By: Joseph Farley and Vishal Khatri  A recent decision by the International Trade Commission (”ITC”) in Investigation No. 337-TA-1091, suggests that the ITC may not enforce forum selection clauses that typically bind private parties to raise disputes in a specific jurisdiction or forum. Certain Color Intraoral Scanners and Related Hardware and Software, Inv. No. 337-TA-1091, Order No. 23 (May 18, 2018).

This investigation involved Complainant Align Technology, Inc. (“Align”) and Respondents, 3Shape A/S, 3Shape Inc., and 3Shape Trios A/S. Prior to institution of the Investigation, Complainant and Respondent, 3Shape Trios A/S entered into an agreement which included a forum selection clause, in which the parties agreed to “irrevocably submit to the exclusive jurisdiction of the courts in Denmark to settle any dispute arising out of or in connection with this Agreement.” Id. at 1. After institution of the Investigation, and while the Agreement was still in effect, Respondent sought to enforce the forum selection clause and moved for “summary determination that the disputes in th[e] Investigation [were] subject to the exclusive jurisdiction of the courts in Denmark.” Id. at 2.

In his order, ALJ Cheney began by noting that 19 U.S.C. § 1337(c) and 19 C.F.R. § 210.21(a)(2)) gives the ITC discretionary authority to terminate an investigation in certain circumstance, including on the basis of an agreement between the parties. But in this case, he refused to terminate the Investigation because he concluded the public policy in favor of enforcing section 337 outweighed the agreement between the parties. The ALJ observed that “[t]he purpose of section 337 . . . is to regulate international commerce” and “[u]nder section 337, the Commission affords trade relief to domestic industries from a range of unfair trade practices . . . by stopping at the border the entry of goods that are involved in unfair trade practices.” Id at 7. The ALJ found that Respondent “ha[d] not shown that any other court, and specifically a court in Denmark, [could] satisfy this . . . policy by adjudicating alleged violations of section 337.” Id. at 8. As a result, the ALJ determined that “enforcing the forum selection clause . . . would contravene th[e] strong public policy of the ITC.” Id.

The ALJ noted, however, that the Respondent may still have recourse to enforce the forum selection clause by asking a district court to enjoin the Complainant from breaching the forum selection clause and order the Complainant to withdraw its complaint in the ITC. He noted that several Respondents in the past had pursued the same remedy. Importantly, the ALJ also noted that its decision did not extend to arbitration clauses because Congress amended section 337 in 1194 to give deference to arbitration agreements.

Takeaway

Parties considering enforcement of a forum selection clause at the ITC should be aware of the strong public policy favoring enforcement of section 337 over enforcing the parties agreement. Respondents with preexisting forum selection clauses may consider enjoining Complainants from breach by seeking injunctions in district court. Additionally, parties that may be subject to jurisdiction of the ITC should consider this issue when drafting their agreements.

The following two tabs change content below.
Vishal Khatri is an intellectual property lawyer with more than 15 years of experience representing clients in high stakes, bet-the-company patent litigation and procurement matters around the world. He routinely represents clients in matters before U.S. district courts, the United States International Trade Commission (ITC), and the United States Patent and Trademark Office (USPTO), including Inter Partes Review (IPR) proceedings before the Patent Trial and Appeal Board (PTAB).

Latest posts by Vishal Khatri (see all)