THIS forum selection clause in THIS NDA agreement did not bar the IPRs

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In Kannuu Pty Ltd. v. Samsung Electronics Co., [2021-1638] (October 7, 2021) the Federal Circuit affirmed the district court denial of Samsung’s motion for a preliminary injunction compelling Samsung to seek dismissal of Samsung’s petitions for Inter Partes Review at the Patent Trial and Appeal Board (Board).

In 2012, Samsung contacted Kannuu, an Australian start-up company that develops various media-related products (including Smart TVs and Blu-ray players), inquiring about Kannuu’s remote control search-and-navigation technology. Kannuu and Samsung entered into a non-disclosure agreement (NDA), to protect confidential business information while engaging in business discussions and the like. Among other things, the agreement provided:

Any legal action, suit, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby must be instituted exclusively in a court of competent jurisdiction, federal or state, located within the Borough of Manhattan, City of New York, State of New York and in no other jurisdiction.

Following more than a year of discussions, the parties ceased communications. No deal (i.e., intellectual property license, purchase, or similar agreement) over Kannuu’s technology was made.

Six years later, Kannuu sued Samsung for patent infringement and breach of the NDA. Samsung then filed petitions for Inter Partes Review of the patents. Kannuu argued that the review should not be instituted because Samsung violated the NDA’s forum selection clause in filing for such review. When the Board instituted proceedings as to some of the petitions, Kannuu sought rehearing, which was denied. Kannuu then sought a preliminary injunction to compel Samsung to seek dismissal of the instituted Inter Partes Review. The motion was denied, and Kannuu appealed.

The issue before the district court, and before the Federal Circuit on appeal, was whether the forum selection in the NDA prohibited Samsung from petitioning for Inter Partes Review of Kannuu’s patents at the Board. The District Court found it did not, and the Federal Circuit found no abuse of discretion.

Though the district court held the forum selection clause was valid and enforceable, it concluded that the plain meaning of the forum selection clause in the NDA did not encompass the Inter Partes Review proceedings. Specifically, the district court found that the Inter Partes Review proceedings did not “relate” to the Agreement or transactions contemplated under it.

The Federal Circuit said that the district court correctly concluded that the Inter Partes Review proceedings “do not relate to the Agreement itself.” The connection between the two — the Inter Partes Review proceedings and the NDA — is too tenuous for the Inter Partes Review proceedings to be precluded by the forum selection clause in the NDA, which is a contract directed to maintaining the confidentiality of certain disclosed information, and not related to patent rights.

Takeaway

Neither the district court nor the Federal Circuit said that a forum selection clause in an NDA could not bar an IPR. Rather, they both held that this forum selection clause in this NDA agreement did not bar the IPRs. Under appropriate circumstances, a properly drafted forum selection clause in an NDA could bar an IPR between the parties, just as such clauses in a license agreement can bar challenges to the licensed patents before the PTAB.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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