Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_18-cv-05909/USCOURTS-cand-5_18-cv-05909-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:501 Copyright Infringement

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Case No.: 5:18-cv-05909-EJD

ORDER GRANTING MOTION TO COMPEL ARBITRATION

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

QAD INC.,

Plaintiff,

v.

ST. JUDE MEDICAL, LLC, a Delaware 

limited liability company,

Defendant.

Case No. 5:18-cv-05909-EJD 

ORDER GRANTING MOTION TO 

COMPEL ARBITRATION; STAYING 

ACTION

Re: Dkt. No. 16

I. INTRODUCTION

This is an action for copyright infringement. Defendant St. Jude Medical, LLC (“St. Jude 

Medical”) moves to compel arbitration under the Federal Arbitration Act (“FAA”), or in the 

alternative, to dismiss the action. The court finds it appropriate to take the motion under 

submission for decision without oral argument pursuant to Civil Local Rule 7-1(b). For the 

reasons set forth below, the motion to compel arbitration will be granted. 

II. BACKGROUND1

Plaintiff QAD Inc. (“QAD”) designs, develops, produces, and markets, through the 

granting of nonexclusive licenses, Enterprise Resource Planning [“ERP”] software and related 

products and support services. Compl. ¶ 3. In 1995, QAD and St. Jude Medical’s corporate 

predecessor, St. Jude Medical, Inc. (“SJM”) entered into an agreement to license QAD’s software. 

Compl. Ex. A (“License Agreement”), ¶ 12.1. The License Agreement provided that SJM would 

receive “a non-exclusive license, for perpetual use,” of certain software products created by QAD. 

 

1 The Background is a summary of the allegations in the Complaint that are relevant to the instant 

motion.

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Case No.: 5:18-cv-05909-EJD

ORDER GRANTING MOTION TO COMPEL ARBITRATION

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Id. ¶ 2.1. The License Agreement was to remain in effect for ten years, but provided that the 

license would survive the termination of the License Agreement. Id. ¶ 12.1. 

The License Agreement contained two other clauses that are relevant to St. Jude Medical’s 

motion. First, the License Agreement contained an arbitration clause, which stated:

Any dispute arising between the parties shall be settled by 

arbitration under the rules of the American Arbitration Association 

in Minneapolis, Minnesota, USA before a single arbitrator selected 

under those rules. The arbitral language shall be English. The 

arbitral award may be enforced in any court having jurisdiction 

thereof.

Id. ¶ 13.1 (emphasis added). Second, the License Agreement contained clauses restricting SJM’s

ability to assign and transfer the license. In section 13.6, the License Agreement stated that SJM 

“may not assign or transfer interest in a license granted under this Agreement without the prior 

written consent of QAD,” which written consent “shall not be unreasonably withheld.” Id. ¶ 13.6. 

In 2005, QAD and SJM agreed to renew the License Agreement for another ten years. 

Comp. ¶ 25. At the end of this term, SJM elected not to renew the License Agreement. Id. ¶ 27. 

Although there was no further renewal, SJM retained its existing license to continue using QAD’s 

custom software after the License Agreement expired in December of 2015. Id. ¶ 29. 

In 2016, SJM entered into a merger that affected its ownership and corporate form. Id. ¶¶

32-35. The merger was completed in two steps. Id. ¶ 34. SJM became a wholly-owned 

subsidiary of Abbott Laboratories and then changed its corporate form to become a limited 

liability company—St. Jude Medical. Id. ¶ 35. QAD alleges on information and belief that St. 

Jude Medical “survived the second merger as a wholly-owned subsidiary of Abbott” and that SJM 

“ceased to exist, with its assets, liabilities, and business operations having been transferred to” St. 

Jude Medical. Id. QAD alleges that neither SJM nor St. Jude Medical sought or obtained written 

consent of QAD for the transfer of any license granted under the License Agreement. Id. ¶¶ 36, 

37.

QAD alleges that after SJM was “merged out of existence,” St. Jude Medical began and 

has continued to use QAD software that had been licensed to SJM without QAD’s consent. Id. ¶ 

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ORDER GRANTING MOTION TO COMPEL ARBITRATION

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39. QAD filed the instant lawsuit seeking damages for copyright infringement and injunctive 

relief.

III. STANDARDS

Under the Federal Arbitration Act (“FAA”), written arbitration agreements “shall be valid, 

irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the avoidance 

of any contract.” 9 U.S.C. § 2 (2012). “[A]rbitration agreements [are] on an equal footing with 

other contracts,” and therefore courts are required to enforce arbitration agreements according to 

their terms. Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 67 (2010).

The FAA “leaves no place for the exercise of discretion by a district court, but instead 

mandates that district courts shall direct the parties to proceed to arbitration on issues as to which 

an arbitration agreement has been signed.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 

1126, 1130 (9th Cir. 2000) (citing Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985)). 

A district court’s role is limited to determining two “gateway” issues: (1) whether the parties 

agreed to arbitrate and, if so, (2) whether the claims at issue are within the scope of that 

agreement. See Brennan v. Opus Bank, 796 F.3d. 1125, 1130 (9th Cir. 2015). If the party seeking 

arbitration meets these two requirements, the court must compel arbitration. 9 U.S.C. § 4; Chiron, 

207 F.3d at 1130. To be arbitrable, the claims at issue need only “touch matters” covered by the 

contract containing the arbitration clause. Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 721 (9th Cir. 

1999). “[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of 

arbitration.” Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24–25 (1983).

IV. DISCUSSION

The parties do not dispute the validity of the License Agreement and the arbitration 

provision therein. Nor can it be reasonably disputed that the copyright infringement claim 

“touches matters” covered by the License Agreement. QAD’s Complaint is replete with 

references to the transfer and assignment provisions of the License Agreement. Further, QAD 

argues repeatedly that the merger between Abbott and SJM violated those provisions. Compl. ¶¶ 

22, 38; Opp. 10:24-26; 13:11-12; 17:13-14. 

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The only issue is whether the claim at issue is within the scope of the arbitration provision. 

St. Jude Medical contends that the dispute falls within the scope of the arbitration provision 

because it presents a dispute “between the parties” to the License Agreement. St. Jude Medical 

reasons that it is the successor-in-interest to the entity that received a perpetual license to use 

QAD’s software under the License Agreement, SJM, and that SJM’s merger does not vitiate 

QAD’s commitment to arbitrate disputes involving the License Agreement. QAD contends that

St. Judge Medical is not a “party” to the License Agreement, and that there is nothing in the 

License Agreement indicating any intent to extend the scope of the arbitration provision to anyone 

other than the parties to the License Agreement.

The right to compel arbitration stems from a contractual right. Britton v. Co-op Banking 

Group, 4 F.3d 742,744 (9th Cir. 1993). “That contractual right may not be invoked by one who is 

not a party to the agreement and does not otherwise possess the right to compel arbitration.” Id. 

(citing Lorber Indus. of California v. Los Angeles Printworks Corp., 803 F.2d 523, 525 (9th 

Cir.1986)). Nevertheless, a successor in interest to a party subject to an arbitration agreement may 

compel the other party to the agreement to arbitrate. Tech & Intellectual Prop. Strategies Grp. PC 

v. Insperity, Inc., No. 12-3163 LHK, 2012 WL 6001098, at *10 (N.D. Cal. Nov. 29, 2012).

Here, St. Jude Medical has presented uncontroverted evidence that it is SJM’s successor in 

interest. As a successor in interest, St. Jude Medical may enforce the arbitration clause against 

QAD. See Adams v. AT & T Mobility, LLC, 524 F. App’x 322, 324 (9th Cir. 2013) (holding that 

parent company of successor to wireless contract could invoke arbitration agreement); Galbraith 

v. Resurgent Capital Servs., No. 05-2133 KJM, 2006 WL 2990163, at *1 (E.D. Cal. Oct. 19, 2006)

(finding non-signatory “successors in interest” could enforce arbitration agreement); see also John 

Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 551 (1964) (enforcing union’s arbitration 

agreement signed by corporate employer against entity with which employer merged). To the 

extent there is any doubt about whether St. Jude Medical is a successor in interest, this court 

upholds the federal presumption in favor of arbitration. See QAD, Inc. v. Conagra Foods, Inc., 

No. 11-5162 ODW, 2011 WL 4964914 (C.D. Cal. Oct. 18, 2011) (upholding federal presumption 

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in favor of arbitration because, among other things, defendant had merged with party to arbitration 

agreement and was “arguably the successor in interest”). 

Lastly, QAD contends that the arbitration provision cannot be invoked here because the 

License Agreement ended on December 20, 2015. The argument is unpersuasive. Courts 

routinely enforce arbitration clauses in expired contracts. See e.g. Litton Fin. Printing Div., a Div. 

of Litton Bus. Sys., Inc. v. NLRB, 501 U.S. 190, 193 (1991) (establishing presumption in favor of 

post-expiration arbitrability and holding that a post-expiration dispute is arbitrable where “a 

dispute has its real source in the contract”). The Litton court explained that arbitration may be 

compelled after the expiration of a contract where (a) the dispute involves facts and occurrences 

that arose before expiration of the contract, (b) where an action taken after expiration infringes a 

right that accrued or vested under the agreement, or (c) where, under normal principles of contract 

interpretation, the disputed contractual right survives expiration of the remainder of the agreement.

Id. at 206. This case presents all three circumstances. First, this case involves the license granted 

in 1995, well before the expiration of the License Agreement in 2015. Second, this case includes 

allegations about post-expiration conduct—SJM’s merger into Abbott—and the effect of that 

conduct, if any, on the license granted under the License Agreement. Third, this case involves a 

contractual right that survives the expiration of the License Agreement, namely, the scope and 

ostensible restrictions of the license granted under the License Agreement. 

V. CONCLUSION

For the reasons set forth above, St. Jude Medical’s motion to compel arbitration is 

GRANTED. The matter is stayed pending arbitration. The Clerk shall administratively close the 

file.

IT IS SO ORDERED.

Dated: July 8, 2019

______________________________________

EDWARD J. DAVILA

United States District Judge

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