United States District Court, N.D. California, San Jose Division
ORDER GRANTING MOTION TO COMPEL ARBITRATION; STAYING
ACTION RE: DKT. NO. 16
J. DAVILA UNITED STATES DISTRICT JUDGE.
an action for copyright infringement. Defendant St. Jude
Medical, LLC (“St. Jude Medical”) moves to compel
arbitration under the Federal Arbitration Act
(“FAA”), or in the alternative, to dismiss the
action. The court finds it appropriate to take the motion
under submission for decision without oral argument pursuant
to Civil Local Rule 7-1(b). For the reasons set forth below,
the motion to compel arbitration will be granted.
QAD Inc. (“QAD”) designs, develops, produces, and
markets, through the granting of nonexclusive licenses,
Enterprise Resource Planning [“ERP”] software and
related products and support services. Compl. ¶ 3. In
1995, QAD and St. Jude Medical's corporate predecessor,
St. Jude Medical, Inc. (“SJM”) entered into an
agreement to license QAD's software. Compl. Ex. A
(“License Agreement”), ¶ 12.1. The License
Agreement provided that SJM would receive “a
non-exclusive license, for perpetual use, ” of certain
software products created by QAD. Id. ¶ 2.1.
The License Agreement was to remain in effect for ten years,
but provided that the license would survive the termination
of the License Agreement. Id. ¶ 12.1.
License Agreement contained two other clauses that are
relevant to St. Jude Medical's motion. First, the License
Agreement contained an arbitration clause, which stated:
Any dispute arising between the parties shall be settled by
arbitration under the rules of the American Arbitration
Association in Minneapolis, Minnesota, USA before a single
arbitrator selected under those rules. The arbitral language
shall be English. The arbitral award may be enforced in any
court having jurisdiction thereof.
Id. ¶ 13.1 (emphasis added). Second, the
License Agreement contained clauses restricting SJM's
ability to assign and transfer the license. In section 13.6,
the License Agreement stated that SJM “may not assign
or transfer interest in a license granted under this
Agreement without the prior written consent of QAD, ”
which written consent “shall not be unreasonably
withheld.” Id. ¶ 13.6.
2005, QAD and SJM agreed to renew the License Agreement for
another ten years. Comp. ¶ 25. At the end of this term,
SJM elected not to renew the License Agreement. Id.
¶ 27. Although there was no further renewal, SJM
retained its existing license to continue using QAD's
custom software after the License Agreement expired in
December of 2015. Id. ¶ 29.
2016, SJM entered into a merger that affected its ownership
and corporate form. Id. ¶¶ 32-35. The
merger was completed in two steps. Id. ¶ 34.
SJM became a wholly-owned subsidiary of Abbott Laboratories
and then changed its corporate form to become a limited
liability company-St. Jude Medical. Id. ¶ 35.
QAD alleges on information and belief that St. Jude Medical
“survived the second merger as a wholly-owned
subsidiary of Abbott” and that SJM “ceased to
exist, with its assets, liabilities, and business operations
having been transferred to” St. Jude Medical.
Id. QAD alleges that neither SJM nor St. Jude
Medical sought or obtained written consent of QAD for the
transfer of any license granted under the License Agreement.
Id. ¶¶ 36, 37.
alleges that after SJM was “merged out of existence,
” St. Jude Medical began and has continued to use QAD
software that had been licensed to SJM without QAD's
consent. Id. ¶ 39. QAD filed the instant
lawsuit seeking damages for copyright infringement and
the Federal Arbitration Act (“FAA”), written
arbitration agreements “shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in
equity for the avoidance of any contract.” 9 U.S.C.
§ 2 (2012). “[A]rbitration agreements [are] on an
equal footing with other contracts, ” and therefore
courts are required to enforce arbitration agreements
according to their terms. Rent-A-Center, West, Inc. v.
Jackson, 561 U.S. 63, 67 (2010).
“leaves no place for the exercise of discretion by a
district court, but instead mandates that district courts
shall direct the parties to proceed to arbitration on issues
as to which an arbitration agreement has been signed.”
Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207
F.3d 1126, 1130 (9th Cir. 2000) (citing Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985)). A
district court's role is limited to determining two
“gateway” issues: (1) whether the parties agreed
to arbitrate and, if so, (2) whether the claims at issue are
within the scope of that agreement. See Brennan v. Opus
Bank, 796 F.3d. 1125, 1130 (9th Cir. 2015). If the party
seeking arbitration meets these two requirements, the court
must compel arbitration. 9 U.S.C. § 4; Chiron,
207 F.3d at 1130. To be arbitrable, the claims at issue need
only “touch matters” covered by the contract
containing the arbitration clause. Simula, ...