858 F.3d 1377
Fed. Cir.2017Background
- RNB (Roof N Box) and GAF entered a promotional agreement in Sept. 2009 under which GAF would promote RNB’s three‑dimensional roofing model; the agreement included an arbitration clause covering disputes “arising under this Agreement.”
- The agreement had a one‑way confidentiality clause obligating only RNB to protect GAF’s proprietary information; GAF did not obligate itself to protect RNB’s information.
- GAF terminated the agreement in 2010; termination’s validity is not contested.
- In March 2016 RNB and its founder Evans sued GAF for patent infringement, trade‑dress infringement, and related unfair‑competition claims based on GAF’s development and sale of a competing promotional roofing model.
- GAF moved to dismiss or stay pending arbitration under the 2009 agreement; the district court denied the motion, finding the arbitration clause inapplicable to the claims and that arbitration need not be referred to the arbitrator.
- On appeal the Federal Circuit applied the more plaintiff‑favorable “wholly groundless” threshold (which GAF accepted) and affirmed, concluding GAF’s assertion of arbitrability was wholly groundless.
Issues
| Issue | Plaintiff's Argument (Evans/RNB) | Defendant's Argument (GAF) | Held |
|---|---|---|---|
| Whether the court should decide arbitrability or refer it to arbitrator | Court may decide arbitrability when claim plainly outside clause | Issue should be referred unless assertion of arbitrability is not "wholly groundless" | Applying the "wholly groundless" standard (accepted by GAF), court correctly decided arbitrability itself and denied referral |
| Whether the claims "arise under" the 2009 agreement so as to trigger arbitration | Claims arise independently from GAF’s post‑termination conduct and do not depend on contract duties | Claims relate to the agreement (e.g., confidentiality, lost profits) and thus fall within clause | Claims do not ‘‘arise under’’ the agreement; they challenge GAF’s independent wrongful acts and are outside arbitration clause |
| Whether Count IV (state common‑law unfair competition) is arbitrable due to alleged confidentiality breach | Count IV is not contract‑based and does not rely on the agreement | Count IV incorporates breach of confidentiality and thus is arbitrable | GAF forfeited any confidentiality‑based arbitration argument; the contract contained no reciprocal confidentiality obligation from GAF |
| Whether other factors (e.g., damages measured by contract revenues; factual overlap) make arbitration appropriate | Damages and factual overlap do not transform independent tort and IP claims into contract claims | Adjudication will implicate the agreement and thus favors arbitration | Court held that factual overlap or damages calculations do not require interpreting contract terms; arbitration not warranted |
Key Cases Cited
- Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366 (Fed. Cir.) (standard for when courts must defer arbitrability to arbitrator discussed)
- Am. Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88 (4th Cir.) (interpreting "arising under" language; doubts resolved in favor of arbitration)
- Long v. Silver, 248 F.3d 309 (4th Cir.) (distinguishing "arising under" from broader "relating to" arbitration language)
- J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315 (4th Cir.) (scope of arbitration clauses and relatedness tests)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Co., 460 U.S. 1 (U.S.) (principle that doubts about arbitrability favor arbitration)
- United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (U.S.) (arbitration clause interpretation standard)
- Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367 (1st Cir.) (examples of agreement‑dependent wrongs held arbitrable)
- Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (U.S.) (willfulness analysis in patent damages context)
- Microchip Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350 (Fed. Cir.) (jurisdictional citation used by court)