Arbitration Clauses in License Agreements (Part 1)

This 2010 case is a good reminder that courts will give effect to arbitration clauses if that's what the parties have chosen in their license agreements.

• In PRM Energy Sys., Inc. v. Primenergy, LLC, 592 F.3d 830 (8th Cir. 2010) , the United States Court of Appeals, Eighth Circuit decided to uphold an arbitration clause in a patent license agreement, which was drafted to cover "all disputes arising under" the agreement. A complex series of agreements and disputes led PRM to sue Kobe Steel, a non-party or "non-signatory" to the original license agreement that contained the arbitration clause. However, Kobe Steel convined the court that the arbitration clause should be enforced. The court decided that PRM's claims were so intertwined with patent license that contained the arbitration clause that it would be unfair to allow PRM to rely on the license agreement in making its claims, but to avoid the arbitration clause of that same agreement.