No Privilege for Plaintiff’s Patents

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No Privilege for Plaintiff’s Patents


We’ve blogged, oh, a time or two, about the Federal Circuit’s opinion in ResQNet v. Lansa and the aftershocks in the district courts. Since ResQNet, at least some courts have allowed defendants (at least in certain circumstances) the ability to get a peek at the man behind the curtain, to examine the negotiations behind license agreements for the same patents–in–suit in order to determine whether or not those license agreements are truly evidence of a reasonable royalty for the patent in question—or whether there is more shine than substance to the settlement.

In an interesting opinion denying mandamus from a decision of the Northern District of Illinois, the Federal Circuit took an opportunity to weigh in on the flurry of activity in the lower courts following ResQNet. Of particular note, after several pages of analysis, the Court found that settlement negotiations related to reasonable royalties and damage calculations are not protected by any “settlement negotiation privilege,” thus declining to adopt the rule set forth by the Sixth Circuit in Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc. (and invoked by parties wishing to prevent disclosure of negotiation materials). In response to the specific facts of the case at bar, the Federal Circuit found that the court did not abuse its discretion in ordering production of settlement documents when the evidence suggested that they might contain evidence showing that the grounds plaintiff’s expert relied on to reach his conclusion of a reasonable royalty rate were erroneous.

In short, expect to see In re MSTG, Inc. cited alongside ResQNet in future requests by defendants for disclosure of settlement negotiations.

Posted by Stacy Stitham

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