Meredith Delgado owns a small firm that has developed software for organizing and playing music on a computer. Her software contains a number of unique features that she has patented, so her company’s future has looked bright.

However, there now has been an ominous development. It appears that a number of her patented features were copied in similar software developed by MusicMan Software, a huge software company with annual sales revenue in excess of $1 billion. Meredith is distressed. MusicMan Software has stolen her ideas and that company’s marketing power is likely to enable it to capture the market and drive Meredith out of business.

In response, Meredith has sued MusicMan Software for patent infringement. With attorney fees and other expenses, the cost of going to trial (win or lose) is expected to be $1 million. She feels that she has a 60 percent chance of winning the case, in which case she would receive $5 million in damages. If she loses the case, she gets nothing. Moreover, if she loses the case, there is a 50 percent chance that the judge would also order Meredith to pay for court expenses and lawyer fees for MusicMan (an additional $1 million cost). MusicMan Software has offered Meredith $1.5 million to settle this case out of court.



  1. What does Meredith need to decide?
  2. What are some factors that complicate her decision?
  3. What else would you like to know in order to help Meredith make her decision?
  4. If you were Meredith, what would you do? Why?

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