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Copyright infringement claims regarding the use of software provided through a licensing agreement are significantly related and within the scope of a broadly worded arbitration clause contained in the agreement, according to a North Carolina federal court.
In Empowered Benefits, LLC v. Blue Cross Blue Shield of Tennessee, No. 3:06-CV-161, 2007 WL 1652538 (W.D. N.C. June 5, 2007), Blue Cross sought a dismissal of Empowered's case, or a stay of proceedings and an order to compel arbitration of its claims. Empowered had filed suit against Blue Cross, alleging copyright infringement of a program licensed to Blue Cross. Empowered challenged the motion to dismiss or stay, alleging that an arbitration clause contained within the parties' licensing agreement did not encompass copyright infringement claims.
The Court noted the broad language used by Empowered in the arbitration clause, by which "Empowered opened the door for judicial interpretation that must be viewed in the light most favorable to arbitration." The Court followed the Fourth Circuit's standard that "when the scope of the arbitration clause is open to question, a court must decide the question in favor of arbitration," and followed specific district precedent that "a broadly worded arbitration clause applies to disputes that do not arise under the governing contract when a 'significant relationship' exists between the asserted claims and the contract in which the arbitration clause is contained."
Applying these rules to the copyright claim asserted by Empowered, the Court found the claim to fall within the scope of the arbitration clause. The Court noted that Empowered's "general construction of the arbitration clause shows no intent to exclude [copyright] claims," and that, "[u]nder the significant relationship test, the copyright infringement claim can be adequately related to the agreement as it is essentially a dispute over the use of copyrighted software provided through the agreement" containing the arbitration clause. Therefore, the Court found the claims within the scope of the clause, and stayed proceedings pending arbitration.
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