Federal Circuit Reverses Newest Member
The concept of excluding the PTAB via a forum selection clause is not a new idea. Back in 2019 I highlighted this option as the #1 development in PTAB practice for district court litigators. Since that time, there have been a handful of cases that sought to leverage this mechanism. Earlier this week, the Federal Circuit was given another opportunity to explore this topic, and the potential policy consequences of such private agreements.
In Nippon Shinyaku Co. v. Sarepta Therapeutics, Inc., the Federal Circuit (Newman, Lourie, and Stoll) reversed and remanded the District Court of Delaware’s (Stark – CAFC’s Newest Judge as of Yesterday) denial of Nippon Shinyaku’s motion for a preliminary injunction seeking to enjoin Sarepta from proceeding with IPR petitions against Nippon Shinyaku’s patents and to require Sarepta to withdraw its petitions. Nippon Shinyaku’s motion was based on a forum selection clause in a Mutual Confidentiality Agreement (“MCA”) requiring the parties to bring any patent challenges in the District Court for the District of Delaware.
In January of this year, the PTAB instituted all petitions. The PTAB pointed out that the denial of the injunction by the district court drove its decision.
On appeal, the Federal Circuit explained (here):
As a general principle, this court has recognized that parties are entitled to bargain away their rights to file IPR petitions, including through the use of forum selection clauses. For example, in Dodocase VR, Inc. v. MerchSource, we affirmed a district court’s grant of a preliminary injunction on the basis that a defendant had likely violated a forum selection clause by filing IPR petitions, even though the forum selection clause did not explicitly mention IPRs. Even in Kannuu Pty Ltd. v. Samsung Electronics Co., where we determined that the parties’ forum selection clause did not extend to IPRs, that determination was based on the specific language in the forum selection clause at issue in that case. Inherent in our holding in Kannuu was an understanding that a differently worded forum selection clause would preclude the filing of IPR petitions. In the case before us now, we have such a forum selection clause, which uses a defined term that the district court acknowledged “literally encompasses IPRs.”
As I pointed put when Dodocase issued, when entering pre-suit negotiations, it is critical to review the scope of a forum selection clauses as patent owners are increasingly seeking to prevent IPRs.
Certainly bargaining away a potential district court forum in favor of another is nothing new, or controversial. But, allowing private agreement to altogether foreclose the PTAB as a venue may not be in the public interest. At least not what Congress had in mind when it was fashioning a solution to address improvidently granted patents. As such, I would not be surprised to see this emerging practice addressed as the Restore the America Invents Act (RAIA) winds its way through Congress.