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A United States District Court in Oregon has held that a patent infringement claim could not be raised in court after the party withdrew patent infringement claims from an earlier arbitration proceeding.
In Innovative Engineering Solutions, Inc. v. Misonix, Inc., Civ. No. 05-1592-PK, 2006 WL 2987710 (D. Or. Oct. 17 2006), Innovative Engineering Solutions, Inc. (IES) owned the intellectual property rights to a gas abatement device used in the production of silicon chips. Defendant Misonix, Inc. initially received a license to produce the device, but later operated under an implied license. In 2002, Misonix refused to pay royalties to IES, since they believed that they had “designed around” the licensed technology. IES sought damages and royalties by filing an arbitration demand pursuant to the preexisting agreement between the parties, but later dropped the patent infringement portion of the claim, which it viewed as “too complex” for arbitration.
One year after prevailing in arbitration, IES attempted to sue Misonix for patent infringement. The Court granted Misonix’s motion for summary judgment, finding that the patent infringement claim was barred by res judicata. The arbitration clause provided that “[a]ny dispute relating [to] the interpretation or performance of this Agreement shall be conducted in the county of Washington, Oregon...”.
Here, the Court found that the arbitration clause was broad enough to encompass patent infringement claims. Moreover, all of the requirements for claim preclusion had been met: “a final judgment binding on the parties; claims based on the same facts as the claims in the previous proceeding; and a party seeking ‘a remedy additional or alternative to the one sought earlier, and...of such a nature as could have been joined in the first action.’” See Rennie v. Freeway Transport, 656 P.2d 919, 921 (Or. 1982). Therefore, IES was not allowed to reserve certain claims for litigation, while arbitrating other claims arising from the same transaction.
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