Correct. Which is why "it's a great quote." By sending the credible signal that they will fight patent trolls to the bitter end, and probably win, they avoid fights.
In terms of game theory, by making public statements of this kind, they make it harder for their future selves to settle with future trolls instead of fight. Future trolls, knowing this, will be less likely to target them. Trolls want settlements, not fights they'll probably lose.
"Future trolls, knowing this, will be less likely to target them. "
We can take strategy further though instead of the obvious implementation.
What if you settle in some cases but not all cases?
So a troll sees that you settled with company "x" but upon review you feel that you aren't going to settle with them?
This happens in personal injury cases or other legal matters. Taking a "we don't settle ever stand" sends a signal that you aren't evaluating the merits of the action just taking a flat approach. Consequently nothing can be inferred as far as how you even view the merits of the action. It's all the same. Otoh, taking a "settle when necessary" doesn't imply you will always settle and sends (I would argue) a stronger message when you do fail to roll over that you aren't because you feel particularly strongly in the case before you.
In strategy (that I use for negotiating) I have always found it best to not be predictable.
The Troll's business model is predicated on the belief that, for almost all values of X, Company X will decide to settle, should the Troll attack. Therefore, the choice from the Troll's perspective is between outcomes [1.1] with a payoff of 0 and [1.2.1] with a payoff of +10. Strategically, the Troll chooses the +10 and attacks.
But if a Company X can credibly destroy its option to settle, the Troll's expected payoffs for attacking X change to [1.2.2.1] = -5, [1.2.2.2.1] = +100, and [1.2.2.2.2] = -1000, with the +100 payoff being unlikely (because, if it were likely, the Troll's business model wouldn't be to troll). So the most likely payoffs in the Troll's estimation are either -5 (ouch) or -1000 (OUCH!).
Therefore, the Troll's best choice becomes not to attack Company X. That choice has a payoff of 0, but it's greater than the expected payoff should they fight.
I upvoted your comment but I also note that your background and training is very different than mine is. I look at things from a human nature point of view mostly and by my gut feelings which makes me think the way I do. That has tended to work for me based on past experience. As an aside I don't have a degree in psychology or anything special that qualifies me as someone special other than just plenty of experience and observation over the years. And I happen to be exceptional at negotiation and strategy (not that I can or will prove that so take that for what it's worth). And I've certainly frustrated many attorneys over the years as well.
As a tangible example I had a case where someone wanted something from me and my lawyer said "they have a good case and you will have a really hard time etc. etc.". Legally he was right. However in my view the company that wanted the "something" also had a new facility that was opening in 3 months approx. and I realized that they would rather pay and acquire the item then they would follow a legal route (regardless of outcome or cost).
So while I am not disagreeing with the method to which you look at this it isn't the way that I think.
That said it's entirely possible that the strategy of putting up a fight each and every time could work to the advantage of someone being trolled. But I've seen enough cases of people following different legal strategies to know that it must have drawbacks because not every top legal mind seems to go that route.
As they say ask 10 get 10 opinions.
Lastly, I'm sure you would agree that a lawyer is at least somewhat biased in wanting to follow a "fight everyone" strategy as it (for lack of a better way to put it) lines his pockets.
Patent trolls are parasites looking for easy money. If Newegg is signaling that no money from them is easy, then that seems to be the best way to fend off all the lawsuits, no matter the level of perceived merit.
That wouldn't be true in the sort of patent lawsuit where somebody is defending against an existential threat. But when you're trying to influence a cost/benefit calculation, signaling "we will maximize your costs and maybe we will sink your whole operation" seems like a great way to get the extortionists to move on to other targets.
"If Newegg is signaling that no money from them is easy, then that seems to be the best way to fend off all the lawsuits, no matter the level of perceived merit."
I get your point but would you agree that otoh it is entirely possible that a patent troll might decide to take them on in order to show that they won't go away easy as well? (variation of a Moral hazard?)
Additionally we don't really have complete data on every demand made by trolls it's not as if someone who decides to settle (and/or the patent troll) is publicly disclosing all agreements made prior to legal action, right?
We only know about when lawsuits are filed and settled. We don't know about someone settling before a suit is filed at all.
As an example a domain owner might have a publicly stated policy that they will never turn over a domain when someone comes calling even if they file a lawsuit UDRP etc. And in fact there are people that do this (google rick schwartz domain king). But how do we know the times that Mr. XYZ gets approached and does settle? It wouldn't be in his interest to tell the world about that and he could easily have an agreement with the other company that he will only agree if they don't disclose the info.
I don't think that's the case. Trolls don't have to sue anybody in particular. But they have a strong incentive to be able to win any case they start, because, as with this story, a loss can eliminate future shakedowns.
Correct. Which is why "it's a great quote." By sending the credible signal that they will fight patent trolls to the bitter end, and probably win, they avoid fights.
In terms of game theory, by making public statements of this kind, they make it harder for their future selves to settle with future trolls instead of fight. Future trolls, knowing this, will be less likely to target them. Trolls want settlements, not fights they'll probably lose.