Thursday, November 14, 2013
Can You Settle an Argument?: SDNY Finds Rule 408 Doesn't Support Imposition of Gag Order In Patent Case
Federal Rule of Evidence 408 reads as follows:
(a) Prohibited Uses. Evidence of the following is not admissible — on behalf of any party — either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction:
(1) furnishing, promising, or offering — or accepting, promising to accept, or offering to accept — a valuable consideration in compromising or attempting to compromise the claim; and
(2) conduct or a statement made during compromise negotiations about the claim — except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority.
(b) Exceptions. The court may admit this evidence for another purpose, such as proving a witness’s bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.
As I have noted before, Rule 408 only governs the admissibility of settlement-related statements at trial, not their inclusion in pleadings or other documents. What this also means is that a party cannot get a gag order pursuant to Rule 408 that would prevent the opposing party from disclosing those statements to the court of public opinion.
In Lumen View Technology LLC v. Findthebest.com, Inc., Lumen View Technology sued FindTheBest, a consumer research website, claiming that the website violated its patent covering a "System and method for facilitating bilateral and multilateral decision-making." The two sides then entered into settlement negotiations, with FindTheBest's CEO then allegedly “blogging details of the settlement discussion . . . [i]n an effort to taint the public’s perception of the case and to paint Lumen View in a negative light.” Lumen View Technology then moved for a protective order prohibiting the public dissemination of settlement information.
In support of its motion, Lumen cited to Federal Rule of Evidence 408, prompting the United States District Court for the Southern District of New York to respond:
Rule 408 is a rule of evidence. It is inapposite where, as here, the question is not whether material will be admitted into evidence in court but whether a party may discuss certain matters in public. The plaintiff appears to concede this in its reply brief, where it for the first time asserts that “Lumen View is not taking the position that Rule 408 prevents a party to a litigation (in this case, [Findthebest.com]) from providing settlement discussions to the public. As such, it is unclear ￼ what role Rule 408 is supposed to play in this motion practice and why it figures so prominently in the plaintiff’s briefing.