IP News

Federal Circuit Requires Courts to Decide Question of Who is Bound to Arbitrate

In Microchip Tech., Inc. v. U.S. Philips Corp., 367 F.3d 1350 (Fed. Cir. 2004), the Federal Circuit held that the issue of whether two parties agreed to arbitrate is an issue for the court ' not an arbitrator ' to decide. In so doing, the court rejected Ninth Circuit authority stating that an arbitrator could decide the issue.

The case began when Microchip sought a declaratory judgment for non-infringement of several patents owned by Philips. Microchip argued that it was a successor to a license agreement that conveyed rights to practice the Philips patents. Philips disagreed and commenced an arbitration proceeding against Microchip to resolve the issue of successorship of the license. Microchip refused to arbitrate, stating that it had not been a party to the license agreement, and thus was not bound to arbitrate.

The district court denied Philips' motion to compel arbitration, and Philips appealed. Philips relied on Ninth Circuit authority that allowed an arbitrator to decide whether a party was bound to arbitrate unless there was an “independent challenge” to the arbitration clause separate from an attack on the contract as a whole. The Federal Circuit disagreed with Philips, stating that while it was normally obligated to follow regional law, “[w]here regional circuit authority is contrary to governing Supreme Court precedent we need not, and indeed must not, follow it.” The court explained that the Ninth Circuit precedent was at odds with the Supreme Court's decision in John Wiley & Sons Inc v. Livingston, 376 U.S. 543 (1964). In Wiley the Supreme Court determined that whether a party is bound by an agreement with an arbitration clause is a “threshold question” for a court to decide. The present case was remanded to the district court to determine whether Microchip was bound to arbitrate under the license agreement.

Canadian Supreme Court Upholds Patentability of Monsanto's Genetically Engineered Corn

The Canadian Supreme Court found that Monsanto Company's patent claims reciting genes and cells for genetically engineered Canola corn was patentable subject matter, and that a farmer using the modified seed without a license infringed the patent. The corn in question had been genetically modified to be resistant to a brand of weed killer, Roundup. The case was closely watched to determine if this type of technology was patentable subject matter under the Canadian Patent Act, especially since the Canadian Supreme court held that the “Harvard Mouse,” a mouse predisposed genetically to have a certain type of cancer, was deemed not properly patentable under the Act 2 years ago.

The matter began more than 7 years ago when Roundup Ready corn was found growing in defendant's field. The defendant farmer argued that he had not intentionally planted the seed, but that it showed up on his farm by blowing off a passing truck or by cross pollination from nearby fields. Thus, the farmer argued that he did not “use” the patented seed as required by Canadian infringement law. The lower courts dismissed this serendipitous explanation and found that it was more likely that defendant planted the seed. After a discussion related to construction of the term “use” in the statute, the Supreme Court held that the ultimate question was whether Monsanto was deprived, directly or indirectly, from the full enjoyment of the monopoly that a patent confers. Since the answer was yes, the defendant infringed.

As a result of the ruling, the defendant was precluded from using or selling the modified corn, and was required to deliver all of the Roundup Ready corn in his possession to Monsanto. However, the Supreme Court reversed a lower court ruling requiring the defendant to disgorge all of the profits from previous sales to Monsanto.

Federal Circuit Requires Courts to Decide Question of Who is Bound to Arbitrate

In Microchip Tech., Inc. v. U.S. Philips Corp., 367 F.3d 1350 (Fed. Cir. 2004), the Federal Circuit held that the issue of whether two parties agreed to arbitrate is an issue for the court ' not an arbitrator ' to decide. In so doing, the court rejected Ninth Circuit authority stating that an arbitrator could decide the issue.

The case began when Microchip sought a declaratory judgment for non-infringement of several patents owned by Philips. Microchip argued that it was a successor to a license agreement that conveyed rights to practice the Philips patents. Philips disagreed and commenced an arbitration proceeding against Microchip to resolve the issue of successorship of the license. Microchip refused to arbitrate, stating that it had not been a party to the license agreement, and thus was not bound to arbitrate.

The district court denied Philips' motion to compel arbitration, and Philips appealed. Philips relied on Ninth Circuit authority that allowed an arbitrator to decide whether a party was bound to arbitrate unless there was an “independent challenge” to the arbitration clause separate from an attack on the contract as a whole. The Federal Circuit disagreed with Philips, stating that while it was normally obligated to follow regional law, “[w]here regional circuit authority is contrary to governing Supreme Court precedent we need not, and indeed must not, follow it.” The court explained that the Ninth Circuit precedent was at odds with the Supreme Court's decision in John Wiley & Sons Inc v. Livingston , 376 U.S. 543 (1964). In Wiley the Supreme Court determined that whether a party is bound by an agreement with an arbitration clause is a “threshold question” for a court to decide. The present case was remanded to the district court to determine whether Microchip was bound to arbitrate under the license agreement.

Canadian Supreme Court Upholds Patentability of Monsanto's Genetically Engineered Corn

The Canadian Supreme Court found that Monsanto Company's patent claims reciting genes and cells for genetically engineered Canola corn was patentable subject matter, and that a farmer using the modified seed without a license infringed the patent. The corn in question had been genetically modified to be resistant to a brand of weed killer, Roundup. The case was closely watched to determine if this type of technology was patentable subject matter under the Canadian Patent Act, especially since the Canadian Supreme court held that the “Harvard Mouse,” a mouse predisposed genetically to have a certain type of cancer, was deemed not properly patentable under the Act 2 years ago.

The matter began more than 7 years ago when Roundup Ready corn was found growing in defendant's field. The defendant farmer argued that he had not intentionally planted the seed, but that it showed up on his farm by blowing off a passing truck or by cross pollination from nearby fields. Thus, the farmer argued that he did not “use” the patented seed as required by Canadian infringement law. The lower courts dismissed this serendipitous explanation and found that it was more likely that defendant planted the seed. After a discussion related to construction of the term “use” in the statute, the Supreme Court held that the ultimate question was whether Monsanto was deprived, directly or indirectly, from the full enjoyment of the monopoly that a patent confers. Since the answer was yes, the defendant infringed.

As a result of the ruling, the defendant was precluded from using or selling the modified corn, and was required to deliver all of the Roundup Ready corn in his possession to Monsanto. However, the Supreme Court reversed a lower court ruling requiring the defendant to disgorge all of the profits from previous sales to Monsanto.