A federal court has upheld an arbitration award, including attorney fees, against an invention promotion company sued for violating the American Inventors Protection Act.
U.S. District Chief Judge Joy Flowers Conti of the Western District of Pennsylvania on Tuesday affirmed an arbitration award in favor of plaintiff Betty Frison and against Davison Design & Development.
However, the court also upheld the dismissal of Frison’s fraudulent misrepresentation claim.
Frison took Davison to arbitration after claiming the company had violated the AIPA when addressing the likelihood of success of Frison’s invention by making “material false and fraudulent statements or representations and omissions of material fact … and by their failure to make required disclosures,” according to Conti’s opinion.
The arbitrator found in favor of Frison, awarding her roughly $13,000—twice the amount of what she paid to Davison for invention assistance—and $10,000 in attorney fees. Davison asked the district court to upend the award, arguing “the arbitrator manifestly disregarded the law and exceeded his powers when entering the award in Frison’s favor and made a material miscalculation of damages owed pursuant to the award.”
However, Conti shot down that argument, as well as Davison’s others. First, she examined the contract at issue in the case and the warranty disclaimers. The warranty said in part that the company does not make representations about the probability of success of an invention.
“The arbitrator did not specifically explain why he determined that the warranty disclaimer in the IPRPA was unenforceable; nevertheless, in rendering the award, he stressed the AIPA’s role in consumer protection and found that Davison had made false representations to Frison violating the act by implication,” Conti said.
She added, “Even if boilerplate disclaimers like those included by Davison in the pre-development agreement and [integrated product rendering presentation agreement] were lawful and enforceable under the AIPA, Davison still cannot vacate the award on the basis of manifest disregard for the law.”
Davison also contested the amount of damages and attorney fees awarded.
“By increasing the damages by a factor of two—per the discretion afforded under Section 297(b)(2) to increase damages by up to a factor of three where there is evidence of intentional misrepresentation—the arbitrator makes clear that he considered the conduct by Davison to be intentional,” Conti said. “As the court already observed, ‘if a court can find any line of argument that is legally plausible and supports the award then it must be confirmed.’”
Davison is represented by Anna Shabalov of K&L Gates, and Frison is represented by Daniel W. Ernsberger of Behrend & Ernsberger. Neither responded to calls seeking comment.