The opinion of the court was delivered by: John D. Bates United States District Judge
Plaintiff Institut Pasteur brings this action to appeal the decisions of the United States Patent and Trademark Office awarding priority of invention for a diagnostic test for HIV antibodies to defendant Chiron Corporation ("Chiron"). Chiron has filed a motion to compel arbitration and to stay this action pending the outcome of the arbitration, arguing that a 1993 cross-license agreement signed by Chiron and Institut Pasteur compels arbitration of certain issues in this action. Institut Pasteur maintains that it signed the cross-license agreement for limited purposes only and that it is not bound to the arbitration provision in the agreement.
In a March 2004 opinion, the Court explained that it was not beyond dispute, on the record then before the Court, that there had been a meeting of the minds between Chiron and Institut Pasteur on an agreement to arbitrate. The Court therefore held a two-day trial in September 2004 to determine whether such an agreement existed. The Court has now carefully considered the evidence and testimony presented at the trial, the memoranda of the parties, the argument of counsel at a hearing on the issue, and the entire record in the case, and concludes that, in the specific circumstances of this case, Institut Pasteur should not be able to evade an arbitration provision contained in a contract that it knowingly signed. The Court will therefore enter judgment in favor of Chiron on the issue of the arbitrability of the HIV Cross-License Agreement.*fn1
Institut Pasteur is a private, non-profit medical research foundation organized under the laws of France. JTX 45, at 1; 9/7/2004 A.M. Tr. at 88:21-89:8.*fn3 During the period relevant here, Institut Pasteur was a minority shareholder of Pasteur Sanofi Diagnostics ("PSD"), a company that develops, manufactures and sells medical diagnostic products. 9/7/2004 A.M. Tr. at 91:12-91:13.*fn4 Institut Pasteur and PSD were parties to a cooperation agreement under which PSD had a right of first refusal to a license of any of Institut Pasteur's intellectual property relating to diagnostics. JTX 1, arts. 5.1, 5.10; 9/7/2004 P.M. Tr. at 90:23-91:3, 94:7-95:1. The agreement also allowed PSD to sub-license this property to third parties, provided that Institut Pasteur had given its"prior agreement to the signing of the sub-license in question" and was a "signatory to said sub-license." JTX 1, art. 5.10; 9/7/2004 P.M. Tr. at 94:7-95:1; 9/8/2004 A.M. Tr. at 5:6-7:14, 8:17-8:23.
Pursuant to this agreement, Institut Pasteur licensed to PSD its intellectual property relating to diagnostics for the human immunodeficiency virus (HIV), and PSD in turn sublicensed this property in certain geographic areas to one of its subsidiaries, Genetic Systems Corporation (GSC). 9/8/2004 A.M. Tr. at 11:13-11:17; 12:22-13:16. In 1992, these companies -- Institut Pasteur, PSD, and GSC -- began exploring the possibility of a partnership with Chiron and Ortho Diagnostics Systems, Inc. ("Ortho"),*fn5 two companies that working together had developed a strong portfolio of patents in hepatitic C virus (HCV) immunodiagnostics, and were gaining a foothold in HIV immunodiagnostics as well. 9/7/2004 A.M. Tr. at 35:1-35:12; 9/8/2004, A.M. Tr. at 12:22-13:8.
The various entities negotiated for several months in 1993. The negotiations culminated in a series of contracts in late 1993, three of which are relevant to the instant dispute. The first is an HIV Cross-License Agreement, in which Institut Pasteur, PSD and GSC agreed to license to Ortho and Chiron, and Ortho and Chiron agreed to license to PSD and GSC, intellectual property relating to HIV immunodiagnostics in certain countries. JTX 45. The second contract is an HCV License Agreement, in which Ortho and Chiron licensed to PSD certain intellectual property relating to HCV immunodiagnostics in certain countries. JTX 49. Finally, the third contract is a Non-Assertion Agreement, in which Institut Pasteur agreed not to use certain of its HCV patents to challenge the HCV-related patents of Ortho and Chiron. JTX 44.*fn6
I. Text of the Agreements
The present dispute concerns the arbitration clause in the HIV Cross-License Agreement. The clause is located in section 9.10.2, which provides that"[a]ny dispute, controversy, or claim arising out of or relating to the validity, construction, enforceability or performance of this Agreement shall be settled by binding Alternative Dispute Resolution" by a neutral arbitrator selected by the Center for Public Resources in New York City and applying New York law. Id. §§ 9.10.2, 220.127.116.11. The clause is at the center of the present dispute because Chiron maintains that certain other provisions in the HIV Cross-License Agreement foreclose Institut Pasteur from challenging the decisions in the Patent and Trademark Office, and that the interpretation of these provisions is delegated to an arbitrator under section 9.10.2. The parties do not seem to dispute, at least before this Court, that the question of whether these provisions in fact bar this action is a "dispute" that "aris[es] out of or relat[es] to the validity, construction, enforceability or performance" of the cross-license agreement within the meaning of section 9.10.2. The only question presently before this Court is whether Institut Pasteur is bound to the arbitration provision at all.
The parties direct the Court to several provisions in the agreement that they believe bear on this question:
First, the preface to the cross-license agreement states that it is "made by and among" Chiron, Ortho, PSD, and GSC. The preface closes with a statement that Institut Pasteur "joins in this Agreement for the purposes set forth herein." Id. at 1.
Second, section 2.8 of the Agreement confers certain rights and obligations upon Institut Pasteur: (I) Ortho must attempt to obtain clarification regarding the scope of one of its sublicenses within six months of the agreement, and "such period shall be extended with Institut Pasteur's prior consent (which consent shall not be unreasonably withheld) once by up to six additional months," id. § 2.8.1; (ii) Institut Pasteur grants a short-term option to Ortho and Chiron to obtain a license for certain patents, and Ortho and Chiron must pay a royalty to Institut Pasteur calculated by a formula set out in the agreement, id. §§ 2.8.1, 2.8.2; (iii) "Except as set forth herein, 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.; and (iv) "PSD, GSC, and Institut Pasteur... agree not to assert (or assist others in asserting) against the Ortho/Chiron Parties" certain patent rights, id. § 2.8.3.
Third, section 6.3 provides that "[t]he 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. § 6.3. The section continues: "In addition, under a separate agreement of even date herewith, Chiron and Institut Pasteur have agreed to work expeditiously toward the withdrawal of their oppositions and/or potential oppositions against each other's patent rights specifically relating to HIV-1 and/or HIV-2." Id.
Fourth, section 9.6 states: "This Agreement is entered into solely for the benefit of the parties hereto, and the provisions of this Agreement shall be for the sole and exclusive benefit of such parties. Nothing herein contained will be deemed to create any third party beneficiaries or confer any benefit or rights on or to any person not a party hereto, and no person not a party hereto shall be entitled to enforce any provisions hereof or exercise any rights hereunder." Id. § 9.6.
Fifth, section 9.10.1 of the Agreement states:
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.... 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 30-day period, either party may invoke the provisions of Section 9.10.2 within 15 days following the 30-day period.
Sixth, section 9.15 provides that "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. § 9.15.
Seventh, there are certain provisions in the Agreement where Institut Pasteur is not mentioned, although Ortho, Chiron, GSC, and PSD are. See, e.g., id. § 5.1 (warranties), § 7.2 (breaches and cure), § 8.1 (confidential information), § 9.8 (indemnification).
Eighth, and finally, the Agreement concludes with the statement that "the parties have duly executed this Agreement on the date(s) written below." Id. at 22. Immediately following this language is a signature block for each of Chiron, PSD, Ortho, GSC, and Institut Pasteur.
Above Institut Pasteur's signature block is the phrase "For Approval and as to Section 2.8." Id. No language is found above any of the other signature blocks.
The Non-Assertion Agreement and the HCV License Agreement differ from the HIV Cross-License Agreement in certain ways that are relevant to this dispute. For example, the preface of the Non-Assertion Agreement indicates that it was"made by and among" Chiron, Ortho, and Institut Pasteur; the Agreement contains an arbitration provision that chooses a Zurich forum applying French law; and there is no qualifier at all above Institut Pasteur's signature block. JTX 44 at 1, 5, § 6.2. The HCV License Agreement does not list Institut Pasteur in the preface at all; it contains an alternative dispute resolution clause that specifies a New York forum applying New York law; and the words "For Approval" appear above Institut Pasteur's signature block. JTX 49 at 1, 25, § 13.10. Nonetheless, as is true of the HIV Cross-License Agreement, the HCV License Agreement contains a provision stating that Institut Pasteur, "by executing this Agreement, hereby signifies its consent to the terms hereof and agrees to take no action which would have the effect of frustrating this Agreement." Id. § 13.15.
The evidence presented at trial reveals the negotiating history of these agreements to have proceeded as follows. After an initial exchange of correspondence, the companies met for the first time to discuss an accord in New York City in February 1993. Representatives from PSD, GSC, Ortho and Chiron were present at the meeting, as was Alain Gallochat, the general counsel of Institut Pasteur. In fact, Gallochat gave a presentation on Institut Pasteur's patent position and the nature of its license agreement with PSD. 9/7/2004 A.M. Tr. at 41:19-42:7; 9/7/2004 P.M. Tr. at 33:24-34:10; 9/8/2004 Tr. at 75:19-76:18. At one point in the discussions, Gallochat asked representatives ...