Northern District of California Enforces Forum Selection Clause in License Agreement and Orders Licensee to Withdraw IPR Petitions

Apr 2, 2018

Reading Time : 3 min

Plaintiff manufactures accessories for mobile devices and is the owner of the three patents at issue in this case (collectively, the “Patents-at-Issue”). Defendants sell, manufacture, design and/or import certain products that plaintiff alleges infringe (or threaten to infringe) the Patents-at-Issue. In October 2016, the parties entered into a Master License Agreement (MLA) regarding the Patents-at-Issue, granting defendants the right to manufacture and sell certain virtual-reality accessories for mobile devices. Among other provisions, the MLA contained a choice-of-law provision stating that “the laws of California shall govern any dispute arising out of or under this Agreement” and a Forum Selection clause stating that “THE PARTIES AGREE … THAT DISPUTES SHALL BE LITIGATED BEFORE THE COURTS IN SAN FRANCISCO OR ORANGE COUNTY, CALIFORNIA” (emphasis in original).

Beginning in June 2017, defendants began to express dissatisfaction with both the terms of the MLA and plaintiff’s alleged failure to enforce its intellectual property rights against non-licensed third parties. Defendants informed plaintiff that they believed the allowed claims of the Patents-at-Issue were invalid and stated that they would not pay royalties on products covered by the patents.

Plaintiff filed suit against defendants, seeking both injunctive relief enforcing the MLA and declaratory judgment of the validity of the Patents-at-Issue. After attempts to resolve the dispute were unsuccessful, defendants filed three separate PTAB petitions challenging the validity of the Patents-at-Issue.

Plaintiff terminated the MLA on February 14, 2018, and filed an amended complaint alleging, in relevant part, that defendants’ PTAB petitions constituted a breach of the Forum Selection clause of the MLA, and seeking injunctive relief against defendants’ attempt to challenge the Patents-at-Issue before the PTAB. Plaintiff argued that defendants could not challenge the Patents-at-Issue in the PTAB because the Forum Selection clause of the MLA explicitly requires that all disputes be litigated in either the Northern or Central District of California.

The court applied the four-prong test set out in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 22 (2008) to evaluate plaintiff’s request for a preliminary injunction. The four Winter factors are (1) likelihood of success on the merits, (2) likelihood of irreparable harm, (3) whether the balance of equities favors an injunction and (4) whether an injunction is in the public interest.

The court found that all four Winter factors favor granting a preliminary injunction against the IPR petitions. First, in finding that plaintiff demonstrated a “likelihood of success” on its breach of contract claim, the court determined that the terms of the MLA required the parties to exclusively litigate all disputes in California under California law and that defendants’ IPR petitions were disputes “arising out of or under” the MLA. Further, the court found that there was no reason to find the Forum Selection clause unenforceable, since patent validity can be fairly adjudicated by the district courts. The court also found that plaintiff would be irreparably harmed without an injunction because it would be forced to “simultaneously litigate on two fronts with different attorneys and under different rules” instead of obtaining the benefit of its bargained-for forum. Finally, the court held that granting the injunction was in the public interest because it “protects the right of parties to freely contract for a chosen forum” and, further, “nothing prevents an independent third party from initiating separate PTAB proceedings.”

In issuing its decision, the court ordered defendants to commence the process of withdrawing their IPR petitions which, as a first step, included sending an email to the PTAB to set up a conference call to discuss withdrawal of the petitions. Defendants appealed the district court’s order to the Court of Appeals for the Federal Circuit and filed an emergency motion for the injunction to be stayed pending appeal. The Federal Circuit appeal is docketed as Dodocase VR, Inc. f/k/a Dodocase, Inc. v. MerchSource, LLC d/b/a Sharper Image et al, Case No. 18-1724 (Fed. Cir.). On March 28, 2018, the Federal Circuit issued an order temporarily staying the injunction while the court considers defendants’ motion. Dkt. No. 6.

Dodocase VR, Inc. f/k/a Dodocase, Inc. v. MerchSource, LLC d/b/a Sharper Image et al, 3-17-cv-07088-EDL (CAND, March 23, 2018).

Share This Insight

Previous Entries

IP Newsflash

June 6, 2025

In a precedential opinion, the Federal Circuit definitively held that the Patent Trial and Appeal Board has jurisdiction over IPRs that concern expired patents.

...

Read More

IP Newsflash

June 6, 2025

In a patent infringement litigation in the U.S. District Court for the Eastern District of Texas, Judge Rodney Gilstrap denied a joint motion to stay the litigation pending resolution of inter partes review when it was uncertain that all defendants would be bound by the statutory estoppel provision of 35 U.S.C. § 315(e).

...

Read More

IP Newsflash

May 30, 2025

A district court recently dismissed a patent infringement complaint for improper venue under 28 U.S.C. § 1400(b), finding that the storage and distribution of products from an Amazon warehouse was not sufficient to establish that warehouse as a regular and established place of business in the district.

...

Read More

IP Newsflash

May 27, 2025

The Federal Circuit affirmed a District of Delaware finding of non-infringement in an ANDA litigation due to the patentee’s clear and unmistakable disavowal of claim scope during prosecution. Specifically, the court held that statements made during prosecution of a parent application before the asserted claims were allowed amounted to a prosecution disclaimer that extended to subsequent patents in the family. In reaching this conclusion, the court rejected an attempt by the patentee to resurrect the claim scope through a unilateral, self-serving statement made in later applications in the family.

...

Read More

IP Newsflash

May 13, 2025

The Federal Circuit recently affirmed a district court’s holding that patent term extension (PTE) for a reissued patent was properly based on the issue date of the original patent and not that of the reissued patent. The Federal Circuit concluded that, where both the original and reissued patents claimed a drug product under regulatory review, using the issue date of the original patent to calculate PTE comports with both the purpose of the Hatch-Waxman Act and the related statutory context.

...

Read More

IP Newsflash

May 12, 2025

The Patent Trial and Appeal Board recently declined to institute a petition for IPR that was filed on the same day that the petitioner filed another petition challenging the same claims of the same patent. The board was not persuaded by petitioner’s arguments that a second petition was needed due to alleged claim construction issues or the number, length or scope differences of the challenged claims.

...

Read More

IP Newsflash

May 9, 2025

The USPTO Director vacated the board’s decision to institute inter partes review based on an erroneous application of the Fintiv factors. Specifically, the Director found that the board placed too much emphasis on Petitioner’s Sotera stipulation, and not enough emphasis on the investment in the parallel litigation. Weighing the factors as a whole, the Director determined that institution should be denied.

...

Read More

IP Newsflash

May 9, 2025

In an institution decision following the USPTO’s withdrawal of its Fintiv Memo, the board addressed discretionary denial of an IPR under Fintiv in view of a parallel ITC investigation. The board noted it would not consider the now-rescinded June 2022 memo from then-director Vidal which instructed that the PTAB would not deny institution of an IPR or PGR under Fintiv when the request is based on a parallel ITC investigation. The board conducted a Fintiv analysis in view of the ITC investigation, but ultimately determined that discretionary denial was not warranted in this particular situation.

...

Read More

© 2025 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.