Licensee Challenges Ruling that a Standard Language Forum Selection Clause Bars PTAB Proceedings 

In a case that could have a significant impact on the interpretation and drafting of patent licensing agreements, a patent licensee filed an appeal for an en banc proceeding at the Federal Circuit to challenge the court’s finding that a forum selection clause governing disputes that “arise out of and under [the Master License Agreement]” and does not explicitly allow proceedings at the Patent Trial and Appeal Board (PTAB) prevents proceedings from being initiated at the PTAB. If this holding remains intact, many licenses having forum selection clauses that are silent about PTAB proceedings may be able to be successfully relied upon to prevent PTAB proceedings.

The dispute emerges between parties to a patent licensing agreement in which MerchSource licensed patents from Dodocase. Despite being the licensee, MerchSource filed PTAB proceedings to challenge the validity of the licensed patents. Dodocase responded by trying to enforce a forum selection clause that states, inter alia, “disputes shall be litigated before courts in San Francisco County or Orange County, California.” The lower court sided with Dodocase, finding that the PTAB proceedings were in violation of the Master License Agreement’s forum selection clause. The lower court required MerchSource withdraw the PTAB petitions directed to the licensed patents.

In Dodocase VR, Inc. v. Merchsource, LLC, the Federal Circuit upheld the lower court’s decision. The Federal Circuit did so by relying on their own precedent that, “the governing law clause…as in any patent license agreement, necessarily covers disputes concerning patent issues,” and extended this to encompass proceedings in front of the PTAB.

MerchSource has now appealed the decision, requesting a rehearing en banc. In its appeal brief, MerchSource argues that the rehearing is appropriate “because the panel’s opinion imposes a significant, far-reaching restriction on the availability of Congressionally created AIA patent review.” With amicus briefs already submitted by intellectual property law professors and industry corporations in support of a rehearing en banc, this is a case to watch.

Maximizing the protection and value of intellectual property assets is often the cornerstone of a business's success and even survival. In this blog, Nutter's Intellectual Property attorneys provide news updates and practical tips in patent portfolio development, IP litigation, trademarks, copyrights, trade secrets and licensing.

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