The Federal Circuit issued just one precedential opinion the week of Labor Day (along with several non-precedential opinions and Rule 36 judgments). But it’s an interesting one, addressing the interplay between arbitration agreements and nonappealability of decisions to institute inter partes review. 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: 1
Non-precedential opinions: 8
Rule 36: 4
Longest and shortest (non-Rule 36) pending case from argument: Team Worldwide Corporation v. Intex Recreation Corp., No. 20-1975 (94 days)
Case of the week: In re: MaxPower Semiconductor, Inc., No. 2021-146
Panel: Judges O’Malley, Reyna, and Chen, with Judge Reyna authoring the order and Judge O’Malley dissenting in part
You should read this case if: you have a matter involving an agreement to arbitrate disputes regarding the validity of a patent.
In 2007, ROHM and MaxPower entered a technology license agreement that included an arbitration clause. In 2019 and 2020, a dispute arose regarding whether the agreement covered certain ROHM products. In September 2020, ROHM filed a complaint seeking a declaratory judgment of non-infringement of four MaxPower patents in the Northern District of California and also filed four petitions for inter partes review with the Patent Trial and Appeal Board. The district court dismissed the complaint and compelled ROHM to arbitrate, but the Board instituted review in all four proceedings.
MaxPower filed interlocutory appeals seeking reversal of the institution decisions, and it also sought a writ of mandamus to compel the Board to terminate or stay the IPR proceedings pending a decision by an arbitrator about whether IPR proceedings were appropriate. MaxPower argued that 35 U.S.C. § 294(a) precluded an IPR because it states that an agreement requiring arbitration of validity disputes “shall be valid, irrevocable, and enforceable, except for any grounds that exist at law or in equity for revocation of a contract.”
A divided Federal Circuit panel rejected MaxPower’s arguments. All three judges agreed that MaxPower’s interlocutory appeals were barred by 35 U.S.C. § 314(d), which states that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” The Court explained Section 314(d) deprived the Federal Circuit of jurisdiction to hear an appeal of a decision whether to institute IPR.
On the question whether mandamus relief was appropriate, the judges disagreed. The majority denied the mandamus petition because “[t]he Board is not bound by the private contract between MaxPower and ROHM,” and 35 U.S.C. § 294 “does not by its terms task the [Board] with enforcing private arbitration agreements.” Mandamus relief would require a “clear and indisputable right” to immediate review of the Board’s institution decisions, but 35 U.S.C. § 314(d) prevents the Federal Circuit from reviewing such decisions. Furthermore, the majority explained, MaxPower’s rights would not be irretrievably lost because it could raise its arbitration-related arguments after the Board issues final written decisions.
In dissent, Judge O'Malley took the opposite view. She noted the “liberal federal policy favoring arbitration agreements” and read Section 294 to give MaxPower a clear and indisputable legal right to enforcement of the arbitration agreement. Further, Judge O'Malley reasoned, the majority’s decision “denie[d] MaxPower the benefit of any agreement to arbitrate validity.” She criticized the “strange result” that a patent challenger may be allowed to raise invalidity arguments in an IPR that a district court would dismiss pursuant to an arbitration clause.
It remains to be seen whether other Patent Trial and Appeal Board panels will consider arbitration agreements in deciding whether to institute review, but in this particular battle between the powers of administrative agencies and private arbitrators, the agency won.