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  • Writer's pictureJoseph Dragon

YOUR BUSINESS HAS BEEN SUED! Now Pivot And Find Your Cheese (The Business Attorney).

Updated: Aug 9, 2021

Dragon Law Group strongly emphasizes its business clients to avoid litigation at all costs. Business law-suits can be extremely complicated. Usually, they involve claims for theft of intellectual property or a violation of a restriction of trade (non-compete agreements). Even the best attorneys in the country have a difficult time predicting the outcome of these cases. They can last anywhere from one to five years (sometimes longer). They are extremely expensive (easily $60,000-$500,000 of attorney fees). And at the end of the day, few are happy with the results.

But what happens if your business is served with a law-suit? Now what? In addition to the expensive tedious nature of these suits, it also leaves a bad taste in people's mouths resulting from the stigma of being sued. So, if you find yourself in this situation, it helps to take a deep breath and consider others who have been in your position and how they pivoted direction, finding their cheese.

Netflix recently came out with a new documentary mini-series entitled “High Scores.” The documentary tells the tale of the video game evolution during the 80s and early 90s. It was the beginning of a digital revolution, where technological advancements did not occur in Apple's fancy headquarters building, but in garages throughout the Silicon Valley.

At that time, a company named Atari emerged as the video game industry's giant. For those of you not familiar with Atari, it was the first video game home counsel, equivalent to Xbox and PlayStation today. Atari did not have any competitors, and thus, it solely enjoyed the fruits of its innovation. In a different part of town, four best friends, the oldest being 21 years old, sat down in their parents' garages with the smell of freshly microwaved chicken nuggets omitting in the air, and their Atari hooked up to their brand new twenty-inch color tv. They were gamers who knew how to write computer code. Together they began their very own start-up company, General Computer Corporation (“GCC”).

GCC took Atari's gaming code and modified it, making it better. Essentially the new code allowed the games to self-evolve on their own. At that point, if someone played a game, he or she would get better at that game to the point where the game was no longer challenging and thus no longer fun. GCC created code that caused the game's difficulty to increase as the player's skills grew, making the game more challenging and fun.

Well… Atari did not like GCC's activates… not one little bit. Atari filed a federal law-suit against GCC claiming the young start-up stole their code to create the new modifications. Usually, when someone gets sued, she or he tends to go into a “panic mode.” But GCC did not. In fact, GCC's members were thrilled that their little company had been sued. In the documentary, GCC explains that the fact that Atari sued them meant they were highly respected by the biggest video game company in the world. So much so that Atari felt compelled to take legal action. In GCC's eyes, the law-suit was a badge of honor.

At this point, you are probably saying to yourself, “That's great for GCC, but I am not excited at all that I've been sued. Now my business is at risk, and I have to come up with funds to hire a law firm to defend it.” We hear you, but take a lesson from GCC; pivot and find your cheese.

After they were sued, GCC got to work. First, they took a hard look at what Atari was complaining about. Then GCC changed their code to avoid Atari's claims. In short, they stay composed and stood their ground. Then something happened GCC did not expect. Atari was impressed both by GCC's programming skills and that GCC took itself seriously. Rather than fight GCC, Atari changed its tune. Atari decided to work with GCC instead of against it. Atari offered a substantial contract to GCC to program code for Atari, making their games better. As a result, GCC's members moved out of their parents' garage into a beautiful high-rise in San Francisco, trading in their chicken nuggets for Kobe beef.

The idea of pivoting and finding your cheese is embraced by the most successful companies in the world. Take Tesla, for example. The electric automobile giant is the only successful battery-powered automobile producer in the world. But because of that, they had a problem. Our society is built on 110 years of infrastructure designed for gas-consuming vehicles. Tesla needs charging stations across the country and the world. That is an enormous cost. What is the solution? Tesla believes the answer lied in encouraging the creation of more competitors in its market. Seems absurd, but it wasn't. By doing so, the electric car industry shares the costs of creating the infrastructure needed to support electric cars. So, Tesla released part of its intellectual property to the world, saying, “here is how you make electric cars, please make some and put some charge stations in along the way.” Despite receiving heavy criticism for doing so, six years later, Tesla has been listed on the S&P 500, and its stock value increased by a whopping five times. Tesla pivoted and found its cheese; the results speak for themselves.

Here is the bottom line. If your business is being sued, then the plaintiff is doing so because it knows your business has value. Conversely, if your business needs to sue a competitor, then you realize that competitor has value. When selecting an attorney to assist you, look for attorneys who are creative and can effectively persuade the parties to put their swords down and seize the opportunities before them.

In retrospect, Atari had a case. GCC did, in fact, unlawfully use Atari's intellectual property to create its business. Atari could have pounded GCC into the ground using the court to shut them down and preventing GCC from competing in the video-game market. But had Atari done so, it would have shot itself in the foot, allowing other competitors to push them out of the market. Both Atari and GCC pivoted to find their cheese. As a business attorney, my advice to clients, big or small, is to do the same.

Please Contact Dragon Law Group if we can assist your business in finding its cheese.

Please note: the contents found on this website are not legal advice and is strictly intended for educational purposes only. The legal needs of each individual vary significantly and are dependent on a variety of factors relevant to their specific needs.

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