Synopsys, Inc. v. Siemens Industry Software Inc.

Background

Synopsys accused Siemens’s Aprisa product of infringing four Synopsys patents. The litigation originally named Avatar as the defendant, but Avatar merged into Siemens and the parties agreed to substitute Siemens as the defendant.

In 2018, Synopsys, Siemens AG, and Mentor Graphics entered into a Patent Licensing and Settlement Agreement. The agreement included a three-step dispute-resolution process: good-faith negotiations, an alternative-dispute-resolution process, and arbitration if the dispute remained unresolved. The parties appeared to agree that disputes about whether newer Aprisa releases were covered by the license should proceed through those grievance procedures.

Siemens released Aprisa version 20.1.rel.1.0 and later took the position that the release, and future releases, were licensed under the agreement. Synopsys requested additional information and began reviewing the source code. Siemens then moved under Section 3 of the Federal Arbitration Act, a federal law governing stays for disputes subject to written arbitration agreements, asking the court to stay the patent case pending arbitration.

Motion to Stay

The parties agreed that the licensing agreement contained a valid arbitration provision and that the first two grievance steps were still in progress. Siemens argued that the question whether those preliminary requirements had been satisfied belonged to the arbitrator. Synopsys argued that because the parties agreed the requirements had not been satisfied, the arbitration provision had not yet been activated and the court should not stay the case.

Judge Orrick concluded that the arbitration provision had not been triggered. He distinguished cases holding that arbitrators generally decide procedural questions about whether arbitration prerequisites have been met because, here, there was no disagreement about whether the prerequisites had been met: both sides agreed they had not. Relying on decisions addressing uncompleted mediation or other pre-arbitration requirements, the court held that the Federal Arbitration Act did not yet authorize a stay.

The court therefore denied Siemens’s motion to stay. The introduction described the denial as without prejudice, and the conclusion stated that Siemens could renew the motion after the other grievance procedures were completed if a dispute remained. The court did not decide whether Aprisa version 20.1.rel.1.0 was covered by the license or whether Siemens infringed Synopsys’s patents.

Sur-Reply Motion

Synopsys sought permission to file a sur-reply, meaning an additional response after the usual reply brief. The court denied that request, finding that Siemens’s reply arguments and cited cases directly responded to arguments raised in Synopsys’s opposition.

Motions to Seal

The parties asked to seal documents filed in connection with the stay motion. The court applied the requirement that parties show compelling reasons to seal filings more than tangentially related to the underlying claims.

The court denied sealing for information about the existence and name of the Patent Licensing and Settlement Agreement, its date, the parties to it, and references to or quotations from Section 10.4, which described the dispute-resolution procedures. The court granted sealing for the agreement’s remaining terms because they were confidential and could cause competitive harm, and because they were not material to deciding the stay motion.

The court also granted sealing for technical information about Aprisa version 20.1.rel.1.0, including release notes and source code, because disclosure could cause Siemens competitive harm and the information was not necessary to understand the stay dispute. The order required the parties to file new redacted versions of certain documents within 15 days and directed that specified documents be unsealed. Overall, the parties’ sealing motions were granted in part and denied in part.