Steven Gorelick and Haim Gvritzman, professors at Stanford University, created a new method of extracting volatile organic compounds from groundwater (NoVOCs technology). They granted the patent right to Stanford in exchange for one-sixth each of the royalty payments. After a series of transfers and acquisitions of stock and licenses, the company EG&G held a license to use the NoVOCs technology with an agreement to pay Gorelick installment payments of $3,000 for every well drilled with NoVOCs technology.

Their agreement included an arbitration agreement that excluded patent invalidity or infringement, and that held the arbitrator's decision final and nonappealable. EG&G was bought by MACTEC, which transferred all of EG&G's responsibilities to MACTEC, including the payments for drilling NoVOCs wells. MACTEC developed a similar and partly overlapping technology and renegotiated its contract with Gorelick to $1,500 per well drilled. When MACTEC terminated its license with Stanford to use the NoVOCs technology, it ceased paying Gorelick. Gorelick filed a demand for arbitration.

The arbitrator awarded Gorelick approximately $4.5 million, based partly on the discovery of many wells for which Gorelick had not received payment. MACTEC filed for review before a federal district court. The district court found the arbitrator's award to be proper, and therefore upheld the award. MACTEC appealed to the Tenth Circuit Court of Appeals. Gorelick argued that the nonappealability clause in the arbitration agreement prevented the court of appeals from having jurisdiction over the case. Do you think the court agreed to hear the case? Why?

MACTEC, Inc. v. Gorelick, 427 F.3d 821 (10th Cir. 2005).