Published 06/18/2021 by CIONCA IP TEAM (SE)
The New Vision Gaming & Development, Inc v. SG Gaming, Inc. case is an interesting Federal Court case with several implications about due process in the trial system. Sometimes, conflicts of interest arise with government services where individuals who establish rules and procedures receive a financial benefit from their decisions.
In this example, New Vision Gaming felt that a potentially corrupt decision made by the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) meant that the company could not receive its right to due process. Here is what you should know about New Vision Gaming & Development, Inc. v. SG Gaming, Inc.
New Vision and SG Gaming, Inc. entered into a patent license agreement that outlined what would occur if there was ever a patent dispute in the future. In this agreement, there was a forum-selection clause, where both parties would argue their case in a federal or state court within the state of Nevada. Both parties agreed to the terms for the patent license agreement, which was the beginning of events that led to this unique court case.
So, when a dispute did arise, New Vision filed their suit using a federal district court in Nevada, but SG Gaming, Inc went against the agreement. Instead of filing an appeal in a federal or state court in Nevada, SG Gaming, Inc went against the deal by taking their intellectual property rights petition to the PTAB, not a state or federal court system.
Even with this apparent conflict, the PTAB refused to honor the forum selection agreement and instead made two final written patent decisions that New Vision believed were invalid. Both written findings from the PTAB invalidated two of New Vision’s patents, which the company was quick to appeal because of the court case Arthrex, Inc. v. Smith & Nephew, Inc.
Although Arthrex, Inc. was an active case during the disagreement between New Vision and SG Gaming, Inc, the court system issued a resolution to that case before the PTAB provided their written decisions about New Vision’s patents. Therefore, New Vision was allowed to appeal their case, even as SG Gaming and PTAB directors argued that due to a decision in Thryv, Inc. v. Click-To-Call Technologies, LLP, a decision by the PTAB could not be overturned, even if they rejected the choice of the forum that was previously agreed to by both parties.
New Vision argued in court that the PTAB’s intellectual property rights decisions were invalid, as both parties in the suit have already agreed upon a forum for solving disputes by using the Nevada court system. Judges Moore and Taranto felt that the PTAB should have decision power over the patents but avoided the forum selection clause in their decisions.
Judge Newman, however, argued that the forum selection needed to be resolved before creating a new PTAB proceeding while also stating that New Vision is owed due process regardless of the Thryv case since the board’s decision to agree on an institutional forum disregarded a previous agreement between both parties.
To further complicate matters more, New Vision believes that fees and compensation that the PTAB makes it impossible to receive due process for their trial since administrative patent judges who make decisions on behalf of the PTAB also receive salaries and bonuses from board proceedings. This fact may explain why the PTAB chooses not to honor the forum selection agreement between both parties, as sending the case to a federal or state court in Nevada would mean a loss of income for the judges.
Overall, there is a lot to discuss in this case, which goes well beyond disagreements on resolving patent disputes between two parties. Fortunately, two court cases may solve the question of whether parties must use their agreed-upon forum, which may resolve the issue in New Visions favor for the future.
CIONCA IP TEAM (SE)6/18/2021 5:29:44 PM
Forum Selection 101
Marin Cionca, Esq.
Registered Patent Attorney
USPTO Reg. No. 63899
About CIONCA® IP Law firm: We are an Irvine, Orange County, California based boutique intellectual property law firm with a focus on patent and trademark application, prosecution, opinion, licensing and IP enforcement services, including IP litigation, offering its IP services, other than IP litigation, primarily at flat fee rates. We serve local OC (Orange County) clients, as well as clients from the Los Angeles, San Diego and Riverside Counties and clients throughout the state of California, the United States and also international clients, such as EU clients.
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