Federal Circuit Declines to Recognize a Mediation Privilege

In a patent infringement case, the U.S. Court of Appeals for the Federal Circuit declined to recognize a federal mediation privilege.

In Kimberly-Clark Worldwide v. First-Quality Baby Products (Fed. Cir. 2011), Kimberly-Clark Worldwide, Inc. (“K-C”), owner of patents related to disposable absorbent products (such as diapers) brought a patent infringement action against competitor First Quality Baby Products, LLC (“First Quality”). Fist Quality sought discovery with regard to dispute resolution agreements between K-C and another alleged infringer.

K-C appealed the order of the U.S. District Court which required K-C to produce the dispute resolution agreements. K-C argued that the agreements were protected from disclosure under a federal mediation privilege, and that the proceedings under the agreements were privileged mediations. The appellate court held, however, that the agreements established an arbitration proceeding rather than a mediation, and thus the agreements were not subject to any mediation privilege.

The Federal Circuit noted that (a) the agreements set up an adversarial proceeding in which a panel expressly described as “arbitrators” issued formal findings of fact and conclusions of law; (b) the fact that the arbitration panel’s decision was not binding did not by itself establish that the proceeding was a mediation to facilitate settlement; and (c) the decision affected the parties rights concerning limitations of damages and shifting of fees of the arbitrators and attorneys.

Accordingly, the Federal Circuit affirmed the order requiring K-C to produce the agreements. The court stated, “[b]ecause we conclude that K-C failed to show that the district court abused its discretion in concluding that the Dispute Resolution Agreements did not provide for mediation, we decline to determine if, in light of reason and experience, we should recognize a mediation privilege.”