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Life Technologies Corp. and Applied Biosystems LLC v. Ab Sciex Pte. Ltd. and Dh Technologies Development Pte. Ltd

August 16, 2011


The opinion of the court was delivered by: Richard J. Holwell, District Judge:


Defendant AB Sciex Pte. Ltd. ("AB Sciex") is a trademark licensee seeking to avoid arbitration with its trademark licensors, plaintiffs Life Technologies Corp. ("Life Tech") and Applied Biosystems LLC ("Biosystems"). Life Tech and Biosystems initiated arbitration pursuant to an arbitration clause in an asset purchase agreement (the "Purchase Agreement") by which AB Sciex's affiliate, defendant DH Technologies Development Pte. Ltd. ("DH Tech") purchased Life Tech's mass spectrometry business. That agreement also required the parties to execute, or cause their affiliates to execute, a trademark license agreement. Ultimately, Life Tech and Biosystems licensed the trademarks to AB Sciex through a license agreement (the "License Agreement") that does not contain an arbitration clause. Life Tech and Biosystems have since commenced arbitration proceedings against AB Sciex and DH Tech arising out of AB Sciex's use of the trademarks. AB Sciex now moves to enjoin those proceedings as to it, arguing that it is not a signatory to any agreement containing an arbitration clause and that its use of the trademarks is governed exclusively by the License Agreement. AB Sciex is estopped from avoiding arbitration, however, because it knowingly exploited the direct benefits of the Purchase Agreement by obtaining and using the licenses provided by the License Agreement. Accordingly, AB Sciex's motion to enjoin the arbitration proceedings is DENIED.


The facts in this case are set forth in detail in the Court's opinion denying plaintiffs' motion for a preliminary injunction, Life Technologies Corp. v. AB Sciex Pte. Ltd., No. 11 Civ. 325, 2011 WL 1419612, at *1-4 (S.D.N.Y. Apr. 11, 2011), familiarity with which is assumed. The Court recounts the facts only as relevant to this motion.

In 2009 Life Tech transacted to sell its mass spectrometry business to Danaher Corporation ("Danaher"), an affiliate of defendant DH Tech. On September 2, 2009, Life Tech, Danaher, and DH Tech signed the Purchase Agreement laying out the terms of the sale. (See generally Szekeres Decl. Ex. A.) The Purchase Agreement, by which DH Tech bought Life Tech's mass spectrometry business for roughly $450 million, required that "[o]n or prior to the Closing (but subject to the Closing being consummated), (i) [DH Tech] shall, and shall cause its respective Affiliates*fn1 to, execute and deliver to [Life Tech] copies of the Ancillary Agreements to which such Person is a party . . . ." (Id. § 7.8; see also id. § 4.2(a)(v), (b)(iv) (requiring the parties to deliver the Ancillary Agreements at Closing); Szekeres Decl. ¶ 11.)

The Purchase Agreement also contained a detailed section on dispute resolution. As relevant to the present motion, the parties agreed therein that in the event of any dispute, controversy or claim arising out of, relating to or in connection with this Agreement or any other Transaction Document . . . or the breach, termination or validity thereof or the negotiation, execution or performance thereof (a "Dispute"), the parties shall attempt to settle such Dispute in the first instance by mutual discussions between representatives of senior management of each party. (Id. § 11.6(a).) Should a Dispute prove irresolvable through negotiation, then the dispute "shall be submitted to mediation in accordance with the JAMS International Mediation Rules." (Id. § 11.6(b).) In turn, "[a]ny Dispute not timely resolved in accordance with Section 11.6(b) shall be finally and exclusively resolved by arbitration in accordance with the then-prevailing JAMS International Arbitration Rules and Procedures . . . ." (Id. § 11.6(c).) The Transaction Documents referred to in Section 11.6(a) included the Purchase Agreement and all Ancillary Agreements. (Id. § 1.1 (defining "Transaction Documents").)

One of the Ancillary Agreements was the License Agreement. (Id. § 1.1 (defining "Ancillary Agreements").) Life Tech and Biosystems executed that agreement with AB Sciex, a DH Tech affiliate, on January 29, 2010, the closing date of the Purchase Agreement. (See generally Szekeres Decl. Ex. B; Szekeres Decl. ¶ 10.) The agreement's recitals noted the Purchase Agreement "whereby [DH Tech] has agreed to purchase, or cause affiliates to purchase, certain assets of [Life Tech and Biosystems] relating to [Life Tech and Biosystem's] Mass Spec Business and Consumables Business." (License Agreement at 1.) The recitals concluded, "NOW THEREFORE, in consideration of the mutual promises and covenants set forth herein and in the [Purchase Agreement], the parties, intending to be legally bound, hereto agree." (Id.)

In the License Agreement, Life Tech and Biosystems granted AB Sciex licenses to use certain trademarks in certain manners. Specifically, Life Tech and Biosystems granted AB ScieX (1) "a non-exclusive, limited worldwide, royalty-free and fully paid-up license" to use one set of marks; and (2) "an exclusive (even as to [Life Tech and Biosystems]), perpetual, worldwide, royalty-free and fully paid-up license" to use another set of marks. (Id. §§ 2.1, 2.2.) Both licenses were subject to certain limitations explainted in detail in the License Agreement. (Id. §§ 2.1-2.8, 3.5.) The parties also "agree[d] that no additional consideration is owed or due to [Life Tech and Biosystems] for the rights granted to [AB Sciex] hereunder." (Id. § 2.9.)

The License Agreement lacks a section explicitly addressing conflict resolution procedures, but does state (1) that the agreement "and any other writing signed by the parties that specifically references this Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements, understandings . . . both written and oral, between the parties with respect to the subject matter hereof," (id. § 9.1); and (2) that AB Sciex "acknowledges that monetary relief would not be an adequate remedy for a breach . . . and that [Life Tech and Biosystems] shall be entitled to the enforcement of this Agreement by injunction, . . . without prejudice to any other rights and remedies . . . ." (id. § 9.4).

On January 18, 2011, plaintiffs brought this suit asserting claims for, inter alia, breach of contract pursuant to the License Agreement, trademark infringement, and related claims against AB Sciex, and breach of contract pursuant to the Purchase Agreement against DH Tech, and sought a preliminary injunction. The Court subsequently denied plaintiffs' motion for a preliminary injunction.

On April 22, 2011, Life Tech and Biosystems filed a demand for arbitration with JAMS, naming both DH Tech and AB Sciex as respondents. (Szekeres Decl. ¶ 12; see also Szekeres Decl. Ex. C at 2, 5.) AB Sciex now moves to enjoin the arbitration as against it, arguing primarily that it never signed any agreement to arbitrate with Life Tech or Biosystems.


"Arbitration is a matter of contract, and therefore a party cannot be required to submit to arbitration any dispute which it has not agreed so to submit." Ragone v. Atlantic Video at Manhattan Center, 595 F.3d 115, 126 (2d Cir. 2010) (alterations omitted, citing JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 171 (2d Cir. 2004)). The Second Circuit "ha[s] stated," however, "that non-signatories may be bound by arbitration agreements entered into by others . . . pursuant to five different theories: (1) incorporation by reference; (2) assumption; (3) agency; (4) veil-piercing/alter ego; and (5) estoppel." Am. Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349, 352 (2d Cir. 1999) (citing Thomson-CSF, S.A. v. Am. Arbitration Assoc., 64 F.3d 773, 776 (2d Cir. 1995)); see also MBIA Ins. Corp. v. Royal Bank of Canada, 706 F. Supp. 2d 380, 398 n.9 (S.D.N.Y. 2009).

Plaintiffs here contend that AB Sciex must arbitrate under an estoppel theory.*fn2 "A nonsignatory may be estopped from avoiding arbitration where it 'knowingly accepted the benefits of an agreement with an arbitration clause.'" Bank of Am. Nat'l Ass'n v. Sopher, 10 Civ. 8870, 2011 WL 2419872, at *3 (S.D.N.Y. June 8, 2011) (quoting MAG Portfolio Consult, GMBH v. Merlin Biomed Grp. LLC, 268 F.3d 58, 61 (2d Cir. 2001)); see also Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1064 (2d Cir. 1993). "The benefits must be direct-which is to say, flowing directly from the agreement." Oppenheimer & Co. Inc. v. Deutsche Bank AG, No. 09 Civ. 8154, 2010 WL 743915, at *2 (S.D.N.Y. Mar. 2, 2010) (quoting MAG Portfolio, 268 F.3d at 61); see also Tencara Shipyard, 170 F.3d at 353. In contrast, "the benefit derived from an agreement is indirect," and is therefore insufficient to support estoppel, "where the nonsignatory exploits the contractual relation of parties to an agreement, but does not exploit (and thereby assume) the agreement itself." Republic of Ecuador v. ChevronTexaco Corp., 499 F. Supp. 2d 452, ...

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