Settlement negotiations discoverable in patent cases

Aug. 15, 2012 - PRLog -- On April 9, 2012, the Federal Circuit ruled that settlement negotiations related to reasonable royalties and damages calculations are not protected by settlement negotiations privilege. Damages experts often rely on related settlement agreements and licenses to support their damages theories in a patent case. However, facts falling outside of the four corners of an agreement, such as whether the agreement was entered into under threat of litigation, may be crucial in determining whether the agreement may be relied upon – stated otherwise, settlement negotiations may shed light on whether the terms of a particular agreement accurately reflect what the parties would have agreed upon in a hypothetical negotiation before the present action.

“MSTG further reinforces the Court’s preference, if not demand, for quantifiable and supportable damages theories in patent cases. The closer one can mirror the circumstances of a pre-litigation, business-like hypothetical negotiation between the parties, the better their chances defending their damages position,” observed Darin M. Klemchuk, patent trial lawyer.  

“The Federal Circuit appears to have opened up settlement negotiations to discovery in the patent license context. It will be interesting to see what limits, if any, the district courts impose on this evidentiary ruling in their future interpretations.”

The In re MSTG decision is yet another move by the courts requiring precise justification of damages testimony, and further highlights the need for careful planning when developing licensing and enforcement strategies.


About Darin Klemchuk:
Darin Klemchuk is co-founder and managing partner of Klemchuk Kubasta LLP, a Dallas-based IP boutique law firm that offers comprehensive intellectual property legal services, including litigation and enforcement of all forms of intellectual property as well as registration and licensing of patents, trademarks, trade dress and copyrights.  For Mr. Klemchuk’s full bio, click here.  To contact Mr. Klemchuk, email him at darin.klemchuk@kk-llp.com

About Klemchuk Kubasta LLP:
Based in Dallas, Texas, Klemchuk Kubasta LLP is an IP boutique law firm that offers comprehensive intellectual property legal services, including litigation and enforcement of all forms of intellectual property as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides legal services relating to domain names, e-commerce, privacy policies, social media, Internet law, commercial and business litigation, technology transactions, and international business & trade.  Additional information about the firm and its attorneys may be found at www.kk-llp.com.