◊ VRP Law-The Intellectual Property and Employment Law Blog.
Provided by Vihar R. Patel and Sponsored by Enterprise Law Group, LLPArchive for November, 2009
Failure to contest arbitration properly, can waive access to courts!
Plaintiff was acquired by a new company and sued the defendant on a breach of contract theory in an American Arbitration Association (“AAA”) Complaint. The AAA Complaint alleged breach of a written agreement; however, Defendant counterclaimed requesting reformation or rescission of the contract from the arbitrator. The Defendant asserted a mutual mistake of fact as the basis for seeking a reformation remedy, and alternatively sought rescission of the contract.
In the arbitration proceeding, the Plaintiff asserted that reformation was not necessary as there was no mutual mistake of fact and no scrivener’s error. However, Plaintiff did not argue that an arbitrator could not reform a contract. Subsequently, Plaintiff filed a motion with the trial court to vacate the arbitration award asserting that the arbitrator lacked the authority to reform the 2004 written contract.
The trial court held that Plaintiff’s failure to assert at arbitration that the Arbitrator lacked the authority to reform the contract was a waiver of the argument. The trial court held that to object to arbitration, a party must object to the arbitration proceeding in a timely manner. The appellate court affirmed and stated that there is a mandate by the Illinois Supreme Court that arbitration awards should be construed as to uphold their validity whenever possible.
The presumption is that an arbitrator did not exceed his or her authority, and grant a petition to vacate an arbitration award only in extraordinary circumstances. Judicial review of an arbitration award is extremely limited. Consequently, litigators must be more cognizant and advise their clients of the need to assert all claims and arguments in arbitration proceedings.
See: First Health Group v. Ruddick, N0 1-083236; 2009 WL 1940702 (1st Dist). First Health Group Corp_Arbitration.
Discrimination based on genetic information prevented by GINA!
GINA is not the name of my favorite aunt, but the acronym for the Genetic Information Nondiscrimination Act (42 USC 2000 et. seq.). GINA prevents the discrimination of individuals on the basis of their genetic information for providing health insurance (Title I) and employment (Title II). Title II will be effective as of November 21, 2009.
GINA will prevent “covered entities” (employers, labor unions, etc…) from discrimination against current and former employees, union members, apprentices and trainees based on their genetic information. GINA has prohibitions against intentionally acquiring information about your employees, union members, apprentices, and trainees. If a “covered entity” has genetic information about these individuals, then it must keep the information in the strictest of confidence.
“Genetic Information” is defined as follows: any information about an individual’s genetic tests, including requesting or receiving genetic services, the individual’s family members’ genetic tests or the manifestation of diseases or disorders among the individual’s family members. “Genetic tests” is defined as an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detects genotypes, mutations or chromosomal changes.
GINA authorizes the EEOC to enforce its prohibitions against discrimination, acquisition and dissemination of genetic information. Employees must file a charge with the EEOC to enforce their rights under GINA. Feel free to contact us to understand how to implement policies and practices that comply with GINA, or to assert your rights under GINA.
Pooled Patent Licenses, Patent Misuse and Price Fixing
Recently, the Federal Circuit agreed to hear the Princo v. Phillips case en banc to decide whether or not Sony, Phillips, Taiyo Yuden and Ricoh’s agreement to pool patents and jointly license technology relating to the “Orange Book” standard for making CD-Rs and CD-RWs was a form of Patent Misuse and price fixing amounting to an Antitrust violation? Phillips provided the joint licenses to this technology to Princo, but Princo stopped paying the fees for the license and claimed Patent Misuse.
Patent Misuse is not a new defense, but an old equitable defense. The idea behind Patent Misuse is to prevent business practices that do not violate any law, but drew anticompetitive strength from the patent right and thus were deemed contrary to public policy. Phillips I, 424 F.3d at 1134 (quoting Maillinckrodt, Inc., v. Medipart Inc., 976 F.2d 700, 704 (Fed. Cir. 1992). Typically, in a Misuse analysis, courts will focus on determining whether or not the patentee has imposed conditions or restraints that derive their force from the patent, and increase the scope of the patent with anticompetitive effect. Phillips I, 424 F.3d at 1134 (quoting C.R. Bard Inc. v. M3 Sys., Inc., 157 F.3d 1340, 1372 (Fed. Cir. 1998).
In Princo v. Phillips, the court recently held that there was Patent Misuse, because the Lagadec Patent was a non-essential patent that was pooled into the licensing agreement. In other words, the court held that the pooling of a patent that was not essential to the “Orange Book” standard was an expansion of the scope of the other patents. The Court also emphasized and seemed to find that there was an agreement by Sony and Phillips to combine and pool their individual (digital and analog) solutions to the wobble signal that is used to control the recording speed in creating CD-Rs/RWs.
The court focused on the fact that only one of these two solutions is needed and found that the Lagadec Patent (digital) solution was non-essential. The court stated that since Sony and Phillips ultimately chose to define the Orange Book standard with the analog solution, the Lagadec Patent was non-essential. The Federal Circuit has agreed to hear a motion for a rehearing en banc, and may make some important changes to the patent licensing, misuse and antitrust standards.
For a review of the Petition for Rehearing from the ITC, please see attached: Princo-Petition for Rehearing en banc – ITC
