Recently, the U.S. International Trade Commission (ITC) ruled to terminate the Section 337 investigation filed by U.S. software company Zync Inc. against the BMW Group. Notably, the case was not terminated because the plaintiff’s claims of trade secret infringement lacked merit, but rather because a “forum-selection clause” in a prior agreement between the parties was upheld by a U.S. federal court, thereby prohibiting Zync from proceeding with the ITC proceedings. As a result, this case has become a rare example in recent years where a forum-selection clause has influenced the progress of a Section 337 investigation.
Focus of the Dispute
A forum-selection clause is a common provision in international commercial contracts used to specify which country or region’s courts shall hear future disputes between the parties. Typically, such clauses are primarily used to resolve conflicts of jurisdiction among different courts.
However, Section 337 investigations have unique characteristics. Under Section 337 of the U.S. Tariff Act of 1930, the ITC may conduct investigations into unfair trade practices involving imported products and, upon a finding of infringement, issue an exclusion order or a cease-and-desist order. Unlike ordinary civil litigation, the ITC is not a court but a U.S. federal administrative agency. Consequently, whether a forum-selection clause in a contract can restrict a party from filing a 337 investigation petition with the ITC has long been a major point of contention.
Those in favor of the restriction argue that since the parties have explicitly agreed on the method of dispute resolution through a contract, they should be bound by the contract; opponents, however, contend that a Section 337 investigation is a public enforcement proceeding authorized by Congress, the purpose of which involves not only the private interests of the parties but also U.S. trade policy and industrial interests, and therefore should not be simply restricted by contractual terms.
In this case, BMW successfully utilized the choice-of-court clause to prevent Zync from proceeding with the Section 337 investigation, providing the first relatively clear practical resolution to this issue and serving as the key factor distinguishing this case from ordinary trade secret disputes.
Case Background
Zync had previously engaged in a technical collaboration with BMW, during which the two parties cooperated on the development and application of relevant software and signed a confidentiality agreement. In that agreement, the parties stipulated that disputes arising from the agreement would be subject to the exclusive jurisdiction of the courts in Munich, Germany—a choice-of-court clause that lies at the heart of the dispute in this case.
After the collaboration ended, Zync contended that certain software technologies, architectural designs, and related commercial information it had disclosed to BMW during the collaboration constituted trade secrets, and that BMW continued to use the relevant technologies after the collaboration ended, incorporating them into its in-vehicle infotainment systems.
Based on these claims, Zync filed a trade secret infringement lawsuit in U.S. court and, in February 2026, filed a Section 337 complaint with the ITC, requesting that the ITC impose exclusionary measures against BMW products suspected of using the relevant technology to prevent such products from entering the U.S. market.
Court’s Ruling
In response to Zync’s legal actions, BMW raised a jurisdictional defense challenging the validity of the choice-of-court clause and filed a motion with the U.S. court seeking an injunction to halt the ITC investigation proceedings.
In May 2026, the Superior Court of Santa Clara County, California, was the first to rule that the jurisdiction clause in question was valid and enforceable, dismissing Zync’s lawsuit and clarifying that the dispute should be heard by a court in Munich, Germany. Subsequently, BMW filed a motion for a preliminary injunction with the U.S. District Court for the Northern District of California to prevent Zync from proceeding with the Section 337 investigation.
On June 22, 2026, the federal court formally upheld BMW’s claims, specifically noting that contractual dispute resolution agreements between commercial entities are legally binding and take precedence over the parties’ right to initiate a Section 337 administrative investigation. Allowing Zync to proceed with the investigation would directly deprive BMW of its established contractual rights and cause irreparable harm, while also directly rejecting Zync’s argument that “the Section 337 investigation is an independent administrative proceeding not subject to contractual constraints.”
Zync contested the ruling and appealed to the U.S. Court of Appeals for the Ninth Circuit, attempting to argue that the jurisdiction clause applies only to judicial proceedings and cannot restrict Section 337 administrative remedies, while also seeking to reinstate the investigation on the grounds that its market interests had been harmed. However, the appellate court ultimately denied its motion for emergency relief, upheld the injunction, and completely blocked Zync’s path to seeking redress.
For future cross-border technology cooperation, this case serves as a reminder to companies that they must exercise greater caution when drafting forum selection clauses and dispute resolution mechanisms in confidentiality agreements, technology cooperation agreements, or licensing agreements. Such clauses may not only affect where the parties can file lawsuits but may also determine whether a party can access specialized remedies, such as those available through the ITC.
Currently, the Ninth Circuit Court of Appeals is still hearing the merits appeal regarding the preliminary injunction.
