In a new Law360 article, St. Louis patent litigator Doug Robinson comments on the Federal Circuit’s April 18 ruling that says a PTAB petitioner must withdraw its challenges because a clause in a previous licensing agreement requires any litigation take place in California, thereby preventing the proceedings from taking place at the PTAB.
At first glance, the ruling appears to benefit patent owners who are hoping to avoid the PTAB, even though the number of cases in which previous licensing agreements include forum selection clauses will likely be very low. Still, the ruling could lend itself to a good defensive strategy for future licensing opportunities. As noted by Robinson, “Any time a case is being settled or a patent is being licensed, this decision is one that people need to keep in mind because they can use it to keep any later challenges out of the PTAB if they want.”
Robinson is careful to point out that this does not necessarily mean the end of the PTAB’s involvement, though. The PTAB could, for example, disagree with the Federal Circuit and hold that forum selection clauses are erroneous. The complex nature of Inter Partes Reviews means that “it could be a lot harder as a practical matter to get the relief you wanted” even if you receive a favorable ruling, he says.
In the present case, the three IPR challenges brought by The Sharper Image and its parent company MerchSource LLC against DodoCase are still moving forward, and there is a chance that the PTAB will invalidate the DodoCase patents despite the CAFC’s ruling. This scenario would place DodoCase in a highly unusual position. “It would be fascinating if [DodoCase] has to appeal to the Federal Circuit to say the PTAB proceeding should never have been instituted. Because that’s a tough thing to do,” Robinson says.
The PTAB has held that assignor estoppel does not apply to it because the America Invents Act allows anyone who does not own a patent to seek Inter Partes Review. If they follow a similar logic, it is not out of the realm of possibility that they will not be bound by licensing clauses either.
“I don’t think that will happen, but it’s possible,” says Robinson.
More litigation will likely be needed to decide if a licensing clause can trump an IPR and whether such a ruling can be granted from the PTAB itself or from a district court. For now, patent owners who are currently negotiating licensing agreements would be wise to include language that bars future validity disputes “arising out of or under” the agreement from taking place at the PTAB.