Rehearing Cites Lack of Countervailing Public Policy Against PTAB Review
Last month the Federal Circuit decided Dodocase VR, Inc. v. Merchsource, LLC (here). In Dodocase the Federal Circuit held that a standard forum selection clause can divest the PTAB of AIA trial jurisdiction.
If maintained, the ability to avoid the Patent Trial & Appeal Board (PTAB) by private agreement would prove a game changer in periodic licensing agreements between competitors, including SEP licensors.
But, earlier this week, en banc rehearing was sought.In the petition for rehearing, two issues are presented (here):
1. Are contractual forum selection clauses interpreted under regional circuit law as according to precedent, or are AIA proceedings to review the validity of patents necessarily covered by the forum clause in any patent license agreement regardless of the clause language?
2. Can the Supreme Court’s ruling in Lear, prohibiting contractual obstacles to validity challenges, be overcome in the absence of the countervailing public policy set forth in Flex-Foot?
The first issue, a squabble about controlling circuit law, isn’t of much interest to me. To my eyes, a provision that prohibits a challenge of “validity or enforceability” (as in the relevant clause at issue here) should never reach the PTAB. The PTAB assesses patentability — under an examinational burden of proof. Validity is a different question under a different standard. And enforceability, of course, is an altogether different issue.
The second issue is of more interest given the significant public policy expressed in the legislative history of the AIA. As argued in the petition:
. . .Lear itself explained that the technical requirements of contract doctrine must give way before the demands of the public interest, in part because the equities of the licensor do not weigh very heavily when they are balanced against the important public interests in eliminating invalid patents.
Lear held contract provisions erecting obstacles to challenging validity are void against public policy because contractual interests are outweighed by important public policies and interests. In Flex-Foot, this Court recognized a limitation to Lear for settlement agreements of pending litigation because they involve the countervailing public policy of resolving litigation and res judicata.
But resolving litigation and res judicata are not present here, and the Opinion fails to identify any countervailing public policy to Lear. Indeed, the Opinion fails to substantively address or even mention public policy.
(internal quotations omitted)