Controlling the Forum when Disputes arise in International License Agreements

U.S. companies who enter into intellectual property license agreements with European companies often ask how, if they accept a choice of law clause that involves a European country, they can ensure that disputes under the license will be resolved in a particular European country. 

According to the IPR Helpdesk, a European Commission service relating to IP rights, parties are free to negotiate a forum choice clause in a license agreement.  However, if a party wishes to dispute the validity, existence or expiry or priority claim of a licensed patent, that issue must be brought in the state where the patent is registred, regardless of the agreement’s forum choice clause.  

If the parties choose an arbitration clause, the IPR Helpdesk recommends that the clause include the following details:

  • Number and qualification of the arbitrators, procedure of their nomination;
  • Domicile of the arbitration court (a contracting country party to the New York Convention should be chosen);
  • Language (normally the language of the main contract);
  • Applicable arbitration law (usually the law applicable at the domicile of the arbitration court).

Forum choice only becomes an issue in a very small number of cases, but the Commission’s guidelines are helpful reading for anyone who is drafting license agreements with European companies.

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