In Rohm Semiconductor USA LLC v. Maxpower Semiconductor, Inc., [2021-1709] (November 12, 2021), the Federal Circuit affirmed the district court’s decision compelling arbitration and dismissing ROHM USA’s declaratory judgment action without prejudice.
In 2007, ROHM Japan and MaxPower entered into a technology license agreement (“TLA”). Under the TLA,
ROHM Japan and its subsidiaries (collectively “ROHM”) were permitted “to use certain power [metal oxide semiconductor field effect transistors (‘MOSFET’)]-related technologies of” MaxPower (“Licensor”) developed under a
Development and Stock Purchase Agreement in exchange for royalties paid to MaxPower. The TLA, as amended in 2011, includes an agreement to arbitrate “[a]ny dispute, controversy, or claim arising out of or in relation to this Agreement or at law, or the breach, termination, or validity thereof.” The arbitration agreement provides that arbitration is to be conducted “in accordance with the provisions of the California Code of Civil Procedure” (“CCCP”).
In 2019, a dispute arose between ROHM Japan and MaxPower concerning whether the TLA covers ROHM’s silicon carbide MOSFET products. In September 2020, MaxPower notified ROHM Japan of its intent to initiate arbitration. Shortly thereafter, on September 23, 2020, ROHM USA, a subsidiary of ROHM Japan, filed suit.
Rohm USA argued that the CCCP is ambiguous, containing two apparently conflicting provisions regarding who determines arbitrability, but the district court found, and the Federal Circuit agreed, that the provisions were not in conflict, and the provision allowing the arbitrator to determine arbitribility controlled.
Rohm USA further argued that even if §1297.161 applies, it states that “[t]he arbitral tribunal may rule on its own jurisdiction,” which Rohm USA says it merely allows the parties to agree to waive a court determination, which ROHM USA does not want to do. The Federal Circuit disagreed, noting that while Rohm USA is correct that
“may” is generally a permissive verb, “may” as used in §1297.161 does not mean “may also,” as ROHM USA
urges. MaxPower’s interpretation of the permissive “may” as “may, if arbitrability is disputed,” makes much more
sense in this context.
Thus the court concluded that the Arbitrator should determine whether the dispute was arbitrable.