Many intellectual property license agreements refer disputes to
arbitration under an arbitration clause. After the arbitrator
renders a decision, can that decision be appealed to
court? Or is it final and binding on the parties?
This issue was addressed in Affymax, Inc. v. Ortho-McNeil-Janssen
Pharmaceuticals, Inc., 660 F.3d 281, 285 (7th Cir. 2011) a
decision of the Seventh Circuit Court of Appeals in the US. In that
case, the court dealt with an appeal from an arbitrator's
decision under a license agreement. The court was clear that it had
no interest in vacating or overturning the arbitrator's award,
unless the award is reviewable under one of the 4 circumstances in
Section 10 of the Federal Arbitration Act (US):
if the award was procured by "corruption, fraud, or undue
in the case of "partiality or corruption in the
where the arbitrators were "guilty of misconduct" or
misbehavior by which the rights of any party have been prejudiced;
where the arbitrators exceeded the scope of their powers, or so
imperfectly executed them that "a mutual, final, and definite
award upon the subject matter submitted was not made."
According to this decision, if it doesn't fall into one of
these 4 categories, then the court will not interfere with the
Other appeal-level courts in the US are split on this
issue, and some have reviewed arbitration decisions based on an
independent category, known as "manifest disregard of
the law." Since that is not a specified ground for
appeal in Section 10, it was not accepted by the Seventh Circuit in
the Affymax decision. The lessons for business? In the US,
arbitrator's decisions will not be subject to review by the
courts unless the review falls into one of these 4 narrow
What about the law in Alberta? Watch for Part 3.
Please click links below to read Parts 1 and
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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