In Prism Technologies LLC v. Sprint Spectrum L.P., Dba Sprint PCS, Appeal Nos. 2016-1456, 2016-1457, The Federal Circuit rejected Sprint’s challenges to the denial of its motion for a new trial. The Federal Circuit also rejected Prism’s challenge to the denial of a motion for accounting and ongoing royalties.
Prism, the owner of two patents related to wireless telecommunications technologies, sued Sprint, AT&T, and a number of other telecom companies. AT&T settled with Prism just before closing arguments at trial. Before its own trial, Sprint moved to exclude the AT&T settlement agreement on the basis that the agreement was not comparable to a hypothetical license and that its admission would be unfairly prejudicial under FRE 403. The district court denied the motion and admitted the AT&T settlement agreement. A jury found that Sprint infringed both of Prism’s patents.
Sprint appealed, inter alia, the admission of the AT&T settlement agreement. It argued that the district court abused its discretion in declining to exclude the settlement agreement under FRE 403. Prism, on the other hand, argued that the settlement agreement was properly admitted for its probative value on the amount of reasonable royalty damages. The Federal Circuit explained that, in order to assess the probativeness of a prior settlement agreement, various aspects (e.g., timing, potential for enhanced damages, probability of losing on validity or infringement) needed to be considered. In particular, the Federal Circuit noted that the AT&T agreement covered a number of patents at issue in the Sprint case, that Prism provided evidence attributing settlement amounts to each patent, and that the late timing of the settlement enhanced the reliability of the settlement amount and reduced the likelihood that cost-avoidance was the primary purpose for settlement. Accordingly, the Federal Circuit held that the district court did not abuse its discretion in admitting the AT&T settlement agreement.