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Be Careful With Contract Boilerplate–A Forum Selection Clause May Preclude Challenges In The USPTO Tribunals – Trademark


Under a decision by the U.S. Court of Appeals for the Federal
Circuit (Federal Circuit), if you enter into a contract requiring
disputes to be resolved by lawsuits brought in a specified court,
you may be precluded from challenging the validity of a patent or
trademark in a proceeding in the Patent Trial and Appeals Board
(PTAB) or the Trademark Trial and Appeals Board (TTAB) of the U.S.
Patent and Trademark Office (USPTO).

Possible Patent Challenges

The validity of a patent may be challenged in the USPTO in
various ways, including:

  • During examination, anyone may anonymously submit to
    the USPTO relevant prior art to show that the invention is either
    not novel or is obvious to prevent the issuance of a patent or to
    reduce its scope.

  • Within 9 months from patent grant, anyone may request
    a “Post-Grant Review” (PGR) challenging a patent’s
    validity on a wide variety of bases.

  • After 9 months from patent grant, anyone may request
    an “Inter-Partes Review” (IPR) challenging a patent’s
    validity on the basis that the invention is either not novel or is
    obvious in light of published prior art.

  • At any time after patent grant, anyone may request but
    not participate in an “Ex Parte Reexamination”
    challenging a patent’s validity in light of published prior art
    (similar to the IPR proceeding).

Possible Trademark Challenges

The validity of a trademark application or registration may be
challenged in the USPTO in various ways, including:

  • During examination, anyone may submit a “Letter
    of Protest” to the USPTO with evidence relevant to any ground
    for refusal of an application.

  • Within 30 days after an application is published for
    opposition,
    anyone who believes he, she or it would be damaged
    by the registration may file an opposition.

  • Within 5 years after registration, any person may
    petition the Director of the USPTO for an “Ex Parte
    Reexamination” of the registration for deletion of some or all
    of the recited goods or services on the basis that the mark was not
    in use in commerce on or in connection with those goods or services
    when the application was filed (if use-based,) or when an amendment
    to allege use was filed or the filing period expired (if
    intent-to-use-based).

  • Between 3 and 10 years after registration, any person
    may petition the Director of the USPTO for “Ex Parte
    Expungement” of the registration for some or all of the
    recited goods or services on the basis that the mark has never been
    used in commerce on or in connection with those goods or
    services.

  • Anytime after registration, anyone with standing may
    petition for cancellation on various grounds, depending on how long
    the registration has existed.

See “Trademark Law Alert—Regulations
Implement the Trademark Modernization Act of 2020.”

Contract Forum Selection Clause

The ruling by the U.S. Court of Appeals for the Federal Circuit
in Nippon Shinyako Co., Ltd. (Nippon) v. Sarepta Therapeutics,
Inc.
, 25 F.4th 998 (Fed Cir. 2022) suggests that a forum
selection clause in a Confidentiality Agreement may preclude some
or all of these procedures.

In that case, Nippon and Sarepta had entered into an agreement
concerning their potential business relationship. The agreement
contained a mutual covenant not to sue, wherein each party
agreed that, during a specified time period (Covenant Term)

[I]t shall not directly or indirectly assert or file any legal
or equitable cause of action, suit or claim or otherwise initiate
any litigation or other form of legal or administrative proceeding
against the other Party . . . in any jurisdiction in the United
States or Japan of or concerning intellectual property in the field
of Duchenne Muscular Dystrophy. For clarity, this covenant not to
sue includes, but is not limited to, patent infringement
litigations, declaratory judgment actions, patent validity
challenges before the U.S. Patent and Trademark Office or Japanese
Patent Office, and reexamination proceedings before the U.S. Patent
and Trademark Office.

The agreement also contained a forum selection
clause
:

[T]he Parties agree that all Potential Actions arising under
U.S. law relating to patent infringement or invalidity, and filed
within two (2) years of the end of the Covenant Term, shall be
filed in the United States District Court for the District of
Delaware and that neither Party will contest personal jurisdiction
or venue in the District of Delaware and that neither Party will
seek to transfer the Potential Actions on the ground of forum
non conveniens
.

The Dispute

On the day the Covenant Term ended, Sarepta filed seven IPR
petitions challenging the validity of Nippon patents in the PTAB,
which subsequently granted the institution of these
proceedings.

Less than one month later, Nippon sued Sarepta in the U.S.
District Court for the District of Delaware seeking a declaration
of noninfringement and invalidity regarding Sarepta’s patents
and a declaration of infringement related to Nippon’s patents,
and claiming a breach of the forum selection clause by
Sarepta’s filing of the IPR actions in a tribunal other than
the Delaware District Court. Nippon moved for a preliminary
injunction requiring Sarepta to withdraw its IPR petitions.

The Delaware District Court ruled for Sarepta. It reasoned the
IPR petitions would have been time-barred if they could not be
brought during the Covenant Term plus the two-year forum selection
clause because under 35 U.S.C. § 315(b),

An inter partes review may not be instituted if the petition
requesting the proceeding is filed more than 1 year after the date
on which the petitioner, real party in interest, or privy of the
petitioner is served with a complaint alleging infringement of the
patent.

The District Court reached its result by interpreting the
two-year forum selection clause as applying only to cases brought
in a federal district court, not to petitions in the PTAB.

The Appeal

Nippon appealed to the Federal Circuit, which reversed the
Delaware District Court’s decision and granted Nippon’s
preliminary injunction motion.

The Federal Circuit reasoned that the plain language of the
forum selection clause was clear that Sarepta was required to bring
in the Delaware District Court all disputes regarding the validity
of the patents for two years after the end of the Covenant Term. It
recognized that the parties could bargain away the right to file
IPR petitions. Moreover, the concern that the IPRs will be
time-barred was a result of the early filing of Nippon’s
complaint, not the parties’ contract. If Nippon had sued
Sarepta during the second year of the forum selection clause
restriction, Sarepta’s IPR petitions would not have been
time-barred.

The Appellate Court concluded that the forum selection clause
precluded the filing of the IPR petitions during the two-year
period following the expiration of the Covenant Term as a matter of
law. As a result, the patent validity issues would have to be
determined by the Delaware District of Court.

Nippon Shinyako Co., Ltd. v. Sarepta
Therapeutics, Inc.
, Case. No. 2021-2369 (Fed.
Cir. February 8, 2022)
.

Author’s Note: Although the
Nippon case precluded IPR patent petitions in the PTAB,
its reasoning would seem to be applicable to trademark petitions or
proceedings in the TTAB. Accordingly, you should take care that a
boilerplate choice of a forum contract clause is not worded in a
way that may unintentionally preclude action in the USPTO
tribunals.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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