Page 80 - Intellectual Property Disputes

into under the threat of litigation. In ResQNet, the litigation-related licenses were part of the record and
their admissibility was not before the court." fn 53 The Fenner Investments court found "the potential for
prejudice and jury confusion substantially outweigh any probative value." fn 54 The court noted that
parties enter into settlements for a number of reasons, which "include not only [the] cost of additional
litigation or the relative financial positions of the parties, but also the risk of a sizable verdict against a
defendant or a finding of invalidity or unenforceability against a plaintiff, which would end not only that
action but future actions against other alleged infringers." fn 55 The court determined that allowing
settlement agreements would "invite a ‘mini-trial’ on similarities and differences in the facts," which
"would cause unfair prejudice, confuse the issues, and waste time." fn 56

Similarly, the district court in Pioneer Corp. v. Samsung SDI Co. found that although "negotiations,
offers, and agreements reached under the threat of litigation should not be admitted under either Rules
403 or 408, such evidence may still be of some relevance to a damages expert when considered as one
factor among many. Conversely, experts may not exclusively rely on such negotiations, offers, and
agreements. Such, however, is not the case here." fn 57 The court allowed the testimony of the damages
expert on negotiations, offers, and agreements reached under the threat of litigation because the expert
did not "exclusively rely" fn 58 upon them.

The court in Software Tree LLC v. Red Hat, Inc., fn 59 echoed the findings in Fenner Investments and
further stated that the question before the court in ResQNet.com was not one of comparability, as in that
matter, no question of admissibility or discoverability of litigation-related licenses was before the court.

In 2012, the Federal Circuit affirmed the district court’s ruling in EPlus, Inc. v. Lawson Software, Inc.,
which excluded the plaintiff’s damages expert’s testimony that, in part, relied on licenses executed in
settlement of litigation. fn 60 Here, the Federal Circuit’s opinion addressed the issue of the comparability,
rather than admissibility. In its opinion, the court noted variability within five settlement agreements
with respect to the form (for example, lump sum versus running royalty), magnitude of amounts paid
under the licenses, and timing of the agreements. The Federal Circuit supported the district court’s
decision to exclude the testimony based on a "flawed and unreliable" analysis of the license agreements
that were executed to settle litigation, included lump sums covering multiple patents, and also included
cross-licensing provisions. The court also highlighted the district court’s finding that the expert "had

fn 53 Fenner Invs., Ltd. v. Hewlett-Packard Co., 2010 U.S. Dist. LEXIS 41514 (E.D. Tex.). This decision relates to the plaintiff’s
motion in limine to preclude the defendant’s testimony about prior litigation and settlement license agreements. The defendant argued
that ResQNet.com altered the admissibility of settlement license agreements or those signed under the threat of litigation.

fn 54 Id.

fn 55 Fenner Invs., 2010 U.S. Dist. LEXIS 41514 (E.D. Tex.).

fn 56 Id. (citing Insight Tech., Inc. v. SureFire LLC, 2009 U.S. Dist. LEXIS 97183 [D.N.H. Oct. 8, 2009]).

fn 57 Pioneer Corp. v. Samsung SDI Co., 2008 U.S. Dist. LEXIS 107079 (E.D. Tex.). The patents at issue relate to technology in
plasma displays. The plaintiff sought to exclude the testimony of the defendant’s damages expert related to his reliance on settlement
negotiations, offers, and agreements.

fn 58 Id.
fn 59 Software Tree, LLC v. Red Hat, Inc., 2010 U.S. Dist. LEXIS 70542 (E.D. Tex.). Before the district court was a motion to compel
discovery on settlements, negotiations, and offers.

fn 60 EPlus, Inc. v. Lawson Software, Inc., 700 F. 3d 509 (Fed. Cir. 2012).

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