Texas Instruments Inc. v. Tessera, Inc.
2000 U.S. Dist. LEXIS 5901, 2000 WL 545255, 192 F.R.D. 637 (2000)
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Rule of Law:
A forum selection clause requiring "any litigation" to take place in a specific jurisdiction applies only to judicial proceedings in a court of law, not to administrative proceedings before a government agency like the International Trade Commission (ITC), unless the contract explicitly includes such administrative actions.
Facts:
- On November 1, 1996, Texas Instruments, Inc. (TI) and Tessera, Inc. entered into a license agreement for Tessera's patented semiconductor chip technology.
- The agreement required TI to pay royalties to Tessera for TI products that used Tessera's patents.
- The agreement contained a forum selection clause stating, 'any litigation between the parties relating to this Agreement shall take place in California.'
- From 1996 to 2000, TI paid no royalties, asserting that its products did not infringe on Tessera's patents.
- Tessera contended that certain TI products did infringe its patents, that royalties were owed, and that TI's failure to pay constituted a breach.
- On January 17, 2000, Tessera provided TI with a 60-day notice of its intent to terminate the license agreement due to the alleged breach.
Procedural Posture:
- On February 1, 2000, Texas Instruments (TI) filed a lawsuit against Tessera in the U.S. District Court, seeking a declaratory judgment regarding their license agreement.
- Tessera filed a counterclaim for patent infringement against TI in the same district court action.
- On March 28, 2000, Tessera filed a separate complaint with the International Trade Commission (ITC) against TI and others.
- On April 5, 2000, TI applied for a temporary restraining order and moved for a preliminary injunction in the district court to enjoin Tessera from pursuing the ITC action.
- The district court denied the temporary restraining order and set a hearing for the motion for a preliminary injunction.
- The ITC filed a motion to intervene in the district court case for the limited purpose of opposing TI's motion for a preliminary injunction.
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Issue:
Does a contractual forum selection clause requiring 'any litigation between the parties' to take place in California prevent one party from initiating an administrative action against the other before the International Trade Commission (ITC)?
Opinions:
Majority - Carter, District Judge
No. The forum selection clause does not prevent a party from initiating an action before the International Trade Commission (ITC) because an administrative proceeding is not 'litigation' within the meaning of the contract. The court reasoned that the plain meaning of 'litigation,' as supported by California procedural law, refers to proceedings in a state or federal court. The ITC is an independent government agency, not an Article III court, and has a distinct statutory mandate and different remedial powers, such as preventing importation rather than awarding damages. The court noted that if the parties had intended to include administrative agency actions within the scope of the forum selection clause, they could have used more explicit language to do so. Since an ITC action is not 'litigation,' it does not fall under the contract's forum restriction.
Analysis:
This decision narrowly interprets the term 'litigation' in forum selection clauses, distinguishing between judicial proceedings and administrative actions. It clarifies that standard contractual language limiting 'litigation' to a specific forum does not, by default, restrict a party's right to seek remedies from federal administrative bodies like the ITC. The ruling places the burden on contract drafters to use more comprehensive language (e.g., 'any action, proceeding, or complaint before any court or administrative agency') if they intend to cover all forms of dispute resolution. This case reinforces the principle that private contracts generally cannot strip a federal agency of its independent statutory authority to investigate claims within its jurisdiction.
