Background
Nippon Shinyaku and Sarepta Therapeutics are rival pharmaceutical companies both developing exon-skipping therapies for Duchenne muscular dystrophy (DMD), a devastating progressive muscle disease primarily affecting boys. The companies entered into a Mutual Confidentiality Agreement (MCA) to facilitate discussions about a potential business collaboration. The MCA included a mutual covenant not to sue each other during a defined “Covenant Term,” and a forum-selection clause stating that for two years after the Covenant Term, all patent infringement and invalidity disputes arising under U.S. law must be filed in the U.S. District Court for the District of Delaware.
The day the Covenant Term expired, Sarepta filed multiple inter partes review (IPR) petitions at the Patent Trial and Appeal Board (PTAB) against several Nippon Shinyaku patents — before initiating any district court proceeding. Nippon Shinyaku moved to dismiss the IPRs, arguing that the forum-selection clause required all disputes to be filed in district court, and that filing IPR petitions at the PTAB violated the contract. Sarepta countered that the clause covered only actions in the Delaware court, not IPR filings at the PTAB, which it characterized as a different type of proceeding not governed by the agreement.
The Court’s Holding
The Federal Circuit reversed the PTAB’s denial of Nippon Shinyaku’s motion and remanded with instructions to dismiss the IPR petitions. Judge Stoll held that the plain language of the forum-selection clause resolved the dispute: the parties had agreed that “all Potential Actions arising under U.S. law relating to patent infringement or invalidity” must be filed in the District of Delaware. An IPR petition is a “Potential Action” — it is an adversarial proceeding relating to patent validity — and thus fell squarely within the clause’s scope.
The court rejected Sarepta’s argument that the PTAB is not a “court” covered by a “forum-selection” clause. The Federal Circuit held that the contractual language was broad enough to encompass PTAB proceedings and that parties have the freedom to contractually limit where they can challenge patents. The decision affirmed that IPR rights, while created by statute, can be waived by private agreement — just like other statutory rights.
Key Takeaways
- Parties can contractually waive the right to file IPR petitions at the PTAB, and courts will enforce such agreements according to their plain terms.
- Broad forum-selection clauses covering “all disputes relating to patent infringement or invalidity” can encompass PTAB proceedings, not just district court litigation.
- Companies entering into collaboration, licensing, or confidentiality agreements should carefully evaluate whether forum-selection or dispute resolution clauses inadvertently bar IPR filings.
- Conversely, patent owners can use contractual provisions to protect their patents from IPR attacks when entering into business agreements with competitors or partners.
Why It Matters
The Nippon Shinyaku decision is a significant tool for patent owners who want to shield their patents from PTAB challenges in the context of licensing or business negotiations. By confirming that forum-selection clauses can bar IPR filings, the Federal Circuit gave patent holders a powerful contractual mechanism: any counterparty who agrees to a broad dispute-resolution clause risks losing its right to file IPR petitions if the clause mandates district court as the exclusive forum for validity disputes.
For deal lawyers and IP counsel, the decision highlights the need to pay close attention to forum-selection language in any agreement involving patents. A counterparty that later decides to challenge your patents via IPR may be contractually precluded from doing so if the agreement’s plain language covers patent invalidity actions. The case is particularly important in the pharmaceutical and biotech sectors, where parties often enter into complex collaboration or licensing agreements that include broad dispute-resolution provisions.