In Lexington Services Ltd. v. U.S. Patent No. 8019807 Delegate, L.L.C., C.A. No. 2018-0157-TMR (Oct. 26, 2018), a Maltese company owned a patent that was subject to a security interest. In accordance with its rights under the applicable security agreement, the secured party sold the patent when the Maltese company defaulted on its obligations to the secured party.
The Maltese company filed a lawsuit in the Chancery Court of Delaware alleging the patent was fraudulently transferred. Although the Security Agreement contained a forum-selection clause requiring the parties to bring any dispute “arising out of or in connection with [this agreement] or its subject matter or formation must be brought in Ireland”, the Maltese company argued the transferees could not invoke the forum-selection clause since they were not signatories to the security agreement. The Court reasoned that the security agreement contemplated the assignment of the patent and, as a result, the Court held that the transferees were closely related to the security agreement and could invoke the forum-selection clauses.
BOTTOM LINE: Consider including the following language in forum selection clauses which has been found by the court to unambiguously mandate exclusive jurisdiction in particular courts:
“Each party irrevocably agrees that…the Courts of…shall have exclusive jurisdiction over any dispute or claim arising out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims) and, for such purposes, irrevocably submits to the exclusive jurisdiction of such courts. Any proceedings, suit or action arising out of [or] in connection with this agreement shall therefore be brought in the Courts of ….”