17 F.4th 1377
Fed. Cir.2021Background
- ROHM Japan and MaxPower executed a 2007 technology license agreement (TLA), amended in 2011, granting ROHM (including subsidiaries) rights to use MaxPower MOSFET technology in exchange for royalties and containing an arbitration clause incorporating the California Code of Civil Procedure (CCCP).
- In 2019 MaxPower disputed whether the TLA covered ROHM’s silicon carbide MOSFETs and notified ROHM Japan it would initiate arbitration under the TLA.
- On September 23, 2020, ROHM Semiconductor USA (a ROHM Japan subsidiary) sued in the Northern District of California for declaratory judgment of noninfringement and filed inter partes review petitions challenging the same MaxPower patents.
- MaxPower moved to compel arbitration; the district court concluded the TLA "unmistakably" delegates arbitrability to an arbitrator (relying on CCCP Title 9.3 / §1297.161) and dismissed the suit without prejudice.
- On appeal, the Federal Circuit (applying Ninth Circuit law on arbitrability) affirmed: it held the dispute is covered by CCCP Title 9.3 (international arbitration), incorporation of those rules constitutes clear and unmistakable delegation, and §1297.161 permits the arbitrator to decide arbitrability.
Issues
| Issue | Plaintiff's Argument (ROHM USA) | Defendant's Argument (MaxPower) | Held |
|---|---|---|---|
| Whether the arbitration clause (via incorporation of CCCP) clearly and unmistakably delegates arbitrability | Incorporation of the CCCP does not clearly delegate arbitrability; First Options presumption favors judicial decision | Incorporation of CCCP Title 9.3 (including §1297.161) is clear and unmistakable evidence delegating arbitrability to the arbitrator | Court: Incorporation of CCCP Title 9.3 is clear and unmistakable; arbitrator decides arbitrability |
| Whether the dispute is "international" so Title 9.3 applies | Dispute is domestic (U.S. patents, U.S. forum, ROHM USA not a TLA signatory) so §1297.161 is inapplicable | TLA covers ROHM subsidiaries; parties have places of business in different countries and TLA is global — Title 9.3 governs | Court: Dispute is international under CCCP §1297.13; Title 9.3 (and §1297.161) applies |
| Whether the permissive verb "may" in §1297.161 defeats a delegation of arbitrability | "May" is permissive and therefore does not clearly force arbitrator to decide arbitrability | "May" allows the arbitrator to decide arbitrability where necessary; it is functionally equivalent to delegation language in UNCITRAL rules | Court: "May" in context permits the arbitral tribunal to rule on its own jurisdiction and is a valid delegation |
| Whether incorporation of arbitration rules (e.g., CCCP/UNCITRAL/AAA) can satisfy First Options despite contrary authority (e.g., Third Circuit) | Incorporation alone is insufficient under First Options; asks to overrule Oracle and similar precedents | Precedent (including Ninth Circuit Oracle and many circuits) holds incorporation of such rules is clear and unmistakable in contracts between sophisticated parties | Court: Declines to disturb Oracle line; incorporation of CCCP is sufficient here (distinguishes Chesapeake Appalachia) |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (establishes that courts should not assume parties agreed to arbitrate arbitrability absent clear and unmistakable evidence)
- AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643 (1986) (presumption that courts decide arbitrability unless parties clearly and unmistakably delegate it)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (distinguishes questions for courts from those presumptively for arbitrators)
- Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069 (9th Cir. 2013) (incorporation of UNCITRAL rules is clear and unmistakable delegation of arbitrability)
- Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366 (Fed. Cir. 2006) (applies Ninth Circuit law that incorporation of arbitral rules can delegate arbitrability)
- Republic of Argentina v. BG Group PLC, 665 F.3d 1363 (D.C. Cir. 2012) (supports arbitrator authority to decide arbitrability under incorporated rules)
- Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, 809 F.3d 746 (3d Cir. 2016) (recognized broadly that most circuits treat incorporation as delegation but carved a limited exception in a class-action context)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (courts must enforce valid delegation clauses and may not refuse to send arbitrability questions to arbitrators on the basis that the argument is frivolous)