TAKEAWAY: The Federal Circuit is expected to provide further guidance on forum selection clauses that purport to preclude post-grant proceedings at the PTAB.
The law on forum selection clauses implicating jurisdiction for post-grant proceedings at the USPTO Patent Trial and Appeal Board (PTAB) continues to evolve. In mid-May, the Federal Circuit reversed and remanded a PTAB Final Written Decision of invalidity in New Vision Gaming & Development, Inc.. v. SG Gaming, Inc. (Fed. Cir. May 13, 2021). This decision was based on the Federal Circuit’s holding in Arthrex, Inc. v. Smith & Nephew, Inc. that the current structure of the PTAB is unconstitutional based on the way Administrative Patent Judges are appointed. The U.S. Supreme Court has since issued its decision on appeal in Arthrex, agreeing with the Federal Circuit on unconstitutionality but disagreeing how to resolve the problem by giving the USPTO Director the authority to review final PTAB decisions.
The PTAB panel in New Vision Gaming & Development had found that a forum selection clause in an agreement between the parties did not preclude institution of a covered business method review challenging patent validity. In part, the clause read as follows: “In the event of any dispute between any of the parties that cannot be resolved amicably, the parties agree and consent to the exclusive jurisdiction of an appropriate state or federal court located within the State of Nevada, Clark County, to resolve any such dispute.”
While Judge Newman agreed with the remand of New Vision Gaming & Development under Arthrex, she disagreed with the majority’s decision to not address forum selection. In her dissent, Judge Newman argued that the Federal Circuit should have addressed forum selection as a threshold issue on PTAB jurisdiction. She also questioned whether a new PTAB panel in accordance with the Federal Circuit’s decision in Arthrex would have jurisdiction.
The Federal Circuit is addressing forum selection clauses in another case, Kannuu Pty Ltd., v. Samsung Electronics Co., Ltd. (Fed. Cir. 2021), in which oral argument was held on July 8, 2021. It remains to be seen whether the Federal Circuit will provide clearer guidelines for licensing agreements and other contracts that exclude PTAB jurisdiction. In the meantime, patent owners should consider explicit language paired with a forum selection clause in licensing agreements that specifically and unambiguously precludes licensees from challenging patents before the PTAB.