arbitrability dispute needs an arbitrator | McDermott Will & Emery

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The United States Court of Appeals for the Federal Circuit found that a licensing agreement between two parties required an arbitrator to determine whether a dispute between the parties should be heard by an arbitrator. ROHM Semiconductor USA, LLC v MaxPower Semiconductor, Inc., case n ° 21-1709 (Fed. Cir. 12 Nov. 2021) (O’Malley, J.)

MaxPower holds patents relating to silicon transistor technology and granted these patents to ROHM Japan under a Technology License Agreement (TLA) which contained an arbitration clause applicable to any dispute arising out of or related to the TLA. , including disputes regarding the validity of patents. A dispute arose between the parties over whether the patents covered certain products of ROHM Japan. After MaxPower informed ROHM USA that it was initiating arbitration under the TLA, ROHM USA filed a declaration claim of non-infringement of four MaxPower patents in a district court in California. After MaxPower filed a motion to compel arbitration, the district court allowed the motion and dismissed the action in the district court, finding that the TLA “unquestionably delegates[s] the question of arbitrability to the arbitrator. ROHM USA has appealed.

The issue on appeal rested on legal rulings as to whether the parties agreed to arbitrate arbitrability. The Federal Circuit noted that “courts should not assume that the parties have agreed to arbitrate arbitrability unless there is ‘clear and unmistakable’ evidence that they have done so.” ROHM USA argued that its TLA with MaxPower lacked clear and compelling evidence of an agreement to arbitrate arbitrability, and that two provisions of the California Code of Civil Procedure (CCCP) were ambiguous regarding arbitrability. The Court noted that the articles of the CCCP cited by the ROHM were explicitly replaced by another provision of the CCCP for international commercial arbitration.

ROHM USA then contested the international character of the case. ROHM USA attempted to present the matter as a dispute between two national companies and stated that ROHM USA was not a signatory to the TLA at issue. The Federal Circuit concluded that ROHM USA was clearly covered by and obligated by the TLA, as the TLA explicitly applied to all subsidiaries of ROHM Japan. The Court also noted that the present case was “just one aspect of a sprawling international dispute” involving MaxPower, ROHM Japan and ROHM USA.

ROHM USA also argued that the meaning of “may” in the CCCP statement that “[t]the arbitral tribunal may to rule on its own jurisdiction “was ambiguous, but the Federal Circuit concluded that MaxPower’s interpretation of” may “as permissive (that is to say, “May, if arbitrability is contested”) had meaning in the context of the TLA. The Court concluded:

In contracts between sophisticated parties, it is fair to oblige the parties to comply with all the provisions of their contract, including those incorporated by reference. To hold otherwise would deprive sophisticated parties of a powerful tool commonly used to simplify their contract negotiations: the adoption of arrangements established by neutral third parties. And to refuse to give effect to the plain language of the contract, both its incorporation of the CCCP and the delegation of arbitrability from the CCCP to an arbitrator, would ignore a basic contract law premise – that contracts are written legal instruments. and their words are not to be ignored.

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