Fed. Cir. Issues Precedential Decision in Kannuu-Samsung Dispute

On Thursday, a split panel of Federal Circuit judges resolved a non-disclosure agreement (NDA) dispute in favor of Samsung Electronics Co. Ltd. and Samsung Electronics America Inc. The opinion explained that the forum selection clause in the NDA entered into by Kannuu Pty. Ltd. and Samsung does not prohibit the latter from petitioning for inter partes review (IPR) of Kannuu’s patents with the Patent Trial and Appeal Board (PTAB).

The case came about after Samsung contacted Kannuu, an Australian start-up that develops various media-related products including Smart TVs, in 2012. The two engaged in business discussions under an NDA, which provided, in relevant part, that “any proceeding … arising out of or relating to” the NDA must be brought in state or federal court in New York City.

Business discussions ended without Samsung licensing or purchasing Kannuu’s technology or products. Several years later, Kannuu sued Samsung for patent infringement and for breach of the NDA in the Southern District of New York. Then, Samsung sought IPR, contending that Kannuu’s patent claims should be cancelled as unpatentable. 

Kannuu asked the trial court for a preliminary injunction compelling Samsung to seek dismissal of its IPR petitions. The court denied the motion on the basis that though the NDA’s forum selection clause was valid and enforceable, its plain meaning did not encompass the IPR proceedings.

The majority upheld the ruling, finding no abuse of discretion. “The connection between the … inter partes review proceedings and the NDA … is too tenuous for the inter partes review proceedings to be precluded by the forum selection clause in the NDA, which is a contract directed to maintaining the confidentiality of certain disclosed information, and not related to patent rights,” the opinion said.

In the same vein, the majority opined “That Kannuu might present some evidence about a potential NDA breach, which might be relevant to the Board’s obviousness analysis, to rebut some of the arguments by Samsung in the inter partes review proceedings is not enough to place the petitions, which are fundamentally about claim patent-ability, within the scope of the NDA’s forum selection clause, when the NDA is, at its core, about protecting confidential information.”

In a 11-page dissent, Judge Pauline Newman disagreed with the conclusion, writing that

“The forum selection clause is clear and unambiguous, and law and precedent require that it be respected and enforced.” The opinion said that the majority’s decision rested on an argument that neither party proposed: that the patent claim is not subject to the forum selection clause because the NDA is not a patent license. 

Kannuu is represented by Progress LLP and Hudnell Law Group PC and Samsung by Quinn Emanuel Urquhart & Sullivan LLP.