A guide to the UPC and the UP - Flipbook - Page 461
22-09 It would appear that any document marked as being “Subject to Rule 11(3) of the Rules of
Procedure of the Unified Patent Court” (or similar) will be presumed to fall within the rule, as
it has clearly not been made on an open basis. However, this presumption can be rebutted if a
party can show that the document was not made for the purposes of settlement, meaning that
it is not afforded the protection of r.11(3) RoP.
22-10 It would also seem likely that the protection of r.11(3) RoP can be waived if a communication
is expressed to have been made on an open basis and freely disclosable to the Court. However,
if the communications in a settlement negotiation contain admissions made by both parties,
it would seem that such protection can only be waived jointly.
22-11 Common law systems treat settlement negotiations as subject to a form of privilege, and
parties negotiating a settlement need to be careful as waiver of privilege on one document
may result in privilege being inadvertently waived in relation to a wider class of materials.
Therefore, although r.11(3) RoP is not expressly described as being a form of privilege, the
similarities to without prejudice privilege means that parties should treat materials relating
to negotiations to settle a Unitary patent dispute in a similar way to avoid the risk of the
Court finding a wider waiver.
22-12 Like r.11(3) RoP, there are exceptions to the privilege afforded settlement negotiations in
common law systems, which allow materials to be used in certain circumstances in a way that
would otherwise be prohibited. However, unlike r.11(3) RoP the exceptions to common law
privilege in settlement negotiations is not absolute and may be wider, as common law courts
may consider such material “for a variety of reasons when the justice of the case requires it”. 17
This has included allowing the parties to use such materials to evidence that these negotiations
have concluded in a settlement agreement. However, exceptions have also been made in other
situations that do not appear to fall within r.11(3) RoP, for example, to evidence fraud or
perjury, to explain delay and as evidence of the reasonableness of a settlement. Therefore, if
the exception in r.11(3) RoP is given a narrow and literal interpretation by the Court, it is likely to
be much narrower than the exceptions to the common law privilege in settlement negotiations.
22-13 Further, as confidentiality is central to common law privilege in settlement negotiations, it is
important to ensure that all settlement negotiations relating to patent disputes before the
Court remain confidential. Also, if any materials relating to a settlement are shared with a third
party, this should only be done under a duty of confidentiality and in general should be avoided
as this could well waive the r.11(3) RoP protection for such materials.
22-14 What the common law privilege in settlement negotiations will not do is to avoid a potential
settlement agreement under negotiation becoming contractually binding. Where the settlement
agreement in question is relatively complex and takes some time to conclude there is always
a danger that an intervening draft of the agreement becomes binding on the parties before
they both intend this. This can be avoided by marking clearly all correspondence relating to
settlement “subject to contract” to make it clear that the proposals are still subject to further
negotiation and that it is intended that the document only becomes binding on the signing of
a finalised settlement agreement.
Settlement Agreements
22-15 Legal practitioners will recognise that, if the parties to a dispute agree terms on which they
would be prepared to settle the dispute, it is always advisable for the parties to formalise the
terms of the settlement by way of a written settlement agreement. However, the advent of the
Court will introduce new factors that need to be considered whenever an agreement is drafted
to settle a dispute before the Court, including the following:
17
Rush & Tompkins Ltd v Greater London Council and others [1988] UKHL 7.
© Bird & Bird LLP | May 2023
A Guide to the UPC and the UP 451
