Inter and Intra Circuit Split Emerges on Forum Selection Clauses Barring PTAB Challenges

In our May 2021 Newsletter, we discussed whether patent owners could contract away the ability for a challenger to bring Patent Trial and Appeal Board (PTAB) invalidity challenges, e.g., inter partes or post grant reviews. We looked at the Federal Circuit cases addressing invalidity forum selection clauses in various types of agreements.

Since the May 2021 article, a circuit split has arisen in patent law between the Ninth Circuit and the Federal Circuit, and a split appears to be forming within the Federal Circuit itself. And we are still awaiting decisions on other cases that have been argued.

In In re Maxpower Semiconductor, the Patent Owner filed a Mandamus action and a direct appeal from an institution decision that instituted trial despite an arbitration clause specifically forbidding an invalidity challenge in the PTAB. The Federal Circuit issued a split decision where the majority denied the appeal against a lengthy sixteen-page Judge O’Malley dissent. The majority held that despite the parties agreeing to arbitrate all disputes, the PTAB could continue to address validity. The dissent disagreed and scolded the majority for fabricating exceptions to long-standing precedent and statutes finding arbitration forum selection clauses are binding on the parties and must be enforced.

In contrast, the Ninth Circuit in Nomadix, Inc. v. Guest-Tek Interactive Entertainment Ltd, on appeal from a grant of permanent injunction entered by the Central District of California, held the opposite (and what many in the patent bar are saying the correct way). Here, the Ninth Circuit affirmed the district court’s holding that a forum selection clause that identified a specific district court to handle all disputes without mentioning the PTAB divested the PTAB from jurisdiction.

While we await further decisions out of the various circuit courts, and a potential cert petition at the Supreme Court highlighting this intra- and inter-circuit split, we will continue to update our readers on decisions in this space.