte Software’s promotion.

In the most optimistic scenario, we contribute this set of algorithms to the patent pool in exchange for a free license to use the ADPCM technology patent.

But I think, Bell South will not easily settle with us."

Well, the conservative outcome is already quite good. As long as Teams can continue to sell, Byte Software won’t be killed in one fell swoop.

Even considering the current state of internet infrastructure, perhaps the standard-definition mode might be more suitable for Teams’ promotion, since hardware limitations are a problem faced by most users.

"Guys, it looks like we need to prepare for a long legal battle with Bell South," Dean certainly wasn’t going to give up easily, in fact, he even wanted to use this as a selling point for Byte Software’s publicity.

"WSGR will have a dedicated team of lawyers to handle this lawsuit," Boris Feldman was already prepared for battle, and they would be the main force in the upcoming legal proceedings.

"However, for the sake of the long-term future, I suggest that Byte Software resolve the technical issues with voice coding as soon as possible.

Whether it’s alternative solutions or independent research and development, we need to act quickly.

Because even if we get through this difficulty smoothly, we don’t know when the other party will strike next."

Boris Feldman’s suggestion was acknowledged by Dean, either to completely replace ADPCM or to secure its permanent usage rights.

But obviously, the former is safer, although it may require a larger investment.

"The final question," Glenn Miller of Mayfield pointed at the lawyer’s letter, "How do we deal with this now?"

Dean and Boris Feldman exchanged glances, then shrugged in unison, "Just a piece of scrap paper~"

If they were already prepared for litigation, why bother with the opponent’s lawyer’s letter?

In America, the litigation process also follows the "polite first, soldiers later" approach, where a lawyer’s letter is first sent to the defendant before formal litigation begins.

Typically, there’s a 7 to 10-day response period, and if no response comes, it moves into the filing stage.

Clearly, Byte Software was not going to respond to Bell South’s allegations, and there was nearly no chance of amicable negotiations between the two sides.

"If Bell South sues us, where will the hearing court be? In Atlanta, Georgia?"

This point was crucial, as David Morgentaler, who had been through several lawsuits, knew all too well that different states could yield different outcomes for the same case.

Bell South’s headquarters were in Atlanta, Georgia, and if it were up to them, they would likely choose to initiate the lawsuit on their home turf.

However, Boris Feldman had a different opinion on this matter, "This might count as another piece of good news.

Patent litigation cases differ from regular civil cases, as federal district courts typically have jurisdiction to hear patent cases nationwide in the first instance.

According to the Judiciary and Judicial Procedure Act, section 1400, patent lawsuits should be initiated at the defendant’s residence or where the alleged infringement took place if the defendant has already established a regular place of business there.

Unquestionably, Silicon Valley in California is Byte Software’s stronghold, and we have not yet established a branch in Georgia. Otherwise, Bell South would surely choose Georgia as the litigation venue."

"Now they have no choice, the federal district court of California will be the sole venue for this litigation case."

It has to be said that this indeed is good news. First, California itself has an encouraging attitude towards the circulation of technology, otherwise it would not have abolished restrictions like non-compete agreements.

Moreover, both WSGR and Byte Software’s headquarters are located here, especially the former, where Boris Feldman and his team have abundant legal resources in California.

Being the de facto host, this invisibly adds to their chances of winning.

But Dean felt it was not enough. He stroked his chin and pondered for a while before ordering Jimmy and the others, "Slow down the expansion steps of Byte Software in the southern states, especially near Georgia.

If we have offices in that vicinity, close them temporarily, to prevent giving the other party any opportunity. Of course, continue recruiting staff, the only difference being the cancellation of a fixed office location for now.

Hold on for a while, wait until Southern Bell initiates formal litigation. Once the trial court is confirmed, we will then resume the expansion steps."

"A wise choice," Boris Feldman appreciated Dean’s guerrilla tactics, "If all goes well, we will receive a summons from the southwest district federal court of California within a week.

After that, we can continue to advance Byte Software’s commercial policies. Based on past statistics, the win rate for patent litigation cases in California is generally around 32%.

The average litigation duration is 1.9 years, and the median compensation amount is around one million US dollars. Each of these points makes it worthwhile for us to slightly delay our expansion."

"Good~" David Morgentaler rose to give the final summary of the meeting, "Guys, proceed with the plan as discussed.

It’s time to give Bell Octopus another profound lesson; they have apparently forgotten the experience of their last breakup."

"Yeah~" Everyone raised their fists and cheered loudly. Although there were troubles, they were not without a chance of winning.

As everyone gradually dispersed, Dean and David Morgentaler were still left in the meeting room.

"Dean, how much funds are on Byte Software’s books?" David Morgentaler was first concerned about the financials because all upcoming actions would require money.

Less than two million, there will be a payment coming in from a distributor next month." Dean had a rough idea of what was coming, "So, how much money do we need to spend to cope with this lawsuit?"

"Charging standards for a partner lawyer like Boris are 800 US dollars per hour. Even if we calculate according to the quickest resolution time of one year, the lawyer’s service time for this lawsuit case will be at least several hundred hours.

This alone is already a few hundred thousand dollars in fees, plus the whole legal team. As well as the legal resources that need to be utilized, the current funds on the books might not last very long."

The news from David Morgentaler made Dean’s heart sink. Legal fees of tens to hundreds of millions of dollars were undoubtedly a huge burden for Byte Software at that moment.

Dean sighed softly, "There will be a payment of about three million US dollars next month, but Byte Software is still in a phase of expansion, and I even wanted to use this litigation to do a publicity campaign for Teams."

The groundwork had been laid: Teams was selling well, but Byte Software had many places to spend money. Originally, according to plans, this three-million-dollar payment would have been entirely invested into the next round of expansion.

More advertising, recruiting personnel, establishing branches—all these required money. As previously said, such investments and expansions would keep cycling until Byte Software went public.

"How do you plan to use this lawsuit to promote Byte Software?" asked David Morgentaler, showing interest.

"One is a startup without much fame; the other is the household name Bell Octopus." Dean gestured with his hands, "The confrontation between the weak and the strong naturally garners more sympathy from people.

What’s more, we are on the side of justice—don’t forget that Teams uses international open standards, while Southern Bell’s actions are akin to banditry.

In the past, I always felt that the spread of Byte Software’s reputation was a bit slow, and the advertising effect can only be considered decent at best.

Perhaps we have a little fame among enterprise users, but the general public doesn’t know about Byte Software.

This lawsuit is an excellent opportunity to bring Byte Software to the public’s attention and promote our image of justice."

Dean believed that many people would be interested in a company that could arm-wrestle with the Bell Matriarch.

The Bell company itself attracted media attention, especially after the 1984 breakup.

Dean was now prepared to heavily promote the litigation case between Byte Software and Southern Bell.

This wave of attention he would shamelessly seize, aiming to associate Byte Software’s name alongside the Bell brand.

However, as previously mentioned, marketing this lawsuit well would mean Byte Software needs to invest even more money in promotion.

Given the current scenario, not only does the funding on the books appear insufficient, but the subsequent payments might also fall short of covering the expenses.

"OK, I get it." David Morgentaler crushed his cigar firmly in the ashtray, "Perhaps we can consider launching a second round of financing."