Arbitration and Injunctive Relief

Courts have been resolute in enforcing arbitration agreements that cover copyright disputes. One issue, however, is injunctive relief. In Pacific Reinsurance Management Corp. v. Ohio Reinsurance Corp., 935 F.2d 1019, 1022-23 (9th Cir.1991), the Ninth Circuit wrote:

Temporary equitable relief in arbitration may be essential to preserve assets or enforce performance which, if not preserved or enforced, may render a final award meaningless. However, if temporary equitable relief is to have any meaning, the relief must be enforceable at the time it is granted, not after an arbitrator's final decision on the merits. Arbitrators have no power to enforce their decisions. Only courts have that power. Consequently, courts in other circuits that have been faced with arbitrators' temporary equitable awards have not characterized them as non-final awards on the merits which can only be reviewed in extreme cases. Rather, they have characterized them as confirmable, final awards on an issue distinct from the controversy on the merits.

In that case, the arbitrators had requited, on an interim basis that money be placed in an escrow account pending a final order. The arbitrators did not "enjoin" conduct. Yet, in Arrowhead Global Solutions, Inc. v. Dapath, Inc., 166 Fed. Appx. 39 (4th Cir. 2006), the Fourth Circuit, after quoting the above passage from the Ninth Circuit, wrote:

In short, as the other circuits to have addressed this issue recognize, arbitration panels must have the power to issue temporary equitable relief in the nature of a preliminary injunction, and district courts must have the power to confirm and enforce that equitable relief as “final” in order for the equitable relief to have teeth.

I don't think this what the Ninth Circuit meant. On way around the issue was presented recently in National League of Junior Cotillions, Inc. v. Porter, 2007 WL 1741278 (W.D. N.C. June 14, 2007), where the parties' arbitration clause had this exception: "Injunctive relief: As an alternative or supplement to arbitration ... Licensor, at its option, may obtain in any court of competent jurisdiction any injunctive relief, including temporary restraining orders and preliminary injunctions, against conduct or threatened conduct for which no adequate remedy at law may be available or which may cause Licensor irreparable harm." Following this clause, the court sent the dispute to arbitration , but retained jurisdiction to entertain a preliminary injunction motion, therefore staying, rather than dismissing the copyright claim.