In today’s competitive business environment, the value of a brand is often measured by its trademarks. When disputes arise over trademark rights—whether between direct competitors or across industries—startup founders and entrepreneurs must navigate sensitive legal territory. The good news is that trademark settlement negotiations can offer a powerful, cost-effective way to resolve intellectual property disputes (IP Disputes) outside the courtroom.
One of the foundational tools enabling these negotiations is Federal Rule of Evidence (FRE) 408, which protects certain settlement discussions from being used as evidence later in trial. Whether you’re involved in a pending federal trademark lawsuit, a TTAB opposition proceeding, or pre-litigation correspondence, understanding how FRE 408 works is crucial.
The Legal Framework: What Is FRE 408?
Federal Rule of Evidence 408 prohibits the admission of statements made during settlement negotiations as evidence to prove or disprove liability. In essence, it creates a safe space for parties to speak candidly about potential resolutions without fear that those discussions will be used against them in court.
The FRE 408 rule states:
“Evidence of the following is not admissible — on behalf of any party — either to prove or disprove the validity or amount of a disputed claim: (1) furnishing, promising, or offering — or accepting, promising to accept, or offering to accept — a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or statements made during compromise negotiations about the claim.”
Importantly, this protection applies in federal courts, including cases involving trademark infringement and dilution under the Lanham Act. It also applies to negotiations before litigation is filed—so long as the dispute is live and the parties are attempting to resolve it.
Why Trademark Settlement Negotiations Matter for Startups
For a growing startup, litigation is often too expensive and time-consuming to pursue aggressively. That’s why trademark settlement negotiations—especially when protected under FRE 408—are so valuable. They allow parties to reach creative business resolutions that courts might not be able to provide.
For example, settlements can include:
- Licensing agreements that allow co-existence
- Rebranding phases with timelines and transition support
- Cross-promotional partnerships
- Agreements to limit use to specific territories or industries
Each of these outcomes can preserve the core value of a startup’s brand while avoiding costly litigation or TTAB proceedings.
Applying FRE 408 in USPTO TTAB Proceedings
Although the Trademark Trial and Appeal Board (TTAB) is not an Article III court and is not strictly bound by the Federal Rules of Evidence, the principles of FRE 408 often influence how the Board evaluates evidence.
According to TBMP § 408.01, the TTAB respects the confidentiality of settlement negotiations and generally does not admit communications made in the context of settlement. However, if one party discloses settlement terms inappropriately, the other may move to strike or request a protective order.
It’s a best practice for attorneys to label all emails or letters containing settlement discussions with language such as:
“Confidential Settlement Communication – Subject to FRE 408 and TBMP § 408.”
This helps protect the conversation and encourages candid dialogue between counsel.
Pre-Litigation Strategy: Using FRE 408 to Your Advantage
Many trademark disputes never reach the courtroom or TTAB. They begin—and often end—with a cease and desist letter followed by settlement discussions. At this stage, understanding how to properly frame communications can make or break your negotiation.
Here’s how startups and their attorneys can use FRE 408 pre-litigation:
- Label communications: Always include “Confidential Settlement Communication – FRE 408” in the subject or header.
- Limit distribution: Ensure emails or letters are only shared with the opposing counsel or party—not on social media or public platforms.
- Be strategic in your offers: Structure compromise proposals carefully to show willingness to resolve without conceding liability.
Limitations of FRE 408 Protection
While FRE 408 offers strong protections, there are limitations:
- No shield for threats or misconduct: Statements involving extortion, threats, or misconduct during negotiations are not protected.
- Admissions outside the negotiation context: If a party makes an admission about infringement or business operations outside the scope of settlement talks, it may still be admissible.
- No protection in non-litigation contexts: FRE 408 applies only where there is a “disputed claim.” If no litigation or dispute is present, the rule may not apply.
For example, in Pierce v. F.R. Tripler & Co., 955 F.2d 820 (2d Cir. 1992), the court held that statements made during settlement talks about unrelated claims were not protected by FRE 408. This underscores the need for experienced legal counsel when structuring negotiations.
Key Case Law Supporting FRE 408
- Ramada Dev. Co. v. Rauch, 644 F.2d 1097 (5th Cir. 1981): Confirmed that settlement offers and related communications are inadmissible under FRE 408.
- Trebor Sportswear Co. v. The Limited Stores, Inc., 865 F.2d 506 (2d Cir. 1989): Reinforced that compromise statements are inadmissible even when relevant.
- Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976 (6th Cir. 2003): Extended confidentiality to settlement negotiations under both FRE 408 and public policy principles.
The Attorney’s Role in Trademark Settlement Negotiations
A savvy and experienced trademark attorney doesn’t just draft legal threats—they also understand when and how to de-escalate conflict. At L.A. Tech and Media Law Firm, Attorney David Nima Sharifi, Esq. brings more than 17 years of experience representing tech startups, e-commerce brands, and entertainment ventures in trademark disputes. By leveraging FRE 408 correctly and creatively, David positions his clients to minimize risk, maintain brand integrity, and keep legal costs under control. Whether your matter involves Amazon takedowns, social media use, federal litigation, or TTAB proceedings, a strategic approach to trademark settlement negotiations is essential.
For tech startups and entrepreneurs, trademarks are among the most valuable business assets. But defending them doesn’t always require courtroom warfare. With a skilled attorney and a working knowledge of FRE 408, your business can negotiate from a position of strength—privately and effectively.
Trademark settlement negotiations are more than legal formalities—they’re business strategy. And they’re often the fastest route to protecting your brand, keeping your focus on growth, and avoiding unnecessary exposure.
If you’re facing a trademark dispute or want to protect your brand before a conflict arises, contact the L.A. Tech and Media Law Firm today. Principal Attorney David Nima Sharifi, Esq. has been consulting tech startups on the legal and business affairs of innovation since 2007. Schedule your confidential consultation now by visiting L.A. Tech and Media Law Firm or using our secure contact form.
