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Arbitration Clause Does Not "Run With Patent"

Client Alert | 1 min read | 04.18.08

Finding that the parties in Datatreasury Corp. v. Wells Fargo & Co. (No. 2007-1317; April 16, 2008) were not the parties to a patent license agreement containing an arbitration clause and thus were not bound under state law by that clause, a Federal Circuit panel affirms a district court's order denying the accused infringers' motion to dismiss or stay the infringement litigation pending arbitration. A Wells Fargo subsidiary had entered into a software license agreement in 2003 with e-Bank LLC and WMR e-Pin LLC, and that agreement memorialized a side agreement that WMR would grant a royalty free license under its Central Check Clearing System patent. In 2004, WMR and the Wells Fargo subsidiary did enter into a patent license agreement based on that patent and agreed to arbitrate any dispute or disagreement in accordance with the software license agreement's dispute resolution procedures. Then in 2006, WMR assigned four patents, one of which was the licensed patent, to Datatreasury who later sued Wells Fargo & Company and Wells Fargo Bank for patent infringement.

Federal policy favoring arbitration does not apply, says the panel, to a determination of whether there is a valid agreement to arbitrate between the parties. Instead, ordinary contract principles determine who is bound. Applying state law, in this case Minnesota's law, the panel notes that none of the parties to this litigation was a signatory to the patent license agreement or assisted in negotiating its terms, and thus could not be bound absent a theory of equitable estoppel, agency, third party beneficiary, incorporation by reference, assumption or veil-piercing/alter ego. None of these theories was asserted in this case. And the court finds no persuasive authority for the proposition that the arbitration clause binds Datatreasury because it "runs with the patent." Legal encumbrances deemed to run with the patent in prior case law involved only the right to use the patented product, not a duty to arbitrate.

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Client Alert | 5 min read | 12.12.25

Eleventh Circuit Hears Argument on False Claims Act Qui Tam Constitutionality

On the morning of December 12, 2025, the Eleventh Circuit heard argument in United States ex rel. Zafirov v. Florida Medical Associates, LLC, et al., No. 24-13581 (11th Cir. 2025). This case concerns the constitutionality of the False Claims Act (FCA) qui tam provisions and a groundbreaking September 2024 opinion in which the United States District Court for the Middle District of Florida held that the FCA’s qui tam provisions were unconstitutional under Article II. See United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, 751 F. Supp. 3d 1293 (M.D. Fla. 2024). That decision, penned by District Judge Kathryn Kimball Mizelle, was the first success story for a legal theory that has been gaining steam ever since Justices Thomas, Barrett, and Kavanaugh indicated they would be willing to consider arguments about the constitutionality of the qui tam provisions in U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (2023). In her opinion, Judge Mizelle held (1) qui tam relators are officers of the U.S. who must be appointed under the Appointments Clause; and (2) historical practice treating qui tam and similar relators as less than “officers” for constitutional purposes was not enough to save the qui tam provisions from the fundamental Article II infirmity the court identified. That ruling was appealed and, after full briefing, including by the government and a bevy of amici, the litigants stepped up to the plate this morning for oral argument....

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