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CAFC OKs Transfer Despite Forum Selection Clause


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: October 20, 2013 @ 9:05 am
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In a non-precedential opinion issued October 18, 2013, the Federal Circuit issued a decision that calls into question the overall utility of forum selection clauses in contractual relationships. In fact, Eli Lilly lost its bid to have its dispute with Genentech and City of Hope heard in the Northern District of California despite having a forum selection clause in the governing contract that stated the parties would litigate any dispute in the Northern District of California. See In re Eli Lilly and Co. 

Eli Lilly petitioned for a writ of mandamus directing the United States District Court for the Northern District of California to vacate its order transferring this case to the United States District Court for the Central District of California. In its order granting Genentech’s motion to transfer, the district court noted that the trial judge in the Central District of California had presided over four cases involving the same family of patents at issue. The district court further noted that another trial judge in the Northern District of California had recently transferred a case brought by one of Eli Lilly’s business partners that involves the same patent and product to the Central District of California, citing the expertise the trial judge had gained through these prior lawsuits.

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Posted in: Companies We Follow, Eli Lilly, Federal Circuit, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

5 comments
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  1. Agreed about the uncertainty, but I think this is the standard background law for forum selection clauses – they are enforceable, unless they’re not.

  2. And I think forum non conveniens trumps an otherwise legal forum selection, since it is an add on equitable decision by the court.

  3. Is “convenience for the courts” synonymous in this case and set of facts with better attainment of justice?

    After all, this is a non-precedential opinion, and justice is something that may not always be ‘contracted away,’ is it?

    I think her that more than mere cost and convenience is at the heart of the issue: but rather, triable facts, issues and, well, justice have a voice.

  4. This is a tough one. As attorneys, we do all we can to anticipate certain things in our contracts. One of them is controlling where litigation is going to take place. Here, the court is just telling us that it doesn’t matter any more what the parties already have agreed to. Going to have to take another look at how we draft contracts I suppose…

  5. I also think this means that you cannot expect a district court to keep a case involving one issue when another district court has had several cases addressing related issues. If forum matters you need to fight for that fall all the cases otherwise you will lose the ability to keep the contract controlling.

    I don’t know how much it would matter in this case, but notice how the court did mention that the forum clause was for the benefit of Genentech and not Eli Lilly. If it matters to you and you are picking a forum where the other party has more ties it might be worth saying in the clause that the forum selection is agreed to be mutually beneficial to the parties and either party may challenge and stop a transfer to a different court.