Yahoo! Inc. v. Microsoft Corp.

Yahoo! Inc. (Yahoo) (plaintiff) entered into an agreement to merge its search-engine ads system into the search-engine ads system run by Microsoft Corporation (defendant) to become more competitive in international markets, including in Taiwan and Hong Kong, where the transition was to be complete by October 2013. The agreement contained an arbitration clause that included a provision by which an emergency arbitration may be initiated by either party if certain disputes arose and that the arbitrator was authorized to grant interim, injunctive, or other emergency relief as well as any nonmonetary, or equitable, relief intended to maintain or restore the status quo. In September 2013, Yahoo decided to delay the transition. Microsoft claimed that Yahoo breached the agreement. Microsoft initiated an emergency arbitration pursuant to the agreement, seeking equitable relief in the form of specific performance and an injunction against Yahoo. After evaluating the evidence submitted during the emergency arbitration, the arbitrator ruled in favor of Microsoft, decided that Yahoo breached the agreement, and concluded that Yahoo’s breach resulted in irreparable harm to Microsoft. The arbitrator denied Microsoft’s request for specific performance but issued an injunction that permanently restrained Yahoo from delaying the transition further and directed Yahoo to complete the transition in Taiwan and Hong Kong by certain dates. Yahoo filed suit and motioned the district court to vacate the arbitrator’s award of injunctive relief. Yahoo argued that the arbitrator only had the power to issue interim relief, not final permanent relief, and that the evidence presented at the arbitration failed to demonstrate irreparable harm to Microsoft. Microsoft cross-moved to confirm the arbitration award.