Immersion Corp. v. Sony Computer Entertainment America LLC

188 F. Supp. 3d 960, 2016 U.S. Dist. LEXIS 66938, 2016 WL 2914415
CourtDistrict Court, N.D. California
DecidedMay 19, 2016
DocketCase No. 16-cv-00857-RMW
StatusPublished
Cited by5 cases

This text of 188 F. Supp. 3d 960 (Immersion Corp. v. Sony Computer Entertainment America LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Immersion Corp. v. Sony Computer Entertainment America LLC, 188 F. Supp. 3d 960, 2016 U.S. Dist. LEXIS 66938, 2016 WL 2914415 (N.D. Cal. 2016).

Opinion

ORDER GRANTING PETITION TO CONFIRM ARBITAL AWARD

Re: Dkt. Nos. 1, 38

Ronald M. Whyte, United States District Judge

Plaintiff Immersion Corporation petitions this court to confirm an arbital award [964]*964against defendants Sony Computer Entertainment America LLC and Sony Computer Entertainment Inc. (collectively, “Sony”) under the New York Convention. Dkt. No. 1. Sony opposes the petition and requests that the award be vacated pursuant to Article Y of the New York Convention and § 10 of the Federal Arbitration Act. Dkt. No. 38. The court heard argument on April 1, 2016. For the reasons set forth below, the court grants Immersion’s petition to confirm the award. Sony’s motion to vacate is denied. Immersion’s request for attorney’s fees is denied.

I. BACKGROUND

Immersion is incorporated in Delaware and owns several patents covering digital touch technologies. Sony Computer Entertainment America LLC is incorporated in Delaware, and Sony Computer Entertainment Inc. is incorporated in Japan. Sony manufactures, markets, and distributes PlayStation systems. In 2002, Immersion sued Sony in the Northern District of California, asserting that certain Sony PlayStation products infringed its patents. The court entered final judgment in Immersion’s favor, and the parties subsequently entered into a 2007 settlement agreement resolving the litigation and establishing “a new business relationship.” Dkt. No. 38-2 at 1. Under the 2007 agreement, Immersion granted Sony a license to manufacture “royalty bearing” products in exchange for the payment of royalties. See id. The agreement defines “Royalty Bearing Products” as products that 1) contain “the physical means.. .that create tactile sensations that can felt by the user” and 2) are “covered by at least one Immersion Patent in the country or area where such unit is manufactured, sold, used or distributed.” Id. ¶ 5.4(b). Section 4.3 of the 2007 agreement provides for arbitration of certain disputes between the parties, including “whether a particular product or service of the Sony Entities is a Royalty Bearing Product.” Id. ¶ 4.3(a).

In 2014, a dispute arose between the parties as to whether DualShock® 4 controllers sold by Sony in Japan are “Royalty Bearing Products.” In particular, the parties were unable to agree whether the DualShock® 4 controllers are covered by one of Immersion’s Japanese patents— the ’301 patent. Pursuant to the arbitration clause in the 2007 agreement, the parties arbitrated the dispute with retired United States District Judge James Ware presiding. The arbitrator issued a Final Award on December 22, 2015, declaring that “Sony’s DS4’s Wireless Controllers manufactured, sold or distributed in Japan after April 8, 2014 were and are ‘royalty bearing’ products as defined by Paragraph 5.4 of the 2007 Agreement.” Dkt. No. 38-4 at 23. The arbitrator indicated that the award addressed all issues presented for determination in the arbitration proceeding. Id.

Immersion petitions this court to confirm the award, arguing that Sony “has no legitimate basis for opposing” Immersion’s petition. Dkt. No. 1. Sony opposes Immersion’s petition and moves to vacate the award on three grounds: 1) the award is contrary to the well-established policy of the United States because the arbitrator precluded Sony from asserting an invalidity defense, 2) the arbitrator refused to hear evidence pertinent and material to the controversy—specifically prior art evidence relating to non-infringement under Japanese law, and 3) the arbitrator manifestly disregarded Japanese law by failing to determine the extent of direct infringement as a necessary predicate for a finding of indirect infringement.

II. IMMERSION’S PETITION TO CONFIRM AND SONY’S MOTION TO VACATE

Immersion asks this court to confirm the award under the Convention on the Recog[965]*965nition and Enforcement of Foreign Arbi-tral Awards (the “New York Convention”), which is implemented by the Federal Arbitration Act (“FAA”) at 9 U.S.C. §§ 201-08. Dkt. No. 1 at 1. The arbitration award falls under the New York Convention because it arises “out of a legal relationship.. .which is considered as commercial” and involves a party that is not a citizen of the United States—Sony Computer Entertainment Inc. Id. § 202. This court must confirm the award “unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.” Id § 207.

Sony opposes Immersion’s petition and asks the court to vacate the award pursuant to Article V of the New York Convention and § 10 of the FAA. There are seven grounds for refusing to confirm or vacating an award under Article V of the New York Convention.1 In this case, Sony argues that “recognition or enforcement of the award would be contrary to the public policy” of the United States under Article V(2)(b). Sony also argues that it may challenge the award based on the grounds provided for in the FAA, specifically under § 10(a)(3) for failure to consider pertinent and material evidence and under § 10(a)(4) for manifest disregard of the law.2 See [966]*966Dkt. No. 55 at 9. Immersion contends that the “Convention’s enumeration of defenses is exclusive” and that Sony may not challenge the award on FAA grounds. Dkt. No. 45 at 17.

■ Article V(l)(e) of the New York Conyention provides that a court may refuse to confirm an award that has been “set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.” Therefore, Sony argues, the “Convention specifically contemplates that the state in which.. .the award is made, will be free to set aside or modify an award in accordance with its domestic arbitral law and its full panoply of express and implied grounds for relief.” Zurich Am. Ins. Co. v. Team Tankers A.S., 811 F.3d 584, 588 (2d Cir.2016), quoting Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15, 23 (2d Cir.1997). Sony notes that this approach has been adopted by other circuits, as well as by a district court in this circuit. See, e.g., Ario v. Underwriting Members of Syndicate 53 at Lloyds for 1998 Year of Account, 618 F.3d 277, 292 (3d Cir.2010), as amended (Dec. 7, 2010) (“When both the arbitration and the enforcement of an award falling under the Convention occur in the United States, there is no conflict between the Convention and the domestic FAA because Article V(l)(e) of the Convention incorporates the domestic FAA and allows awards to be ‘set aside or suspended by a competent authority of the country in which... that award was made.’ Here, because the arbitration took place in Philadelphia, and the enforcement action was also brought in Philadelphia, we may apply United States law, including the domestic FAA and its vacatur standards.”); LaPine v. Kyocera Corp., No. C 07-06132 MHP, 2008 WL 2168914, at *5 (NJD.CaL May 23, 2008) (finding that for awards rendered in the United States under the New York Convention, “the appropriate standard of review is under both Article V and(9 U.S.C.

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188 F. Supp. 3d 960, 2016 U.S. Dist. LEXIS 66938, 2016 WL 2914415, Counsel Stack Legal Research, https://law.counselstack.com/opinion/immersion-corp-v-sony-computer-entertainment-america-llc-cand-2016.