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Illumina (one of the plaintiffs) sued Ariosa for infringement of its non-invasive prenatal diagnostic test patents, and Ariosa countersued for breach of a supply agreement.  The supply agreement included an arbitration clause and Illumina moved to compel arbitration.   The district court denied Illumina’s motion to compel arbitration.  The Federal Circuit affirmed.

The Federal Circuit noted that “a court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute.” While the “Federal Arbitration Act establishes a national policy favoring arbitration,” the “presumption in favor of arbitrability applies only where the scope of the agreement is ambiguous as to the dispute at hand, and . . . where the presumption is not rebutted.”

The Federal Circuit reasoned that the arbitration provision in the agreement between the parties “is unambiguous and makes clear that disputes relating to the issues of patent scope and infringement are not subject to mandatory arbitration,” and Defendant’s counterclaims “are not about licensing or a license defense in the abstract—they are centered on whether [Defendant] is licensed to use, and thus is immunized from the infringement of, the asserted claims of the ’794 patent.” The Federal Circuit noted that the “Ninth Circuit and courts interpreting California law have held that the phrase ‘relating to’ should be given broad meaning, in contrast to other prefatory phrases, such as ‘arising hereunder’.” Accordingly, the Federal Circuit found that the arbitration clause of the agreement applied only to issues “that are not patent-related, such as failure of performance and defenses against the enforceability of or validity of the supply agreement itself.” 

Verinata Health, Inc. et al. v. Ariosa Diagnostics, Inc. et al., Case No. 2015-1970 (July 26, 2016); Opinion by: Reyna, joined by Clevenger and Wallach; Appealed From: United States District Court for the Northern District of California, Illston, J.  Read the full opinion here.

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