Farrel Corporation v. United States International Trade Commission, and Pomini Farrel S.P.A. And Pomini, Inc., Intervenors

949 F.2d 1147, 20 U.S.P.Q. 2d (BNA) 1912, 13 I.T.R.D. (BNA) 1897, 1992 U.S. App. LEXIS 10068, 1991 WL 243308
CourtCourt of Appeals for the Federal Circuit
DecidedFebruary 5, 1992
Docket91-1111
StatusPublished
Cited by13 cases

This text of 949 F.2d 1147 (Farrel Corporation v. United States International Trade Commission, and Pomini Farrel S.P.A. And Pomini, Inc., Intervenors) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Farrel Corporation v. United States International Trade Commission, and Pomini Farrel S.P.A. And Pomini, Inc., Intervenors, 949 F.2d 1147, 20 U.S.P.Q. 2d (BNA) 1912, 13 I.T.R.D. (BNA) 1897, 1992 U.S. App. LEXIS 10068, 1991 WL 243308 (Fed. Cir. 1992).

Opinion

MICHEL, Circuit Judge.

Farrel Corporation (“Farrel”) appeals the decision of the U.S. International Trade Commission (“ITC” or “Commission”) terminating its investigation under 19 U.S.C. § 1337 (1988) on the basis of a prior agreement between Farrel and respondent/intervenor Pomini Farrel S.p.A. (“Pomini”) to arbitrate certain disputes. In re Certain Internal Mixing Devices and Components Thereof, Inv. No. 337-TA-317 (U.S. Int’l Trade Comm’n) (Nov. 2, 1990). Because the governing statutory section, 19 U.S.C. § 1337(c), does not authorize the termination of ongoing investigations except in certain specified circumstances not present here, the Commission’s premature termination in light of an arbitration agreement was contrary to law, and therefore, we reverse.

BACKGROUND

The Licensing Agreements

Farrel manufactures and distributes worldwide heavy machinery used in mixing rubber and plastics. Pomini, an Italian corporation, also sells imported rubber and plastics processing machinery in competition with Farrel. Complaint, as amended, In re Certain Internal Mixing Devices and Components Thereof, Inv. No. 337-TA-317, (U.S. Int’l Trade Comm’n) (July 24, 1990) (“ITC Complaint”).

*1149 From 1957 until 1986, Farrel and Pommi entered into a series of licensing agreements allowing Pomini to manufacture, using Farrel’s technology, and sell a line of rubber and plastics mixing machines worldwide, with the exceptions of the United States, the United Kingdom and Japan. The agreements included provisions requiring that all designs, specifications, drawings, blueprints, photographs, reproductions, and other materials be returned by Pomini on the expiration of the contractual relationship.

Each of the licensing agreements contained an arbitration clause requiring that “all disputes” be resolved by arbitration under the International Chamber of Commerce (“ICC”). For example, in 1973 Far-rel and Pomini entered into an agreement, superseding an earlier agreement, that extended Pomini’s rights to make and sell the machinery with continued technical assistance from Farrel. The agreement contained the following provision governing arbitration of disputes:

All disputes arising in connection with the present Agreement shall be finally settled by arbitration. Arbitration shall be conducted in Geneva, Switzerland, in accordance with the rules of Arbitration of the International Chamber of Commerce.
Judgment upon the award rendered may be entered in any Court having jurisdiction, or application may be made to such Court for a judicial acceptance of the award and an order of enforcement, as the case may be.

Farrel/Pomini License Agreement, paragraph 28, Mar. 22, 1973. On January 1, 1976, Pomini and Farrel renewed the 1973 Agreement for an additional ten-year period, providing that the agreement was to continue in force thereafter unless either party gave six months’ prior written notice of termination. While the Agreement did change some provisions of its 1973 predecessor, it did not alter the arbitration clause.

Civil Actions Against Pomini

On January 1, 1986, in accordance with the license provisions, Farrel terminated “Pomini’s rights to use or to retain any Farrel technology.” Farrel Br. at 8. Approximately seven months later, Pomini announced that it planned to enter the U.S. market and supply American customers with internal mixing devices and components it manufactured in Italy. Farrel later alleged to the ITC that Pomini was able to do this by using trade secrets which Pomini had misappropriated from Farrel. ITC Complaint at 15-18. As a result, Far-rel charged that it “has lost significant business to Pomini[,] ... has been forced to furlough some of its work force, and is threatened with further decreases in production workers, sales staff and technical staff, through layoffs or attrition.” Farrel Br. at 8.

In response to what it characterized as “Pomini’s unfair competition,” Farrel filed a complaint against Pomini in the Tribunal of Busto Arsizio, an Italian civil court, alleging, inter alia, the misappropriation of trade secrets and infringement of various patents and trademarks registered in Italy. Farrel Br. at 8-9. A similar suit was filed in the Scottish Court of Sessions, in which Farrel alleged that Pomini infringed certain of its patents and trademarks registered in the United Kingdom. In both suits, Pomini asserted, as an affirmative defense, the “existence of binding arbitration agreements between the parties requiring that all disputes ... be resolved by an arbitration panel of the [ICC],” and therefore both tribunals were precluded from ruling on the merits of Farrel’s claims. 1 Pomini Br. at 3.

On June 29,1988, Farrel also filed suit in the United States District Court for the Northern District of Ohio, alleging that Pomini and its newly-formed U.S. marketing subsidiary, Pomini, Inc. (collectively “Pomini”), committed various patent and trademark-related violations, and seeking injunctive relief as well as treble and punitive damages. Farrel Corp. v. Pomini, Inc., Civ.Action No. C88-2161A (N.D.Ohio). *1150 Pomini responded by filing a Motion to Stay Proceedings and to Compel Arbitration, based on the agreements’ arbitration clauses. On September 10, 1990, the district court granted Pomini’s motion, holding that if Farrel desired to pursue its claims against Pomini, it must do so before an ICC arbitration panel. 2

On October 9, 1990, pursuant to 28 U.S.C. § 1295(a)(1) (1988), which grants this court exclusive appellate jurisdiction over suits involving patents, Farrel filed a notice of appeal from the district court’s order to the Federal Circuit. On Farrel’s request, that appeal was dismissed by this court on December 28, 1990.

Proceedings Before the Commission

Meanwhile, on July 24, 1990, Farrel filed a complaint against Pomini with the Commission, alleging that Pomini violated 19 U.S.C. § 1337(a) in the importation and sale of internal mixing machines and their components by misappropriating trade secrets, committing trademark infringement and falsely representing the manufactures’ source. Farrel petitioned for an immediate cease and desist order under 19 U.S.C. § 1337(f) and a limited permanent exclusion order forbidding entry into the United States of Pomini’s internal mixing devices. ITC Complaint at 29. In its complaint, Farrel alleged the existence of the then-pending Ohio district court proceedings.

On the basis of the allegations contained in Farrel’s complaint, the Commission voted on August 21, 1990, to institute an investigation.

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949 F.2d 1147, 20 U.S.P.Q. 2d (BNA) 1912, 13 I.T.R.D. (BNA) 1897, 1992 U.S. App. LEXIS 10068, 1991 WL 243308, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farrel-corporation-v-united-states-international-trade-commission-and-cafc-1992.