by Dennis Crouch
Kannuu Pty. LTD v. Samsung Electronics Co., LTD (Fed. Cir. 2021)(KannuuSamsungDecision)
US Courts typically enforce choice-of-forum provisions found within contracts between two business entities. Here, Kannuu and Samsung entered into a non-disclosure agreement as part of a potential deal, and the contract included a choice-of-forum provision that directed “any legal action” stemming from the agreement to courts located in New York City “and no other jurisdiction.” The potential deal fell apart and Kannuu eventually sued Samsung for patent infringement. Samsung responded with an inter partes review (IPR) petition. Kannuu then asked the USPTO to drop the petition based upon the forum-selection-clause and, failing that, also petitioned the district court for an order that Samsung drop the IPR. The district court denied Kannuu’s motion for preliminary injunction and then appealed.
On appeal, the court centers-in on the issue:
The underlying question that this case presents is one of first impression: Does the forum selection clause in the non-disclosure agreement between the entities prohibit Samsung from petitioning for inter partes review of Kannuu’s patents at the Board?
Slip Op. Apart from the general legal question of whether such a clause can operate to keep the case out of IPR, Kannuu’s case has a more fundamental problem identified by the district court — “the plain meaning of the forum selection clause in the NDA [does] not encompass the inter partes review proceedings.” Slip Op.
The district court case is only at the preliminary injunction stage, and the appellate panel found no abuse of discretion in the district court’s finding that the IPR proceedings are not covered by the agreement since the agreement focuses on confidentiality rather than intellectual property rights.
On the bigger question of whether such a contract, if properly drafted, might be enforceable, the court explains that it “might” work:
Had Kannuu and Samsung entered a contract which applied to inter partes review proceedings, a forum selection clause in that hypothetical contract might permit Kannuu to avoid inter partes review and its inherent features. But, they did not enter such a contract.
Id. The court has previously found such a clause enforceable to prevent a post-grant-review proceeding, but only in a non-precedential opinion. Dodocase VR, Inc. v. MerchSource, LLC, 767 F. App’x 930 (Fed. Cir. 2019).
The majority opinion was written by Judge Chen and joined by Judge Prost.
Writing in dissent, Judge Newman argued that “the forum selection clause is clear and unambiguous, and law and precedent require that it be respected and enforced.”
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I should note that the patent at issue here has the auspicious title of “Process and apparatus for selecting an item from a database.” [Link]