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Alerts and Updates

Forum Selection Clause Held Inapplicable for Precluding Inter Partes Review Before the Patent and Trial Appeal Board

February 8, 2021

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NDAs are meant to protect the confidential information of one or both parties while each party determines whether the collaboration is worth pursuing.

Confidentiality agreements or nondisclosure agreements (NDAs) are generally one of the first documents that in-house counsel require teams to execute when exploring licensing and/or research opportunities with third parties. NDAs are meant to protect the confidential information of one or both parties while each party determines whether the collaboration is worth pursuing. However, in a recent case in the Southern District of New York, one party tried to invoke a forum selection clause of an NDA to prevent the other party from challenging patents using inter partes review (IPR) at the USPTO’s Patent Trial and Appeal Board (PTAB). Specifically, the court noted in Kannuu v. Samsung:

Because the Agreement implicates confidentiality and not the intellectual property rights of the parties, it is not directly “connected with” or “associated” with the IPR proceedings. … Again, at bottom, the IPR proceedings concern the validity of patents, not confidentiality.

Kannuu Pty. Ltd. v. Samsung Elecs. Co., No. 19 Civ. 4297, 2021 WL 195163, at *4-5 (S.D.N.Y. Jan. 19, 2021).

Further, the court concluded that the IPR proceedings did not relate to the agreement (i.e., an NDA) or any transactions contemplated therein and thus the IPR proceedings did not fall within the scope of the forum selection clause.

Thus, under current U.S. law as decided in this case, it may not be problematic to use a standard forum selection clause in an NDA exclusively limited to protection of confidential information in the United States. However, the implications of such a clause in agreements that include licensing or division of patent rights are not addressed in this U.S. case. Further, for in-house attorneys dealing with forum selection clauses that could be interpreted in other countries or that relate to patents in other countries, it may be a good idea to make more than a cursory review of forum selection clauses in any agreements relating to patents, for example, licensing agreements, development agreements, etc.

Thus, the key takeaway for in-house lawyers concerned about ensuring the rights of their company with respect to patents may be to modify any forum selection clause in agreements relating to patents such as nondisclosure agreements, licensing agreements, or joint development agreements to include an acknowledgement of alternative forums available for patent disputes around the world, such as the PTAB or the European Patent Office. Further, as many companies operate on a worldwide basis, it may be necessary to address that while litigation related to contractual breaches may be subject to the forum selection clause, patents are subject to separate proceedings in every country and/or jurisdiction in which they are registered.

As always, in-house attorneys need to understand and communicate to their teams the various risks of third-party disclosures and types of agreements used to protect the corporation. Further, attorneys and teams must understand that any such third-party interactions may have consequences for intellectual property protection worldwide.

For More Information

If you have any questions about this Alert, please contact Thomas J. Kowalski, Deborah L. Lu, Ph.D., Heidi Lunasin, Brandon A. Chan, Ph.D., any of the attorneys in our Intellectual Property Practice Group, any of the attorneys in our Life Sciences and Medical Technologies Industry Group or the attorney in the firm with whom you are regularly in contact. 

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.