Earlier this month, in the precedential decision New Vision Gaming & Development, Inc. v. SG Gaming, Inc., FKA Bally Gaming, Inc., the Court of Appeals for the Federal Circuit (“the CAFC”) vacated and remanded a decision by the Patent Trial and Appeal Board (“the Board”) on the ground that the decision issued after the CAFC’s Arthrex, Inc. v. Smith & Nephew, Inc. decision (where the CAFC made administrative patent judges of the Board “inferior officers” under the U.S. Appointments Clause). New Vision is appealing two covered-business method review final written decisions in which the Board held all claims of the patents at issue patent ineligible under 35 U.S.C. § 101. The CAFC’s opinion, delivered by Judge Moore, is short and largely unremarkable. What is more interesting, however, is Judge Newman’s dissent.
While Judge Newman agreed that Arthrex applied and also agreed with vacatur, she went on to state that the CAFC should have addressed a threshold issue that would have made remand unwarranted: New Vision and SG Gaming had agreed to a forum selection clause. “New Vision and SG Gaming, Inc. mutually agreed, in their patent licensing agreement, that if ‘any dispute’ arose, jurisdiction would be ‘exclusive’ in the appropriate federal or state court in the state of Nevada.”
Judge Newman noted that originally, when the dispute first arose, New Vision sued SG Gaming in Nevada district court, per the agreement, but that SG Gaming then went to the Board and filed the petitions on appeal. When the issue of the forum selection clause was raised, the Board refused to apply it. The Board stated, in its Institution Decision, that it “[does] not discern, nor has Patent Owner pointed to, any portions of chapter 32 or § 18 of the AIA, or authority otherwise, that explicitly provide for a contractual estoppel defense.” Citing the Supreme Court’s 1972 decision in M/S Bremen v. Zapata Off-Shore Co., Judge Newman found that precedent required the forum-selection clause be respected.
Andrew Hirshfield, the Acting Director of the Patent and Trademark Office, intervened in the appeal, arguing that the CAFC had no jurisdiction under 35 U.S.C. § 324(e) (“The determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable.”). Judge Newman disagreed, however, finding that “the Board’s rejection of the parties’ choice of forum is indeed subject to judicial review, for § 324(e) does not bar review of Board decisions ‘separate . . . to the institution decision.’” (citing Facebook, Inc. v. Windy City Innovations, LLC, 973 F.3d 1321, 1332 (Fed. Cir. 2020)).
Judge Newman concluded by stating: “[T]he question of forum selection is not thereby resolved; it is merely postponed to determination by a new, constitutionally organized Board. It is both inefficient and unnecessary to require replacement PTAB proceedings if the new PTAB does not have jurisdiction to proceed.” Although she ultimately agreed with the Court’s decision to remand under Arthrex, Judge Newman’s dissent in favor of judicial efficiency is compelling. Future litigants who are subject to a forum-selection clause should bear the dissent in mind when contemplating petitions to the Board. Ultimately, whether the parties’ forum-selection clause plays a part in the case on remand, or in any forthcoming appeals, remains to be seen.
Further Reading: In the case of Kannu v. Samsung (discussed in this post by my colleague Richard Waterman) decided earlier this year by the District Court for the Southern District of New York, the Court held that petitions for inter partes review did not fall within the scope of an agreement’s forum-selection clause.