Parties regularly opt to keep terms, conditions and licensing agreements confidential when settling patent infringement disputes. Often, patentees do not want the license terms to serve as precedent in other assertions of the patent(s). Defendants may also not want other potential patent plaintiffs to believe they are a “soft touch.” Whatever the reason, parties assume that the confidentiality provision will be effective against disclosure of the license terms by the other side or to third parties. The assumption may be warranted in the former, but recent cases have cast serious doubt on the latter.

The Federal Circuit, for example, has held that such confidentiality provisions may not shield the license terms or their negotiations from either disclosure or admissibility on the issue of damages in other suits brought under the same patent(s). However, it has intimated that this may not be the case if the negotiations were conducted in, and the settlement the result of, a mediation. It appears that conducting patent infringement settlement negotiations in mediation maximizes the prospects for protecting at least the confidentiality of those negotiations, if not the license itself.

Originally published on Law.com on October 29, 2014.