Today, Mon., Apr. 9, 2012, in In re MSTG, Misc. No. 996, the Federal Circuit (Rader, Dyk and Moore) on mandamus affirmed a district court’s ruling that the patent owner must produce negotiation documents underlying settlement agreements, ruling that there was no settlement privilege to preclude such production.  This case will impact the usual discovery disputes about production of settlement documents, but leaves enough unanswered questions for further development and parties may alter litigation strategies accordingly.

The patent owner produced settlement agreements that resulted in licenses to the patents, but not documents created during the negotiation of those agreements.  The patent owner’s damages expert relied on those agreements as well as patent owner testimony about the business reasons for entering them.  The defendant argued that the underlying settlement documents would permit testing of the business reasons on which the damages expert relied.

The Federal Circuit ruled that there is no settlement privilege to bar production of such documents.  The Court noted the existence of mediation privileges, but there was no mediation here.  The Court noted that district courts may fashion discovery limits in order to balance discovery with promoting candor in settlement discussions, but declined to explore the scope of such limits in the present case.