Think Before You Settle: Protegrity Teaches Timing Is Important When Negotiating Settlement Agreements

As a patent owner involved in patent litigation, you must consider numerous factors when negotiating a settlement agreement. An important contemplation is timing, because finalizing a settlement agreement at the wrong juncture of your legal proceedings can have devastating results. Specifically, the recent district court ruling in Protegrity USA, Inc., et al. v. Netskope, Inc., Case No. 15-cv-02515-YGR (N.D. Cal. Sept. 13, 2016) suggests that settling during your appeal of an unfavorable district court judgment may leave you stuck with the lower court's original ruling.

In Protegrity, plaintiff originally sued defendant, Netskope, in the Northern District of California for infringement of U.S. Patent No. 7,305,707 (the "'707 Patent"). Netskope filed a motion for judgement on the pleadings, asking the Court to dismiss the case with prejudice on the grounds that the asserted claims for the '707 Patent were invalid. The district court granted Netskope's motion finding that the '707 Patent contained unpatentable abstract ideas. Accordingly, the district court entered judgement invalidating the '707 Patent.

Following the judgement, Protegrity timely appealed to the Federal Circuit. However, before the Federal Circuit adjudicated the...