Dodocase May Encourage New NDA Strategies
As discussed a few weeks back, licensors have begun to seek cover from the PTAB via forum selection clauses in their licensing agreements. In a recent district court opinion, this strategy was explored as language of a non-disclosure agreement (NDA) between parties pre-litigation.
Left unchecked, the holding in Dodocase could have a chilling effect on pre-suit negotiations as well.
In last Tuesday’s ruling in NuCurrent Inc. v. Samsung Electronics Ltd. et al. (here) the parties had previously entered into a Mutual Confidentiality Agreement (“MCA”) in 2015 to explore a potential business relationship. The MCA was effective for twelve months and the parties subsequently entered into an NDA in January 2016. The NDA, which expired in January 2018, included a forum selection clause that stated, in relevant part:
This Agreement shall be construed in accordance with and all disputes hereunder shall be governed by the laws of the State of New York . . . . Any legal action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby must be instituted exclusively in a court of competent jurisdiction, federal or state, located within the Borough of Manhattan, City of New York, State of New York and in no other jurisdiction.
Unlike the forum selection clause in the MCA, the NDA’s forum selection clause was not drafted to survive the expiration or termination of the NDA.
In February 2018, NuCurrent filed suit in the Eastern District of Texas. This action was ultimately transferred the action to the Southern District of New York pursuant to the forum selection clause in the NDA. Samsung filed petitions for IPR in March and June 2019.
NuCurrent moved for a preliminary injunction to order Samsung to withdraw its IPR petitions in view of the NDA forum selection clause. The court found the forum selection clause to be a mandatory forum selection clause, drafted by Samsung, that conferred jurisdiction “exclusively” to New York courts and to “no other jurisdiction.”
But the court found the plain language of the clause did not preclude the IPR petitions. The NDA expired more than a year before the filing of the IPR petitions. Only obligations regarding confidential information disclosed during the NDA survived the expiration of termination of the agreement. Because the petitions did not rely on any confidential information covered by the NDA, the court found the IPRs could continue.
NuCurrent argued that forum selection clauses presumptively survive the expiration of the contract. The court focused on the language in the MCA that expressly provided for the survivability of the forum selection clause, and noted how this language was omitted in the NDA. The NDA forum selection clause also did not apply to any and all disputes between the parties – just disputes relating to confidentiality obligations or breaches of the NDA while the agreement was in effect. The court therefore found the presumption to be insufficient to overcome the parties’ expressed intent.
In this instance, Samsung’s IPRs were allowed to proceed due to deficient controls in the NDA. Of course, a more artfully drafted NDA could expressly preclude a potential licensee from later challenging subject patents in an IPR pursuant to Dodocase.
While patentees frequently complain that PTAB filings are seemingly favored over negotiations, NDA risks may only exacerbate such practices going forward.