UiPath, Inc. v. Shanghai Yunkuo Information Technology Co., Ltd

Background

UiPath, Inc. petitioned to confirm and enforce a final arbitration award against Shanghai Yunkuo Information Technology Co., Ltd., doing business as ENCOO Tech. Shanghai Yunkuo participated in the arbitration but did not appear in this court action or oppose the petition.

In 2020, the parties entered a settlement agreement concerning Shanghai Yunkuo’s alleged misappropriation of UiPath’s source code. The agreement required disputes to be arbitrated in New York City before a single American Arbitration Association arbitrator. It also provided that New York substantive law would apply and that a court could enter judgment on the arbitrator’s award.

The agreement required Shanghai Yunkuo to submit its source code for third-party review. After Shanghai Yunkuo failed to do so by the required deadline, UiPath demanded arbitration. The arbitrator first ruled that UiPath’s misappropriation and related claims fell within the arbitration clause. After a two-year arbitration that included a multi-day evidentiary hearing, the arbitrator found for UiPath on both the breach-of-contract claim and the misappropriation and related claims.

The Arbitration Award

The arbitrator’s merits award found that Shanghai Yunkuo breached the settlement agreement and violated New York and federal law by misappropriating UiPath’s source code. It ordered Shanghai Yunkuo to:

- pay $70,000,000 in compensatory damages within thirty days, plus post-award interest at nine percent; - stop using, disclosing, or exploiting UiPath’s trade secrets; - remove similarities between its product code and UiPath’s source code; and - make the source code for all its robotic-process-automation software products available for review by a third-party expert twice a year for five years.

The final award additionally ordered Shanghai Yunkuo to pay UiPath $1,411,243.93 in attorney’s fees and costs and $281,512.50 in administrative fees and expenses, plus post-award interest on those amounts.

Court’s Analysis

The court held that the award was governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, implemented through Chapter 2 of the Federal Arbitration Act. The court found that the agreement was written, provided for arbitration in the United States, concerned a commercial dispute, and was not entirely domestic because Shanghai Yunkuo was organized under the laws of the People’s Republic of China.

The court treated UiPath’s unopposed petition as an unopposed motion for summary judgment. Summary judgment is a ruling entered when the undisputed facts show that a party is entitled to judgment under the law. The court explained that judicial review of an arbitration award is highly deferential and that only a barely colorable justification for the arbitrator’s result is required for confirmation.

The court found that the parties had agreed to arbitration, participated in the arbitration, and received a final award. Shanghai Yunkuo had not asked the court to vacate, modify, or correct the award. The court also concluded that the arbitrator had more than a barely colorable justification for finding source-code misappropriation, breach of the settlement agreement, liability for related claims, and an award of fees and costs.

Interest and Disposition

The court granted UiPath’s request to confirm the post-award interest specified in the arbitration awards. Applying New York’s nine-percent prejudgment-interest rate, the court confirmed interest on the $70 million damages award beginning thirty days after the merits award and interest on the fees and costs beginning thirty days after the final award.

The court also awarded post-judgment interest at the federal statutory rate under 28 U.S.C. § 1961, accruing from the date judgment is entered until payment. The court concluded: “the Petition to confirm the Final Award is GRANTED.” UiPath was directed to file a proposed judgment consistent with the opinion by June 18, 2024.