Affymax, Inc. v. Ortho-McNeil-Janssen Pharmaceuticals, Inc.
660 F.3d 281
| 7th Cir. | 2011Background
- Affymax and Ortho-McNeil-Janssen formed a 1992 joint venture to develop peptide inventions, with joint ownership of joint-effort inventions and sole ownership for single-party inventions, and mandatory arbitration for disputes.
- The venture produced valuable discoveries; Affymax sued in 2004 seeking ownership of the '940 and '078 patent families.
- The arbitration panel conducted extensive discovery and held a 35-day hearing, issuing an award in October 2010 determining joint ownership of the '940 family and sole ownership of the '078 family by Ortho.
- The district court largely confirmed the panel but vacated the foreign-patent portion related to the '078 family and remanded for reconsideration.
- The district judge later concluded the arbitrators manifestedly disregarded the law by failing to discuss foreign patents separately; the district court remanded, Affymax appealing the rest.
- The Seventh Circuit held the dispute is a contract matter, not a patent matter, and reviewed under the FAA, reversing to confirm the award in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FAA jurisdiction over contract disputes in IP ownership | Affymax argues jurisdiction lies in contract arbitration, not patent law. | Ortho contends patent-law framework governs ownership issues. | Arbitration/contract dispute; FAA applies; jurisdiction is proper in the Seventh Circuit. |
| Whether district court properly vacated award for manifest disregard of law | Affymax asserts no manifest disregard; award valid as to inventorship. | Ortho asserts district court correctly found disregard due to lack of separate analysis for foreign patents. | Manifest disregard grounds do not support vacatur; not a basis here under §10(a). |
| Whether arbitrators exceeded their powers under §10(a)(4) | Affymax argues arbitrators exceeded by misapplying contract or inventorship rule. | Ortho contends arbitrators stayed within contract and analyzed inventorship per contract terms. | Arbitrators did not exceed their powers; award faithful to contract terms. |
| Applicable law governing ownership vs. inventorship | Affymax contends ownership disputes arise under contract governing inventorship. | Ortho relies on contract framework that ownership follows inventorship. | Contract law governs ownership dispute; ownership follows inventorship per the 1992 contract. |
Key Cases Cited
- T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir.1964) (contracts about ownership of copyrights arise under contract, not patent law)
- George Watts & Son, Inc. v. Tiffany & Co., 248 F.3d 577 (7th Cir.2001) (court may vacate awards directing third-party rights; limited FAA scope)
- Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (Supreme Court, 2008) (FAA grounds are exclusive; cannot expand grounds via contract or practice)
- Hill v. Norfolk & Western Ry., 814 F.2d 1192 (7th Cir.1987) (review is limited to contract interpretation, not re-weighing merits)
- Kennedy v. Wright, 851 F.2d 963 (7th Cir.1988) (recognizes contract-based ownership disputes fall outside patent-law relief)
- Beghin-Say International, Inc. v. Rasmussen, 733 F.2d 1568 (Fed. Cir.1984) (contractual disputes over IP ownership fall outside patent-law remedies)
- Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988) (Supreme Court on scope of IP dispute in arbitration and contract)
- International Armor & Limousine Co. v. Moloney Coachbuilders, Inc., 272 F.3d 912 (7th Cir.2001) (applies Eliscu-like approach to IP ownership/arbitration)
- Ramos-Santiago v. United Parcel Service, 524 F.3d 120 (1st Cir.2008) (recognizes limits of manifest disregard as a basis for vacatur)
- Citigroup Global Markets Inc. v. Bacon, 562 F.3d 349 (5th Cir.2009) (manifest disregard not a standalone FAA ground)
- Medicine Shoppe International, Inc. v. Turner Investments, Inc., 614 F.3d 485 (8th Cir.2010) (endorses limited role of manifest disregard post-Hall Street)