Java Royalties Case May Be Arbitrated After All

(CN) - Before Oracle can seek royalties over Java programming language and trademarks, an arbitrator must first determine the need to arbitrate, the 9th Circuit ruled Friday.

Oracle sued the mobile software company Myriad Group A.G in Oakland after Myriad stopped paying royalties on a source license for the use of Java. Myriad claimed that a separate agreement allowed it to continue using the programming language for free. Oracle disagreed and alleged breach of contract, copyright infringement, and unfair competition. After filing its own contract complaint in Delaware, Myriad moved to compel arbitration in the California case.

U.S. District Judge Saundra Armstrong found that the source license agreement supported arbitration only for the contract claims, not the copyright or other allegations.

Noting that the "only issue in this case is whether the parties agreed to arbitrate arbitrability," the federal appeals court in San Francisco unanimously reversed based on the tenets of the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules, which the parties included in their licensing agreement.

Where the lower court had concluded that the UNCITRAL rules did not grant the arbitrator "exclusive authority ... to decide its own jurisdiction," the panel found that they did just that, as evidenced in previous rulings by the 2nd and D.C. Circuits.

"We see no reason to deviate from the prevailing view that incorporation of the UNCITRAL arbitration rules is clear and unmistakable evidence that the parties agreed the arbitrator would decide arbitrability," Judge Morgan Christen wrote for the panel. "We hold that as long as an arbitration agreement is between sophisticated parties to commercial contracts, those parties shall be expected to understand that incorporation of the UNCITRAL rules delegates questions of arbitrability to the arbitrator."

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