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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.
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