Monday, August 12, 2013
Ninth Circuit Leaves Determination of Arbitrability to the Arbiter in Oracle America v. Myrida Group
The facts of this case are complex and require an understanding of computing that I Iack, but what it seems to come down to is that Myriad Group (Myriad) had some licenses to use Java trademarks and the Java programming language developed by Oracle America (Oracle). The parties dispute the terms of the licenses and as a result Oracle alleges that Myriad had been using the trademarks and the programming language without paying for them, thus infringing upon Oracle's intellectual property rights. Oracle sued in the Northern District of California alleging breach of contract and violation of intellectual property rights, while Myriad sued Oracle in Delaware alleging breach of contract.
Myriad moved to compel arbitration in the Northern District of California pursuant to an arbitration clause that provided for arbitration of any claim relating to intellectual property rights "in accordance with the rules of the United Nations Commission on International Trade Law (UNCITRAL) (the 'Rules') in effect at the time of the arbitration as modified herein . . . " The District Court granted Myriad's motion with respect to Oracle's breach of contract claim only, finding that the UNCITRAL Rules do not provide the arbitrator with exclusive jurisdiction to determine the scope of its own jurisdiction.
On July 26, 2013, the Ninth Circuit issued its opinion in Oracle America, Inc. v. Myriad Group A.G. and reversed the District Court’s partial grant of Myriad’s motion to compel arbitration.
The Ninth Circuit began by noting that, while public policy favors arbitration agreements, there is a presumption that courts should decide which issues are arbitrable. Nonetheless, a court should grant a motion to compel arbitration to decide issues of arbitrability if the parties’ arbitration provision “constitutes clear and unmistakable evidence that the parties intended to arbitrate arbitrability.” While the Ninth Circuit had never decided whether UNCITRAL’s Rules constitute such evidence, both the Second Circuit and the D.C. Circuit had concluded that the 1976 version of the UNCITRAL Rules constitutes clear and unmistakable evidence that the parties to an agreement governed by the Rules intended to arbitrate questions of arbitrability. Although the 2010 version of UNCITRAL’s Rules might have been at issue in this case, the Ninth Circuit ruled the differences betwee the 1976 and 2010 versions do not affect the outcome on this issue.
The Court remanded the case to the District Court for proceedings consistent with its opinon.