Book SummaryBargaining with the Devil, by Robert Mnookin

1-Page Summary1-Page Book Summary of Bargaining with the Devil

Neutral arbitrators played a significant role in settling the dispute involving IBM and Fujitsu.

During the 1980s, Mnookin was instrumental in resolving a major conflict within the software sector between IBM and Fujitsu. IBM was recognized as the leading global computer company, with Fujitsu as its main competitor. The illustration shows how the presence of a neutral third party can aid in achieving a settlement between businesses that are excessively confrontational to work together directly.

IBM and Fujitsu were embroiled in a conflict over the software that operates their individual systems.

This excerpt sets the stage for the imminent legal clash among the leading companies in the computer sector. In the 1970s, Japan began implementing measures to strengthen its local computer industry, concentrating on advancing the technological prowess of its key players, Fujitsu and Hitachi.

IBM was the dominant mainframe computer company and viewed Fujitsu's compatible operating system as violating its intellectual property

In 1969, IBM dominated the sector for mainframe computers. Many mainframe software applications are engineered to operate smoothly in conjunction with system software produced by IBM. In the 1970s, the Japanese government stepped in to encourage two companies, Fujitsu and Hitachi, to develop what were called "IBM compatible” computers—that is, computers capable of running the same applications as IBM’s machines.

IBM soon realized the economic value of its software and began to license it separately. Initially, IBM allowed its customers to examine and modify the core code within its software programs. In theory, this allowed a programmer who had access to the source code to use it to develop compatible operating systems or modify existing applications. Fujitsu developed a unique operating system for its M series, which was the company's initial machine compatible with IBM, launched in 1976. In 1982, a decade following their initial doubts, IBM validated their concerns by purchasing a computer manufactured by a different company, Fujitsu. Fujitsu's operating system included several identical programs.

IBM and its distinguished team of engineers viewed this as an act of theft. Fujitsu had an obligation to offer recompense. The only aspect taken into account was the subject's breadth.

Fujitsu argued that its system was crucial for preserving its competitive edge and was not an exact replica.

Fujitsu, on the other hand, held a contrasting viewpoint. IBM refrained from claiming copyright over the source code that was distributed, and moreover, the copyright regulations of Japan had no bearing on the situation. IBM's operating system established the standard against which the industry measured other systems. Therefore, it was essential for Fujitsu and its industry peers to possess the ability to develop and sell computers that could operate compatibly.

The conflict escalated, culminating in a legal battle where both parties accused one another of improper behavior.

In 1982, IBM accused Fujitsu of stealing intellectual property and demanded monetary reparation along with significant changes to their business practices. In 1983, after eight months of negotiation, the two rivals entered into a complex settlement agreement that, Mnookin says, was never going to end this conflict. The agreement sought to identify the specific Fujitsu software that had been duplicated without authorization. Second, to establish a fee schedule that would compensate IBM for past and future use of those programs. It is essential that we move forward to maintain uniqueness. All three scenarios were mishandled.

Despite being deeply suspicious of each other, they were both determined to uncover evidence of wrongdoing. The scenario was shaped by not only psychological elements but also by varying cultural backgrounds, as Mnookin posits. The precise language used in the Settlement Agreement held significant value for IBM, a corporation based in the United States. The agreement was legally binding. IBM made the discovery that Fujitsu had breached certain contracts. IBM was entitled to a stringent enforcement of...

Bargaining with the Devil Summary The author has developed an innovative approach to settling disputes.

The disputing parties opted for arbitration, which empowered the arbitrators to create a new regulatory framework governing the interactions between IBM and Fujitsu. The rules were designed with three main goals in mind: first, to resolve all previous allegations of plagiarism that emerged prior to 1987; second, to establish a new framework to steer future exchanges between the involved parties, thereby diminishing the chances of further conflicts regarding plagiarism; and third, to put in place a mechanism for addressing any future disagreements that might occur, even with the new guidelines in effect.

Identifying the core goals and principles that will guide the negotiation process.

The involved parties directly made the pivotal decisions during this phase, without the involvement of any committee.

The involved parties took charge of settling their own dispute.

A critical initial determination involved defining the scope of the panel's authority in settling disputes. Jones and Mnookin could have been given full discretion to shape the verdict, with each party laying out their case and bolstering it with evidence, leading to a resolution based on the arguments and...

Bargaining with the Devil Summary Guiding intricate discussions between opposing businesses.

The dispute involving IBM and Fujitsu exemplifies the intense disputes that can arise among major companies over the ownership of intellectual property. The potential consequences were immense. Mutual suspicion was held by both parties. The emotional investment and unwavering conviction in their own viewpoints clouded clear thinking for both individuals involved. They exaggerated their conflicts without acknowledging their common goals.

Navigating the representation of the disagreement in public discussions and media coverage.

Mnookin emphasizes the importance of controlling the flow of information to the public as a key factor in the successful resolution of conflicts. In disputes of considerable importance, the parties involved aim to achieve more than mere victory; they strive to vindicate their actions in the public eye, which can lead to the sharing of statements and narratives that may be incomplete or potentially misleading. Additionally, the public narrative may be influenced by the actions of different third-party observers and stakeholders—such as friends, competitors, employees, and potential clients—who aim to steer the narrative in a direction that serves their...