New Vision Gamingi touches on an interesting forum-selection issue currently before the Federal Circuit in at least one other case. The issue is the enforceability of a forum-selection clause in an agreement between parties that attempts to prohibit the filing of an Inter Partes Review (IPR) petition. New Vision and SG Gaming, Inc. mutually agreed in their patent license agreement that if “any dispute” arose, jurisdiction would be “exclusive” in the appropriate federal or state court in the state of Nevada. After a dispute arose, New Vision filed suit in the federal district court in Nevada, and SG Gaming filed in the PTAB the IPR petitions at issue in this appeal. The Board refused to respect the forum selection agreement and proceeded to final written decision on the petitions.
Whether the forum-selection clause is enforceable turns on the dual public-private nature of the patent right.
On the one hand, patents grant to inventors (or their assignees) a private property right to exclude others from using the claimed invention, as well as the right to assign and license those rights as they see fit. Under the private-right theory, private parties should have the freedom to enter into agreements that restrict the forum in which disputes surrounding the patent may be brought, which could potentially exclude the PTAB as a forum. On the other hand, patents also serve a public purpose in stimulating innovation, and the patent grant also binds the public. Under the public-right theory, courts have occasionally struck-down private agreements that go too far, including agreements that frustrate the invalidation or cancellation of wrongfully issued patents. Perhaps the most famous example is the Supreme Court’s decision in Lear v. Adkinsii, which held that licensee estoppel cannot absolutely prohibit a patent licensee from challenging the validity of a licensed patent.
In New Vision Gaming, the patent owner New Vision appealed two covered-business method review final-written decisions invalidating two of its patents. The decisions also denied New Visions’s proposed substitute claims as being patent ineligible under 35 U.S.C. § 101. On appeal, New Vision sought relief under Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) cert granted No. 19-1458, which it was entitled to do because Arthrex issued after the Board’s final-written decisions and after New Vision sought Board rehearing. New Vision also cited the non-precedential Dodocase VR, Inc. v. MerchSource, LLC, 767 F. App’x 930 (Fed. Cir. 2019) and argued that the IPRs should be removed from the PTAB based on an agreed choice of forum. SG Gaming, and the Director of the Patent and Trademark Office as intervenor, both argued that the Board’s rejection of the choice of forum is an unreviewable “institution” decision, citing Thryv, Inc. v. Click-To-Call Technologies, LLP, 140 S. Ct. 1367 (2020).
The panel majority (Judges Moore and Taranto) vacated the final written decisions and remanded the cases to the PTAB for further proceedings consistent with Arthrex without addressing the forum selection clause. In dissent, Judge Newman argued that “the forum question requires resolution, for if the parties are committed to a Nevada forum instead of the PTAB, there is no basis for new PTAB proceedings on remand.” Judge Newman argued that the court should have resolved the forum selection issue before requiring a new trial by a new Board. She also argued that the issue was reviewable, notwithstanding Thryv, because the decision to disregard the forum selection clause cuts to “Board’s ‘conduct’ in declining to adhere to the parties’ contracted forum and not the institution decision.”
Though the majority in New Vision Gaming ducked the issue in view of Arthrex, whether or not a forum-selection clause is enforceable in PTAB proceedings may yet be resolved soon. For example, the issue is currently pending before the Federal Circuit in Court in Kannuu Pty. Ltd. v. Samsung Electronic Co. Ltd., Appeal No. 2021-1638, which has generated dueling amicus briefs from two different groups of law professors. We will continue to monitor this important issue as it develops. In the meantime, parties should pay close attention to forum-selection clauses and their wording. Moreover, patent owners in PTAB proceedings should preserve arguments for an appeal if there is a chance a forum-selection clause could terminate a post-grant challenge.
i New Vision Gaming & Development, Inc. v. SG Gaming, Inc. (FKA Bally Gaming) (Fed. Cir. May 13, 2021).
ii 395 U.S. 653 (1969).
