An Earlier U.S. Judgment Insufficient To Enjoin A Foreign Arbitration Where Issues In The U.S. Litigation And Foreign Arbitration Are Not Identical Or Functionally The Same

In Sanofi-Aventis Deutschland GmbH v. Genentech, Inc., No. 12-1454 (Fed. Cir. May 10, 2013), the Federal Circuit affirmed the district court's ruling against enjoining a foreign arbitration of a license to the patents-in-suit despite a U.S. judgment of noninfringement.

The dispute originated from an agreement ("the Agreement") in which Behringwerke AG ("Behringwerke") licensed Genentech, Inc. ("Genentech") intellectual property, including Behringwerke's patent applications that matured into U.S. Patent Nos. 5,849,522 and 6,218,140 (collectively "the patents-in-suit"), related to DNA enhancers for amplification of drug production rate in a cell. In addition to requiring a fixed annual payment for Genentech to practice the patents-in-suit for research purposes, the Agreement also required Genentech to pay a running royalty of 0.5% on the sale of commercially marketable goods incorporating a "Licensed Product." The Agreement defined Licensed Product as "materials (including organisms), the manufacture, use or sale of which would, in the absence of this Agreement, infringe one or more unexpired issued claims of the Licensed Patent Rights." Slip op. at 3. The Agreement was governed by German law and required disputes to be settled by arbitration under International Chamber of Commerce ("ICC") rules.

Behringwerke later became Hoechst AG ("Hoechst"), which transferred its pharmaceutical business to a company that eventually became Sanofi-Aventis Deutschland GmbH ("Sanofi"). Both the Agreement and the rights in the patents-in-suit remained with Hoechst.

Sanofi accused Genentech and another entity of infringing the patents-in-suit by using the patented enhancers in the manufacture and sale of two drugs: Rituxan and Avastin. Genentech did not identify either drug as licensed products, nor did it pay the 0.5% royalty on them. Hoechst transferred the patents-in-suit to Sanofi and later sought arbitration before a European arbitrator of the ICC for breach of the Agreement.

Three days after Hoechst initiated the foreign arbitration, Genentech terminated the Agreement and filed a complaint for DJ of invalidity and noninfringement. On the same day, Sanofi sued Genentech and another entity for infringement of the patents-in-suit based on sales of Rituxan and Avastin. The two district court actions were consolidated and, after a Markman hearing, the trial court granted SJ of noninfringement. Sanofi appealed and the Federal Circuit affirmed.

While the litigation proceeded in the United States, the ICC arbitration continued abroad. After the Federal Circuit affirmed, Genentech argued to the arbitrator that the...