In DexCom, Inc., v. Abbott Diabetes Care, Inc., 89 F.4th 1370 (Fed. Cir. 2024), the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s denial of a preliminary injunction, finding that a patentee could not rely on a forum selection clause found in a settlement between the parties to avoid IPR proceedings.

DexCom, Inc. (“DexCom”) and Abbott Diabetes Care, Inc., and Abbott Diabetes Care Sales Corp. (collectively, “Abbott”) are competing manufacturers of continuous glucose monitoring systems.  Following years of patent litigation, in 2014, the parties entered into a settlement and licensing agreement that included (1) a cross-license for certain patents; (2) a mutual covenant not to sue during a Covenant Period; (3) a mutual covenant not to Challenge¹ the licensed patents during the Covenant Period; and (4) a forum selection clause identifying the U.S. District Court for the District of Delaware as the exclusive jurisdiction “over any dispute arising from or under or relating to this Agreement, to the extent permitted by law.”² The Covenant Period expired on March 31, 2021 while the remainder of the agreement was set to end “the earlier of (i) the date when the last of the Licensed Patents expires or (ii) December 31, 2025.”³

Upon expiration of the Covenant Period, DexCom sued Abbott for patent infringement in the Western District of Texas.⁴ Relying on the agreement’s forum selection clause, Abbott moved to transfer the case to the District of Delaware.  Abbott also filed a breach of contract suit in Delaware, alleging that DexCom violated the agreement’s covenants.⁵ DexCom’s patent infringement suit was transferred to Delaware and consolidated with Abbott’s breach of contract suit.⁶

Ten months after DexCom’s bringing suit, Abbott petitioned the Patent Trial and Appeal Board (“PTAB”) for an inter partes review of DexCom’s asserted patents.⁷ DexCom filed preliminary patent owner responses, urging the PTAB not to institute any of the IPRs.⁸ DexCom thereafter filed a counter-counterclaim in the district court litigation alleging that “Abbott breached the Agreement’s forum selection clause by filing IPR petitions,”⁹ and Abbott moved to dismiss.¹⁰

DexCom then moved for a preliminary injunction, requesting the district court enjoin the IPRs.¹¹ The district court denied DexCom’s motion.  The court assumed that DexCom had shown a likelihood of success, however, it found that DexCom failed to make a showing of irreparable harm as DexCom “actively participated in IPR proceedings for six months before seeking injunctive relief.”¹² The court also found that DexCom’s inconsistent legal positions regarding applicability of the forum selection clause favored denial and that public interest favored the PTAB proceedings concluding.¹³  DexCom appealed to the Federal Circuit.¹⁴

Relying on Third Circuit law, the Federal Circuit affirmed on other grounds.¹⁵ The Federal Circuit focused solely on whether DexCom had shown a likelihood of success on the merits—a factor the district court assumed DexCom satisfied.¹⁶ Accordingly, under de novo review, the Court considered as a matter of Delaware law¹⁷ whether the agreement’s forum selection clause barred IPRs after expiration of the Covenant Period.¹⁸

The Court noted that the agreement provided exceptions to the no-challenge covenants for “any patent . . . asserted (or threatened to be asserted) against it or its products,” and where “there is a statute, regulation, or rule that sets a deadline to make the Challenge,”¹⁹ and noted further that “the Agreement’s definition of Challenge expressly include inter partes review of the parties’ patents.”²⁰

On its face, the Court found that the forum selection clause applied during the agreement’s entire term and not just during the Covenant Period.²¹ Because the agreement permitted IPRs during the Covenant Period where certain conditions were met, the Court found that “it necessarily follows that . . . the [forum selection] clause cannot operate to prohibit the filing of IPRs after the Covenant Period if it allowed them during the Covenant Period.”²² In so holding, the Court rejected DexCom’s arguments that the clause has “a different interpretation during the Covenant Period versus after the Covenant Period” and “that the forum selection clause does not apply during the Covenant Period” because “[n]othing in the Agreement supports such an interpretation.”²³

The Federal Circuit therefore found that DexCom was not likely to succeed on its breach-of-contract claim, and although the district court erred in assuming this factor was satisfied, the error was harmless because the court ultimate reached the same conclusion in denying the preliminary injunction.²⁴

As the Court here explained, its decision is purely one of contract interpretation under Delaware law, suggesting that IPR’s can be contractually prohibited where the contract is properly drafted to provide such protection. DexCom therefore stands as a reminder that parties must be mindful of certain best practices should they wish to limit future disputes and draft agreements with particularity.  Parties should also consider at the outset of litigation whether to seek a preliminary injunction so as to avoid any potential waiver of such an option by mere timeliness, which was the main driver of the district court’s decision.