Be Careful What You Agree To: Incorporated Rules Clearly and Unmistakably Delegate Determining Arbitrability
In Rohm Semiconductor USA, LLC v. Maxpower Semiconductor, Inc., Appeal No. 21-1709, the Federal Circuit held that an arbitration agreement, which incorporated the California Code of Civil Procedure by reference, delegated determining arbitrability and supported dismissal of a district court action.
Rohm Semiconductor USA, LLC (“Rohm USA”) sued MaxPower Semiconductor, Inc. (“MaxPower”) for declaratory judgment of non-infringement of four patents related to semiconductors. Rohm USA also petitioned for inter partes review of the four patents. The dispute stemmed from a technology license agreement (“TLA”) between MaxPower and Rohm USA’s parent company, Rohm Co., Ltd. (“Rohm Japan”). An amendment to the TLA included an arbitration agreement and provided that arbitration would be conducted according to the California Code of Civil Procedure (“CCCP”). Based on the arbitration agreement, the District Court granted MaxPower’s motion to compel arbitration and to dismiss Rohm USA’s declaratory judgment claims without prejudice. Rohm USA appealed.
The Federal Circuit affirmed the dismissal. Under First Options of Chicago, Inc. v. Kaplan, “[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence that they did so.” 514 U.S. 938, 944 (1995). Rohm USA argued that the CCCP was ambiguous because it contained two provisions: § 1297.161, which states that an arbitrator “may rule on its own jurisdiction” in an international commercial arbitration; and § 1281.2, which states that “the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists.” The Federal Circuit held that the CCCP was not ambiguous because § 1297.161, which Rohm USA alleged was contradicted by § 1281.2, expressly supersedes § 1281.2 with respect to international commercial arbitrations. Further, the Federal Circuit found that the case was fundamentally an international dispute between MaxPower, a California corporation, and Rohm Japan, a Japanese company. The Federal Circuit also held that the phrase “[t]he arbitral tribunal may rule on its own jurisdiction” was mandatory, in part, by comparing § 1297.161 to language in the United Nations Commission on International Trade Law’s similar provision, which courts have held to be mandatory. The Federal Circuit distinguished a Third Circuit case wherein arbitration rules incorporated by reference were held to not clearly and unmistakably delegate arbitrability due to requiring a “daisy-chain of cross-references from the contract to the [arbitration organization] to the [arbitration organization’s] fifty-plus sets of rules” to reach the alleged delegation. The Federal Circuit found that there was no such “daisy-chain of cross-references” in the case before it.
Lack of Written-Description Support for Claimed Ranges Makes Parent Application Prior Art
In Indivior UK Limited v. Dr. Reddy’s Laboratories S.A., Appeal No. 20-2073, the Federal Circuit held that claims of a continuation application were anticipated because they were not entitled to the filing date of a parent application that failed to support the ranges of numerical values claimed in the continuation.
Dr. Reddy’s Laboratories petitioned for inter partes review (IPR) of Indivior’s patent claims. The Board held that the challenged claims, which issued from a continuation application, were not entitled to the filing date of a parent application. According to the Board, the parent application lacked written-description support for numerical ranges recited in the challenged claims, and therefore the parent application was prior art. Because the parent application disclosed values within the claimed ranges, the Board held that it anticipated the challenged claims. Indivior appealed.
The Federal Circuit found substantial evidence for the Board’s factual findings concerning the lack of written-description support. Although some of the claimed ranges could be derived mathematically from certain entries in a table in the parent application, the Federal Circuit held that this table was insufficient to support the claimed ranges.
Judge Linn dissented, arguing that the majority ignored two precedential cases showing that the parent application provided adequate support for the claimed ranges.
Written Description: What is the Proper “Dosage” to Satisfy This Requirement?
In Biogen International GMBH v. Mylan Pharmaceuticals Inc. Appeal No. 20-1933, the Federal Circuit held that a specification may not demonstrate “possession” of an invention in satisfaction of the § 112 written description requirement even though the specification lists dosage ranges encompassing the claimed limitation.
Biogen sued Mylan for infringement of a patent directed to a method of treating multiple sclerosis (MS) with dimethyl fumarate (DMF). Mylan counterclaimed asserting invalidity and non-infringement. Claim 1 recited inter alia “wherein the therapeutically effective amount of [DMF]… is about 480 [milligrams] per day [DMF480].” The patent specification recited inter alia “an effective dose of DMF… can be… from about 240 mg to about 720 mg per day; or from about 480 mg to about 720 mg per day; or about 720 mg per day.” The district court found the asserted claims to be invalid for lack of written description because the specification failed to describe that the inventors possessed the claimed therapeutically effective dose of DMF to treat MS. Biogen appealed.
The Federal Circuit affirmed invalidity based on a lack of written description. First, the specification’s reference to DMF480 was part of a wide dosage range. Specifically, DMF480 appeared in only a single range among multiple ranges and appeared at the end of that range. The Federal Circuit contrasted this with the specification’s reference to DMF720 independently as a therapeutically efficacious dose. Despite the wide range of potential doses, Biogen argued that a skilled artisan would be drawn to the DMF480 dose because it was “anchored” to the DMF720 dose, which was known at the time to be effective. However, the Federal Circuit noted that the specification also “anchored” other doses to DMF720 that were known to be ineffective (e.g., DMF240) as well as doses that would far exceed therapeutic efficacy (e.g., DMF1,000). The Federal Circuit further noted that one of the inventors stated that his research was not focused on informing the clinical dosing of DMF and “denied that his research could be extrapolated to a clinical dose of DMF.” Moreover, Biogen’s expert conceded that the sole DMF-dosage paragraphs in the specification did not teach a person of ordinary skill in the art that DMF480 would be therapeutically effective for treating MS. Finally, the Federal Circuit noted that the patent specification included only the single paragraph teaching potential DMF dosage levels and that this paragraph was not linked to the treatment of any specific disease (e.g., MS).
Judge O’Malley dissented, arguing that the district court erred in applying judicial estoppel to prevent Biogen from arguing a distinction between the clinical and therapeutics effects of DMF480. Judge O’Malley asserted that this error led to a fundamental misunderstanding of what was claimed and impacted the district court’s obviousness and written-description analyses.