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Qualcomm Inc. v. Nokia Corp.

United States Court of Appeals for the Federal Circuit

October 20, 2006, Decided

2006-1317

Opinion

 [***1670]   [*1368]  PROST, Circuit Judge.

Appellants, Nokia Corporation and Nokia, Inc. (collectively, "Nokia"), appeal the March 14, 2006 Order [**2]  of the United States District Court for the Southern District of California denying Nokia's motion to stay litigation with appellees, Qualcomm Inc. and SnapTrack, Inc. (collectively, "Qualcomm"), pending arbitration. Qualcomm Inc. v. Nokia Corp., No. 05-CV-2063 B (S.D. Cal. Mar. 14, 2006) ("Order"). Because the district court did not perform the correct inquiry as we discuss herein, we vacate the district court's March 14, 2006 Order with respect to its denial of Nokia's motion to stay, and remand for the court to perform the inquiry in the first instance.

I. BACKGROUND

Wireless telecommunications require mobile stations and infrastructure equipment that conform to a common set of standards. Two of the primary mobile telecommunications standards are the Code Division Multiple Access standard ("CDMA") and the Global System for Mobile Communications standard ("GSM"). Qualcomm pioneered CDMA technology and consequently holds and licenses patents related to that technology. Nokia manufactures wireless telephone handsets and telecommunications infrastructure equipment used by wireless carriers.

In July 2001, Qualcomm and Nokia entered into a "Subscriber Unit and Infrastructure [**3]  Equipment License Agreement" (the "2001 Agreement") whereby Qualcomm granted Nokia a non-exclusive license to some of Qualcomm's patents, permitting Nokia to make and sell products that incorporate CDMA technology. The 2001 Agreement contains an arbitration clause which covers "[a]ny dispute, claim or controversy arising out of or relating to this Agreement, or the breach or validity hereof" and dictates that any such dispute "shall be settled by arbitration in accordance with the arbitration rules of the American Arbitration Association (the 'AAA Rules')." 2001 Agreement at P22. The 2001 Agreement also specifies that it shall be construed in accordance with California law. Id.

On November 4, 2005, Qualcomm sued Nokia for patent infringement in the United States District Court for the Southern District of California, asserting in its Complaint that Nokia infringed twelve of Qualcomm's patents. After Qualcomm filed its Complaint, Nokia [***1671]  initiated an arbitration proceeding against Qualcomm on December 20, 2005. As amended, Nokia's Arbitration Demand asked an arbitrator to resolve its dispute with Qualcomm pertaining to two issues relevant to this appeal: (1) Nokia's estoppel defense, [**4]  in which it asserted that Qualcomm engaged in misleading conduct that caused Nokia to believe that Qualcomm did not hold issued or pending patents it intended to assert against Nokia's GSM products, and (2) Nokia's license defense, in which it sought a declaration that it had a valid and enforceable license to make, import, use, sell, offer  [*1369]  to sell, lease, or otherwise dispose of products that incorporate CDMA technology and that Qualcomm's claims of infringement against those products should be barred by the 2001 Agreement. Even though these two issues were not directly raised in Qualcomm's Complaint, Nokia sought to assert them as affirmative defenses to Qualcomm's infringement claims. 1 

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466 F.3d 1366 *; 2006 U.S. App. LEXIS 25942 **; 80 U.S.P.Q.2D (BNA) 1669 ***

QUALCOMM INCORPORATED and SNAPTRACK, INC., Plaintiffs-Appellees, v. NOKIA CORPORATION and NOKIA, INC., Defendants-Appellants.

Prior History:  [**1]  Appealed from: United States District Court for the Southern District of California. Senior Judge Rudi M. Brewster.

CORE TERMS

arbitrability, district court, parties, license, products, groundless, unmistakably, delegate, asserts, decisions, infringement, patents, motion to stay, defenses, trial of the action, standard of review, technology, novo, estoppel defense, telecommunications

Business & Corporate Compliance, Arbitration, Federal Arbitration Act, Stay Pending Arbitration, Patent Law, Jurisdiction & Review, Standards of Review, General Overview, Civil Procedure, Appeals, Abuse of Discretion, De Novo Review, Alternative Dispute Resolution, Arbitrability