This "cost of litigation" argument is probably bogus. Even some of the epic patent battles like Apple v. Samsung or other decade long arbitrations like Yukos vs. Russia were like 50-60 Million USD in legal fees.
The bigger problem (for a large company) is the uncertainty caused by litigation. It's a distraction to the core business and can tie-up attempts to improve or expand on features accused in the litigation, not to mention it can spook investors.