The opinion of the court was delivered by: JOHN BATES, District Judge
Plaintiff Institut Pasteur ("Pasteur") brings this action under
35 U.S.C. § 146 to review certain decisions of the Board of Patent
Appeals and Interferences of the United States Patent Trademark Office.
Defendant Chiron Corporation ("Chiron") prevailed in a patent
interference against Pasteur's predecessors in interest regarding a
disputed test for HIV antibodies. Chiron has moved to stay these
proceedings and compel arbitration, citing an HIV Cross-License Agreement
of 1993 ("the Agreement"), signed by Pasteur and Chiron, that arguably
requires submission of this dispute to binding arbitration. Pasteur
insists that it joined the Agreement for limited purposes only and did
not bind itself to the provision of the Agreement compelling arbitration.
Also before the Court is Chiron's motion seeking relief from its
obligations under FED. R. Civ. P. 26(f) during the pendency of the motion
to compel arbitration.
Pasteur is a private non-profit medical research foundation established
under the laws of France. Chiron is a biotechnology company specializing
in vaccines, blood testing, and
biopharmaceuticals. It is incorporated in Delaware and has its
principal place of business in California.
The cross-license agreement states that it was "made by and among
Chiron . . . Ortho Diagnostics Systems, Inc., a New Jersey Corporation
(`Ortho'), Pasteur Sanofi Diagnostics, a corporation formed under the
laws of France (`PSD'), and Genetic Systems Corporation, a Delaware
Corporation (`GSC')." Agreement at Preamble. It further states that
Pasteur "joins in this Agreement for the purposes set forth herein."
Id. Chiron and Ortho were at the time of the Agreement engaged
in a long-term collaborative research venture involving the products
subject to the Agreement. PSD and GSC each owned or controlled patents to
HIV tests very similar to those developed by Chiron and Ortho. An
underlying purpose of the Agreement, therefore, was the desire of PSD and
GSC on the one hand and Ortho and Chiron on the other "to provide each
other with freedom of operation under their respective patent rights, and
thereby to avoid the possible mutual blocking of their patent rights and
the uncertainty and expense of potential patent disputes." Id.
at Background ¶ 4. Accordingly, Ortho and Chiron granted to PSD and
GSC nonexclusive licenses under certain Ortho and Chiron patents to
manufacture and market potentially disputable HIV products in specified
countries. Id. at §§ 2.1, 2.2. In return, PSD and GSC
granted to "the Ortho/Chiron parties" nonexclusive licenses under PSD and
GSC patents*fn1 to manufacture and market similar HIV products in other
countries. Id. at §§ 2.3, 2.4.
In Section 2.8 of the Agreement, "[t]o further ensure complete freedom
hereunder," Pasteur granted to the Ortho/Chiron parties an option
to obtain a license as to some patents held directly by Pasteur under
certain circumstances. See id. §§ 2.8.1, 2.8.2. "Except as
set forth herein," the Agreement states, "such license from Institut
Pasteur shall be subject to the same use limitations, terms and
conditions as the licenses granted hereunder to the Ortho/Chiron Parties
by PSD and GSC." Id. at § 2.8.1. The Ortho/Chiron parties
agreed to pay royalties directly to Pasteur for any licenses granted
under Section 2.8. Id. Finally, "[f]or the avoidance of doubt,
PSD, GSC, and Institut Pasteur further agree[d] not to assert (or assist
others in asserting) against the Ortho/Chiron Parties, solely with
respect to their activities that are licensed under Sections 2.3 and 2.4,
any patent rights specifically relating to HIV-1 and/or HIV-2, if any,
that are not otherwise provided for under this Agreement." Id.
at § 2.8.3.
A similar concern with warding off disputes is apparent in Sections 6.3
and 9.10 of the Agreement. In the former section, it was agreed that:
The parties shall cooperate reasonably to resolve
and withdraw from any patent interferences, and
withdraw from any patent oppositions, between them
with respect to Licensed Ortho/Chiron Patents
owned by Ortho, Chiron or their Affiliates or
Licensed PSD/GSC Patents owned by PSD, GSC or
their Affiliates, or Institut Pasteur, to the
extent the coverage of claims involved in such
interference or opposition is limited to the uses
licensed under this Agreement.
Id. at § 6.3.*fn2
Substantiating the Agreement's
concern for cooperation, Section 9.10 outlines a dispute resolution
procedure at some length. Section 9.10.1 provides:
The parties recognize that bona fide disputes as
to certain matters may arise from time to time. In
the event of the occurrence of such a dispute,
either party may, by written notice
to the other party, have such dispute referred
to the respective officers designated below or
their successors, for attempted resolution by good
faith negotiations within 30 days after such
notice is received. The designated officers for
Chiron and Ortho are their respective Presidents
or Chairmen; the designated officers for GSC and
PSD are their respective Presidents or Chairmen.
In the event the designated officers are not able
to resolve the referred dispute within the 3 0-day
period, either party may invoke the provisions of
Section 9.10.2 within 15 days following the 30-day
Id. Section 9.10.2 provides, in turn, that "[a]ny
dispute, controversy or claim arising out of or relating to the validity,
enforceability or performance of this Agreement shall be settled by
binding Alternative Dispute Resolution (`ADR') in the manner described"
in the succeeding nine subsections. Id. However, the Agreement
acknowledges that some disputes related to its subject matter will not be
subject to ADR. Section 9.10.6 states that "[n]othing in this Section
9.10 shall be deemed to preclude a party from bringing suit against the
other party in a court of competent jurisdiction to enforce, or enjoin
infringement of, such parties intellectual property rights."
Finally, Section 9.15 states: "Institut Pasteur, by executing this
Agreement, hereby signifies its consent to the terms hereof, agrees to
the provisions of Section 2.8, and agrees to take no action which would
have the effect of frustrating this Agreement." Id. The words
"For Approval and as to Section 2.8" appear above the signature block for
A. Applicable Legal Standards
The parties do not dispute the applicability of the Federal Arbitration
Act, 9 U.S.C. § 1 et seq. ("FAA"), to Chiron's motion. In relevant
part, the FAA provides: " [a] party aggrieved by the alleged failure,
neglect, or refusal of another to arbitrate under a written agreement for
arbitration may petition any United States district court which, save for
such agreement, would have jurisdiction . . . of the subject matter of
a suit arising out of the controversy between the parties,
for an order directing that such arbitration proceed in the manner
provided for in such agreement." Id. at § 4. Further,
"upon being satisfied that the making of the agreement for arbitration
or the failure to comply therewith is not in issue, the court shall make
an order directing the parties to proceed to arbitration in accordance
with the terms of the agreement. . . . If the making of the arbitration
agreement . . . be in issue, the court shall proceed summarily to the
trial thereof." Id.
The Supreme Court has determined that "arbitration is a matter of
contract and a party cannot be required to submit to arbitration any
dispute which he has not agreed so to submit." Steelworkers v.
Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960); see also
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002). While
the courts have adhered to a "liberal federal policy favoring arbitration
agreements," Moses H. Cone Memorial Hospital v. Mercury Construction
Corp., 460 U.S. 1, 24-25 (1983), the question whether the parties
have submitted a particular dispute to arbitration is "an issue for
judicial determination unless the parties clearly and unmistakably
provide otherwise." AT & T ...