## Facts

- American Safety Equipment Corp. (ASE) manufactured automobile seat belts and related products.
- Hickok Manufacturing Co., Inc. (Hickok) owned “Hickok” trademarks and sold men’s belts, suspenders, gift items, and certain apparel.
- ASE and Hickok executed a 1963 License Agreement granting ASE an exclusive license to use the “Hickok” marks on “safety protective devices” (principally seat belts) and defined “accessories” for vehicle use.
- The agreement set royalties based on ASE’s total annual sales of safety protective devices “whether or not” the trademark was used, and on accessory sales when sold under the mark.
- The agreement restricted foreign sublicensing by barring proposed sublicensees who were competitors of Hickok or Hickok’s licensees with respect to products sold by the sublicensee.
- The agreement included field-of-activity restrictions: Hickok would not sell safety protective devices or accessories, and ASE would not manufacture or sell specified apparel and gift items (with a limited exception for transportation-related sets).
- A contemporaneous Manufacturing Agreement required Hickok to manufacture seat belts for ASE.
- The License Agreement included an arbitration clause and provisions addressing assignment consent and severability.
- ASE later asserted that provisions of the arrangements violated federal antitrust laws and sought declaratory relief against Hickok and against J. P. Maguire & Co., Inc. (Maguire), which claimed rights as Hickok’s assignee and demanded arbitration of royalty-related disputes.
- The district court stayed the declaratory-judgment actions and compelled arbitration, including of the antitrust issues; ASE appealed.

## Issues

1. Whether claims alleging violations of federal antitrust law arising from the license arrangements could be compelled to arbitration under the contract’s arbitration clause.
2. Whether the court or the arbitrator must decide if Maguire, as an alleged assignee, had the contractual right to compel arbitration.

## Decision

- The Second Circuit held the district court erred by directing arbitration of ASE’s antitrust claims.
- The court held federal antitrust claims in this setting were not appropriate for compulsory arbitration because they implicate important public interests and complex legal questions.
- The court held the question whether Maguire had the right to demand arbitration as an assignee was for judicial determination, not the arbitrator.
- The court remanded for further proceedings consistent with these holdings.

## Legal Principles

- Federal antitrust claims, because they serve public interests beyond the parties’ private contract dispute, should not be compelled into private arbitration in the absence of clear justification.
- Courts must act as gatekeepers on threshold arbitrability questions when statutory rights and public policy are implicated.
- Whether a party seeking arbitration has standing under the contract (including as a valid assignee) is a threshold issue for the court to decide before compelling arbitration.

## Conclusion

The Second Circuit required judicial resolution of the antitrust challenges to the licensing arrangement and required the district court to decide whether the alleged assignee could invoke the arbitration clause, reversing the stay-and-compel approach and remanding for further proceedings.


American Safety Equip. Corp. v. J. P. Maguire & Co., 391 F.2d 821 (2d Cir. 1968)