Question: Global Energy Systems, Inc. (GES), owned technology patents that it licensed to Energytech to use and to sublicense in the United States. The agreement stated that all disputes would be settled by arbitration. Chang Steel of China was interested in using the technology at its U.S. subsidiary. GES directed Chang to talk to Energytech about that. Chang talked to GES directly about using the technology in China, but no agreement was reached. Energytech then agreed to let Chang use the technology in China without telling GES. The dispute between GES and Energytech about Chang went to arbitration, as required by the license agreement. In addition, GES sued Energytech for fraud and theft of trade secrets. GES also sued Chang for using the technology in China without its permission. The district court ruled that GES had to take all complaints about Energytech to arbitration. GES also had to take its complaint about Chang to arbitration because the complaint involved a sublicense Chang was granted by Energytech. GES appealed, contending that the fraud and theft of trade secrets went beyond the license agreement with Energytech and that Chang had no right to demand arbitration because it never had a right to use the technology under a license from GES.

Is GES correct, or must all matters, including torts, go to arbitration? Why or why not?