Ben McGrath reports in the Sept. 1 New Yorker that Fox knew, from the beginning, that its ridiculous lawsuit claiming trademark infringement against Al Franken was doomed to fail (and "tactically wrongheaded" to boot --- the backlash has bought publicity that money can't buy, multiplied many times over). However, insider rumors have it that O'Reilly demanded the lawsuit, and Fox ponied up the legal fees in order to soothe his bruised ego. As McGrath writes:
So what was Fox thinking? Old Hollywood hands ought to know. They might recognize, in the extravagance and folly of a flimsy lawsuit, the telltale signs of an appeasement gift, a sop to a sulking star-the sulker, in this case, being Bill O'Reilly, the top-rated anchor on cable.
According to someone close to the situation, Fox executives were not at all in favor of suing, correctly anticipating a P.R. debacle. They told O'Reilly as much in a series of meetings, but he continued to lobby aggressively for bringing a suit, pressing his case with Roger Ailes, the Fox News chairman, and others. And so Fox enlisted its lawyers to cobble together a complaint.