United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 08-3189

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Industrial Wire Products, Inc., a *

Missouri corporation, * 

*

Appellee, *

* Appeal from the United States

v. * District Court for the Eastern

* District of Missouri.

Costco Wholesale Corporation, a *

Washington corporation, *

* 

Appellant. *

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Submitted: April 15, 2009

Filed: August 6, 2009

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Before RILEY, BENTON, and SHEPHERD, Circuit Judges.

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SHEPHERD, Circuit Judge.

Costco Wholesale Corp. (“Costco”) appeals from the district court’s order

denying its motion to compel arbitration and stay proceedings involving claims of

patent and trade dress infringement brought against it by Industrial Wire Products, Inc.

(“IWP”). For the reasons set forth below, we reverse.
1

Like the district court, we limit our analysis to the 2007 agreement because

“the 2007 Import Vendor Agreement states that it supercedes all prior written

communications between the parties for the matters covered in the Import Vendor

Agreement.” Indus. Wire Prods., Inc. v. Costco Wholesale Corp., No. 4:08-cv-00070,

slip op. at 3 n.1 (E.D. Mo. June 9, 2008).

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I.

In 2006 and 2007, IWP and Costco entered into vendor agreements in which

IWP agreed to supply Costco with IWP’s patented “Configurable Bins,” which are

interlocking plastic storage containers. The 2007 vendor agreement1

 contains the

following arbitration clause:

[¶]27.1 All claims and disputes that (1) are between Vendor [IWP] and

Costco Wholesale . . . and (2) arise out of or relate to the Agreement

Documents or any agreement or transaction or occurrence between

Vendor [IWP] and Costco Wholesale or to their performance or breach

(including any tort or statutory claim) . . . shall be arbitrated under the

Commercial Arbitration Rules of the American Arbitration Association

(“AAA”), in English in Seattle, Washington . . . .

[¶]27.2 Vendor [IWP] acknowledges and agrees that . . . this agreement

to arbitrate covers, without limitation, any claims with respect to matters

relating to the distribution rights of any of the parties arising under this

Import Agreement or any applicable law.

(J.A. 68-69.)

After entering into these vendor agreements with IWP, Costco began selling a

product called an “Interlocking Shoe Organizer” that it obtained from a different

vendor. The Interlocking Shoe Organizer is a storage device that is assembled by

joining a series of panels with interlocking connectors to produce bins of various

shapes and configurations. In January 2008, IWP filed the present action against
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Costco contending that Costco’s sale of the Interlocking Shoe Organizer infringed

IWP’s patent and trade dress rights and violated Missouri unfair competition laws.

Costco moved to compel arbitration.

The district court denied Costco’s motion to compel arbitration. The court

analyzed paragraph 27.1 of the 2007 vendor agreement and held that IWP’s claims

were not arbitrable because they did not arise from the vendor agreement or any

agreement, transaction, or occurrence between the parties:

The claims are that Costco infringed on plaintiff’s patent by selling the

Interlocking Shoe Organizer. These infringement claims exist separate

from any agreement, transaction, or occurrence between the parties.

Although it happens that at some point in the past plaintiff sold products

using its patented design to Costco, and signed a vendor agreement with

an arbitration clause related to this sale, this fact is irrelevant to the

present suit. Plaintiff’s claims would exist regardless of whether the

plaintiff had ever entered into any vendor agreement with Costco.

Indus. Wire Prods., Inc. v. Costco Wholesale Corp., No. 4:08-cv-00070, slip op. at 5

(E.D. Mo. June 9, 2008). However, the court did not analyze whether IWP’s claims

were arbitrable under paragraph 27.2. Costco brings this appeal.

II.

Both IWP and Costco agree that we have jurisdiction over this interlocutory

appeal. Still, we must examine our appellate jurisdiction sua sponte, even if the

parties concede the issue. Dieser v. Cont’l Cas. Co., 440 F.3d 920, 923 (8th Cir.

2006). An order denying a motion to compel arbitration is immediately appealable

under the Federal Arbitration Act (“FAA”). See 9 U.S.C. § 16(a)(1). However, the

FAA does not specify which court(s) possess jurisdiction over such appeals. This

court has previously exercised jurisdiction in a patent infringement case over an

interlocutory appeal from a district court’s denial of a motion to stay pending
2

Section 1292(b), which vests district courts with discretion in extraordinary

circumstances to certify for interlocutory appeal orders that are not otherwise

appealable, is inapplicable to the present case.

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arbitration. See Medtronic, Inc. v. Advanced Cardiovascular Sys., Inc., Nos. 99-3188,

00-1566, 2000 WL 637045, at *1 (8th Cir. May 18, 2000) (unpublished) (per curiam).

However, this circuit has not squarely addressed the issue of whether, in a patent

infringement action, an interlocutory appeal concerning arbitrability falls within the

exclusive appellate jurisdiction of the Federal Circuit. The Third and Federal Circuits

have addressed this issue and reached opposite conclusions. See Microchip Tech. Inc.

v. U.S. Philips Corp., 367 F.3d 1350, 1354-55 (Fed. Cir. 2004) (the Federal Circuit

has exclusive jurisdiction); Medtronic AVE, Inc. v. Advanced Cardiovascular Sys.,

Inc., 247 F.3d 44, 51-53 (3d Cir. 2001) (the Federal Circuit does not have exclusive

jurisdiction).

The district court has original jurisdiction in this case because it is a “civil

action arising under [an] Act of Congress relating to patents[.]” 28 U.S.C. § 1338(a).

The Federal Circuit would have exclusive jurisdiction over an appeal from a final

decision in this case. See 28 U.S.C. § 1295(a)(1) (giving Federal Circuit exclusive

jurisdiction “of an appeal from a final decision of a district court . . . if the jurisdiction

of that court was based . . . on section 1338”). However, the district court’s denial of

Costco’s motion to compel arbitration was not a “final decision.” See Microchip

Tech., 367 F.3d at 1354 (“The district court’s decision [denying defendants’ motion

to compel arbitration] was not final[,] [and] we do not have jurisdiction under 28

U.S.C. § 1295(a)(1).”); Medtronic AVE, 247 F.3d at 52 (“[T]his appeal [from the

denial of a motion to stay pending arbitration] is not from a ‘final decision.’”). Thus,

the Federal Circuit does not have jurisdiction over this appeal under section 1295.

The Federal Circuit would also have exclusive appellate jurisdiction over “an

appeal from an interlocutory order or decree described in subsection [1292](a) or

[1292](b) of this section.”2

 28 U.S.C. § 1292(c). Section 1292(a) describes, inter
3

As we already noted, the Federal Circuit cannot have jurisdiction under section

1295 because the district court’s order was not a “final decision.” Section 1292(d),

which deals with appealability of orders from the Courts of International Trade and

Federal Claims, is also inapplicable. Thus, if the Federal Circuit does not have

jurisdiction under section 1292(c), then section 1294(1) vests this circuit with

jurisdiction over the present appeal.

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alia, orders granting and refusing injunctions. See id. § 1292(a)(1). The Federal

Circuit has determined that “order[s] compelling arbitration [are] in effect []

mandatory injunction[s].” Microchip Tech., 367 F.3d at 1354. Thus, the Federal

Circuit finds that “section 16 [of the FAA] renders appealable under section

1292(a)(1) the denial of an injunctive order (i.e. motions to compel arbitration)[.]” Id.

at 1355.

The Third Circuit disagrees, finding that an order denying a motion to stay

proceedings pending arbitration is “not . . . an order denying an interlocutory

injunction under section 1292(a)(1).” Medtronic AVE, 247 F.3d at 52 (citing

Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 287-88 (1988) (order

granting or denying motion to stay legal proceedings is not appealable as injunction

under 28 U.S.C. § 1292(a)(1))). Therefore, the Third Circuit holds that “this case is

the unusual one that finally turns on the residual jurisdictional statute, 28 U.S.C. §

1294(1)[.]” Id. at 53. Section 1294(1) states, “Except as provided in sections 1292(c),

1292(d), and 1295 . . . appeals from reviewable decisions . . . shall be taken . . . [f]rom

a district court of the United States to the court of appeals for the circuit embracing

the district[.]”3

In sum, the key difference between the Third and Federal Circuits’ analyses

concerns whether the denial of a motion to compel arbitration is equivalent to the

denial of an injunction. Under the Federal Circuit approach, denying a motion to

compel has an injunctive effect and, therefore, the Federal Circuit has exclusive

appellate jurisdiction under 28 U.S.C. § 1292(a)(1) and 1292(c). See Microchip
4

This outcome makes sense from a practical standpoint. We typically resolve

questions of arbitrability by interpreting contract language and provisions of the FAA,

not by analyzing the merits of underlying suits, whether they involve patent

infringement or not. Cf. Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1371 (Fed.

Cir. 2006) (the Federal Circuit “applies regional circuit law to questions of

arbitrability that are not intimately involved in the substance of enforcement of a

patent right” (quotation omitted)).

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Tech., 367 F.3d at 1354-55. According to the Third Circuit, denying a motion to

compel does not have an injunctive effect and, thus, subsection 1292(a)(1) and

1292(c) do not vest the Federal Circuit with appellate jurisdiction. See Medtronic

AVE, 247 F.3d at 51-53. In a non-patent case, this court has already rejected the

argument that section 1292(a)(1) grants jurisdiction to review denials of motions to

compel arbitration because of their alleged “injunctive effect.” See McLaughlin

Gormley King Co. v. Terminix Int’l Co., 105 F.3d 1192, 1193 (8th Cir. 1997).

Consequently, we must reject the Federal Circuit’s analysis in Microchip Tech.

Because the district court’s decision denying Costco’s motion to compel

arbitration was neither “final” nor “injunctive,” the Federal Circuit does not have

exclusive jurisdiction over this appeal.4

 Instead, as the Third Circuit decided in

Medtronic AVE, this court has jurisdiction pursuant to 9 U.S.C. § 16(a)(1), which

renders the denial of a motion to compel arbitration appealable, and 28 U.S.C. §

1294(1), “which provides, with exceptions that [] are inapplicable, that an appeal from

a reviewable decision of a district court ‘shall be taken to the . . . court of appeals for

the circuit embracing the district.’” Medtronic AVE, 247 F.3d at 53 (quoting 28

U.S.C. § 1294(1)). Because this appeal came from the United States District Court

for the Eastern District of Missouri, which is within this circuit, we have appellate

jurisdiction.
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III.

“[T]he FAA limits a district court’s initial role in any challenge to an arbitration

agreement to deciding whether ‘the making of the agreement for arbitration or the

failure to comply therewith’ is at issue.” MedCam, Inc. v. MCNC, 414 F.3d 972, 974

(8th Cir. 2005) (quoting 9 U.S.C. § 4). “[O]ur circuit has refined this inquiry to

asking 1) whether the agreement for arbitration was validly made and 2) whether the

arbitration agreement applies to the dispute at hand, i.e., whether the dispute falls

within the scope of the arbitration agreement.” Id. (emphasis in original). Neither

party disputes the validity of the arbitration clause. The district court found that

IWP’s claims for patent and trade dress infringement did not fall within the scope of

the clause and, therefore, denied Costco’s motion to compel arbitration. “We review

de novo the district court’s denial of a motion to compel arbitration based on contract

interpretation.” Suburban Leisure Ctr., Inc. v. AMF Bowling Prods., Inc., 468 F.3d

523, 525 (8th Cir. 2006) (emphasis omitted). “The scope of an arbitration agreement

is given a liberal interpretation, with any doubts resolved in favor of arbitration.”

Medcam, 414 F.3d at 975. A motion to compel arbitration “should not be denied

unless it may be said with positive assurance that the arbitration clause is not

susceptible of an interpretation that covers the asserted dispute.” Id. (quotation

omitted).

The district court analyzed paragraph 27.1 of the 2007 vendor agreement,

finding that “the arbitration clause is limited to disputes that arise out of an agreement,

transaction, or occurrence” between IWP and Costco. Indus. Wire, No. 4:08-cv00070, slip op. at 4. As “[t]he claims asserted in the complaint do not arise out of or

relate to transactions or occurrences between the parties . . . [t]he Court [decided] that

none of plaintiff’s claims fall[s] within the scope of the arbitration clause . . . .” Id.

at 4-5. This interpretation of paragraph 27.1 is likely correct. However, the district

court failed to analyze paragraph 27.2, which contains additional language concerning

the scope of the parties’ arbitration agreement, despite the fact that Costco specifically
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cited paragraph 27.2 in both memoranda it filed in support of its motion. (See J.A. 31,

114.)

Paragraph 27.2 states that “[IWP] acknowledges and agrees that . . . this

agreement to arbitrate covers, without limitation, any claims with respect to matters

relating to the distribution rights of any of the parties arising under this Import

Agreement or any applicable law.” (Id. at 68-69.) Costco contends this provision

mandates arbitration of IWP’s intellectual property claims:

[P]aragraph 27.2 . . . covers the right to distribute products based on

provisions within the Agreement or any applicable law such as patent

law as asserted in the complaint. IWP’s complaint asserts that Costco

has no right to distribute a product that is a “colorable imitation” of the

product Costco previously distributed for IWP, and those claims fit

squarely within this provision and must be arbitrated.

(Appellant’s Reply Br. 11 (emphasis in original); accord Appellant’s Br. 16.)

Although IWP quotes paragraph 27.2 in its Statement of Facts (Appellee’s Br. 4), IWP

never responds to Costco’s argument, nor does it provide any reason why we should

ignore paragraph 27.2.

Given the broad language of paragraph 27.2, we simply cannot say “with

positive assurance that the arbitration clause is not susceptible of an interpretation that

covers the asserted dispute.” MedCam, 414 F.3d at 975. IWP’s infringement claims

reasonably “relat[e]” to Costco’s right to “distribut[e]” the Interlocking Shoe

Organizer, which IWP believes violates its intellectual property rights with respect to

the Configurable Bins. Indeed, “distribution” simply means “the marketing or

merchandising of commodities.” Webster’s Third New International Dictionary 660

(2002). At best, paragraph 27.2 plainly requires arbitration of IWP’s claims. At

worst, the provision is ambiguous and susceptible of an interpretation that covers

IWP’s claims. Because we interpret arbitration clauses liberally and resolve any
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doubts in favor of arbitration, MedCam, 414 F.3d at 975, we hold that this dispute

falls within the scope of the parties’ arbitration agreement and that the district court

erred in denying Costco’s motion to compel arbitration.

IV.

Accordingly, we reverse and remand to the district court with instructions to

enter an order compelling arbitration.

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