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By Peter Leung
Jan. 19 — Dow AgroSciences LLC has failed to stay an arbitration award against it for patent infringement, even though there is a pending proceeding to reexamine the validity of the underlying patents.
An arbitrator may exercise its discretion when deciding whether to stay its proceedings pending the Patent and Trademark Office's reexamination of the underlying patents, the U.S. District Court for the Eastern District of Virginia wrote in a Jan. 15 ruling. In both court and arbitration proceedings, the court explained, a stay pending PTO proceedings is not automatic, and whether to do so will depend on the competing interests in each instance or whether there is agreement to do so.
The case involves a licensing agreement between patent holder Bayer Cropscience AG and several defendants, including Dow AgroSciences. Nearly 20 years into the agreement, the plaintiff sued the defendants for patent infringement. Dow AgroSciences successfully stayed the case after asserting the arbitration clause in the agreement.
The arbitrator returned a decision in favor of Bayer Cropscience, which then moved to confirm the arbitration award. Dow Agroscience moved to stay the award pending the PTO proceedings.
The court noted that the arbitrator had already denied Dow AgroSciences' earlier motion to stay. Because public policy dictates that courts take a very deferential stance when reviewing arbitration awards, there are no grounds to overturn that decision, the Virginia court wrote.
“In reviewing an arbitration award, the court sits to determine only whether the arbitrator did his job—not whether he did it well, correctly, or reasonably, but simply whether he did it,'” the court explained.
The court also found that the Patent Act specifically contemplated such a case. It pointed out that Section 294(c) states that parties may agree to modify an arbitration award based on a patent later found invalid or unenforceable. This section, the court explained, shows that Congress had considered this very issue and decided that a subsequent PTO finding of invalidity does not automatically undermine a final arbitration award, unless there is an agreement to modify. The court further pointed out that the parties did not have such an agreement.
The court also granted Bayer Cropscience's motion to confirm the award while denying Dow AgroSciences' motion to vacate the award, citing again the fact that courts have very limited grounds to review arbitration decisions.
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