BMW Counsel: How a Supplier Clause Prevented U.S. Trade Secret Litigation

A recent ITC decision terminated Zync’s complaint against Finnegan client BMW based on a forum selection clause in agreements the parties entered into in 2021, which required disputes to be litigated in Munich, Germany. The ruling followed related decisions in California courts that enforced the same contractual provision and limited Zync’s efforts to pursue trade secret claims against BMW in multiple U.S. forums.

Speaking to World Intellectual Property Review, Finnegan partner and lead counsel for BMW, Lionel Lavenue said, “It's the first time that the ITC has ever dismissed a case based upon the forum selection clause that we’re aware of.”

In the agreement between BMW and Zync, the forum selection clause originated in a non-disclosure agreement, Lionel said.

“We already brought the lawsuit in Germany, which is the forum that was selected for any disputes. Sometimes when you're drafting a contract, you're worried about every part of the contract, except maybe not the forum selection or arbitration clauses.”

But this development at the ITC in BMW v. Zync thrusts these to first-of-mind issues.

Lionel’s advice for in-house counsel working with the other party is to “insert that forum selection clause at that appropriate time”.

“Given this case and the importance of being able to honor the forum selection clause and therefore not have to litigate in the ITC—that’s a pretty significant consideration.”

Regarding the pending case in Munich, Lionel said that “we will defend ourselves and overcome the false allegations that have been made.”

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