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Arbitration, Except During Inter Partes Review

Posted by Thomas P. Howard | Sep 09, 2021 | 0 Comments

By James Juo.

There is a strong federal policy favoring arbitration agreements which is reflected in the Federal Arbitration Act (FAA) and the case law, see, e.g., AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346 (2011). Also, 35 U.S.C. § 294 states that a contract involving a patent may require arbitration of “any dispute relating to patent validity or infringement arising under the contract.” Where a party subject to such an arbitration clause still files a lawsuit, the other party often will move to have the case stayed or dismissed in favor of arbitration.

The Federal Circuit, however, recently confronted whether an inter partes review (“IPR”) proceeding before the Patent Trial and Appeal Board (“PTAB”) should be dismissed in favor of arbitration. In re MaxPower Semiconductor, No. 2021-146 (Fed. Cir. Sept. 8, 2021).

MaxPower had licensed certain patents to Rohm Semiconductor for power transistor technology, and that license included an arbitration provision. When Rohm developed a new silicon carbide transistor and suggested it was not covered by the license, MaxPower disagreed and stated it would initiate arbitration. Rohm, however, filed an IPR petition with the PTAB which held that there was no statute, rule, or policy that would preclude the Board from acting on the Petition.

Noting that the PTAB's decision on whether to institute inter partes review proceedings is “nonappealable” under 35 U.S.C. § 314(d), the Federal Circuit ruled that mandamus to review those decisions was inappropriate because it would in effect be a means of avoiding the statutory prohibition on appellate review of agency institution decisions. See In re Power Integrations, Inc., 899 F.3d 1316 (Fed. Cir. 2018).

Also, the collateral order doctrine did not warrant immediate review because that doctrine also requires that rights will be irretrievably lost in the absence of an immediate appeal, see Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214 (Fed. Cir. 2013); and MaxPower still could meaningfully raise its arbitration-related challenges after the PTAB's final written decision.

As for 9 U.S.C. § 16(a)(1) of the FAA, that section is limited to courts such as United States district courts. The PTAB does not fall within those categories.

In denying mandamus, the Federal Circuit, however, did suggest in a footnote that MaxPower could seek to have a district court enjoin Rohm from proceeding with the IPR based on the arbitration provision.

In dissent, Judge O'Malley wrote that while she agreed that interlocutory appeals of the PTAB's institution decisions are not appealable under Section 314(d); the “denial of a writ of mandamus in this case allows the Patent Trial and Appeal Board to add a new caveat to Congress's clear instruction that agreements to arbitrate patent validity shall be ‘valid, irrevocable, and enforceable'—i.e., except during inter partes review” which “cast[s] a shadow over all agreements to arbitrate patent validity, which, after today, apply only in district courts and not in inter partes review proceedings.”

About the Author

Thomas P. Howard

Thomas Howard is an experienced trial lawyer that handles intellectual property litigation nationwide, including copyright, trademark, trade secret and patent litigation, as well as complex civil litigation, including breach of contract, interference with contract, breach of fiduciary duty, conspiracy, fraud and fraudulent transfer of assets.


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