Oracle America, Inc. v. Myriad Group A.G.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ORACLE AMERICA , INC., No. 11-17186

Plaintiff-Appellee,

D.C. No.

v. 4:10-cv-05604-SBA

MYRIAD GROUP A.G.,

Defendant-Appellant. OPINION

Appeal from the United States District Court

for the Northern District of California

Saundra B. Armstrong, District Judge, Presiding

Argued and Submitted

May 6, 2013—San Francisco, California

Filed July 26, 2013

Before: William A. Fletcher, Ronald M. Gould,

and Morgan Christen, Circuit Judges.

Opinion by Judge Christen

2 ORACLE AMERICA , INC. V . MYRIAD GROUP A.G.

SUMMARY*

Arbitration

The panel reversed the district court’s partial denial of a

motion to compel arbitration in a copyright and trademark

infringement action concerning licenses for access to the Java

computer programming language.

The panel held that, unlike the arbitrability of claims in

general, the question whether the court or the arbitrator

decides arbitrability is an issue for judicial determination

unless the parties clearly and unmistakably provide otherwise.

Agreeing with the Second and D.C. Circuits, the panel held

that incorporation of the United Nations Commission on

International Trade Law arbitration rules into an arbitration

provision in a commercial contract constitutes clear and

unmistakable evidence that the parties to the contract

intended to delegate questions of arbitrability to the arbitrator.

The panel remanded the case for proceedings consistent with

its opinion.

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

ORACLE AMERICA , INC. V . MYRIAD GROUP A.G. 3

COUNSEL

Jeffrey S. Bucholtz (argued), Kevin R. Sullivan, Shannon M.

Kasley, Daniel S. Epps, and Timothy J. Sullivan, King &

Spalding LLP, Washington, D.C.; Brian A. White, King &

Spalding LLP, Atlanta, Georgia; Geoffrey M. Ezgar, King &

Spalding LLP, San Francisco, California, for Defendant-

Appellant.

Jeffrey M. Shohet (argued), Christopher J. Beal, and Amanda

C. Fitzsimmons, DLA Piper LLP, San Diego, California;

Elizabeth Rogers Brannen, Oracle America, Inc., Redwood

City, California, for Plaintiff-Appellee.

OPINION

CHRISTEN, Circuit Judge:

Myriad Group A.G. appeals the district court’s partial

denial of its motion to compel arbitration. Myriad maintains

that incorporation of the United Nations Commission on

International Trade Law (UNCITRAL) arbitration rules into

an arbitration provision in a commercial contract constitutes

clear and unmistakable evidence that the parties to the

contract intended to delegate questions of arbitrability to the

arbitrator. We agree, consistent with the other circuits to

have considered the question. We therefore reverse the

district court’s partial denial of Myriad’s motion to compel

arbitration.

4 ORACLE AMERICA , INC. V . MYRIAD GROUP A.G.

I. BACKGROUND

Myriad is a Swiss mobile software company. Oracle

America, Inc. is a Delaware corporation that developed Java,

a computer programming language, and the Java Runtime

Environment. The Java Runtime Environment facilitates

cross-platform computing compatibility.

Oracle has a community licensing program that allows

access to the Java programming language and use of Java

trademarks in exchange for royalties. Myriad entered into a

Community Source License in 2002. The Source License

encompasses several separate licenses, including the

Technology Compatibility Kits (TCK) License. The TCK

License allows a licensee to access Oracle’s testing protocols;

it is intended to ensure compatibility of the licensee’s

products. A licensee’s right to use Java trademarks is

contingent upon the licensee’s product meeting applicable

testing protocols.

Myriad maintains that a separate agreement, the Java

Specification Participation Agreement (JSPA), gave it rights

to the Java language and the testing protocols without

payment of royalties. Oracle maintains that, based on

Myriad’s faulty interpretation of the JSPA, Myriad stopped

paying royalties and breached the Source License. Oracle

also alleges that Myriad failed to renew a separate agreement,

the Master Support Agreement, which was a prerequisite to

a valid TCK License, and that Myriad’s continued use of the

Java trademarks and the Java programming language

infringed upon Oracle’s intellectual property rights.

Oracle filed suit in the Northern District of California

asserting claims for breach of contract, violation of the

ORACLE AMERICA , INC. V . MYRIAD GROUP A.G. 5

Lanham Act (15 U.S.C. § 1125(a)), copyright infringement

(17 U.S.C. § 101 et seq.), and unfair competition under

California law (Cal. Bus. & Prof. Code § 17200 et seq.).

Myriad sued Oracle separately in the District of Delaware

asserting that Oracle breached the JSPA.

Myriad moved in the Northern District of California to

compel arbitration based on an arbitration clause in the

Source License. The arbitration clause provides:

Any dispute arising out of or relating to this

License shall be finally settled by arbitration

as set out herein, except that either party may

bring any action, in a court of competent

jurisdiction (which jurisdiction shall be

exclusive), with respect to any dispute relating

to such party’s Intellectual Property Rights or

with respect to Your compliance with the

TCK license. Arbitration shall be

administered: (i) by the American Arbitration

Association (AAA), (ii) in accordance with

the rules of the United Nations Commission

on International Trade Law (UNCITRAL)

(the “Rules”) in effect at the time of

arbitration as modified herein; and (iii) the

arbitrator will apply the substantive laws of

California and United States. Judgment upon

the award rendered by the arbitrator may be

entered in any court having jurisdiction to

enforce such award.

Myriad submitted a demand for arbitration with the

arbitrator on August 15, 2011. Approximately two weeks

later, the district court granted Myriad’s motion to compel

6 ORACLE AMERICA , INC. V . MYRIAD GROUP A.G.

arbitration with respect to Oracle’s breach of contract claim

but denied Myriad’s motion with respect to all other claims.

The district court concluded that incorporation of the

UNCITRAL arbitration rules did not constitute clear and

unmistakable evidence that the parties intended to delegate

questions of arbitrability to the arbitrator. The district court

reasoned that the relevant provision of the 2010 UNCITRAL

rules states only that the arbitrator has authority, but not

exclusive authority, to decide its own jurisdiction.

In January 2012, the district court enjoined Myriad from

proceeding with arbitration of its non-contract claims. In

deciding Oracle’s motion for preliminary injunction, the

district court clarified that it had not ruled that it had

concurrent jurisdiction with the arbitrator over questions of

arbitrability. Rather, because the arbitration clause states that

the court’s jurisdiction is “exclusive” with respect to a party’s

intellectual property claims or claims arising out of the TCK

License, the court determined that the parties intended for the

court to decide questions of arbitrability.

Myriad appeals the district court’s order partially denying

its motion to compel arbitration. The parties stipulated to a

stay of the district court proceedings pending the outcome of

this appeal.

II. STANDARD OF REVIEW

We review an order denying a motion to compel

arbitration de novo. Smallwood v. Allied Van Lines, Inc.,

660 F.3d 1115, 1120 (9th Cir. 2011).

ORACLE AMERICA , INC. V . MYRIAD GROUP A.G. 7

III. DISCUSSION

The only issue in this case is whether the parties agreed

to arbitrate arbitrability. There is generally a “liberal federal

policy favoring arbitration agreements.” Moses H. Cone

Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24

(1983). In accordance with that policy, “doubts concerning

the scope of arbitrable issues should be resolved in favor of

arbitration.” Id. at 24–25. But the dispute in this case centers

on who decides whether a claim is arbitrable.

“Just as the arbitrability of the merits of a dispute depends

upon whether the parties agreed to arbitrate that dispute, so

the question ‘who has the primary power to decide

arbitrability’ turns upon what the parties agreed about that

matter.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938,

943 (1995) (internal citations omitted). But, unlike the

arbitrability of claims in general, whether the court or the

arbitrator decides arbitrability is “‘an issue for judicial

determination unless the parties clearly and unmistakably

provide otherwise.’” Howsam v. Dean Witter Reynolds, Inc.,

537 U.S. 79, 83 (2002) (emphasis added) (alteration omitted)

(quoting AT & T Techs., Inc. v. Commc’ns Workers, 475 U.S.

643, 649 (1986)). In other words, there is a presumption that

courts will decide which issues are arbitrable; the federal

policy in favor of arbitration does not extend to deciding

questions of arbitrability.

A. Whether Incorporation of the UNCITRAL

Arbitration Rules Clearly and Unmistakably

Delegates Arbitrability to the Arbitrator

As a preliminary matter, the parties disagree about which

version of the UNCITRAL arbitration rules controls. Their

8 ORACLE AMERICA , INC. V . MYRIAD GROUP A.G.

agreement refers to the UNCITRAL rules “in effect at the

time of arbitration as modified herein.” The 2010

UNCITRAL rules were in effect at the time Myriad submitted

its demand for arbitration, and some of Oracle’s arguments

hinge on application of the 2010 rules. But Myriad represents

that the parties at one point agreed that the 1976 UNCITRAL

rules govern. We conclude that it is ultimately unnecessary

to decide which version of the UNCITRAL rules applies.

The 1976 UNCITRAL arbitration rules provide that “[t]he

arbitral tribunal shall have the power to rule on objections

that it has no jurisdiction, including any objections with

respect to the existence or validity of the arbitration clause or

of the separate arbitration agreement.” UNCITRAL

Arbitration Rules art. 21, para. 1, G.A. Res. 31/98, U.N. Doc.

A/RES/31/98 (Dec. 15, 1976). The 2010 UNCITRAL rules

state that “[t]he arbitral tribunal shall have the power to rule

on its own jurisdiction, including any objections with respect

to the existence or validity of the arbitration agreement.”

UNCITRAL Arbitration Rules art. 23, para. 1, G.A. Res.

65/22, U.N. Doc. A/RES/65/22 (Jan. 10, 2011).

By giving the arbitral tribunal the authority to decide its

own jurisdiction, both the 1976 and 2010 UNCITRAL rules

vest the arbitrator with the apparent authority to decide

questions of arbitrability. The only difference is that, under

the 1976 rules, the authority of the arbitral tribunal is

described as ruling on objections to its jurisdiction and under

the 2010 rules the tribunal has the authority to decide its

jurisdiction. The 1976 rules are more narrowly phrased than

the 2010 rules, but there is not a significant distinction

between how these sets of rules treat questions of

arbitrability. We conclude it is immaterial which version of

ORACLE AMERICA , INC. V . MYRIAD GROUP A.G. 9

the UNCITRAL rules is applied to the question presented by

this appeal.

The parties’ central dispute is whether incorporation of

the UNCITRAL rules into the parties’ arbitration provision

constitutes clear and unmistakable evidence that the parties

intended to arbitrate arbitrability. This is an issue of first

impression in the Ninth Circuit, but the Second Circuit and

the D.C. Circuit have concluded that incorporation of the

1976 UNCITRAL arbitration rules constitutes clear and

unmistakable evidence that the parties to an agreement

intended to arbitrate questions of arbitrability.

1. Second Circuit

In Republic of Ecuador v. Chevron Corp., 638 F.3d 384

(2d Cir. 2011), the Second Circuit held that whether Chevron

had waived its right to arbitration under an investment treaty

or was estopped from invoking arbitration under that treaty

were issues for the arbitral panel. The treaty—to which

Ecuador was a signatory—incorporated the 1976 UNCITRAL

arbitration rules.

The court noted initially that waiver was presumptively an

issue for the arbitrator. Id. at 394. But the court then ruled

that, even if waiver and estoppel could be characterized as

questions of arbitrability (and therefore, presumptively as

issues for judicial determination), incorporation of the

UNCITRAL rules was “clear and unmistakable” evidence

that the parties delegated questions of arbitrability to the

arbitrator. Id. Because Ecuador’s waiver and estoppel claims

challenged the validity of the arbitration agreement, and

because the UNCITRAL rules gave the arbitrator authority to

decide objections to the validity of the arbitration agreement,

10 ORACLE AMERICA , INC. V . MYRIAD GROUP A.G.

the Second Circuit concluded that the waiver and estoppel

claims were for the arbitrator to decide. Id. at 394–95.

Oracle argues that Republic of Ecuador only addressed

whether the arbitrator should decide waiver and estoppel

issues in the first instance. But the Second Circuit has more

recently confirmed that “Republic of Ecuador . . . held that a

bilateral investment treaty’s incorporation of the . . .

UNCITRAL rules was clear and unmistakable evidence that

the parties intended questions of arbitrability to be decided by

the arbitral panel in the first instance.” Schneider v. Kingdom

of Thailand, 688 F.3d 68, 73 (2d Cir. 2012) (internal

quotation marks omitted).

2. D.C. Circuit

In Republic of Argentina v. BG Group PLC, 665 F.3d

1363, 1371 (D.C. Cir. 2012), the D.C. Circuit also concluded

that incorporation of the 1976 UNCITRAL Rules provides

clear and unmistakable evidence that the parties agreed to

arbitrate arbitrability. Like Republic of Ecuador, the decision

in Republic of Argentina involved a bilateral investment

treaty. Id. at 1365. The treaty called for arbitration so long

as a party first filed suit in the host country’s courts and

eighteen months passed without resolution. Id. If those

preconditions were met and the parties did not separately

agree on an arbitration forum or procedure, the treaty dictated

that the UNCITRAL arbitration rules would govern. Id. at

1370–71.

The plaintiff in Republic of Argentina invoked the treaty’s

arbitration provision without first filing suit in an Argentine

court. Id. at 1365. The D.C. Circuit ultimately held that

because the preconditions to arbitration had not been met,

ORACLE AMERICA , INC. V . MYRIAD GROUP A.G. 11

“the question of arbitrability [was] an independent question

of law for the court to decide.” Id. at 1371. But the court

also observed that if the plaintiff had first filed suit in an

Argentine court and waited eighteen months, the result would

have been different: “the Treaty’s incorporation of the

UNCITRAL Rules provides clear and unmistakable evidence

that the parties intended for the arbitrator to decide questions

of arbitrability.” Id. (internal quotation marks, alterations,

and citations omitted). The D.C. Circuit concluded succinctly

that “the UNCITRAL Rules grant the arbitrator the power to

determine issues of arbitrability.” Id.

3. Incorporation of the American Arbitration

Association Rules

Virtually every circuit to have considered the issue has

determined that incorporation of the American Arbitration

Association’s (AAA) arbitration rules constitutes clear and

unmistakable evidence that the parties agreed to arbitrate

arbitrability. See Petrofac, Inc. v. DynMcDermott Petroleum

Operations Co., 687 F.3d 671, 675 (5th Cir. 2012); Fallo v.

High-Tech Inst., 559 F.3d 874, 878 (8th Cir. 2009);

Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1373 (Fed.

Cir. 2006); Terminix Int’l Co. v. Palmer Ranch LP, 432 F.3d

1327, 1332 (11th Cir. 2005); Contec Corp. v. Remote Solution

Co., 398 F.3d 205, 208 (2d Cir. 2005). Only one circuit has

concluded otherwise. See Riley Mfg. Co. v. Anchor Glass

Container Corp., 157 F.3d 775, 777 & n.1, 780 (10th Cir.

1998). The AAA rules contain a jurisdictional provision

similar to Article 21(1) of the 1976 UNCITRAL rules and

almost identical to Article 23(1) of the 2010 UNCITRAL

12 ORACLE AMERICA , INC. V . MYRIAD GROUP A.G.

rules.1 The Second and D.C. Circuits’ conclusions with

respect to incorporation of the UNCITRAL rules are

consistent with the majority view regarding the effect of

incorporating the AAA rules into an agreement.

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. 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.2

B. Whether the Parties Intended a Court Would Decide

Arbitrability or Whether the Parties’ Intent is

Ambiguous

Oracle advances several arguments in support of its

position that the parties to this case intended for a court to

decide arbitrability or that the parties’ intent is at least

ambiguous. We address each in turn.

1

Commercial Arbitration Rule 7(a) provides that “[t]he arbitrator shall

have the power to rule on his or her own jurisdiction, including any

objections with respect to the existence, scope or validity of the arbitration

agreement.” AAA Commercial Arbitration Rule 7(a).

2

W e express no view as to the effect of incorporating arbitration rules

into consumer contracts.

ORACLE AMERICA , INC. V . MYRIAD GROUP A.G. 13

1. Article 23(3) of the 2010 UNCITRAL rules does

not create an ambiguity.

Oracle argues that Article 23(3) of the 2010 UNCITRAL

rules renders the effect of the 2010 rules ambiguous. Article

23(3) states, “[t]he arbitral tribunal may continue the arbitral

proceedings and make an award, notwithstanding any

pending challenge to its jurisdiction before a court.”

UNCITRAL Arbitration Rules art. 23, para. 3, G.A. Res.

65/22, U.N. Doc. A/RES/65/22 (Jan. 10, 2011). From this,

Oracle argues that courts and arbitrators have concurrent

authority to decide the arbitrator’s jurisdiction. But even if

the 2010 UNCITRAL rules apply, they do not, of themselves,

create a path to challenging the arbitrator’s jurisdiction in

federal court. Article 23(3) assumes such a path. See U.N.

Comm’n on Int’l Trade Law, Report of the Working Group

on Arbitration and Conciliation on the Work of its Forty-Fifth

Session ¶¶ 99–101 (Vienna, Sept. 11–15, 2006) (“It was

noted that a number of national laws provided parties with an

irrevocable right to seek recourse from the courts.”). By

contrast, “the central . . . purpose of the [Federal Arbitration

Act] is to ensure that private agreements to arbitrate are

enforced according to their terms.” Stolt-Nielsen S.A. v.

AnimalFeeds Int’l Corp., 130 S. Ct. 1758, 1773 (2010)

(internal quotation marks omitted). The UNCITRAL rules

clearly and unmistakably delegate questions of arbitrability

to an arbitrator—it is immaterial to the outcome of this

dispute that the 2010 UNCITRAL rules also contemplate that

in some countries the arbitrator’s jurisdiction may be

simultaneously challenged in court.

14 ORACLE AMERICA , INC. V . MYRIAD GROUP A.G.

2. The carve-out clause in the parties’ agreement

does not negate incorporation of the UNCITRAL

rules.

Oracle also argues that a carve-out provision in the

parties’ arbitration clause expresses their intent that a court

would decide arbitrability. The arbitration clause states that

any claim arising out of the Source License shall be settled by

arbitration. But the carve-out clause states “that either party

may bring any action, in a court of competent jurisdiction

(which jurisdiction shall be exclusive), with respect to any

dispute relating to such party’s Intellectual Property Rights or

with respect to [Myriad’s] compliance with the TCK license.”

Oracle maintains that whether a court or an arbitrator will

determine the arbitrability of intellectual property claims or

claims arising out of the TCK License are “disputes relating

to” those claims, and therefore concludes that the district

court had exclusive jurisdiction to decide the arbitrability of

those claims.

Enforcement of Myriad’s intellectual property rights is

restricted by the Source License. And the TCK License is

part of the Source License. Thus, by definition, the claims

excepted from arbitration by the carve-out clause are claims

“arising out of or relating to” the Source License. Oracle’s

argument conflates the scope of the arbitration clause, i.e.,

which claims fall within the carve-out provision, with the

question of who decides arbitrability. The decision that a

claim relates to intellectual property rights or compliance

with the TCK License constitutes an arbitrability

determination, which the parties have clearly and

unmistakably delegated to the arbitrator by incorporating the

UNCITRAL rules.

ORACLE AMERICA , INC. V . MYRIAD GROUP A.G. 15

Oracle cites a Sixth Circuit case in support of its position.

In Turi v. Main St. Adoption Servs., LLP, 633 F.3d 496, 511

(6th Cir. 2011), the Sixth Circuit held that even though an

arbitration clause incorporated the AAA rules, the arbitration

clause was so narrow that questions of arbitrability did not

need to be decided by the arbitrator. The arbitration clause in

Turi only contemplated arbitration of “claim[s] regarding

fees” in excess of $5,000, id. at 506, but the plaintiffs in Turi

also asserted claims for fraud, conspiracy, misrepresentation,

intentional and negligent infliction of emotional distress, and

RICO violations, id. at 500. The court stated that “even

where the parties expressly delegate to the arbitrator the

authority to decide the arbitrability of the claims related to the

parties’ arbitration agreement, this delegation applies only to

claims that are at least arguably covered by the agreement.”

Id. at 511.

Turi did not involve a carve-out clause. It involved an

extremely narrow arbitration provision interpreted in the

context of a host of unrelated claims. Here, the excepted

claims are by definition related to arbitrable claims because

they all relate to the Source License. For this reason alone,

Turi is distinguishable. Nor are we persuaded by the

reasoning of Turi because as discussed above, when a tribunal

decides that a claim falls within the scope of a carve-out

provision, it necessarily decides arbitrability. Turi’s

reasoning collapses two separate questions into one.

Oracle also relies on a case from the Delaware Supreme

Court, James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d

76 (Del. 2006). There, the parties’ arbitration agreement

stated, “[a]ny controversy or claim arising out of or relating

to this Agreement . . . shall be settled by arbitration,” but the

agreement also allowed LLC members to pursue injunctive

16 ORACLE AMERICA , INC. V . MYRIAD GROUP A.G.

relief and specific performance in court. Id. at 79–80. The

Delaware Supreme Court held that “[s]ince th[e] arbitration

clause [did] not generally refer all controversies to arbitration,

the federal majority rule does not apply, and something other

than the incorporation of the AAA rules would be needed to

establish that the parties intended to submit arbitrability

questions to an arbitrator.” Id. at 81. In fact, the parties’

agreement in James & Jackson did generally refer all

controversies to arbitration, only excepting claims for

injunctive relief and specific performance. Id. at 79–80. It is

clear that the James & Jackson court relied on the arbitration

agreement’s carve-out provision to decide that questions of

arbitrability would be decided by the court.

James & Jackson nominally supports Oracle’s position,

but the decision’s suggestion that the federal majority rule

only applies when an arbitration agreement lacks a carve-out

provision does not follow from the cases the court cited, see

id. at 80 n.9,3 and we know of no other authority supporting

this proposition.

3. The Source License does not modify the

UNCITRAL rules’ jurisdictional provisions.

Finally, Oracle argues that the parties’ arbitration clause

modified the UNCITRAL rules such that arbitrability must be

determined by the court. The arbitration clause in the Source

License states that arbitration is to be administered “in

accordance with the [UNCITRAL] rules . . . in effect at the

time of arbitration as modified herein.” The paragraph after

the arbitration clause sets out specific rules regarding

3

The court cited, among others, Terminix Int’l, 432 F.3d at 1329, and

Contec Corp., 398 F.3d at 208.

ORACLE AMERICA , INC. V . MYRIAD GROUP A.G. 17

arbitration proceedings that differ from the UNCITRAL rules,

but none of the modifications concern questions of

arbitrability.

Similarly, Oracle maintains that vesting courts with

“exclusive” authority to adjudicate claims relating to the

parties’ intellectual property rights and claims relating to

Myriad’s compliance with the TCK License constitutes

modification of the UNCITRAL rules. Oracle argues that this

modification requires that a court determine arbitrability. We

disagree. This argument merely recasts Oracle’s contention

that the carve-out provision evidences the parties’ intention

for a court to decide the arbitrability of claims that fall within

it. It is foreclosed by the discussion above.

IV. CONCLUSION

Incorporation of the UNCITRAL arbitration rules into the

parties’ commercial contract constitutes clear and

unmistakable evidence that the parties agreed to arbitrate

arbitrability. Accordingly, we REVERSE the district court’s

partial denial of Myriad’s motion to compel arbitration and

REMAND for proceedings consistent with this opinion.