Does your acceptance of a license agreement which contains a clause selecting a certain forum to litigate any disputes arising from the license mean that you have submitted to the jurisdiction chosen to be the forum? At least one California Appellate opinion answers that question in the negative. In Global Packaging, Inc. v. Sup. Ct. (Epicor Software Corp.), the court said that a forum selection clause is not mean that a party consents to personal jurisdiction in that forum. In Global Packaging, Global Packaging , a Pennsylvania corporation, licensed some software from Epicor Software, a Delaware corporation with a principal place of business in Orange County. Epicor’s ELU (End License User Agreement) provided that the venue of any litigation involving the license agreement shall be in Orange County, California or in the jurisdiction in which the software is located. As luck would have it, a dispute arose between the parties over payment and Epicor initiated litigation in Orange County. Global Packaging challenged the court’s personal jurisdiction over it. The trial court determined that the forum-selection clause was the same as a consent to jurisdiction. The appellate court disagreed.
The appellate took great pains, of which I will not bore you here, to distinguish between jurisdiction and venue (or forum). As stated by the court, in general terms there are four ways in which a court may obtain jurisdiction over a person (or entity): 1) the person’s residence or presence in the forum state; 2) the person’s activities are conducted in the forum state such that exercising jurisdiction comports with “traditional notions of fair play and substantial justice;” 3) the person participates in a lawsuit in the forum; or 4) the person consents to jurisdiction in the forum.
The question before the Global Packaging court was whether an agreement to bring an action in a particular forum is the same as consenting to jurisdiction in that forum. The answer is no because the two concepts separate. Essentially, the court stated that to select a forum, a party must somehow be subject to personal jurisdiction of the forum (see the four ways to obtain jurisdiction above). In Global Packaging, the court could not assert personal jurisdiction over Global Packaging by any of the listed means.
What does this mean for you who may be relying on forum selection clauses to assert jurisdiction over a wayward licensee? It means that you should update your license agreements to include an explicit consent to personal jurisdiction in the forum which you wish to select. In an abundance of caution, I would recommend having the party initial by the consent to jurisdiction in the forum. If you are the party being hailed into a far away court, determine if there is any way for the court to assert personal jurisdiction over you, including reviewing the contracts you signed and determine if there is a provision wherein you consent to personal jurisdiction in the far away court.
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