Posts Tagged: "Contract Law"

In commercial contracts, especially with foreign entities, it is very common to agree on arbitration as a dispute resolution method. A typical arbitration agreement specifies arbitrable matters, arbitration institution, place of arbitration, and arbitration rules. In crafting an arbitration agreement, especially when the arbitration clause is embedded in the main body, contracting parties normally write into the contract the applicable law and dispute resolution authority for the main contract, but rarely do the same for the arbitration agreement itself in addition to the main contract. In general, if a dispute involves issues surrounding the validity (or arbitrability) of an arbitration clause, whereas the arbitration agreement does not provide anything about arbitrability, two questions may come up in practice: (1) what is the applicable law on resolving the arbitrability issue? (2) who has jurisdiction over the arbitrability issue – a court or an arbitration institution?

In the United States, the issue of whether or not one has complied with a licensing-related commitment made to a standards setting organization is often treated as a matter of contract. As we have written about before (here and here), some implementers wish to interpret such commitments so as not to lose entitlement to fair, reasonable and non-discriminatory (FRAND) licenses despite not negotiating in good faith or, as we like to say, to have their FRAND cake and eat it too. In a recently prepared article, we explore how such an interpretation lines up with basic contract law principles, particularly having reference to the language of the European Telecommunications Standards Institute’s (ETSI) Intellectual Property Rights Information Statement and Licensing Declaration [“the ETSI Licensing Declaration”].

In a precedential decision issued Friday, the U.S. Court of Appeal for the Federal Circuit (CAFC) affirmed a district court decision that Uniloc USA, Inc., Uniloc Luxembourg, S.A. and Uniloc 2017 all lacked standing to sue Motorola and Blackboard for patent infringement because it was collaterally estopped by a previous decision in its case with Apple. But in a separate precedential ruling, the CAFC said Uniloc’s non-exclusive license with Fortress Credit Co, LLC was terminated by agreement prior to Uniloc’s patent suits against Google, eliminating Fortress’ ability to sublicense the patents-in-suit and maintaining standing for Uniloc.

Almost anyone can, by statute, request an inter partes review (IPR) of an issued patent, but may limit their right to do so contractually, such as through licensing agreements or non-disclosure agreements (NDAs). These agreements may contain clauses that limit the forum in which any dispute between the parties can be litigated. The Patent Trial and Appeal Board (PTAB) itself has consistently declined to enforce such forum selection clauses, finding that it lacks authority to enforce contracts between the parties, and, in any case, its jurisdiction is statutory and not limited by private agreements between the parties. However, in Nippon Shinyaku Co. v. Sarepta Therapeutics, Inc., the U.S. Court of Appeals for the Federal Circuit recently held that a petitioner was barred from bringing an IPR as a result of a contractual agreement with the patent owner.

The U.S. Court of Appeals for the Federal Circuit (CAFC) earlier today issued a precedential decision holding that the U.S. District Court for the District of Delaware improperly denied Nippon Shinyaku Co., Ltd.’s motion for a preliminary injunction in the court’s misreading of the plain language of a contract’s forum selection clause. The CAFC consequently reversed the decision and remanded for entry of a preliminary injunction (PI) enjoining Sarepta Therapeutics, Inc. from proceeding with its seven inter partes review petitions (IPRs) against Nippon Shinyaku and requiring that Sarepta withdraw the petitions.

On February 3, the U.S. Court of Appeals for the Federal Circuit (CAFC) reversed and remanded a decision by the U.S. District Court for the Eastern District of Texas granting a motion to enforce PlasmaCAM’s (Plasmacam) version of an agreement with Fourhills Designs, LLC, and Thomas and Martha Caudle (collectively “CNC”). On appeal, the CAFC held that CNC’s version of the agreement more accurately reflected the understanding between the two parties regarding a settlement over Plasmacam’s claim that CNC infringed U.S. Patent No. 7,071,441 (‘441 patent), for which Plasmacam has an exclusive license.

On November 12, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed the decision of the U.S. District Court for the Northern District of California that compelled arbitration and dismissed Rohm Semiconductor USA’s declaratory judgment action without prejudice, holding that an arbitrator must determine arbitrability. In 2007, Rohm Japan and MaxPower Semiconductor entered into a technology licensing agreement (TLA). According to the TLA, Rohm Japan and its subsidiaries were permitted to use certain power-related technologies of MaxPower developed under a Development and Stock Purchase Agreement in exchange for royalties paid to MaxPower. In 2011, the TLA was amended to include an agreement to arbitrate “any dispute, controversy, or claims arising out of or in relation to this Agreement or at law, or the breach, termination, or validity thereof.” Further, the amendments provide that arbitration must be conducted “in accordance with the provisions of the California Code of Civil Procedure (CCCP).”

The phrase “for the avoidance of doubt” must be a Microsoft Word shortcut that comes standard in some legal IT package. Why do we say that? Well, we recently received an IP licensing agreement from an attorney working at a large law firm located in a large city, serving a large client, and presumably charging a large hourly fee. It seemed as though every 50th word in the agreement was “for the avoidance of doubt.” Now, this is not a personal attack on this particular attorney or law firm. We have seen the phrase used way too often and do not understand why. Perhaps this is just a phrase that makes agreements sound more legalese or maybe the attorneys in question think it makes certain provisions in the agreement more “airtight?” Nonetheless, we ask all of you to please stop!

The U.S. Court of Appeals for the Federal Circuit (CAFC) today held in a precedential decision authored by Judge Chen that a non-disclosure agreement’s (NDA’s) forum selection clause barring lawsuits to be brought outside of the New York court system did not apply to inter partes review (IPR) proceedings at the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB). Judge Newman dissented. Kannuu Pty Ltd. appealed to the CAFC asking that the court compel Samsung Electronics to seek dismissal of its instituted IPR proceedings at the PTAB seeking to invalidate Kannuu’s patents. Kannuu’s appeal was based on the terms of an NDA entered into between the companies during business negotiations in 2012.

Last week, the U.S. Court of Appeals for the First Circuit affirmed a district court ruling denying a request for declaratory judgment by Covidien LP and Covidien Holding Inc. (collectively, “Covidien”) against appellee Brady Esch, a former employee who assigned a medical device patent to a company he founded. After a nine-day trial, the jury awarded Covidien nearly $800,000, finding Esch incurred in a breach of confidential information. Covidien subsequently moved for a declaratory judgment asking the court to require Esch to assign later inventions. The district court denied this request. The First Circuit was tasked with determining whether the district court abused its discretion. Finding it did not, they affirmed.

Fundamental to building and executing any successful patent licensing program is the ability to find and prove evidence of infringement, often through reverse engineering methods. A product is purchased and deconstructed to understand how it was built, how it works and what it is made of. The process of reverse engineering usually involves multiple types of analysis; which type of reverse engineering to apply is determined by the type of technology and the industry in which the patented invention is being used.   Intellectual property law does not discourage innovators from dismantling the inventions of their competitors, whether the technology is software, electronic, chemical, or mechanical. But there are still limits on how the results of a reverse engineering effort can be exploited.

In an appeal from the United States Court of Federal Claims (Claims Court), the United States Court of Appeals for the Federal Circuit (CAFC) last week affirmed a decision granting summary judgment in favor of the U.S. government with respect to a nonexclusive trademark license between the Department of the Army and an apparel company (Authentic Apparel Group, LLC v. United States). In the March 4 opinion, the CAFC agreed with the Claims Court that a license agreement’s provision giving the Army broad approval discretion over Authentic’s requests to use the Army’s trademarks on proposed products or marketing materials was not at odds with the principles of trademark law. The CAFC also held that Authentic did not present any legal or factual reasons to deviate from a plain reading of the license agreement’s exculpatory clauses.

Starting your own business is exciting. Finding the right partner to share the same vision is vital for the company’s future success. However, people don’t always see eye to eye when it comes to important details like finances, marketing, and a strategic business plan. Throw in a global pandemic to turn the economy upside down, and things become even more complicated. Lately, business partners have had to face unusually significant challenges due to the effects of the COVID-19 pandemic on business operations and revenue. With uncertainty continuing to loom over our economy’s future, those challenges are likely here to stay for a while. Fortunately, some companies have been able to find relief during this stressful time through government stimulus checks, insurance claims and other types of aid. On the other hand, many have faced roadblocks, causing disagreements between partners and their visions for the future. The added disruption brought on by COVI9-19 has led some to a business divorce, which is more easily managed when there are clear contractual agreements in place. Without such comprehensive agreements between owners, businesses are in danger of failing.

As outside general counsel to over 150 emerging growth companies in recent years, as well as to their venture capital and growth equity investors, and as someone who represents buyers and sellers in M&A transactions, I am often asked how to protect businesses from interruption to their key customer and supplier relationships. Specifically, in the age of COVID-19, now characterized by the World Health Organization as a “global pandemic,” I am being asked whether a counter-party can trigger a “material adverse change” clause to terminate a contract.