Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Nippon Shinyaku Co., Ltd. v. Sarepta Therapeutics, Inc., No. 2021-2369 (Feb. 8, 2022), reversing the district court’s denial of preliminary injunction and holding that parties to a contract may use a forum selection clause to preclude the filing of inter partes review (“IPR”) petitions.
The Federal Circuit considered the Mutual Confidentiality Agreement (“MCA”) executed by Nippon Shinyaku, Co. (“Shinyaku”) and Sarepta Therapeutics, Inc. (“Sarepta”) in June 2020, which contained two provisions restricting future litigation – a mutual covenant not to sue and a two-year forum selection clause.
Under the covenant, which specifically covered patent validity challenges before the U.S. Patent and Trademark Office, each party agreed not to pursue any cause of action against the other before June 21, 2021. The forum selection clause required that “all Potential Actions arising under U.S. law relating to patent infringement or invalidity,” including intellectual property disputes before a court or administrative agency, must be filed in the U.S. District Court for the District of Delaware.
The day the covenant expired, Sarepta filed seven petitions for IPR with the Patent Trial and Appeal Board. Shinyaku filed a suit for breach of contract in the District of Delaware and moved for a preliminary injunction to block Sarepta’s IPR petitions. The district court denied Shinyaku’s motion, relying on a perceived “tension” between the terms of the covenant not to sue and the forum selection clause and a perception that the forum selection clause, in context, applies only to cases filed in federal court.
The Federal Circuit disagreed. Applying Delaware law, the Court determined the plain language of the forum selection clause unambiguously requires Sarepta to bring all invalidity disputes related to Shinyaku’s patents, including the allegations and contentions in Sarepta’s IPR petitions, in the District of Delaware. The Court reasoned that the MCA provisions were not in conflict merely because they provided different time frames for similar restrictions. The MCA provisions also did not leave the parties without recourse for patent-related claims, which might still be brought in Delaware. The Court ultimately concluded that the public interest does not prevent parties from “bargain[ing] away their rights to file IPR petitions, including through the use of forum selection clauses” as Sarepta did under the MCA. Accordingly, the Court reversed the district court’s judgment and remanded for entry of a preliminary injunction.