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Whenever a business is involved in a lawsuit, it’s known as commercial litigation. There are many different types of commercial litigation from intellectual property disputes to business fraud to corporate espionage, to name just a few. Often commercial litigation can be costly and many businesses choose to settle disputes outside of court whenever possible. Only the most successful companies can afford to take even the most trivial disputes to court. It comes down to a question of choosing your battles. You want to protect your business and reputation but you also want to keep your business out of the red. Walking this fine line is known as strategic business litigation.
Strategic business litigation is all about knowing when to file a lawsuit and when not to. Here is a look at some considerations that need to be taken before any legal action.
A litigation success story
Consider the example of a family-owned soap company called Dr. Bronner’s Magic Soaps. Their specialty is organic soap. At the time of their lawsuit in 2008, many other cosmetic companies were taking much of their business by labeling their own products as organic even though they were using petrochemicals and other non-organic ingredients. Because nothing was being done to restrict these companies from falsely representing their products, Dr. Bronner’s Magic Soaps decided to team up with Organic Consumer Association and sue 13 of the cosmetic companies falsely claiming to be organic.
Four years and nearly 2 million dollars later, the case was dismissed on the grounds that only the USDA could make a decision regarding organic standards. Because the USDA doesn’t currently regulate organic claims when it comes to cosmetic products, no decision has been reached.
On the surface this may not sound like a success story. The company spent large amounts of money and is still nowhere near a victory in court. However, most of the companies named in the lawsuit settled with Dr. Bronner’s out of court. Some retailers that carried those companies’ products refused to sell them unless they changed their labels or their ingredients. In short, Dr. Bronnor’s got everything they wanted from the lawsuit without even winning.
The moral of the story is to be strategic when it comes to business litigation. A company considering a lawsuit should consider carefully what they stand to lose and gain, their odds, and whether or not they can benefit without winning.
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