Immersion Corporation, a U.S. company, had previously entered into a settlement with Sony, a Japanese company, regarding the latter’s alleged patent infringement. Subsequently, a dispute arose surrounding whether Sony was selling a “Royalty Bearing Product” within the meaning of the settlement agreement. An arbitration was held pursuant to the settlement agreement that found in favor of Immersion, which then sought to confirm the award in court. Sony put forth three grounds of opposition to the award: (1) under the New York Convention, the award was contrary to public policy because the arbitrator did not allow Sony to assert an “invalidity” defense; (2) under the FAA, the arbitrator impermissibly refused to hear evidence related to patent infringement that was pertinent and material to the controversy; and (3) under the FAA, the arbitrator committed a manifest disregard of the law “by failing to determine the extent of direct infringement as a necessary predicate for a finding of indirect infringement.”
In ruling on the petition, the court first determined that Sony appropriately argued defenses under both the New York Convention and the FAA. The former was appropriate, the court explained, because Sony is not a U.S. citizen. The FAA defenses were also appropriate under Ninth Circuit precedent because the arbitration had been held in the U.S. The court then turned to the defenses, and determined after a lengthy analysis that public policy had not been violated, that the arbitrator did provide a process to hear material evidence, and that the arbitrator had not committed a “manifest disregard” because it had in fact determined the necessary predicate of indirect infringement under the law. Accordingly, the court confirmed the award and denied Sony’s motion to vacate. Immersion Corp. v. Sony Comp. Entertainment America LLC, et al., Case No. 16-cv-00857 (USDC N.D. Cal. May 19, 2016).
