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Forum Selection Clauses
A few years ago, one of our firm's clients was sued for patent infringement ' along with virtually every other company in the same industry. The plaintiff-patentee filed suit in U.S. District Court in Dallas. One of the other defendants, a Wisconsin corporation, was a licensee of our client under a patent and technology license. Since the products accused in the Texas lawsuit were licensed products, the Wisconsin licensee pressed our client for indemnification, and threatened to bring a cross-claim in the Texas lawsuit.
The initial reaction of our client's corporate counsel was: “They can't do that. We have a forum selection clause in our license agreement. If they want to bring a claim, they have to do it in federal court in Michigan.”
The question quickly became moot, since the client negotiated with its licensee to take over the defense of the lawsuit in Texas. This was not before, however, our eye-opening suggestion that the forum selection clause in their license agreement might not serve them as intended.
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