The US Court of Appeals for the Federal Circuit ruled that a mediator in a patent infringement dispute has a duty to disclose a relationship with the law firm representing one of the parties.
In the case of CEATS, Inc. v. Continental Airlines, et al., CEATS brought a patent infringement suit against Continental and other airlines and parties for alleged infringement of its patents. After the parties failed to settle the case during court-ordered mediation, the case went to trial.
A jury found that CEATS’s patents were infringed but invalid.
CEATS filed a motion for relief from the judgment based on an undisclosed relationship between the court-appointed mediator and the law firm representing one of the defendants.
Previously, the law firm that one of the parties’ lawyers worked for had arbitrated a case before the same mediator and he had made an award of $22 million to the firm’s client. Discovery in that case also disclosed an “enduring social relationship” between the mediator and one of the firm’s attorneys involving “expensive outings and gifts.”
The district court denied this motion and CEATS appealed.
The Federal Circuit disagreed with the district court’s finding that the mediator had no duty to disclose his relationship with one of the firms, but found that this did not warrant relief from judgment.
The Circuit Court noted:
Courts must feel confident that they are referring parties to a fair and effective process when they refer parties to mediation. And parties must be confident in the mediation process if they are to be willing to participate openly in it. Because parties arguably have a more intimate relationship with mediators than with judges, it is critical that potential mediators not project any unreasonable hint of bias or partiality. Indeed, all mediation standards require the mediator to disclose any facts or circumstances that even reasonably create a presumption of bias.
The court noted that this duty was similar to the recusal requirements imposed on judges.
The court found that the mediator should have disclosed his involvement in the previous case but that this was not an “extraordinary circumstance” where relief from judgment was warranted.
The court noted that CEATS was able to fully and fairly present its case to an impartial judge and jury and thus suffered no injustice as a result of the mediator’s failure to disclose.
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