I had a similar experience at the beginning of my career, about a decade before the story you relate, and it left me with a cynical outlook on the moral legitimacy of the legal system and a general skepticism of "intellectual property" as a concept.

The facts of the case did not matter, because the preliminary injunction which "temporarily" halted sales of the product we'd poured so much work into killed the startup, just like that. There was no trial, and no chance to demonstrate that the claims were bullshit, because there was no revenue, and thus no way to fight.

The company who had sued us then released their inferior version of our product, almost a year later.