United States District Court, D. Delaware
BIOMERIEUX, S.A. and BIOMERIEUX, INC., Plaintiffs,
HOLOGIC, INC., GRIFOLS S.A., and GRIFOLS DIAGNOSTIC SOLUTIONS INC., Defendants,
HONORABLE LEONARD P. STARK UNITED STATES DISTRICT JUDGE
before the Court is Defendants Hologic, Inc.
("Hologic"), Grifols Diagnostic Solutions Inc.
("GDS"), and Grifols, S.A.'s ("GSA")
(together, "Defendants") motion to sever and stay
arbitration proceedings with Plaintiffs bioMerieux S.A. and
bioMerieux, Inc. (together "bioMerieux" or
"Plaintiffs"). (D.I. 91) Plaintiffs filed this
patent infringement suit in February 2017 in the Middle
District of North Carolina. (D.I. 1) Defendants moved to
transfer venue and, eventually, Plaintiffs stipulated to a
transfer to this Court. (D.I. 57) The Court has since denied
Defendants' motion to dismiss for failure to state a
claim on which relief may be granted (D.I. 128) and GSA's
motion to dismiss for lack of personal jurisdiction (D.I.
131), in opinions which provide further details about this
litigation (D.L 127, 130).
time Defendants filed their motion to sever and stay, they
had not yet filed an answer - as the motions to dismiss were
pending - but they had represented that their answers would
include an affirmative defense that a Non-Assertion Agreement
("Agreement") between predecessors of bioMerieux and
Hologic gives rise to a license defense, purportedly
insulating Defendants from any potential liability for
infringement of the asserted patents. (See D.I. 92
at 2-4) Defendants further assert that the Agreement contains
a broad arbitration provision, which requires the Court to
sever their affirmative license defense. Defendants
additionally request that once the license defense is
severed, that the Court stay it and refrain from referring it
to arbitration unless and until Defendants are found to
infringe at least one of Plaintiffs' valid patents.
(See D.I. 92 at 1) (asking that Court "sever
the arbitrable license defense and .. . stay proceedings
with respect to that defense pending verdict on the predicate
issues of the validity and infringement of the patents in
suit") Plaintiffs oppose every aspect of Defendants'
motion, arguing that the right to arbitration has been waived
and, in any event, that the appropriate exercise of the
Court's discretion is to require license issues to be
litigated in tandem with the patent issues. (D.1.102 at 1-2)
parties completed briefing on the motion on July 2, 2018.
(See D.I. 92; D.I. 102; D.I. 110) The Court required
them to file a status report in February 2019, following the
claim construction hearing. (See D.I. 177) All
parties advised the Court that the issues briefed in the
motion remain ripe for the Court's decision.
(See D, I. 181)
IS HEREBY ORDERED THAT Defendants' motion (D.I.
91) is GRANTED to the extent that
Defendants' license defense is SEVERED,
but DENIED to the extent it seeks to
STAY an order compelling arbitration until
after completion of proceedings relating to patent
infringement and invalidity. IT IS FURTHER
ORDERED that any party to the Agreement may
file a motion to compel arbitration no later than April 15,
2019. If no such motion is filed, the right to
arbitrate will then be deemed WAIVED.
Court agrees with Defendants that the right to arbitrate
Defendants' licensing defense has not at this point been
waived. The parties agree that the appropriate test for
waiver is set forth in Hoxworth v. Blinder, Robinson, and
Co., Inc., 980 F.2d 912, 926 (3d Cir. 1992), which
considers whether a party has "invoked the litigation
machinery," creating a basis for a finding of waiver, a
result which "is not favored." "[P]rejudice is
the touchstone" of the Hoxworth test.
Id. at 925; see also Nino v. Jewelry Exch,
Inc., 609 F.3d 191, 208 (3d Cir. 2010); Zimmer v.
Cooperneff Advisors, Inc., 523 F.3d 224, 233 (3d Cir.
2008). Waiver is typically found "only where the demand
for arbitration came long after the suit commenced and when
both parties had engaged in extensive discovery."
Chassen v. Fidelity Nat 7 Fin., Inc., 836
F.3d 291, 295 (3d Cir. 2016) (internal quotation marks
the six Hoxworth factors here: (1) while Defendants
have not yet filed a motion to compel arbitration, they have
made known to Plaintiffs their view as to the arbitrability
of the license issue since nearly the inception of the
litigation (including in a May 2017 letter and by raising it
at the initial case management conference here, see,
e.g., D.I. 84; see also D.I. 93 Ex. B-D), and a
motion to compel filed according to the schedule being
ordered by the Court will, under the totality of
circumstances, be timely; (2) as of the date Defendants filed
their motion to sever and stay, which was May 31, 2018, this
case (although then already more than a year old, as it was
originally filed in North Carolina in February 2017) had not
involved any contesting of the merits of the patent-related
claims; (3) Defendants provided early and adequate
"notice to the nonmoving party of its intention to seek
arbitration," as already noted; (4) there was
significant "non-merits motion practice,"
particularly the two defense motions to dismiss (D.I. 69;
D.I. 70) this Court was faced with at the time the motion to
sever and stay was filed; (5) Defendants have "assented
to the court's pretrial orders" but not without
steadfastly insisting throughout that they would be asserting
their right to arbitrate the license issue (as already
noted); and (6) as of the filing of the motion to sever and
stay, the parties had not engaged in any discovery.
Hoxworth, 980 F.2d at 926-27; see also Super
Media v. Affordable Elec, Inc., 565 Fed.Appx. 144, 147
(3d Cir. 2014). These factors do not establish the type of
prejudice to Plaintiffs that would warrant the Court finding,
at this point, that Defendants have waived their right to
Court further agrees with Defendants that their arbitration
defense (once a motion to compel arbitration is filed) must
be severed from the patent infringement and validity issues,
pursuant to the Federal Arbitration Act ("FAA"), 9
U.S.C. § 3. Defendants cite Supreme Court and Third
Circuit precedent which compel the Court to sever the
arbitrable issues from the non-arbitrable issues.
(See D.I. 110 at 5-6) (citing KPMG LLP v.
Cocchi, 565 U.S. 18, 22 (2011); Collins & Aikman
Prod. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 20 (2d Cir.
1995) ("[W]hen a complaint contains both arbitrable and
nonarbitrable claims, the [FAA] requires courts to
'compel arbitration of pendent arbitrable claims when one
of the parties files a motion to compel, even where the
result would be the possibly inefficient maintenance of
separate proceedings in different forums."); Deering
v. Graham, 2015 WL 424534, *4 (D.N.J. Jan. 30, 2015))
"If some claims are non-arbitrable, while others are
arbitrable, then [a district court] should sever those claims
subject to arbitration from those adjudicable only in
court." Collins & Aikman Prod. Co., 58 F.3d
urge the Court to refer the issue of arbitrability to the
arbitrators themselves. (See D.I. 102 at 6-9) The
Court agrees, instead, with Defendants that the question of
whether the right to arbitrate has been waived by
participation in litigation is a question for the Court to
resolve, and not the arbitrators. (See D.I. 92 at 7)
(citing Ehleiter v. Grapetree Shores, Inc., 482 F.3d
207, 220-21 (3d Cir. 2007)) The Court further understands
Plaintiffs' "disputes [over] the Defendants'
construction of the Agreement" (D.I. 102 at 6) to go to
the merits of the license defense and not to whether the
license dispute is within the scope of the parties' broad
that severance of the arbitrable license defense is mandatory
under the FAA, the Court need not (and at this time will not)
assess whether severance would also be proper as an exercise
of the Court's discretion under Federal Rule of Civil
Procedure 42(b). It is unclear whether Defendants are even
requesting severance of their license defense in the absence
of a grant of Defendants' request to stay arbitration. As
the Court has now decided not to stay arbitration
(as explained below), the Court will wait to learn the
parties' updated positions as to whether they are going
to exercise or waive their right to arbitration and
thereafter - if and when necessary - will determine if a
separate trial of the license defense will be permitted.
"when the arbitration should take place" (D.I. 110
at 2), the Court does not agree with Defendants that the
Court must or should stay referral of the license defense to
arbitration. Defendants argue that a decision from the
arbitrators would be a "premature" "advisory
opinion" unless and until a determination is made here
by a factfinder that they infringe a valid patent of
Plaintiffs. (See D.I. 92 at 6-7) This is
incorrect. Instead, as even Defendants acknowledge, their
license defense "is an affirmative defense to
bioMerieux's patent infringement claims, forming part of
the same case or controversy" as the patent action.
(Id.) It can, and should, be resolved in tandem with
the patent infringement claims to which it is a defense.
point out that Defendants have sought to institute four
inter partes reviews ("IPR") - which are
administrative proceedings at the U.S. Patent and Trademark
Office ("PTO") - which have cost Plaintiffs
significant resources. (D.I. 102 at 14-15) Defendants seek a
stay of arbitration to avoid the parties having to fight
their battles in three for a simultaneously: here in District
Court, in the PTO, and before a panel of arbitrators.
(See D.I. 110 at 2) In the Court's view, neither
side makes a strong argument for its preferred approach. Each
side is, as it is permitted to do, pursuing its rights in the
venues in which it has a statutory and/or contractual right
to do so. Rather than allow either side to hold in reserve a
potential "silver bullet" (D.I, 102 at 12) that
could, once used (a year in the future), erase all effect of
and need for the (no doubt expensive, and time-consuming)
litigation here, the Court finds that the best exercise of
its discretion in the present circumstances is not
to stay arbitration. If arbitration is going to be part of
how these parties resolve their disputes, they will need to
get that process started imminently.