Background
Dexcom, Inc. and Abbott Diabetes Care, Inc. are competing makers of continuous glucose monitoring (CGM) devices. In 2014, the companies entered into a settlement and license agreement that included covenants not to sue or challenge each other’s patents during a defined “Covenant Period,” along with a forum selection clause designating the U.S. District Court for the District of Delaware as the exclusive forum for “any dispute arising from or under or relating to this Agreement.”
After the Covenant Period expired, Dexcom sued Abbott for patent infringement (initially in the Western District of Texas, later transferred to Delaware). Abbott then filed eight inter partes review (IPR) petitions at the USPTO challenging Dexcom’s asserted patents. Dexcom sought a preliminary injunction to stop the IPR proceedings, arguing that the agreement’s forum selection clause required all patent disputes — including IPRs — to be filed exclusively in Delaware federal court, not before the PTAB. The district court denied the preliminary injunction, and Dexcom appealed.
The Court’s Holding
The Federal Circuit affirmed the denial of the preliminary injunction. The court analyzed the 2014 settlement agreement and found that the agreement itself expressly addressed IPR proceedings during the Covenant Period: it allowed IPRs in certain limited circumstances even while the covenant was in effect. The court reasoned that this explicit treatment of IPRs demonstrated that the parties knew how to prohibit or permit IPR proceedings when they wanted to. Because the agreement permitted IPRs in at least some circumstances during the Covenant Period, and because the forum selection clause did not expressly extend to administrative proceedings at the PTAB, the court concluded that the clause was not intended to bar post-Covenant-Period IPR filings.
The Federal Circuit applied traditional contract interpretation principles, looking to the agreement’s structure, the parties’ expressed treatment of IPR elsewhere in the agreement, and the canon that courts should read contracts to give meaning to all provisions. Interpreting the forum selection clause to bar IPRs post-Covenant-Period would have been inconsistent with the agreement’s own handling of IPRs during the period when the covenant was in force. The court found Dexcom failed to show a likelihood of success on the merits, and affirmed the denial of the preliminary injunction.
Key Takeaways
- A forum selection clause designating a federal court as the exclusive forum for patent disputes does not automatically bar inter partes review petitions at the USPTO — courts will look to the entire settlement agreement to determine whether IPRs were intended to be covered.
- If a settlement agreement expressly addresses IPR proceedings (even to allow them in limited circumstances), that treatment informs how broadly the forum selection clause should be read.
- Parties that want a settlement agreement to bar post-covenant IPR challenges should include explicit language to that effect — a general forum selection clause will likely be read as applying only to federal court litigation, not administrative proceedings.
- The decision reinforces that IPR petitions are administrative proceedings distinct from district court patent litigation, and courts will not lightly construe contractual litigation clauses to extend to USPTO proceedings.
Why It Matters
Dexcom v. Abbott Diabetes Care is an important case for companies that resolve patent disputes through settlement agreements. Many settlement agreements include forum selection clauses and covenants not to challenge patents for specified periods. This decision makes clear that such clauses do not automatically bar the filing of IPR petitions once a covenant period expires — unless the agreement explicitly provides otherwise. For licensing and settlement negotiators, the lesson is that the prohibition on post-covenant IPR challenges must be expressly stated; it will not be implied from general forum selection language.
For innovators in highly competitive technology markets — particularly medical devices, where CGM patent disputes between companies like Dexcom and Abbott are fiercely contested — the ruling means that settlement agreements provide more limited long-term protection against administrative validity challenges than some negotiators may have assumed. Companies should carefully consider whether to negotiate specific IPR bars in any future settlement, and review existing agreements to assess their exposure.