Let’s say two entities entered into a patent license agreement years ago. Everything has been going wonderfully: The patentee has been receiving royalties, and the licensee has been selling its product without fear of an infringement suit. But now things are not going so well. Several disputes have arisen. The license agreement contains an arbitration clause. Are all the disputes arbitrable, or must some be tried in court? And who decides such questions: an arbitrator or a court?

Two recent litigations address some of these questions. In Henry Schein Inc. v. Archer & White Sales Inc., the district court found that an antitrust claim was not arbitrable because such an assertion was “wholly groundless.” The U.S. Supreme Court of the United States rejected this “wholly groundless” test, holding that the courts must respect an agreement in which the parties have agreed to let the arbitrator decide what is arbitrable and what is not.

Originally published on Law360 on May 1, 2019.