I'm convinced it was a horrible move for TMM to initiate the lawsuit. I've stated before that it was (IMO) just a knee jerk reaction to discovering Dimension had applied for and received their first patent. I wouldn't doubt that the large shareholders of TMM forced Cavanaugh to take this action.
Unfortunately there was little to no investigation as to who owned the rights to the VDK2.0 codec. Remember it was just nine months prior that TMM completed the deal to buy DFI.
It is my opinion that Simpson/Haskins sold a stolen copy of the codec (DFI's reportedly only asset) to TMM, even though TMM was already utilizing the codec (Cavanaugh's 11/11 update to TMM shareholders).
There had already been a "custody" battle over this codec in 2002 in Ventura County wherein Simpson and TMM were parties to this action. It wasn't hard to find, but, if you don't look, you won't find it.