In Nippon Shinyaku v. Sarepta Therapeutics, the Federal Circuit held that a forum selection clause specifying that patent infringement or invalidity actions shall be filed in federal district court in Delaware made clear that any validity challenge was required to be brought in that court and that Sarepta’s IPR petitions filed with the Patent Trial and Appeal (“the Board”) contravened the plain language of the forum selection clause.
The significance of this case is that the Federal Circuit confirmed that parties can contractually negotiate away their right to file IPRs or other validity challenges in the Patent Office. An important takeaway from this case is that careful consideration should be given to the scope of any forum selection clauses regarding patent infringement or invalidity actions. Here, the relevant confidentiality agreement included a forum selection clause to govern patent and other intellectual property disputes between the parties, which stated in relevant part:
[T]he Parties agree that all Potential Actions arising under U.S. law relating to patent infringement or invalidity … 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.
“Potential Actions” was defined in relevant part as: “any patent or other intellectual property disputes between [the parties] … filed with a court or administrative agency … in the United States, Europe, Japan or other countries….
Despite this language, Sarepta filed seven petitions for inter partes review (“IPR”). Nippon Shinyaku filed a complaint in the U.S. District Court for the District of Delaware asserting claims against Sarepta for breach of contract and other claims. In its breach of contract claim, Nippon Shinyaku alleged that Sarepta breached the forum selection clause by filing the IPR petitions. It sought a preliminary injunction to prevent Sarepta from proceeding with its IPR petitions and to require that Sarepta withdraw the petitions. The district court denied Nippon Shinyaku’s motion for a preliminary injunction. Nippon Shinyaku appealed this decision to the Federal Circuit, which reversed and remanded for entry of a preliminary injunction.
The Federal Circuit found that the plain language of the forum selection clause set forth above literally encompasses IPRs. The District Court reached the same conclusion on this point and even Sarepta did not contend otherwise.
Based on this the Federal Circuit concluded the forum selection clause was unambiguous, and that the Court must give effect to the plain meaning of [its] terms. Under the plain language, Sarepta was required to bring all disputes regarding the invalidity of Nippon Shinyaku’s patents—including the allegations and contentions contained in Sarepta’s IPR petitions—in the District of Delaware.
One of Sarepta’s arguments was that other language in the agreement indicated that the forum selection clause is best read as limited only to federal district court litigation. The Federal Circuit disagreed. The Court acknowledged that the district court was correct that issues of patent infringement, forum non conveniens, and jurisdiction challenges are inapplicable to IPR proceedings (citing Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S. 422, 430 (2007); AVX Corp. v. Presidio Components, Inc., 923 F.3d 1357, 1361 (Fed. Cir. 2019)). However, it found that “it does not follow that the parties’ inclusion of those issues in the forum selection clause means that they intended to categorically exclude IPRs. It concluded that the better reading of the clause recognizes the parties’ agreement that, after one party files an action relating to patent infringement or invalidity in the District of Delaware—as a filing party is required to do—the other party will not “contest personal jurisdiction or venue in the District of Delaware” or “seek to transfer . . . on the ground of forum non conveniens.”