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Beyond ResQNet: Clarifying the Standard for the Use of Patent Settlements
(2014)
Abstract
In 2010, the Federal Circuit issued ResQNet.com, Inc. v. Lansa, Inc., a landmark decision holding that settlement-related evidence can be compelling proof of damages in subsequent litigation. The effects of ResQNet were immediately evident. Some practitioners argued that ResQNet granted unlimited permission to use prior patent settlement agreements and related negotiations as evidence of damages for patent infringement. Some courts agreed, while others decided that the Federal Circuit’s ruling had no effect on Federal Rule of Evidence 408’s prohibition on the use at trial of settlement-related evidence to prove damages. Simply put, ResQNet wrought havoc on the standards for the use of patent settlements and settlement negotiations, resulting in a range of divergent rulings nationwide. Faced with an increasingly fractured landscape, the Federal Circuit has taken steps to calm the confusion caused by ResQNet. In two recent decisions, the Federal Circuit attempted to clarify the standards for using patent settlement agreements and negotiations. But several questions remain unanswered. In particular, one of these decisions exacerbated a circuit split over “settlement privilege,” and the other left questions regarding the propriety of certain expert testimony unaddressed. Despite the Federal Circuit’s recent efforts to clarify the meaning and scope of ResQNet, practitioners and courts will continue to wrangle with difficult questions regarding the discovery and admissibility of settlement-related evidence. These lingering issues will require further Federal Circuit attention—or even Supreme Court intervention—before the questions raised by ResQNet can finally be settled.
Keywords
- ResQNet,
- settlement privilege,
- discoverability,
- admissibility,
- Rule 408,
- settlement negotiation related evidence,
- settlement based license,
- patent damages,
- reasonable royalties,
- Eastern District of Texas,
- settlement related evidence,
- patent litigation,
- Goodyear,
- Lansa,
- LaserDynamics,
- MSTG
Disciplines
Publication Date
2014
Citation Information
Tejas N. Narechania & J. Taylor Kirklin, Beyond ResQNet: Clarifying the Standard for the Use of Patent Settlements, Landslide Magazine (January/February 2014)