Thursday, March 29, 2012

CAFC discusses arbitration in PROMEGA v. Life Sciences

The bottom line: Because the district court properly compelled arbitration, we affirm. As to the players,

In 2003, Promega granted Invitrogen written consent to assign its rights under the 1996 agreement to IP Holdings, a wholly- owned subsidiary of Invitrogen. On November 21, 2008, Invitrogen merged with Applied Biosystems Inc. (“AB”), one of Promega’s sublicensees, and changed its name to Life Technologies Corporation (“Life Technologies”). IP Holdings remained a wholly owned subsidiary of Life Technologies. AND

In the course of preparing its responses to Promega’s filings, Life Technologies discovered that IP Holdings had not assigned its rights under the 1996 agreement to Life Technologies. Accordingly, IP Holdings served Promega with a demand for arbitration on behalf of IP Holdings. IP Holdings also filed a motion to compel arbitration.

Within the decision:

As the district court noted, Promega cannot have it both ways; it cannot deny IP Holdings the right to arbitrate because it assigned its right to Life Technologies, and then consequently deny Life Technologies the right to arbitrate because Promega did not grant IP Holdings consent to assign its rights. See Arbitration Order, slip op. at 8. Because there was no assignment, the rights under the 1996 agreement remain with IP Holdings. Because there is no dispute that IP Holdings remains a corporation in good standing under Delaware law, we conclude that there is a valid agreement between Promega and IP Holdings to arbitrate.


the Supreme Court has instructed that “the relevant federal law requires piecemeal resolution when necessary to give effect to an arbitration agreement.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983). The district court’s duty to compel arbitration is not altered by the fact that non-arbitrable claims may remain pending in the district court. See, e.g., Klay v. All Defendants, 389 F.3d 1191, 1204 (11th Cir. 2004) (recognizing the district court’s authority to compel arbitration of arbitrable claims, while allowing related non-arbitrable claims to proceed before the district court).

Judge Newman dissented:

Although arbitration may be a salutary alternative to litigation, there is no agreement to arbitrate as between the parties in interest for this dispute. No consent was given to assignment of the contract to Life Technologies, although consent is explicitly required by the terms of the prior contract.
In the absence of agreement to arbitrate, arbitration cannot be imposed. I respectfully dissent from the court’s contrary ruling.


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