Backflip Software v. Cisco Systems CA6

I. INTRODUCTION

Appellant Cisco Systems, Inc. (Cisco) entered into a software license agreement and an escrow agreement with respondent Backflip Software, Inc. (Backflip), the licensor of the software. After Backflip ceased its operations and the source code for its software was released from escrow to Cisco, a dispute arose regarding the escrow release and Cisco’s rights to the software. Backflip filed this action alleging that Cisco was liable for misappropriation of Backflip’s trade secrets and conversion. Cisco filed a petition to compel arbitration and stay proceedings. The trial court found that the arbitration clause in the escrow agreement did not apply to the parties’ dispute because escrow had closed and denied the petition to compel arbitration. On appeal, Cisco contends that the trial court erred because the arbitration clause in the parties’ escrow agreement must be interpreted to require an arbitrator to determine whether Backflip’s software was properly released from escrow to Cisco. For reasons that we will explain, we conclude from our independent review that Backflip’s claims in the present action are not covered by the arbitration clause in the parties’ escrow…