LeapFrog's third quarter financial results, filed with the SEC Friday, reveal that the Emeryville company agreed to pay $7.5 million to get rid of a lawsuit brought by two local lawyers who style themselves "Tinkers & Chance."
It's a significant payday for Brian Marcus and Warren Heit, two Bay Area patent attorneys who claim they invented certain forms of child-computer interaction in 1995, and parachuted their California partnership into the Eastern District of Texas ten years later "specifically to enforce its intellectual property," filing a lawsuit the same day they moved.
How much of that will go to their legal team led by Haynes & Boone partner Phillip Philbin, I don't imagine I'll find out.
The check will come next year, but the educational toy company booked the payment immediately, tacking it on to the $2.8 million net loss it reported to investors last week.
LeapFrog notes in Friday's quarterly SEC filing that Tinkers & Chance made an earlier demand of $41 million plus interest and attorney's fees. While $7.5 million is a good deal less than that, and a mere 1.2 percent of the $625 million Heit suggested as a starting point in a 2004 letter, it doesn't buy much these days. Just a no-expenses-paid trip back to California, and the right not to be sued by Marcus and Heit until at least 2014.
I blogged yesterday about this story here, with documents, and the full story is in today's Daily Journal. ("Lawyer/Inventors Will Get $7.5 Million in LeapFrog Settlement", 11/13/07, subscription required)