Kimberly-Clark Worldwide, Inc. v. First Quality Baby Products LLC

Kimberly-Clark Worldwide, Inc. (KCW) (plaintiff) held patents related to disposable absorbent products, like diapers. At one point, KCW alleged that Proctor & Gamble (P&G) was infringing the patents. To resolve their disputes, KCW and P&G entered into three agreements that created a dispute-resolution process. The process included the submission of a dispute to non-binding arbitration, governed by federal law. Following an evidentiary hearing, an arbitration panel was required to issue a written decision with findings of fact and conclusions of law. The parties were allowed to conduct discovery and depositions, file briefs, and appeal a panel’s decision. Ex parte communications with the arbitrators were prohibited. Further, the losing party was responsible for paying an arbitrator’s fees, and if P&G did not prevail at arbitration, P&G could cease infringing activity within six months and thereby prevent a lawsuit from KCW. KCW and P&G eventually settled their disputes. Later, KCW sued First Quality Baby Products LLC (First Quality) (defendant) for infringing KCW’s patents, including the ones involved in the disputes with P&G. After learning of the KCW-P&G agreements, First Quality sought discovery relating to the agreements and proceedings. It was undisputed that the information sought by First Quality was relevant, but KCW opposed production based on a claim of privilege. The district court granted an order compelling discovery. KCW appealed, arguing that the agreements set forth a mediation-like process and the related information was privileged.