• Nov 12 2021
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  • Category: CAFC Updates

ROHM and MaxPower entered into a technology license agreement permitting ROHM to use certain power metal oxide semiconductor field effect transistors (‘MOSFET’)-related technologies of MaxPower in exchange for royalties. The agreement includes an agreement to arbitrate (in accordance with the provisions of the California Code of Civil Procedure (“CCCP”)) any dispute, controversy, or claim arising out of or in relation to the Agreement or at law, or the breach, termination, or validity thereof. When a dispute arose, MaxPower notified ROHM of its intent to initiate arbitration. Shortly thereafter, ROHM filed a complaint for declaratory judgment of noninfringement of four MaxPower patents and four inter partes review petitions concerning those same patents. MaxPower filed a motion to compel arbitration. The district court granted MaxPower’s motion to compel arbitration and dismissed the case without prejudice, reasoning that the agreement unmistakably delegates the question of arbitrability to the arbitrator. ROHM appeals, arguing that the agreement lacks clear and unmistakable evidence of an agreement to arbitrate arbitrability, but the CAFC finds none of ROHM’s arguments convincing, noting that some border on the frivolous. After specifically addressing various of ROHM’s arguments, the CAFC declined to adopt the view of the only case ROHM has located (a Florida state court decision which itself is currently under review by the Florida Supreme Court) that held incorporation of arbitration rules is not a clear and unmistakable delegation of arbitrability in the context of bilateral arbitration.  Rather the CAFC reaffirms the prevailing view that in contracts between sophisticated parties, it is fair to hold the parties to all provisions of their contract, including those incorporated by reference, indicating that 1) to hold otherwise would deprive sophisticated parties of a powerful tool commonly used to simplify their contract negotiations— adoption of provisions established by neutral third parties.; and 2) to refuse to give effect to the plain language of the contract, both its incorporation of the CCCP and the CCCP’s delegation of arbitrability to an arbitrator, would ignore a basic premise of contract law—that contracts are written legal instruments and their words are not to be ignored. Agreeing that an arbitrator must determine arbitrability of the dispute between ROHM and MaxPower, the CAFC affirms.

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