Shutting Down the PTAB with Forum Selection Clauses

CAFC Upholds Injunction to Shut Down PTAB

The AIA statutes provide that a person who is not the owner of a patent, can challenge the patent at the Patent Trial & Appeal Board (PTAB). Pursuant to the bright lines drawn by the statute, the PTAB has accepted AIA challenges from non-owners where traditional defenses may have prevented such challenges in other fora. For example, while assignor estoppel might preclude a patent validity challenge in a district court, the PTAB accepts such challenges. In affirming this practice, the Federal Circuit explained that common-law doctrines are subject to abrogation of the AIA statutes.

A more recent argument has been that private agreement, such as a forum selection clause, can divest the PTAB of jurisdiction of a patent validity dispute. For its part, the PTAB has disagreed to date…..the District court on the other hand, has attempted to enjoin petitioners from continuing that the PTAB in such circumstances. Today, the Federal Circuit has backed the injunction strategy, effectively shutting down the PTAB.

In Dodocase VR, Inc. v. Merchsource, LLC (here) the Federal Circuit stayed the injunction of the lower court while it reviewed the lower court’s injunction. In the interim, the filed PTAB proceedings were instituted and were progressing toward an August Final Written Decision (FWD).

After walking through the factors for injunctive relief, and construing the forum selection term as excluding the PTAB, the Court upheld the injunction.

In considering the factors the Court noted the Petitioners argument that it would be effectively blocked from using the PTAB given the concurrent district court action, the Court explained:

“On appeal, MerchSource raises the same alleged harm of being barred from refiling because of the one-year statutory bar of § 315(b). While we acknowledge MerchSource’s concern, we find that the district court did not abuse its discretion in determining that the balance of hardships tipped in favor of granting the preliminary injunction.” (earlier noting that the lower court pointed to the small size of DodCase and its inability to fight on multiple fronts).

Given the Board’s experience in this case, it might be argued going forward that a forum selection clause militates in favor of the agency exercising its discretion to deny a petition. That is, the limited resources of the agency should be conserved in the face of likely injunctive relief. The ability to avoid the PTAB by private agreement may be especially useful in licensing agreements between competitors, or larger industry licensing organizations, such as SEP licensors seeking to simplify the conversation at the time of license renewal.

Scott A. McKeown is an author of the Patents Post Grant