Newman Dissents from CAFC’s Refusal to Address Forum Selection Question in New Vision Gaming’s Arthrex Remand

By Eileen McDermott
May 14, 2021

“My colleagues decline to reach [the forum] question, and simply hold that Arthrex requires vacatur and remand. However, the question of forum selection is not thereby resolved; it is merely postponed to determination by a new, constitutionally organized Board.” – Judge Newman

Pauline Newman

Judge Pauline Newman

U.S. Court of Appeals for the Federal Circuit (CAFC) Judge Pauline Newman dissented in part from a decision authored by CAFC Judge Moore yesterday, explaining that, while she agrees that New Vision Gaming’s request for vacatur and remand of two Patent Trial and Appeal Board (PTAB) decisions in light of Arthrex, Inc. v. Smith & Nephew, Inc. should be granted, the court’s refusal to address the “threshold issue” of proper forum is “inefficient”.

New Vision Gaming and SG Gaming, Inc. were bound by a license agreement stating that “if any dispute” arose, “jurisdiction would be ‘exclusive’ in the appropriate federal or state court in the state of Nevada.” When dispute did arise, New Vision filed suit in a Nevada district court, but SG Gaming filed two covered business method (CBM) petitions with the PTAB seeking to invalidate all claims of U.S. Patent Nos. 7,451,987 and 7,325,806, as well as proposed substitute claims. The Board ultimately held all of those claims patent ineligible under 35 U.S.C. § 101. Subsequently, Arthrex was decided, and New Vision appealed to the CAFC asking in part that the decision be vacated and remanded to a constitutionally-appointed PTAB panel. The majority opinion granted that request, explaining: “Because Arthrex issued after the Board’s final-written decisions and after New Vision sought Board rehearing, New Vision has not waived its Arthrex challenge by raising it for the first time in its opening brief before this Court.”

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The Forum Question

Judge Newman concurred on that point, saying that vacatur and remand of a decision from the unconstitutionally-appointed PTAB was appropriate, but, in light of the contract between the parties, “[t]here may be no basis for any PTAB proceeding at all, for the parties to this dispute had agreed to a different forum, and New Vision Gaming & Development, Inc. asks for compliance with that agreement.”

While the PTAB said that there are no portions of chapter 32 or Section 18 of the America Invents Act that “explicitly provide for a contractual estoppel defense,” Newman argued that “precedent requires respecting an agreed selection of forum,” pointing to M/SBremen v. Zapata Off-Shore Co. and Powertech Tech. Inc. v. Tessera, Inc. She added that the parties had briefed the issue, with New Vision citing Dodocase VR, Inc. v. MerchSource, LLC “to illustrate removal from the PTAB based on an agreed choice of forum” and SG Gaming arguing that “the Board’s rejection of the choice of forum is an unreviewable “institution” decision, citing Thryv, Inc. v. Click-To-Call Technolo-gies, LP, 140 S. Ct. 1367 (2020).”

“These aspects require resolution now, rather than after a full PTAB proceeding on remand,” Newman said.

Newman also rejected the USPTO Acting Director’s intervention in the case to argue that the court has no authority to review the PTAB decisions, since they are “final and nonappealable” under 35 U.S.C. § 324(e), countering that “the parties’ choice of forum is indeed subject to judicial review, for § 324(e) does not bar review of Board decisions ‘separate . . . to the in[stitu]tion decision.’ Facebook, Inc. v. Windy City Innovations, LLC, 973 F.3d 1321, 1332 (Fed. Cir. 2020).”

‘Merely Postponed’

Ultimately, said Newman, the PTAB’s conduct in dismissing the importance of the parties’ contractually agreed-upon forum “warrants our review before remanding to a fresh Board for post-grant litigation.” She questioned SG Gaming’s argument that the license agreement did not bar CBM reviews “because the Agreement concerned disputes ‘relating to the Agreement,’” explaining that the CAFC stated in Texas Instruments Inc. v. Tessera, Inc., 231 F.3d 1325, 1331 (Fed. Cir. 2000) that “Patent infringement disputes do arise from license agreements. . . . Thus, the governing law clause . . . in any patent license agreement, necessarily covers disputes concerning patent issues.”

Newman concluded:

My colleagues decline to reach [the forum] question, and simply hold that Arthrex requires vacatur and remand. However, the 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.

 

 

The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 4 Comments comments.

  1. Pro Say May 14, 2021 6:38 pm

    Dear Honorable Judge Newman,

    Please live forever . . . and never retire.

    Truly yours,

    American Innovators

  2. ipguy May 17, 2021 2:40 pm

    Judge Newman is a national treasure.

  3. Night Writer May 18, 2021 11:47 am

    The sad thing is that rather than more Newmans, Obama packed the court with anti-patent judicial activists. It would be easy for the CAFC to sort out all the problems in patent law.

    But we have judges that have no intention to do so. As a whole they are ignorant of science, innovation, and business and were appointed based on their expressed views that patents do not promote innovation. Thanks Obama.

  4. Model 101 May 18, 2021 3:02 pm

    Judge Newman Is a national treasure. I plan to put her picture on my hero wall beside Judges Moore and Plager.

    Honesty is a virtue not known today by most judges.