SCOTUS Declines to Review $455 Million International Arbitration Award in Biotech Patent Dispute
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The United States Supreme Court has declined to consider whether an international arbitration tribunal’s award in a breach of contract and patent infringement lawsuit should be overturned. In Dow Agrosciences, LLC, et al. v. Bayer Cropscience AG, et al., Nos. 2016-1530 and 2016-1623 (March 1, 2017), a foreign corporation, Bayer, entered into a licensing agreement with Delaware-based Dow Agrosciences related to several of Bayer’s patented biotechnologies. More than a decade later, Bayer filed a lawsuit in the U.S. accusing Dow of breaching the parties’ contract and infringing Bayer’s patents.
The lawsuit was stayed pending arbitration before an International Chamber of Commerce tribunal. Following arbitration proceedings, Bayer was awarded $455 million in damages plus interest. After that, a federal district court confirmed the arbitral award despite Dow’s objections and Dow filed an appeal with the United States Court of Appeals for the Federal Circuit.
On appeal, the court first determined it had jurisdiction over the dispute:
Read original articleIn this case, Bayer’s complaint arises under the patent laws. The complaint expressly alleges multiple counts of patent infringement. The district court stayed adjudication of those claims pending arbitration, but did not dismiss the case or the patent claims. After the tribunal entered its award, the court resolved the parties’ post-award motions in the same action. Bayer cites, and we are aware of, no authority establishing that the tribunal’s adjudication of the patent-infringement claims altered the court’s basis for jurisdiction.
The conclusion would not change even if one looked beyond the original complaint to the post-arbitral-award proceedings in the district court. When Dow turned to the court to challenge the arbitral awardby way of a motion to vacate, it asserted patent law as a necessary basis for certain challenges to parts of the tribunal’s award. See Gunn, 133 S. Ct. at 1065. In particular, Dow argued that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38, required the court to decide, among other issues, whether enforcement of the award would violate a host of patent-law requirements and policies. See New York Convention art. V(2)(b). Those questions were not only “necessarily raised,” but also “substantial” and “disputed.” Gunn, 133 S. Ct. at 1065. Moreover, because French law governed the contract claim, there was no basis for concern that the federal court’s determination of the patent-law issues, within the strict limits of arbitral-award review, would “disrupt[] the federal-state balance.” Id. Thus, whether viewed as a new claim or as a compulsory counterclaim to Bayer’s claim for confirmation of the arbitral award, Dow’s challenge comes within the Gunn standard.
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