Federal Circuit Finds No Abuse of Discretion in Trial Court’s Refusal to Exclude Plaintiff’s Settlement Agreement with Defendant’s Competitor

In Prism Technologies LLC v. Sprint Spectrum L.P, Nos. 16-1456, -1457 (Fed. Cir. Mar. 6, 2017), the Federal Circuit affirmed the district court’s denial of Sprint’s motion for a new trial based on, among other things, the admission of a settlement agreement between Prism and Sprint’s competitor, AT&T.

Prism sued Sprint for the infringement of two patents relating to a system for managing access to protected computer resources. The jury found Sprint liable for infringement and awarded $30 million in reasonable-royalty damages. Sprint argued the district court erred for four reasons, including error in admitting a settlement agreement between AT&T and Prism regarding the patents-in-suit (and others).

On appeal, the Federal Circuit held that the district court did not err in admitting the AT&T Settlement Agreement. In reaching its determination, the Court explained that the probativeness and prejudice components of the Rule 403 balance must be assessed for each of the particular litigation settlements offered into evidence.  As to the AT&T Settlement Agreement, the Court observed that Prism had submitted evidence to discern the value of the patents-in-suit and the other patents in the agreement, as well as evidence that compared how the technology was used by AT&T and Sprint. For these and other reasons, the Court found no abuse of discretion by the district court.