Case Highlight | Settling Above the Client's Expectations Using an ROI Negotiation Model

LawMay attorneys recently represented a cross-border e-commerce seller in a U.S. federal intellectual property action, securing a settlement on terms better than the client had expected, eliminating the litigation risk and containing the client's operating losses.

Drawing on that matter, this note sets out the ROI negotiation model LawMay has developed in practice. The object of negotiation is not simply to ask the other side to "come down." It is to change the plaintiff's assessment of the return, the investment, and the risk of the case — through the facts, the sales data, the scope of provable harm, the composition of the frozen funds, and the cost of continuing to litigate.

I. Moving the Negotiation from "the Plaintiff's Number" to a Litigation ROI Model

In platform-driven intellectual property litigation, a plaintiff's opening settlement demand is often formulaic.

That demand is typically based not only on actual sales, but may also fold in statutory damages, enhanced damages, attorney's fees, the pressure of platform restrictions, and the cost of continued litigation — producing a figure well above the actual sales volume at issue.

Based on extensive experience negotiating cross-border e-commerce IP disputes, LawMay attorneys use a simplified litigation ROI framework:

Settlement ≈ [expected damages on historical sales × plaintiff's probability of success] + [pressure from frozen funds attributable to the accused products + pressure from frozen funds not attributable to them + the value of the listings + time pressure] − the plaintiff's cost of continuing − a discount for the plaintiff's uncertainty of recovery

The factors fall into two groups.

Factors that push the settlement figure up:

• The higher the accused sales, the more readily the plaintiff sees recoverable value.
• The larger the frozen amount tied to the accused products, the more readily the plaintiff treats those funds as the basis for negotiation.
• The more valuable the listings, the more urgently the seller needs to resume business — and the higher the plaintiff's demand.
• The more urgently the seller needs unfreezing, reinstatement, and release of funds, the more the plaintiff expects the seller to accept a higher number.

Factors that push the figure down:

• The stronger the non-infringement position, the lower the plaintiff's expectation of success.
• The harder it is for the plaintiff to prove harm, the lower the expected award.
• The lower the accused sales, the smaller the recovery the plaintiff can claim.
• The larger the share of frozen funds unrelated to the accused products, the harder it is for the plaintiff to characterize the entire frozen balance as case value.
• The higher the plaintiff's cost of continuing, the less economic sense continued litigation makes.
• The more uncertain the plaintiff's actual recovery, the weaker the commercial basis for a high demand.

The work of negotiation therefore becomes clear:

• lower what the plaintiff believes it can recover;
• raise what the plaintiff believes it must still spend; and
• lower the plaintiff's confidence that the seller must settle high, immediately.

In substance, negotiation is about reducing the plaintiff's expected return on continued litigation — making clear that expected recovery is falling, required investment is rising, and the likelihood of a quick, high-value settlement is declining.

II. Using Sales Data, Substantive Defenses, and the Composition of Frozen Funds

In settlement negotiations, sales data does more than show that a seller is small. What it actually bears on is the recoverable value of the case.

Where an individual seller's accused sales are limited, the potential scope of harm cannot support a large demand, and the plaintiff's real return from holding out is correspondingly reduced.

Sales figures are also not mechanically equivalent to damages. A plaintiff must still address infringement, the scope of harm, causation, apportionment of profits, and the conditions for statutory or enhanced damages.

Where a non-infringement defense exists, or where the plaintiff has problems with its rights basis, infringement comparison, proof of harm, sales data, or causation, its assessment of recoverable value drops further.

The frozen funds must also be broken down. A store's total frozen balance is not the same as case value. Part of that balance may derive from sales of the accused products; part may come from unrelated products, the overall account balance, the platform's settlement cycle, or other operating funds.

For negotiation purposes, funds frozen in connection with the accused products bear more directly on case value; funds frozen for other reasons reflect platform and operational pressure on the seller and do not translate into a legitimate basis for the plaintiff's demand.

LawMay attorneys therefore work on three fronts at once in negotiation: using sales data to lower expected recovery, using substantive defenses to lower the plaintiff's assessment of its own prospects, and distinguishing accused-product freezes from unrelated freezes so that the plaintiff cannot present the entire frozen balance as case value.

In this matter, after engagement, LawMay analyzed the client's actual sales data, the scope of the accused products, the products themselves, the composition of the frozen funds, and the potential scope of harm, and assessed whether the plaintiff's demand bore a reasonable proportion to the actual value of the case.

III. Using the Plaintiff's Cost of Continuing to Compress the Demand

For a plaintiff, pressing a case forward requires continued investment: attorney's fees, the cost of developing evidence, procedural costs, platform correspondence, and later enforcement. Where the recoverable value from an individual seller is limited, continuing may not serve the plaintiff's own commercial interest.

Where a seller demonstrates a clear capacity to defend, to marshal evidence, and to be patient procedurally, the plaintiff must reassess whether continuing is worth it, whether it will cost more, and whether it faces greater uncertainty.

Under platform pressure, then, one focus of counsel representing a seller is to use the prospect of continued proceedings and the associated cost to compress the plaintiff's demand.

IV. A Settlement Above Expectations

Proceeding on that basis, and after several rounds of correspondence, the parties settled.

The settlement figure exceeded the client's expectations and materially reduced the client's total cost of resolving the matter. With the settlement completed, the remaining proceedings advanced in step, and the client's litigation risk and platform pressure were effectively contained.

The matter illustrates again that, in U.S. cross-border e-commerce IP litigation, the settlement figure is not a fixed number. A plaintiff's opening demand is only a starting point. What actually drives the outcome is the real scale of accused sales, the provable scope of harm, the composition of the frozen funds, the cost of continuing, the pace of the proceedings, and each side's assessment of the risk ahead.

There is, of course, no formula that guarantees a result. Rights bases, evidentiary strength, frozen amounts, sales data, platform pressure, and plaintiff strategy differ from case to case, and under budget and time constraints no negotiation can be assured of reaching a client's ideal outcome.

The value of the ROI model lies elsewhere: it helps sellers and their counsel see the direction of the negotiation more clearly — which factors are driving the demand up, which can be used to compress it, which forms of platform pressure should be disaggregated, and which litigation costs can be converted into leverage.

For cross-border sellers, intervening early, assessing case value accurately, and building a negotiating framework around the legal facts, the sales data, the composition of the frozen funds, and the cost of continuing will often bear directly on the result.

This case summary is provided for informational purposes only. Outcomes depend on the specific facts, evidence, applicable law, and the court's discretion in each matter. Past results do not guarantee or predict similar outcomes in future matters.