623 F. App'x 568
2d Cir.2015Background
- Wi‑LAN sued LG in federal court for patent infringement and LG asserted that a parties’ patent license agreement (PLA) might cover certain accused LG products, raising a contract‑interpretation defense.
- The PLA contains an arbitration clause requiring arbitration of disputes “in connection with the interpretation” of the PLA.
- Wi‑LAN filed suit in federal court but, after LG disputed applicability of the PLA, moved to compel arbitration of the PLA‑interpretation issue.
- The district court granted Wi‑LAN’s motion to compel arbitration of whether the PLA covers certain LG products and denied LG’s request for declaratory and injunctive relief.
- LG appealed, arguing Wi‑LAN waived arbitration by litigating in federal court and that the claim‑splitting doctrine barred arbitration of the PLA defense while litigating infringement in court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wi‑LAN waived its right to arbitrate by litigating in federal court | LG: Wi‑LAN litigated and incurred expenses, delaying demand and prejudicing LG, so arbitration was waived | Wi‑LAN: It consistently maintained PLA may be inapplicable and promptly sought arbitration once disputed; no discovery occurred and no prejudice to LG | Court: No waiver — LG failed to show substantive prejudice or prejudice from delay/costs; strong presumption favoring arbitration governs |
| Whether the claim‑splitting doctrine bars arbitration of the PLA‑interpretation defense while infringement proceeds in court | LG: Splitting is unfair — Wi‑LAN is effectively prosecuting infringement in court while arbitrating the PLA defense for some products | Wi‑LAN: Parties agreed to arbitrate interpretation of the PLA; FAA permits piecemeal resolution and arbitration of arbitrable issues even if parallel proceedings result | Court: Claim‑splitting does not bar compelling arbitration of agreed‑upon PLA interpretation while allowing non‑arbitrable infringement claims to proceed in court |
Key Cases Cited
- La. Stadium & Exposition Dist. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 626 F.3d 156 (2d Cir. 2010) (waiver analysis factors and prejudice focus)
- Thyssen, Inc. v. Calypso Shipping Corp., S.A., 310 F.3d 102 (2d Cir. 2002) (strong presumption against finding waiver of arbitration)
- Leadertex, Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d 20 (2d Cir. 1995) (doubts resolved in favor of arbitration)
- Doctor's Assocs., Inc. v. Distajo, 107 F.3d 126 (2d Cir. 1997) (litigation conduct may not be used to relitigate issues by invoking arbitration)
- PPG Indus., Inc. v. Webster Auto Parts, Inc., 128 F.3d 103 (2d Cir. 1997) (ordinary pretrial expense and delay insufficient to show waiver)
- Rush v. Oppenheimer & Co., 779 F.2d 885 (2d Cir. 1985) (delay periods alone do not establish waiver)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (U.S. 1985) (FAA requires piecemeal resolution to give effect to arbitration agreements)
- AmBase Corp. v. City Investing Co. Liquidating Trust, 326 F.3d 63 (2d Cir. 2003) (rule against claim splitting explained)
- In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d 113 (2d Cir. 2011) (issue‑by‑issue arbitrability analysis)
- Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529 (3d Cir. 2005) (compelling arbitration of arbitrable claims while litigating others)
- Kanciper v. Suffolk County Soc. for the Prevention of Cruelty to Animals, Inc., 722 F.3d 88 (2d Cir. 2013) (claim‑splitting typically concerns duplicative federal suits)