United States District Court, D. Colorado
COCHLEAR LTD. and COCHLEAR BONE ANCHORED SOLUTIONS AB, Plaintiffs,
OTICON MEDICAL AB and OTICON MEDICAL LLC, Defendants.
A. BRIMMER UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendants' Motion to
Enforce Arbitration Agreement and Stay Litigation Pending
Resolution of Arbitration [Docket No. 31] and Defendants'
Motion to Strike or, in the Alternative, for Leave to File
Supplemental Declaration Regarding Principles of Swedish Law
[Docket No. 59]. Defendants request that the Court stay and
administratively close this case pending resolution of
arbitration proceedings between the parties. Docket No. 31 at
12-13. Defendants also request that the Court strike a
portion of the supplemental brief regarding Swedish law filed
by plaintiffs or that defendants be allowed to supplement
their briefing. Docket No. 59 at 4
a patent dispute. On July 1, 2016, plaintiffs filed their
complaint alleging infringement of U.S. Patent Nos. 5, 735,
790, 7, 043, 040 (the “'040 patent”), 7, 074,
222, and 7, 409, 070. Docket No. 1 at 17-18. On September 13,
2016, plaintiffs filed their amended complaint alleging
infringement of only the '040 patent. Docket No. 9 at 10.
The '040 patent involves a hearing aid that transmits
sound “from one side of the head to the cochlea on the
other side of the head for rehabilitation of patients with
unilateral hearing loss.” Docket No. 1 at 31, '040
patent, Abstract. Plaintiffs allege that defendants'
“promotion, sale, offer for sale, and/or importation of
its abutment extender, and the promotion of combination bone
anchored hearing systems for single sided deafness, has
induced the infringement of one or more claims of the
‘040 patent literally or under the doctrine of
equivalents.” Id., ¶ 31. Plaintiffs claim
that defendants have developed and sought U.S. Food and Drug
Administration (“FDA”) approval for a system by
“stating that the use, function and procedure for
[defendants'] Ponto [bone anchored hearing] system is
substantially equivalent to Cochlear's Baha® Divino
device already approved by the FDA.” Docket No. 9 at 5,
¶ 17. Plaintiffs further allege that defendants have
promoted their products for use in a combined system, in
which defendants' sound processor and abutment extension
is attached to plaintiffs' implant and abutment to form a
complete hearing system. Id. at 7, ¶ 22.
Limited and William Demant Holding A/S (“WDH”),
defendants' parent company, signed a Patent License
Agreement (the “Agreement”) to license the
'040 patent. Docket No. 32-1; Docket No. 31 at 3.
Defendants claim that, as “Affiliates” of WDH
under the agreement, they are licensees of the '040
patent under the Agreement. Docket No. 31 at 3. Plaintiffs do
not dispute the validity of the Agreement, but they deny that
it licenses the actions they accuse of infringement. Docket
No. 41 at 2.
Agreement contains an arbitration clause, which provides that
“[a]ll disputes arising out of or in connection with
this Agreement shall be finally settled under the Arbitration
Rules of the Arbitration Institute of the Stockholm Chamber
of Commerce (SCC) by three arbitrators appointed in
accordance with the said Rules.” Docket No. 32-1 at 11,
¶ 13.1. The Agreement also provides that “[a]ny
dispute, controversy or claim shall be decided in accordance
with the laws of Sweden.” Id., ¶
to the parties' dispute is the interpretation of the
license grant contained in Article 2.2 of the Agreement and
the limitations on that license:
Cochlear grants to WDH and its Affiliates a world-wide,
non-exclusive, nontransferable, fully paid-up license to
make, use, sell, offer for sale or have made for use or sale,
only by WDH and its Affiliates, and only under a WDH brand
label, products that are covered by one or more of the
Licensed Patents, restricted solely to the Field of Use
defined in Article 2.1.
Docket No. 32-1 at 4-5, ¶ 2.2.
license is subject to a field of use limitation under Article
2.1, which limits the licensees to “use in the field
(‘Field of Use') of Hearing Systems, expressly
excluding (by way of example and not limitation) Implantable
Bone Conduction Hearing Systems, and in relation to Patent
no. 1 and 2, expressly excluding any use that constitutes a
breach of Article 2.4.” Docket No. 32-1 at 4, ¶
In the Agreement's list of licensed patents, the '040
patent is “Patent 3” of six licensed patents.
Docket No. 32-1 at 6, ¶ 3.1.
2.4 states, in part, that to “avoid unauthorized use
and avoid encouraging unauthorized use beyond the scope of
the grant in this Agreement, WDH and its Affiliates shall:
2.4.1. refrain from advertising, marketing, or promoting, in
any written form including electronic, whether in encouraging
or discouraging terms, any cross compatibility of WDH
implants and abutments or sound processors with Cochlear
implants and abutments or sound processors.” Docket No.
32-1 at 5, ¶¶ 2.4, 2.4.1.
November 30, 2016, WDH filed a request for arbitration with
the SCC, wherein it asks for a “declaratory judgment to
the effect that the Patent License Agreement authorises [WDH]
and its Affiliates to undertake the actions that is now
alleged by Cochlear to infringe or induce the infringement of
[the '040 patent].” Docket No. 32-3 at 4, ¶
3.1(i). Plaintiffs claim that “WDH's arbitration
request is . . . directly contrary to the [Agreement].”
Docket No. 41 at 9.
Federal Arbitration Act evinces “a liberal federal
policy favoring arbitration.” Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 35 (1991)
(citing MitsubishiMotors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 625 (1985)). But
“arbitration is a matter of contract and a party cannot
be required to submit to arbitration any dispute which he has
not agreed so to submit.” AT&T Techs., Inc. v.
Commc'ns Workers of Am., 475 U.S. 643, 648 (1986)
(quoting United Steelworkers of Am. v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582 (1960)). Accordingly,
a court considering a motion to compel arbitration must
initially examine the scope of the parties' arbitration
agreement and then determine whether plaintiffs' claims
are within that scope. Cummings v. FedEx Ground Package
Sys., Inc., 404 F.3d 1258, 1261 (10th Cir. 2005) (citing
Nat'l Am. Ins. Co. v. SCOR Reinsurance Co., 362
F.3d 1288, 1290 (10th Cir. 2004)). “To determine
whether a particular dispute falls within the scope of an
agreement's arbitration clause, a court should undertake
a three-part inquiry.” Id. (quoting Louis
Dreyfus Negoce S.A. v. Blystad Shipping & Trading
Inc., 252 F.3d 218, 224 (2d Cir. 2001)). First, “a
court should classify the particular clause as either broad
or narrow.” Louis Dreyfus Negoce S.A., 252
F.3d at 224. If the arbitration clause is narrow, “the
court must determine whether the dispute is over an issue
that is on its face within the purview of the clause, or over
a collateral issue” that will generally not be
arbitrated. Id. “Where the arbitration clause
is broad, there arises a presumption of arbitrability and
arbitration of even a collateral matter will be ordered if
the claim alleged ...