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Oct 11, 2021Legal
IPR Proceedings Were Not Prohibited by a Forum Selection Clause in a Non-disclosure Agreement

KANNUU PTY LTD. v. SAMSUNG ELECTRONICS CO., LTD.

Before Newman, Prost, and Chen.  Appeal from the United States District Court for the Southern District of New York.

Summary: The forum selection clause in the parties' non-disclosure agreement only encompassed proceedings relating to or arising out of the agreement which, in this case, did not extend to inter partes review proceedings.

Kannuu and Samsung entered into a non-disclosure agreement (NDA) to facilitate discussions concerning Kannuu’s remote control search-and-navigation technology.  No deal concerning the technology was reached, and Kannuu later sued Samsung alleging patent infringement and breach of the NDA in the Southern District of New York.  Samsung then filed for inter partes review (IPR) of the asserted patents and Kannuu responded by arguing that Samsung’s petitions violated the NDA’s forum selection clause that stated “[a]ny legal action, suit, or proceeding arising out of or relating to” the NDA or its contemplated transactions must be instituted exclusively in New York.  After the Board instituted review, Kannuu moved for a preliminary injunction in the district court seeking to compel Samsung to dismiss the IPR proceedings due to the forum selection clause in the NDA.  The district court denied the motion, concluding that the forum selection clause did not encompass IPR proceedings, and Kannuu appealed.

The Federal Circuit affirmed the district court’s denial, holding that the connection between the IPR proceedings and the NDA was too tenuous for the forum selection clause to preclude the IPR proceedings.  The Federal Circuit reasoned that the NDA was a contract directed to maintaining the confidentiality of disclosed information and, as drafted, was unrelated to any patent rights.  Additionally, the Federal Circuit explained that although adjudication of a patent’s infringement or validity will necessarily impact rights under a patent license agreement, the same is not true for an NDA because an invalidated patent does not change, disrupt, or otherwise impact the parties’ NDA obligations.  Moreover, the Federal Circuit reasoned that any finding that the NDA was breached would not implicate any patent-related determination such as validity or infringement.  Thus, the IPR proceedings did not relate to the NDA, its contemplated transactions, or the forum selection clause contained therein.

Judge Newman dissented, arguing that the asserted patents related to the subject matter communicated under the NDA and, therefore, the “arising out of or relating to” language of the forum selection clause applied and should have been honored.

Editor: Paul Stewart

Written by: Samuel Cockriel & Andrew Morrell, Ph.D.

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