Rohm Semiconductor USA, LLC v. MaxPower Semiconductor, Inc., No. 21-1709 (Fed. Cir. Nov. 12, 2021) [click for opinion]

In 2007, Rohm Japan and Defendant MaxPower entered into a technology license agreement, which, as amended in 2011, included an agreement to arbitrate. In the arbitration agreement, the parties agreed that arbitration would be conducted in accordance with the provisions of the California Code of Civil Procedure ("CCCP").

In 2019, a dispute arose and MaxPower notified Rohm Japan of its intent to initiate arbitration. Shortly thereafter, Rohm Japan's U.S. subsidiary filed a complaint for declaratory judgment in federal court in the Northern District of California. MaxPower appeared in that case and filed a motion to compel arbitration.

The district court granted the motion, holding that, under the arbitration agreement, the arbitrator is to determine arbitrability. On appeal, the Federal Circuit explained that, without a clear and unmistakable delegation to the arbitrator, the district court should decide the issue of arbitrability.

The issue thus was whether the parties had agreed to arbitrate arbitrability. The court established that the matter constituted an international dispute, even if the complaint was initially filed by Rohm's US subsidiary. This meant that Title 9.3 of the CCCP applied to the dispute, including the jurisdictional provision of §1297.161. Section 1297.161 states that "the arbitral tribunal may rule on its own jurisdiction."

The court rejected Plaintiff's argument that §1297.161 does not clearly and unmistakably give the authority to the arbitrator to decide on arbitrability. The court found that the use of "may" in the section was not meant to be permissive, but rather gave the arbitrator the authority to determine arbitrability where arbitrability was disputed.

The court further determined that the fact that these sophisticated parties incorporated the CCCP into the contract, and that the CCCP includes provisions on the authority of the arbitrator to determine arbitrability, was sufficient to establish clear and unmistakable evidence of the parties' intent on the issue. Accordingly, the court affirmed the district court's decision.

Marilyn Batonga of the Washington, DC office contributed to this summary.