Synopsys, Inc. v. Siemens Industry Software Inc.

Background

Synopsys sued Avatar Integrated Systems, Inc., alleging that its Aprisa and Apogee products infringed Synopsys patents. Avatar later merged into Siemens Industry Software Inc. and ceased to exist as a stand-alone entity, and the parties stipulated to substitute Siemens as the defendant. Four patent-infringement counts remained, involving U.S. Patent Nos. 7,546,567, 7,853,915, 8,234,614, and 8,407,655.

In a 2018 Patent Licensing and Settlement Agreement, Synopsys, Siemens AG, and Mentor Graphics agreed to license certain products and arbitrate disputes concerning post-acquisition product versions covered by the license. Siemens released new versions of Aprisa after acquiring Avatar and asserted that those versions, as well as future versions, were licensed under the agreement. The parties completed the agreement’s required pre-arbitration procedures, and Siemens filed a request for arbitration concerning, among other matters, whether certain products were licensed. They agreed to a schedule calling for a final arbitration award by February 16, 2022.

Motion to Stay

Siemens moved under the Federal Arbitration Act to stay the entire patent case pending arbitration. The parties did not dispute that the agreement was valid, that it covered the dispute over the licensing of the newer and future Aprisa versions, or that Siemens had satisfied the agreement’s requirements for starting arbitration. They also agreed that versions released before Siemens’s acquisition of Avatar were not licensed under the agreement.

The dispute was whether the court should stay the entire action, including claims involving non-arbitrable pre-acquisition versions, or stay only the arbitrable issues. The court explained that Ninth Circuit precedent does not require a stay of non-arbitrable claims under the Federal Arbitration Act. The court also explained, however, that it has discretion to stay non-arbitrable issues to control its docket and promote an orderly and efficient resolution.

The court concluded that a complete stay would be more efficient. The arbitration could determine whether post-acquisition versions were licensed, which could simplify issues involving infringement, damages, willfulness, indirect infringement, and patent misuse. If the arbitrators found that none of the post-acquisition versions were licensed, a complete stay could still avoid duplicative discovery, expert work, depositions, and motion practice. The court also considered Synopsys’s claimed competitive harm and the possible delay in seeking an injunction, but found that the potential harm from a stay of about five months did not outweigh the judicial efficiencies.

The court did not decide the scope of the agreement’s definition of “Siemens Licensed Products.” It decided only that the entire action should be stayed while the arbitration proceeded.

Motions to Seal

The parties filed administrative motions to seal portions of their filings. The court applied the “compelling reasons” standard because the materials were more than tangentially related to the underlying patent dispute. It found that the material proposed for sealing contained confidential information, including trade secrets and commercially sensitive business information from the licensing and settlement agreement. The court granted the identified motions to file portions of Synopsys’s opposition and Siemens’s reply under seal, while noting that it had previously rejected sealing basic facts about the agreement and its dispute-resolution procedures.

Disposition

Judge William H. Orrick granted Siemens’s motion to stay the entire action pending arbitration. The court also granted the parties’ administrative motions to file specified materials under seal.