Invista N. Amer. v. Rhodia Polyamide Intermediates

• Decision Date: 06 August 2007
• Docket Number: Civil Action No. 06-2180 (RCL).
• Citation: 503 F.Supp.2d 195
• Parties: INVISTA NORTH AMERICA S.A.R.L., Plaintiff, v. RHODIA POLYAMIDE INTERMEDIATES S.A.S., Defendant.
• Court: U.S. District Court — District of Columbia

503 F.Supp.2d 195

INVISTA NORTH AMERICA S.A.R.L., Plaintiff, v. RHODIA POLYAMIDE INTERMEDIATES S.A.S., Defendant.

Civil Action No. 06-2180 (RCL).

United States District Court, District of Columbia.

August 6, 2007.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Abid Riaz Qureshi, Latham & Watkins, Washington, DC, for Plaintiff.

Jonathan L. Greenblatt, Wesley James Heath, Shearman & Sterling, LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

LAMBERTH, District Judge.

I. INTRODUCTION

This matter comes before the Court on defendant Rhodia Polyamide Intermediates S.A.S.'s ("Rhodia PI") motion [8] to compel arbitration. Upon consideration of Rhodia PI's motion, plaintiff INVISTA North America S.a.r.l.'s ("INVISTA NA") opposition [13] thereto, Rhodia PI's reply [14], INVISTA NA's sur-reply [16], the applicable law, and the record herein, the Court will grant Rhodia PI's motion [8] to compel arbitration.

II. BACKGROUND

In 1998, E.I. DuPont de Nemours and Co. ("DuPont") entered into a licensing agreement with Butachimie, a joint venture between DuPont and Rhodianyl, regarding advanced technology ("Gen III technology") used in the production of nylon fiber. (Pl.'s Comp. ¶ 13.) As part of the licensing agreement, the two parties entered into a Confidentiality Agreement to prohibit various Rhodia Group entities, including Rhodianyl, from disclosing or using confidential Gen III technology for their own purposes. (Def.'s Mot. to Compel Ex. 1. ¶ 2. 1.) In addition, the Confidentiality Agreement prohibits Rhodia Group signatories from using any confidential information regarding Gen III technology in a patent application absent limited exceptions. (Id. ¶ 3.2.) If any confidential information is used by a Rhodia Group signatory, the patent application must be assigned to DuPont, the inventor of the Gen III technology. (Id.) Furthermore, in the Confidentiality Agreement the parties agreed to settle any dispute arising out of the agreement through arbitration. (Id. ¶ 5.1.)

Following the execution of the Confidentiality Agreement, DuPont scientists gave a series of presentations to scientists of Rhodianyl and other Rhodia Group entities, including Rhodia PI. (Pl.'s Comp. ¶¶ 14-16.) These presentations contained confidential information regarding the Gen III process. (See id.) After evaluating the technology, Rhodianyl did not implement the Gen III technology at Butachimie. (Pl.'s Opp'n to Def.'s Mot. to Compel [hereinafter Pl.'s Opp'n] at 4.)

In 2004, DuPont assigned its rights in the Confidentiality Agreement to INVISTA NA. (Def.'s Mot. to Compel, Ex. 2 ¶ 9.) In 2005, INVISTA NA discovered that Rhodia PI, a subsidiary of Rhodianyl that is not a signatory to the Confidentiality Agreement, applied for U.S. Patent No. 7,084,293 ("the '293 Patent") and other related patents that allegedly contain confidential Gen III technology. (Pl.'s Opp'n at 5.) Furthermore, INVISTA NA alleges that the '293 Patent incorrectly names Rhodia PI employees as the inventors of the Gen III technology in place of the DuPont scientists who developed this technology. (Pl.'s Comp. ¶ 4.) INVISTA NA and Rhodia PI attempted to resolve the dispute concerning the inventorship of the '293 Patent and the ownership of the related patents without judicial intervention for over a year. (Pl.'s Opp'n at 5.) Ultimately, however, the negotiations failed, and INVISTA NA filed this suit seeking a court order, pursuant to 35 U.S.C. § 256 ("Section 256"),¹ replacing the names of the inventors on the '293 Patent with the names of the DuPont scientists who allegedly developed the technology contained in the '293 Patent. (Pl.'s Comp. ¶¶ 34-40.) INVISTA NA also seeks to enjoin Rhodia PI from including any confidential information relating to the Gen III technology in other patent applications. (Id. ¶ 44.) Moreover, INVISTA NA asks the Court to place the '293 Patent in a constructive trust along with any other patents which contain INVISTA NA's confidential information. (Id. ¶¶ 45-47.)

In addition to the present suit, INVISTA NA initiated arbitration against Rhodianyl and Rhodia PI for including confidential information regarding the Gen III technology in the patent applications held by Rhodia PI. (See Def.'s Mot. to Compel Ex. 2.) INVISTA NA requests the arbitral tribunal to declare that Rhodia PI breached the confidentiality agreement when it filed the patents and to order Rhodia PI to assign the '293 and related patents to INVISTA NA. (Id. ¶ 45.) INVISTA NA also seeks to enjoin Rhodia PI from disclosing or using any further confidential information protected by the Confidentiality Agreement. (Id.)

Rhodia PI has also initiated arbitration against INVISTA NA. (See Def.'s Mot. to Compel Ex. 3.) Rhodia PI asks the arbitral tribunal to declare that the disputed, patent applications do not contain any confidential information protected by the Confidentiality Agreement. (Id. ¶ 30.)

Rhodia PI now moves this Court to compel INVISTA NA to pursue the claims in its complaint in the pending arbitration proceedings pursuant to 9 U.S.C. § 4 because INVISTA NA's claims are within the scope of the arbitration agreement and because the relief sought is nearly identical to the relief sought in arbitration. (Def.'s Mot. to Compel at 1.) In the alternative, Rhodia PI asks this Court to stay the proceedings pursuant to 9 U.S.C. § 3 until the arbitral tribunal enters a final award. (Id.) In addition, if the Court grants Rhodia PI's motion to compel arbitration, INVISTA NA requests the Court to stay these proceedings until after the pending arbitration is resolved. (Pl.'s Opp'n at 28.)

III. LEGAL STANDARD

The Federal Arbitration Act ("FAA") provides that "a written provision in ... a contract to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable save upon any grounds as exist at law or in equity for revocation of any contract." 9 U.S.C. § 2; Stromberg Sheet Metal Works, Inc. v. Washington Gas Energy Systems, Inc., 448 F.Supp.2d 64, 67 (D.D.C.2006). The FAA creates a strong presumption in favor of arbitration. See Moses. H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Accordingly, courts should resolve "any doubts concerning the scope of arbitrable issues ... in favor of arbitration." Id. Parties, however, cannot be forced into arbitration without an agreement to do so, and the authority of arbitrators to resolve disputes arises out of an agreement between the parties to engage in arbitration. See AT & T Techs. Inc. v. Commc'ns Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986); Stromberg, 448 F.Supp.2d at 67. Thus, "[b]ecause arbitration provisions are in essence a matter of contract between the parties, it is for the courts to decide whether the parties are bound by a given arbitration clause." Stromberg, 448 F.Supp.2d at 67 (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002)).

Section 4 and Section 206 of the FAA grant district courts the authority to compel arbitration, provided that a valid and enforceable arbitration agreement exists. See 9 U.S.C. § 4 ("A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that such arbitration proceed in the manner provided for in such agreement."); 9 U.S.C. § 206 ("A court having jurisdiction under this chapter may direct that arbitration be held in accordance with the agreement at any place therein provided for, whether that place is within or without the United States.").

When a party moves the court to compel arbitration, the court must make a two-part inquiry. Stromberg, 448 F.Supp.2d at 68. First, the court must determine "whether the parties entered into a valid and enforceable arbitration agreement." Id. If the party opposing the motion contends that no agreement to arbitrate exists, the standards for resolving a summary judgment motion pursuant to Rule 56 of the Federal Rules of Civil Procedure should be applied. Booker v. Robert Half Int'l, Inc., 315 F.Supp.2d 94, 99 (D.D.C.2004). Second, if the parties did execute a valid and enforceable arbitration agreement, the court must determine whether the claims raised in the complaint are within the scope of that agreement. Stromberg, 448 F.Supp.2d at 68. Unless the party opposing the motion to compel arbitration demonstrates that the arbitration clause cannot be interpreted to cover the dispute, the court should order the parties to settle the dispute in arbitration. See AT & T Techs. Inc., 475 U.S. at 650, 106 S.Ct. 1415 (stating that a motion to compel arbitration should not be denied absent a showing that the arbitration agreement "is not susceptible of an interpretation that covers the asserted dispute").

IV. ANALYSIS

A. An Enforceable Arbitration Agreement Exists

Chapter Two of the FAA codifies the Convention on the Recognition and Enforcement of Foreign Arbitration Awards ("New York Convention") and governs the enforcement of foreign arbitration agreements in United States courts. See 9 U.S.C. §§ 201-208. An arbitration agreement is governed by Chapter Two if: "(1) there is a written agreement between the parties to arbitrate the dispute; (2) the locus of the arbitration is in a country that is a signatory to the N.Y. Convention; (3) the dispute arises out of a commercial legal relationship; and (4) at least one party to the arbitration agreement is not an American citizen." Khan v. Parsons Global Servs. Ltd., 480 F.Supp.2d 327, 339 (D.D.C.2007); see also 9 U.S.C. § 202. If the agreement is within the scope of Chapter Two of the FAA, the court shall compel arbitration pursuant to Section 206 or Section 4.² See 9 U.S.C. § 206.

Article 5.1 of the Confidentiality Agreement between Rhodianyl and INVISTA NA is a...