In office environments like this, management's stand is very unlikely to change. Trying to change their minds will be an exercise in futility, so you need to just focus your decision making on whether or not you are willing to stick around and be a part of it, or would rather look for another job.

Just because Microsoft coughed up a settlement doesn't mean that Microsoft doesn't have the resources to beat a lawsuit over the issue. It just means that their bean counters did some math and decided that it would cost less to pay these guys off than it would to fight them. Blizzard may decide to react differently, particularly since their flagship cash cow product is being attacked. We might have seen a different reaction from Microsoft had it been Windows that the lawsuit claimed infringed on their patent.