November 15, 2021 - Last Week in the Federal Circuit

Last Week in the Federal Circuit ( November 8-12): An Arbitrability Tongue Twister

Fall colors are on full display in DC. But leaf peeping can’t keep us from following the latest news at the Federal Circuit. Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 3

Non-precedential opinions: 5

Rule 36: 8

Longest pending case from argument: Apple Inc. v. Qualcomm Inc., No. 20-1683 (100 days)

Shortest (non-Rule 36) pending case from argument: Caris MPI, Inc. v. Foundation Medicine, Inc., No. 20-1886 (35 days)

Case of the week: ROHM Semiconductor USA, LLC v. MaxPower Semiconductor, Inc., No. 21-1709.

Panel: Judges Lourie, O’Malley, and Chen, with Judge O’Malley writing the opinion

You should read this case if: you have a matter involving a technology license agreement that includes an arbitration clause.

Our case this week includes an alliterative tongue twister—an agreement to arbitrate arbitrability. Say that three times fast.

ROHM Japan and MaxPower agreed to a license with an agreement to arbitrate under the California Code of Civil Procedure. But they later disagreed about whether the license covers certain ROHM products. After MaxPower notified ROHM Japan of its intent to arbitrate the issue, ROHM USA, a subsidiary, sued for declaratory judgment of noninfringement of four MaxPower patents. The district court dismissed the complaint and ordered arbitration, reasoning that the license “delegate[s] the question of arbitrability to the arbitrator.”

The Federal Circuit agreed. It relied on the license’s incorporation of the California Code, which states that an arbitrator “may rule on its own jurisdiction” in international commercial arbitration. Applying the law of the Ninth Circuit, the Federal Circuit held that the provision applies because the dispute is an international one (involving ROHM Japan). The Court rejected ROHM’s argument that the term “may” in the provision merely allows parties to agree to waive a court determination. Instead, “may” means that the question of arbitrability does not have to be decided by the arbitrator every time but only when disputed. That is how other circuits have interpreted similar phrases, including the Ninth Circuit.

The Court also held, under Ninth Circuit law, that the license amounted to a “clear and unmistakable” delegation of arbitrability to the arbitrator because it incorporated the California Code. The Court explained that “[v]irtually all courts to consider the question, including [the Federal Circuit], have concluded that, in contracts between sophisticated parties, incorporation of rules with a provision on the subject is normally sufficient ‘clear and unmistakable’ evidence of the parties’ intent to delegate arbitrability to an arbitrator.” The Court declined to adopt the view of the lone Florida state court to hold to the contrary. And it distinguished a case about class arbitration as inapplicable to bilateral disputes.