Texas Judiciary Online - HTML Opinion

^{^[1]} The intellectual property at = issue involved=20 an antibody that Tanox envisioned could be used to treat asthma = and=20 allergies. In 1989, Tanox partnered with Genentech, Inc. for = development of the antibody, and Genentech executed a = confidentiality=20 agreement restricting its use of Tanox=3Ds biotechnology. Eventually, = Genentech and=20 Tanox elected not to continue their work together, and in 1990, = Tanox=20 entered into a development agreement with Ciba-Geigy, Ltd. The = litigation=20 Tanox instituted, in federal court, against Genentech arose from=20 Genentech=3Ds alleged misappropriation of = Tanox=3Ds biotechnology in the development of = its own=20 allergy drug. In turn, also in federal court, Genentech sued = Tanox,=20 and later Ciba-Geigy, for patent infringement. The two suits = were=20 consolidated.

^{^[2]} The Fee Agreement pertained only = to the=20 Lawyers=3D representation of Tanox as plaintiff in = the=20 trade-secret action. For the Lawyers=3D defense of Tanox on the patent = infringement=20 claim, Tanox paid the Lawyers an hourly fee.

^{^[3]} Emphasis added.

^{^[4]} When the Lawyers demanded payment = of the $8=20 million fee, Tanox offered to pay $7 million, less expenses of = litigation,=20 if the Lawyers relinquished their claims under the Fee Agreement = to any=20 portion of Tanox=3Ds royalties. The Lawyers did not = accept that=20 offer, choosing instead to file, under seal, a motion to intervene = to=20 protect their rights in the still-pending litigation between Tanox = and=20 Genentech. Tanox opposed the motion to intervene and, = alternatively,=20 moved to compel arbitration of the fee dispute under the = arbitration=20 clause in the Fee Agreement. Thereafter, Tanox and the = Lawyers=20 entered into an agreement under which the Lawyers agreed to = withdraw their=20 motion to intervene, Tanox agreed to pay $6,724,795.15 to the = Lawyers, and=20 both parties agreed to submit their dispute over fees to=20 arbitration. In the Award, the arbitration panel granted the = Lawyers=20 the difference between what Tanox paid under this agreement and = the=20 initial $8 million amount.

^{^[5]} We refer to this issue as the = ARoyalty Issue.@

^{^[6]} We refer to this issue as the = AManufacturing Rights Issue.@

^{^[7]} We refer to this issue as the = ADebt Forgiveness Issue.@

^{^[8]} Unless otherwise stated, all = references to=20 a Asection@ are to the Texas Civil Practice and = Remedies=20 Code.

^{^[9]} Tanox also asserted arguments on = the merits=20 regarding the Royalty Issue, Manufacturing Rights Issue, and Debt=20 Forgiveness Issue.

^{^[10]} The Lawyers also stated that, = although the=20 parties agree that a new arbitration panel should not be created, = if=20 absolutely necessary and required under the law, the trial court = should=20 compel arbitration before a new arbitration = panel.

^{^[11]} While a motion is pending under = sections=20 171.087, 171.088, 171.089, or 171.091, presumably parties = are free=20 to request the trial court to submit to the arbitration panel = issues that=20 need clarification.

^{^[12]} The Lawyers correctly have = asserted that=20 these two provisionsCsection 13 of the Federal Act and = section 171.092=20 of the Texas ActCare Anearly identical@ and that there is Ano meaningful distinction@ between these two sections. Tanox = agrees=20 with this assessment.

^{^[13]} A clarification by the = arbitration panel=20 before confirmation can assist the parties in understanding the = award so=20 as to see if there are any grounds upon which they may seek to = vacate or=20 modify the award, and it can help the parties and the trial court = in=20 formulating an unambiguous judgment for the trial court to render = based on=20 the award. A clarification at this juncture also serves to = take=20 advantage of the panel=3Ds familiarity with the issues involved = in the=20 recent arbitration, before the passage of time diminishes the = panel=20 members=3D memories regarding the issues (or = availability to=20 re-address them), the evidence, and the panel=3Ds award.

^{^[14]} In their briefing, the Lawyers = have been=20 careful not to assert that the Award is ambiguous. During = oral=20 argument in this court, the Lawyers=3D counsel again declined to assert that = the Award=20 is ambiguous, although counsel also did not assert that the Award = is=20 unambiguous. In any event, the Lawyers have not sought = remand to the=20 original arbitration panel based on any alleged ambiguity. =20

^{^[15]} During appellate argument, = counsel for the=20 Lawyers confirmed that they are not alleging that the Award is=20 incomplete. Although the Lawyers never made such an = allegation in=20 either their trial court or appellate filings, trial counsel for = the=20 Lawyers appeared to suggest that the Award is incomplete during = part of=20 the oral argument in the trial court. In any event, it is = clear from=20 the record that the Award is not incomplete. Therefore, even = if the=20 Lawyers had asserted the Award is incomplete, the trial court = would not=20 have abused its discretion in concluding the Award is = complete. =20

^{^[16]} Several of the cases cited by the = Lawyers involve=20 pre-confirmation remands. See, e.g., Colonial Penn Ins. = Co. v.=20 Omaha Indemnity Co., 943 F.2d 327, 333B35 (3d Cir. 1991); Mut. Fire, Marine = &=20 Inland Ins. Co. v. Norad Reinsurance Co., 868 F.2d 52, 58 (3d = Cir.=20 1989); Weinberg v.=20 Silber, 140=20 F. Supp. 2d 712, 722B24 (N.D. Tex.=20 2001). Likewise, = several of the=20 statements cited by the Lawyers are obiter dicta. See, = e.g.,=20 M&C Corp. v. Erwin Behr GMBH & Co., KG, 326 F.3d 772,=20 782B83 (6th Cir. 2003); Green v. = Ameritech=20 Corp., 200=20 F.3d 967, 977B78 (6th Cir.=20 2000); Savinis v. = Goldberg, Persky=20 & White, P.C., No. GD05-027781, 80 Pa. D. & C.4th 19,=20 22B30 (Pa. Ct. Com. Pl. 2006) (stating that = Pennsylvania trial court would consider arguments in the future to = determine whether various issues should be remanded to the = arbitration=20 panel based on ambiguity in the award, following confirmation of = the award=20 under a Pennsylvania statute).

^{^[17]} The Lawyers argue a dispute = exists as to=20 what the arbitration panel meant in the Award and that, having = heard the=20 extensive evidence and arguments and issued the Award, the panel = is in the=20 best position to resolve these disputes. Even if this is = true, it is=20 a policy argument that does not change the unambiguous language of = the=20 Federal Act and the Texas Act, which could, but do not, provide = for=20 clarification of arbitration awards after confirmation or for = treating=20 judgments on arbitration awards differently from judgments = following=20 litigation. Another policy concern might be the need for = finality,=20 efficiency, and a prompt resolution of the issues in arbitration, = without=20 allowing parties to seek to reopen issues years later during the=20 enforcement-of-judgment phase, simply by asserting that there are=20 interpretation disputes regarding language in the arbitration = award upon=20 which the trial court rendered judgment. See Golden Eagle = Archery, Inc. v. Jackson, 24 SW.3d 362, 367 (Tex. 2000) = (discussing=20 the need for finality and stating that A[l]itigation must end at some point if = the public=20 is to have any confidence in judgments@).

^{^[18]} In addition, the Texas Act does = not apply=20 to such arbitrations. See Tex. Civ. Prac. & Rem. = Code Ann.=20 '171.002(a)(1) (Vernon 2005). =20

^{^[19]} Likewise, the Lawyers also rely = on a case=20 involving the enforcement of an arbitration award under the = Railway Labor=20 Act. See See Brotherhood Ry. Carmen Div., Transp.=20 Commc=3Dns Int=3Dl Union v. Atchison, Topeka & Santa = Fe R.R.=20 Co., 956 F.2d 156, 157 = (7th Cir.=20 1992). The Federal Act does not apply to arbitration = awards=20 under this labor statute, and the enforcement provisions for such = awards=20 do not contain any language stating that judgments rendered on = such awards=20 shall = be subject=20 to the same law and given the same effect as judgments not = rendered on=20 arbitration awards. See 45 U.S.C. ' 159 = (1999). Therefore, this case is also not = on=20 point.

^{^[20]} If the Lawyers had argued that = the trial=20 court did not award them relief in the Judgment based on the Page = 7=20 Language but that the Lawyers wanted the court to add that relief = now,=20 this argument would have lacked merit because the trial court has = no=20 jurisdiction to make a material change in the substance of the = relief=20 awarded in the Judgment. See Katz, 848 S.W.2d = at 374=20 (stating that the only limit on a trial court=3Ds authority to enforce its judgments is = that=20 enforcement orders must not make a material change in the = substantial=20 adjudicated portions of the judgment); Harris County Appraisal = Dist. v.=20 West, 708 S.W.2d 893, 896B97 (Tex. App.CHouston [14th Dist.] 1986, no writ) = (holding that=20 trial court=3Ds enforcement order was void because it = attempted=20 to materially change the relief awarded in the trial = court=3Ds judgment). =

^{^[21]} Tanox asserts that the issue of = whether the=20 trial court abused its discretion is premature because the trial = court has=20 not yet determined how it will enforce the Judgment or whether the = Judgment is ambiguous. However, the Lawyers assert that the = trial=20 court clearly abused its discretion under the legal standards they = advocate. If these legal standards were correct, then it = might have=20 been possible to have found a clear abuse of discretion. = Therefore, this=20 mandamus proceeding is not premature.

^{^[22]} The Lawyers also note that, in = November=20 1997, the trial court ordered Tanox and the Lawyers to arbitrate = all=20 claims and disputes. However, the parties did arbitrate all = claims=20 and disputes, and the present issues relate to the enforcement of = the=20 trial court=3Ds Judgment based on the Award from that=20 arbitration.

^{^[23]} Given that we have not found any = clear=20 abuse of discretion, we do not address the Lawyers=3D third issue in which they assert that = they have=20 no adequate remedy at=20 law.