A Small Step on Choice of Forum Issues with PTAB

New Vision Gaming & Development, Inc. v. SG Gaming, Inc. (Bally Gaming) (Fed. Cir. 2021)

In a pair of CBM decisions, the PTAB found New Vision’s patent claims ineligible under Section 101.  New Vision had proposed alternative claims, but those were also found to be invalid. On appeal, the Federal Circuit did not review the merits, but instead vacated and remanded on Arthrex grounds.

New Vision requests that we vacate and remand the Board’s decisions in light of Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019). Because Arthrex issued after the Board’s final-written decisions and after New Vision sought Board rehearing, New Vision has not waived its Arthrex challenge by raising it for the first time in its opening brief before this Court. Thus, we vacate and remand for further proceedings consistent with Arthrex, and we need not reach any other issue presented in this case.

Slip. Op.

Judge Newman authored an opinion that dissents in-part.  In particular, Judge Newman argued that the choice-of-forum clause in a contract between the parties required any dispute over the patent to be resolved in a Nevada-based court, not in the USPTO.  “The Board refused to respect the forum selection agreement, and proceeded to final decision of the petitions.”  Judge Newman argued that the appellate panel should consider the issue before remanding.

Judge Newman particularly wanted to decide this issue here with her colleague Judges Moore on the panel (along with Judge Taranto).   A parallel question is question under consideration in Kannuu Pty Ltd., v. Samsung Electronics Co., Ltd. (Fed. Cir. 2021).  Oral arguments are expected in that case in July 2021 before a yet-to-be-disclosed panel.

The Public Private Nature of Patents

U.S. Patent Nos. 7,451,987 and 7,325,806.  The parallel litigation (filed in Nevada) is stayed pending outcome of the CBM review. New Vision Gaming &
Development, Inc. v. Bally Gaming Inc., No. 2:17-cv-01559-APG-BNW (D.
Nev.).

14 thoughts on “A Small Step on Choice of Forum Issues with PTAB

  1. 3

    Judge Newman is a national treasure.

  2. 2

    I think that Judge Newman has the better of this. The CAFC should have remanded with instructions to dismiss in view of the forum selection clause.

    1. 2.1

      +1.

      As she does with the great majority of here cases, she got this one right as well.

      If the PTAB really wants to be a replacement for court actions (hold your laughter please), they need to respect forum-choice clauses.

      . . . and just think, doing so would even open up some more time to resume their innovation-killing Death Squad duties . . .

  3. 1

    No comment on Trimble v. Perdiemco that was decided on the 12th (i.e., Wednesday)? This case was about limiting the impact of Red Wing Shoe v. Hockerson-Halberstadt, which was a Federal Circuit case from 1998. Red Wing was a personal jurisdiction case that held that the sending of a demand letter did not create personal jurisdiction (e.g., in the context of obtaining a declaratory judgment of non-infringement).

    The Federal Circuit determined that during negotiations (after a demand letter was sent) that patent owner “communicated with [alleged infringer] via letter, email, or telephone at least twenty-two times” and this occurred “in California over a period of three months.” The Federal Circuit then determined the following:
    PerDiemCo’s twenty-two communications over the course of about three months fall well outside the “sufficient latitude” we sought to grant patentees “to inform others of [their] patent rights without subjecting [themselves] to jurisdiction in a foreign forum” on the basis of three letters sent over a similar time period in Red Wing.
    On that basis, they reversed the District Court’s decision that the District Court did not have personal jurisdiction.

    If I’m reading this decision correctly, it basically means that any extended negotiations after notice of infringement has been served will put the patent owner at risk of being DJ’d for non-infringement by the alleged infringer. I suspect this means that more patent holders will file the complaint first and then engage in negotiations than they have previously. Otherwise, the patent owner will be at risk of going to court in a forum not of their own choosing.

    1. 1.1

      I hear you.

      Not quite worth repeating (since it is not a dedicated thread), but here is a link to Greg’s and my comments: link to patentlyo.com

    2. 1.2

      Hi folks. Im slow. Important decision for sure.

    3. 1.3

      “more patent holders will file the complaint first and then engage in negotiations than they have previously. Otherwise, the patent owner will be at risk of going to court in a forum not of their own choosing.”

      Sad but true. Yet another case making it even harder to settle disputes without having to (first) go to Court.

      Which is contrary to what Courts say they prefer . . .

      Sue first. Talk next.

      What a waste of everyone’s time and money; including Courts.

    4. 1.4

      I suspect this means that more patent holders will file the complaint first and then engage in negotiations than they have previously. Otherwise, the patent owner will be at risk of going to court in a forum not of their own choosing.

      Color me skeptical. Every plaintiff already knows and has long known that if the defendant files a DJ before you file your complaint, then they choose the forum. And yet, few plaintiffs actually take the strategy to which you allude. Why not?

      In the case of an outfit like PerDiemCo, they make their money by convincing people to take non-exclusive licenses on PDC IP. License royalties are revenue, while litigation costs are business expenses. Every suit they file and complaint they serve is an expense, and thus means that they have to extract that much more royalty revenue to keep the operation in the black. The advantage of choosing the forum and the economics of that extra hustle do not wash against each other.

      It is just too hard to keep the lights on and the books in the black if you have to run up litigation costs as the antecedent merely to approaching a potential licensee. At the point where serving a complaint is the necessary preliminary to negotiation, you really just need to close the operation and find something else to do for a living. The economics of that business model just do not work.

      1. 1.4.1

        At the point where serving a complaint is the necessary preliminary to negotiation, you really just need to close the operation and find something else to do for a living. The economics of that business model just do not work.
        Read the case, the letter included an unfiled complaint attached to it. The filing/serving of the complaint is a nominal cost as compared to the actual preparation of it. Few potential licensees are going to take you serious unless you can already show them that you’ve done the legwork to establish that they infringe and you are ready to file a complaint.

        Every plaintiff already knows and has long known that if the defendant files a DJ before you file your complaint, then they choose the forum.
        As stated in Red Wing Shoe, “[p]rinciples of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum.” As such, under Red Wing Shoe, one could inform a potential infringer/licensee of one’s patent rights without being subject to personal jurisdiction in a foreign forum. What this new case essentially says is that each contact (e.g., by mail, email, phone, fax, whatever) is going to be cumulatively held against the patent holder when it comes to determining whether some minimum contacts with the forum exists.

        Since the Federal Circuit didn’t provide some hard rule to follow (typical), patent holders are going to err on the side of caution and just simply file the lawsuit without first engaging in some type of negotiation beforehand. This will certainly ratchet up the pressure on both sides to hammer out a settlement but also unnecessarily waste court resources. One would hope that the Federal Circuit would want to incentivize negotiation over litigation. However, that isn’t the situation here.

        Getting DJ’d is, in essence, a mistake by a patentee as they should be able to get into court first if they so choose. This decision merely gives the patentee extra incentive to initiate a negotiation via a lawsuit rather than a cease and desist letter.

        1. 1.4.1.1

          The view of forum as a type of game and choice of forum having a substantial impact on results — as a legal reality — and (here) the snag and dance to arrive at, even if but for argument’s sake, an anti-patent holder animus.

          It is this underlying animus that should be in the spotlight whenever such things as the Eastern or Western Districts of Texas are discussed. People tend to clamor about aiming for those jurisdictions (as if it were a ‘bad thing’), when the ‘bad thing’ is why there is even a driver TO aim for those jurisdictions.

          Having a patent, and (gasp) enforcing that patent are painted as such negative things.

          There are very real ramifications of drinking such Kool-Aid over such extended periods of time.

          1. 1.4.1.1.1

            “the snag” ==> “the song”

        2. 1.4.1.2

          Fair enough. Give it a couple years, and I guess we will see which of us is correct.

          I doubt that I will remember in a couple years that I made a prediction on this subject, so it is unlikely that I will remember to crow about it if I prove you wrong. If you remember, however—and if you turn out to be correct—you will be entirely justified in crowing to me about it.

    5. 1.5

      No one is paying for licenses to individual patents without litigation. There is no point in asking for a license until you get through several motions and IPRs.

      1. 1.5.1

        … pretty much as desired by the Efficient Infringers — make this a ‘true‘ Sport of Kings.

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