The correct Sixth Circuit arbitrability standard examines "whether an action could be maintained without reference to the contract," and not whether the claims "touch upon matters covered by the agreement," according to the Sixth Circuit Court of Appeals.

In NCR Corp. v. Korala Associates, Ltd., No. 06-3685, 2008 WL 140978 (6th Cir. Jan. 16, 2008), NCR instituted a court action against Korala on various counts of direct and contributory copyright infringement, tortious interference with contract, illegal importation, and common law unfair competition, stemming from the copying and distribution of two ATM software programs.

Korala moved to compel arbitration of all the claims under an arbitration agreement within one of the software program's licensing contracts. The district court granted Korala's motion to compel arbitration on all counts.

The Court observed that NCR and Korala not only disputed the scope of the arbitration clause, but also the applicable arbitrability standard in the Sixth Circuit. Korala maintained, and the district court agreed, that "all claims which touch upon matters covered by the agreement" were arbitrable.

NCR argued that this was the incorrect standard, and the Court agreed, holding that the correct arbitrability standard was "whether an action could be maintained without reference to the contract or relationship at issue." If it could, according to the Court, the action was not arbitrable.

The Court explained that the "touch upon" standard, as first enunciated in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625 n. 13 (1985), was only applied in a narrow context to determine "whether the arbitration clause should be read to narrowly exclude the statutory claims." The "maintained without reference" standard, according to the Court, was instead the appropriate Sixth Circuit standard for general questions of arbitrability. See Nestle Waters N. Am., Inc. v. Bollman, 505 F.3d 498, 505 (6th Cir. 2007).

Applying the correct standard, the Court determined that only the claims relating to direct infringement of the software program subject to the licensing contract and the claim of common law unfair competition were arbitrable because they could not be maintained without reference to the licensing contract.