A lawsuit named DodoCase: Contractual Bars to Challenging Patents

DODOcase recently petitioned the Federal Circuit for en banc rehearing on patent licensing law.  The petition raises two questions – paraphrased below:

  1. Should a general forum selection clause (“disputes shall be litigated before . . . California [Courts]”) be interpreted to exclude AIA trials brought by the licensee?
  2. What is the enforceability of a license term that prevents a licensee from filing an AIA trial petition (inter partes review of post grant review).

For its part, the Federal Circuit opinion held that the generic forum selection clause did indeed prevent an AIA petition brought by the licensee and assumed that the clause was enforceable – not even considering the impact of Lear.

Two groups have now filed amicus briefs supporting the petition.

Law Professors: A group of 21 law professors signed-on to a brief drafted by Stanford’s IP Clinic run by Phillip Mallone.  The brief explains that Lear, Inc. v. Adkins, 395 U.S. 653 (1969), should apply with equal strength (if not more) to contracts barring AIA Trial Challenges by the licensee.

The panel’s sweeping elevation of boilerplate forum selection clause language is contrary to Congress’s clear intent to allow and even facilitate licensee validity challenges before the PTAB. Lear requires courts to consider the exceptionally important patent policy interests in validity challenges. Because the panel failed to engage in any such consideration and ignored binding precedent, this Court should grant rehearing to correct the error.

An industry brief was also filed by a group of companies, including SAS, Vizio, Zilinix, and Garmin as well as the Consumer Electronics Ass’n and Engine.  This brief argues that the federal circuit misinterpreted the contract — arguing that boilerplate forum selection clauses pre-AIA licenses should not be interpreted to limit AIA trials.  The Brief also explains that the licensing parties already knew and understood at the time of drafting that the terms restricting validity challenges by the licensee were not enforceable.

Read the briefs:

Contracting Around AIA Trials

 

 

46 thoughts on “A lawsuit named DodoCase: Contractual Bars to Challenging Patents

  1. 5

    The part about Lear I find singularly unconvincing. Lear held that it violates public policy to enforce a contractual term barring challenges to patent validity. It said nothing about contractual terms that seek to regulate where such challenges should be brought. If a defendant can challenge patent validity in the district court, then Lear is satisfied, even if it is precluded from doing so in the PTAB.

    For that matter, even before the AIA, forum selection clauses had this effect. If the defendant is in CA, but gets sued in Texas, then it has to suffer the inconvenience of litigating there, including litigating any validity challenges. The fact that such a challenge may be more burdensome than you would prefer is not inconsistent with Lear.

    1. 5.1

      good point.

      But does not the fact that the action in the PTAB is held to be different than that of action in an actual Article III forum create a distinction that does make a difference?

      It’s not as if the Article III nature is different in one forum than in another ‘traditional’ forum (as both ‘traditional’ forums WERE Article III forums). Such then, is NOT merely a matter of convenience, eh?

    2. 5.2

      Bored: If a defendant can challenge patent validity in the district court, then Lear is satisfied

      Hmm. Seems like that would turn Lear into a “dead letter.” How many restrictions can be piled into the contract and still “satisfy” Lear? As the licensor, can I limit not only the forum but also the month of the year, the duration of the challenge, the particular statute, the number of references cited, and the amount of money that the licensee can spend? Because I’m not totally precluding a challenge in district court (and thus “Lear is satisfied”).

      Or maybe Lear stands for a principle that isn’t easily drafted around. I know that sort of thing greatly troubles the patent community (well, at least a certain segment of that community).

      1. 5.2.1

        Malcolm, you are not using the term “dead letter” correctly.

        You add strawmen with conditions no one else argues only to attempt to knock them down, while avoiding the plainly stated condition that WAS advanced.

        Lear stands for what that case presented.

        I “get” that you want to expand the “don’t limit challenges” of Lear from a “don’t limit Article III challenges” to a “don’t limit ANY challenges.”

        And that may indeed be a legitimate expansion.

        But the legitimacy would NOT come from the mere fact that a desired Ends can be annunciated.

        You need to provide proper Means.

        That does mean taking the time (and effort) to analogize the facts of the case, how the law was applied to those facts, and proposing how the law would be similarly applied to a different set of facts.

        Arguments COULD go either way, and your abrupt dismissal is NOT helpful in a case such as this.

        1. 5.2.1.1

          I posed a hypothetical question in response to Bored”s comment, Bildo. Wipe the foam off your chin and take a time-out.

          1. 5.2.1.1.1

            Did you bother reading what I wrote?

            Whether or not you posed a hypothetical question is NOT ON POINT to what I wrote.

            Further, your “hypothetical” was nothing but a strawman. Such was not even on point to what Bored wrote.

            Further still, I was being generous and pointing out a path that you COULD take to be relevant. Instead of saying “thank you” (as you should have), you exhibit only snippiness.

            I am not the one with foam on my chin and needing a time-out. That would be you. (yes, I know, your number one meme of Accuse Others – go figure )

            1. 5.2.1.1.1.1

              Did you bother reading what I wrote?

              I started to read it, then I hurt my eyes because they rolled back so hard in my head and so I stopped. Go f yourself, Bildo.

              1. 5.2.1.1.1.1.1

                You yet yourself…

                Not a surprise. Is that how you got that foam on your chin?

                1. Just noticed the autocorrect…

                  “You yet yourself”

                  Should read:

                  “You hurt yourself”

  2. 4

    Dennis, the petition is by MerchSource (licensee / accused infringer), not DodoCase (licensor / patent owner).

    Amici don’t want contractual terms enforced because they are “boilerplate.”

    Amici assert that nonprecedential CAFC opinions are precedential to all “lower courts, so district courts will have to apply the panel opinion in other cases nationwide.”

    Amici say that the nonprecedential decision creates incentives not to challenge validity, even though nothing in the decision prevents a federal court validity challenge (what the Lear case was about).

    These are extraordinary statements, even in a context that usually tolerates some bombast and hyperbole.

    1. 4.1

      These are extraordinary statements, even in a context that usually tolerates some bombast and hyperbole.

      What’s “extraordinary” about them? None of the positions you refer to seems remotely “bombastic or hyperbolic”, although your characterization of those positions is certainly a bit hyperbolic.

      1. 4.1.1

        Are you an attorney? Or does the fact that someone (anyone) comes out with a statement that may be taken to be “pro-patent” so enrage your feelings that you lose control and are compelled to post in a denigrating manner?

        The first point (clarifying the parties) is pretty inoculous.

        The second point is a bit more outlandish, as the takeaway is that ANYTHING deemed mere “boilerplate” should be excised from all contracts. That is certainly extraordinary.

        The third point is direct in its meaning, and if you WERE an attorney, you would immediately recognize that subverting the meaning of “precedential” would be extraordinary.

        The fourth point is a bit more nuanced, and it may be arguable that just because Lear was a case directed to challenges in an Article III court, that such MAY WELL carry over into the new post grant review mechanisms. Here, you could have replied with something a bit more on point, as the position of Robert on this point IS a bit hyperbolic.

        As is, you simply lumped everything into one bucket, and then jumped to your usual style of ad hominem with nothing more.

        1. 4.1.1.1

          Dear Bildo,

          Go f—–k yourself.

          Sincerely,

          Everybody

          1. 4.1.1.1.1

            Your feelings (including your Trump-like ego in thinking that your feelings reflect anyone else’s feelings) are noted.

    2. 4.2

      “Amici assert that nonprecedential CAFC opinions are precedential to all
      ‘lower courts, so district courts will have to apply the panel opinion in other cases nationwide.'”

      Don’t do that. Don’t construct quotes containing fictional statements as you mischaracterize others’ arguments.

      The sentence was “Though non-precedential, the panel’s decision
      will have broad and retroactive effects on the ability of licensees to challenge invalid patents” (p. 2 of Amicus Brief IP Profs).

      It says nothing about those decisions being precedential or binding (as opposed to persuasive authority), and is consistent with FRAP 32.1.

      “Amici say that the nonprecedential decision creates incentives not to challenge validity, even though nothing in the decision prevents a federal court validity challenge (what the Lear case was about).”

      Where? “Because licensees are often the only parties with sufficient incentive to challenge an invalid patent, protecting licensee-initiated validity challenges is essential to maintaining statutory bounds on patent monopolies?” Or “Restrictions in license agreements are particularly troubling because ‘[l]icensees may often be the only individuals with enough economic incentive to challenge the patentability of an inventor’s discovery,'” quoting from Lear?

      Those are extraordinary statements because they are strawmen, not actual assertions by the amici. As for nothing in the decision preventing a federal court validity challenge, well, you’re forgetting the no challenge clause in the license, which would make this a far stronger decision but the courts seem to be scrambling to avoid (fn 2).

      1. 4.2.1

        Don’t do that. Don’t construct quotes containing fictional statements as you mischaracterize others’ arguments.

        Bob can’t help it. It’s what he does for a living.

        1. 4.2.1.1

          So Accuse Others of you, Malcolm…

          Stultifying.

          1. 4.2.1.1.1

            Bildo, you’re a well documented path0logical li@r and nobody cares what you think about anything so just S T F u already.

            1. 4.2.1.1.1.1

              That Accuse Others meme of yours is in overdrive.

              Here’s an idea: every time that you post Accusing anyone of doing or being anything,
              STOP.
              Take a moment and put the accusation aside.
              THINK.
              And then write something that is legally cogent and on point and ADDS to the conversation.

              Your “defensive mechanism” of Accusing Others adds nothing and it is quite clear that you do this with zero thought of the underlying topic.

              This meme of yours certainly does not hide when you get busted for your blight, and doubling down as you do just does not help any position that you want to advocate for. It’s actually quite hilarious (in a train wreck sort of way) that you appear to think that you can Accuse your way out of the mess that you post yourself into. It’s like a dullard child who fancies himself “clever” by responding to putdowns with a “I know you are, but what am I?” line (over and over and over).

              That you have convinced yourself of how “clever” it is to play that “Accuse Others” game is a flaw of yours – not a strength.

    3. 4.3

      Here is the full text [from the Fed. Cir. decision] of the subject contractual full prohibition against any validity challenges or support for any validity challenges of others:
      “6.4 MerchSource shall not (a) attempt to challenge the validity or enforceability of the Licensed IP; or (b) directly or indirectly, knowingly assist any Third Party in an attempt to challenge the validity or enforceability of the Licensed IP except to comply with any court order or subpoena. “

    4. 4.4

      LOL

      I just realized that “Robert Greenspoon” is that bald p.o.s. from Big Jeans echo chamber whose been injecting himself with batboy blood for the past ten years.

      ROTFLMAO

      Buyer beware. Bob is one of those people who struggles every day with “facts” and the presentation of them.

      Flackfart and Baldspoon LLP: Where The Truth Goes to Die

      But they have great deals on patent crack. Smoke up, boys.

      1. 4.4.1

        Your obsess10n and mindless as hominem are noted.

  3. 3

    I’m not following your commentary. The professor’s post is about a petition for Fed. Cir. panel rehearing and rehearing en banc, not a cert petition.

  4. 2

    Smart move – going directly to a cert petition from an inadequately legally evaluated and written non-precedential Federal Circuit panel decision, on a broadly applicable and important issue, rather than asking for an en banc Fed. Cir. reconsideration decision that might well have been better written. Even with the normal 300 to 1 odds against cert grants, this one could well be a winner. I have never even heard of any patent licensing expert who ever said that you could validly contractually prevent a licensee from filing a reexamination or IPR patent validity challenge since Lear? It even lead to the death of most “running royalty” licensing. Nor, self evidently, would the Sup. Ct. mind dumping on the Fed. Cir. yet again in a case like this.
    [Forum (venue) selection agreement is a different issue.]

    1. 2.1

      Sorry, I meant smartER.

      1. 2.1.1

        Of course first asking for en banc reconsideration is the usual route, even though it seems to have extremely low odds of being granted, normally.
        I wonder why the amicus briefs did not also cite the more recent MedImmune v. Genentech (Supreme Court 2006), and also an early Fed. Cir. case on a reexam requested by a defendant after that defendant had settled with the patent owner?

        1. 2.1.1.1

          Another case [right on point?] that the briefs missed is the July 10, 2012 Second Circuit decision in Rates Technology Inc. v. Speakeasy, Inc.

      2. 2.1.2

        Sorry. My Comment 3 was in response to Comment 2. I see your correction in 2.1. Carry on.

  5. 1

    This is despicable. These bullies and their lawyers truly believe the law does not apply to them.

    1. 1.1

      A few brief replies:

      (1) These “bullies” are seeking clarification on what the law is. How the law applies to them depends on the answer to that first question. It is a bit premature to assert that they “believe the law does not apply to them” until we know what the law is.

      (2) I thank you for citing to specific PTAB cases on the other thread. I tried to reply over there, but my posts do not go through. I had fairly detailed responses, but I suppose that those are lost to the ether. Suffice it to say, having read the cases that you cite, I sincerely do not see the putative bias that you purport to find in those decisions. They all looked fairly sane and uncontroversial—no different really than what one might have gotten if the same questions and evidence were presented to an Art. III court.

      1. 1.1.1

        You lawyers are all crazy.

        THE PARTIES AGREE THAT THE SUBJECT MATTER AND PERSONAL JURISDICTION ARE PROPER IN THE COURTS LOCATED IN SAN
        FRANCISCO COUNTY OR ORANGE COUNTY, CALIFORNIA AND THAT DISPUTES SHALL BE LITIGATED BEFORE THE COURTS IN SAN
        FRANCISCO COUNTY OR ORANGE COUNTY, CALIFORNIA.

        1. 1.1.1.1

          Not all of us, Josh.

          There indeed is more than one bucket here.

        2. 1.1.1.2

          You are aware, no doubt, that not all clauses that appear in a contract are enforceable. There is a question about the enforceability of this particular clause. The way one achieves clarity on such a question of law is that one litigates the issue, sometimes to the Supreme Court. It is not “bullying” to ask the Court to settle such a question of law. That is just how our common-law system works.

          Naturally, if the Court says that this clause is not enforceable, then the ones seeking to avoid the clause are not acting as if the law does not apply to them. Rather, they are acting in conformity with a law that says that such clauses are unenforceable on public policy grounds. Meanwhile, if the Court says that such a clause is enforceable, then I expect that the affected parties will conform themselves to the Court’s holding.

          1. 1.1.1.2.1

            And there may be lovely parting gifts on the way out.

        3. 1.1.1.3

          I will agree with Greg here.

          Unfortunately, contracts keep getting written with clauses that have no business being included.

          Other times, clauses are included that (at the time) seem perfectly alright to be included, but later conditions or events (outside of the parties’ control) render them unenforceable.

          Sometimes, those conditions and events are NOT outside of the parties’ control, and in those cases, it DOES seem untowards that a party willingly signed something, and then later is obviously trying to get out of what they signed. Perhaps this is the situation as you see it.

          Sometimes, one party simply knows the law better than the other party and may “use” unenforceable clauses as a type of bargaining chip. This may go either way in the sense that a known unenforceable clause may be desired by either party and the other party — knowing full well that such IS unenforceable — may “concede” the inclusion of the term as if it were enforceable in order to “get” some other condition or term that they desire. These trade-offs may well be nuanced, complicated, or otherwise untraceable to the specific unenforceable clause. It will not be often that such a trade-off is blatantly present, as negotiations usually have lots of wheels in motion. Be that as it may, some consider such tactics as “shrewd” while others may consider them “unethical.”

          But is it unethical to allow someone else to make a mistake? If Party A wants to include a clause and is willing to make a concession on a different matter. Is it unethical for Party B to take the concession offered by Party A and allow Party A to include a clause that Party B knows full well is not enforceable (and this, being basically worthless, is obtaining a bit of “free lunch” with the obtained concession?

          Would Party B ethically be held to informing Party A that the clause “being traded for” IS unenforceable? Is there an ethical line being crossed by Party B in “agreeing” to the contract, knowing that they do NOT have to follow through with what they are agreeing to because they know that a particular portion cannot be enforced?

          Am I my brother’s keeper, when my brother has obtained his own counsel who should know better?

        4. 1.1.1.4

          Nope. I don’t understand what you all are talking about. And I am not going to law school to get brainwashed by the kind of professors that wrote this brief and taught you that this is okay. If I take time to research I expect to find this “unenforceability” jurisprudence was at one time based on equitable principles. Then unscrupulous lawyers and activist judges expanded it help their clients escape their obligations. That is my guess.

          1. 1.1.1.4.1

            Suit yourself. None so blind as those that will not see, and all that…

          2. 1.1.1.4.2

            So you don’t trust lawyers? You are scarcely alone in that. I do not imagine that there is much more to be said, under those circumstances.

            For what it is worth, my kids like your balloons, and I make it a point not to buy the knock-offs.

          3. 1.1.1.4.3

            Oh to be so enlightened to understand that one does not have to keep one’s word when it is inconvenient. No thanks.

            1. 1.1.1.4.3.1

              Josh,

              You paint with a single brush FAR too broadly.

              Some of us have done well through law school and into the profession the old-fashioned way: through critical thinking.

              I will grant you though, that in today’s academia-driven philosophy, there is a lot to be desired from schooling (even law school), where instead of a meritocracy (and showcasing the ability to apply critical thinking), all too often the “best grades” go to the best sycophants and those that “herd” best to the desired philosophies within academia.

              1. 1.1.1.4.3.1.1

                I will add that I was fortunate enough (for the most part) to have professors who recognized that my challenging their “prevailing philosophies” was a GOOD thing.

                No doubt, this was due in part to the fact that I was thoroughly prepared and had cogent positions from which TO challenge them.

          4. 1.1.1.4.4

            I mean no disrespect, but in your mind, would a clause that waived liability for the other party’s intentionally liability be o.k. just because the parties agreed?

            1. 1.1.1.4.4.1

              Doesn’t sound right to me. I sure wouldn’t ask these 21 professors for the answer.

              1. 1.1.1.4.4.1.1

                You seem to rail against “you attorneys” earlier, and here it appears that “you academics” are your focal point…

                PLEASE be aware of the vast difference between practicing attorneys and academics, and do NOT paint them with the same brush.

Leave a Reply

Your email address will not be published. Required fields are marked *

You can click here to Subscribe without commenting

Add a picture