IP: Discoverability of settlement negotiations

Settlement negotiations no longer off-limits after the Federal Circuit resolves district courts’ split

The Federal Circuit Court of Appeals’ April 9 opinion in In re MSTG, Inc. has parties to patent license agreements thumbing through their files to see what exactly was said in the settlement negotiations that led to those licenses. In In re MSTG, the Federal Circuit addressed a petition for a writ of mandamus brought by a patent holder that had been ordered by the district court to produce to AT&T, an accused infringer, all communications the patent holder had with six companies that had previously taken licenses.   

In two separate actions, MSTG had charged AT&T and several other mobile service providers and mobile phone manufacturers with infringing its patents related to 3G technology. Except for AT&T, all defendants settled and took licenses to the patents-in-suit and other MSTG patents. MSTG produced the licenses to AT&T, but refused to produce communications between MSTG and the licensees.

The court hinted at some situations in which certain evidence would be discoverable. “For example, settlement negotiation evidence would be admissible where the settlement itself or its interpretation is at issue or where evidence of the ingredients of the settlement might be relevant to an issue of double recovery.”

Evidence related to MSTG’s negotiations was discoverable because the expert had opined that the amount paid to MSTG had been significantly discounted because the agreements were entered into before any major rulings in the litigations.

Contributing Author

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Marla Butler

Marla Butler is a trial lawyer and partner with the firm Robins, Kaplan, Miller & Ciresi L.L.P. She helps clients in the medical, semiconductor, LCD,...

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