United States District Court, D. Minnesota
Orbital ATK, Inc. and Alliant Techsystems Operations LLC, Plaintiffs,
Heckler & Koch GmbH, Defendant.
Gilbert Morris, Esq., Erin Brooke Sheppard, Esq., William T.
O'Brien, Esq., and Dentons U.S. LLP, Michael A. Rosow,
Esq., Thomas H. Boyd, Esq., and Winthrop and Weinstine, PA,
counsel for plaintiffs.
Jacob Ginsberg, Esq., George David Ruttinger, Esq., and
Crowell & Moring LLP, Mark P. Hodkinson, Esq. and Heley,
Duncan & Melander, PLLP, Minneapolis, Minnesota, counsel
S. Doty, United States District Court Judge
matter is before the court upon defendant Heckler & Koch
GmbH's motion to dismiss or stay proceedings and to
compel arbitration. Based on a review of the file, record,
and proceedings herein, and for the following reasons, the
court grants the motion in part.
contract dispute arises out of Heckler & Koch's
(H&K) alleged failure to deliver twenty XM25 weapons
systems and certain intellectual property to plaintiff
Orbital ATK, Inc. (ATK). H&K and ATK entered into a
cooperation agreement on October 8, 1994, under which both
parties agreed to cooperate in pursuing a contract with the
United States Army for the XM25 weapons program. Compl.
¶ 16. Subsequently, ATK entered into several prime
contracts with the Army for work on the XM25 weapons systems.
Id. ¶ 17. Pursuant to the cooperation
agreement, ATK entered into subcontracts with H&K to
assist with ATK's obligations under the prime contracts.
Id. ¶ 18.
September 29, 2005, ATK and H&K entered into a teaming
agreement for the OICW Weapons System (Teaming Agreement),
which superseded the cooperation agreement. Id.
¶ 20; See O'Brien Decl. Ex. A. The parties
agreed, among other things, that if the Army would award ATK
a prime contract for work on the XM25 weapons program, ATK
would award a subcontract to H&K. Compl. ¶ 22.
Teaming Agreement contains an arbitration provision that
states in relevant part: “Any controversy or claim
arising out of or relating to this Agreement, or the breach
thereof, but specifically excluding Subcontract Disputes ...
shall be determined by arbitration administered by the
International Centre for Dispute Resolution in accordance
with its International Arbitration Rules.” O'Brien
Decl. Ex. A § 8.05. The parties further agreed that:
“Notwithstanding anything ... to the contrary, any
claims, controversies or disputes concerning the performance,
validity or enforceability of any Subcontract negotiated
under the Agreement shall be resolved in accordance with the
applicable disputes provision of such Subcontract.”
Id. § 8.04. Additionally, the Teaming Agreement
provides that the agreement could be terminated by the
non-defaulting party if the defaulting party fails to cure,
within thirty-days of written notice, a material breach of
the Teaming Agreement or a subcontract. Id. Art. 5
h, i. If ATK terminated the Teaming Agreement, H&K was
required to grant ATK a non-exclusive license for
intellectual property owned by H&K to “enable ATK
independently to perform or have performed by others all
Subcontract requirements that [H&K] was obligated to
perform under the Subcontract.” Id. §
March 24, 2011, the Army awarded a prime contract to ATK to
begin the engineering and manufacturing development phase of
the XM25 weapons program. Compl. ¶ 25. In anticipation
of being awarded a government contract, on February 1, 2011,
pursuant to the Teaming Agreement, ATK awarded H&K a
subcontract under which H&K agreed to deliver twenty-five
final design XM25 weapon systems to ATK Id.
¶¶ 26, 31-32; see O'Brien Decl. Ex. B.
subcontract incorporated general terms and conditions that
provided for resolving disputes through informal and formal
mediation but not arbitration. See O'Brien Decl.
Ex. B at 8; id. Ex. C § 1.7. The subcontract
further provided to ATK a property interest in all technical
work product, inventions, and works of authorship developed
by H&K in its work under the subcontract and required
H&K to deliver, disclose, or assign such property to ATK.
Id. Ex. C. § 1.14.
alleges that H&K failed to deliver the XM25 weapons
systems in breach of the subcontract. Attempts at informal
mediation failed, and, on December 2, 2016, ATK terminated
the subcontract due to H&K's alleged default. Compl.
¶¶ 46-50. On December 8, 2016, ATK, pursuant to the
terms of the Teaming Agreement, sent a thirty-day cure notice
to H&K. Id. ¶ 51. Because H&K allegedly
failed to cure the breach within thirty days, ATK terminated
the Teaming Agreement on January 26, 2017. Id.
January 26, 2017, ATK filed suit against H&K alleging
that H&K breached the subcontract by failing to deliver
the XM25 weapon systems and failing to participate in a
formal mediation process. Additionally, ATK claims H&K
breached the subcontract and Teaming Agreement by failing to
transfer intellectual property to ATK. ATK also seeks a
declaratory judgment that (1) the Teaming Agreement requires
that H&K grant ATK a non-exclusive license in
H&K's intellectual property and (2) the subcontract
requires that H&K immediately deliver technical work
product and inventions related to the XM25 program. H&K
now moves to compel arbitration, arguing that the dispute is
subject to the Teaming Agreement's arbitration clause.