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

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.”

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.