In this blog, we typically review forum-selection cases in the
context of internet-related contracts and software licenses. A
recent decision out of the US Supreme Court squarely addressed the
issue of forum-selection clauses in a construction contract. While
this is not an intellectual property case, it is instructive for
Canadian companies entering into any contract in the US. To review,
a "forum-selection clause" is a provision in a contract
which picks a particular country or province or state for the
resolution of disputes - put another way, it's the place where
litigation would be started in the event of a dispute.
First, if one party defies the forum-selection clause by
commencing a lawsuit in another jurisdiction, that party has
the burden of convincing the court that the case shouldn't be
transferred to the forum named in the agreement.
Second, "the court should not consider the parties'
private interests aside from those embodied in the forum-selection
clause; it may consider only public interests."
Public-interest factors will not typically override the
forum-selection clauseexcept in very unusual cases.
Lastly, if a party is bound by a forum-selection clause and
they choose to flout those contractual obligations by filing a
lawsuit in a different forum, then they don't get the benefit
of applying the choice-of-law rules in the jurisdiction in which
they filed. In other words, they can't improve their chances of
success by filing in a state with favourable choice-of-law rules.
They will be bound by the choice-of-law rules of the forum named in
the forum-selection clause.
The US Supreme Court has confirmed that forum-selection clauses
should be upheld in the US.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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