Patent dispute settlement by Arbitration

Abstract

Rustom Mody,  Head, R & D Quality Divisions Intas Biopharmaceuticals Ltd. India.

Jayanthi Murthy,  Senior Executive Intellectual Property Management Department Intas Biopharmaceuticals Ltd. India.

Disputes interfere with the successful use and commercialization of patent rights. Providing way for resolving them as fairly and competently as possible, without disturbing underlying business relationships, is therefore an important challenge for international IP policy. Arbitration has a number of unique characteristics that can serve this purpose, and as such offers an important option for resolving patent disputes.

Introduction

Intellectual Property Rights is one of most important property of almost all the domain globally. New technologies, in the field of life sciences, have resulted in the increase of  number of patent applications filed worldwide. Exploitation, protection and enforcement of patent rights at the international level are very crucial for all the innovators. Additionally, patent litigation requires court proceedings in every jurisdiction where the patent is allegedly infringed.  If the particular product is having a worldwide market, then the patent litigation has substantial legal and financial impact. Therefore, the use of Alternative Dispute Resolution (ADR), together with arbitration, to resolve patent litigations is getting increased. Before two years there was a sudden decrease in US patent litigation observed for the first time in the last 15 years. At the same time, around 400 IP cases were filed with American Arbitration Association (AAA). The purpose of this article is to enlighten the emerging popularity of arbitration for a wide range of IP litigations and to identify certain special advantages of IP arbitration.

Article 2(viii) of the Convention Establishing the World Intellectual Property Organization (WIPO) provides that "intellectual property shall include rights relating to:

  • •   literary, artistic and scientific works,
  • •  performances of performing artists, phonograms and broadcasts,
  • •  inventions in all fields of human endeavor,
  • •  scientific discoveries,
  • •  industrial designs,
  • •  trademarks, service marks and commercial names and designations,
  • •   protection against unfair competition, and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields"

Generally, intellectual property is divided into two types: industrial property and copyright. Industrial property includes patents, trademarks, industrial designs and geographic indications while copyright include creative works like novel, poems, plays, films, musical works, computer software and artistic works.

The wide range of disputes commencing under joint research and development initiatives, disputes over agreements are equally broad and can involve licenses like in-licensing, out-licensing and cross-licensing arrangements prior to litigation in several jurisdictions. The legal issues probably involved in such disputes include violation of contract, infringement, claim construction and enforcement through licenses and other agreements. Remedies for such disputes include damages, injunctions, declaratory relief, includes declaration of infringement and invalidation.

Such disputes can only be resolved by either court litigation or by arbitration proceedings in which arbitration can be preferable for solving patent disputes.

Comparison between court litigation and arbitration

WIPO Arbitration and Mediation Center

To provide services for the resolution of commercial disputes through arbitration and mediation between the parties involving intellectual property, WIPO Arbitration and Mediation Center was established in 1994 situated in Geneva, Switzerland. The arbitration procedures offered by this Center are widely recognized as particularly appropriate for technology, entertainment and other disputes involving intellectual property.


WIPO arbitration begins with a claimant submitting a request for arbitration to the WIPO Arbitration and Mediation Center. The request for arbitration should contain summary details concerning the dispute.
Within 30 days of receipt of the request for arbitration, the respondent must file an answer to the request.
The parties may choose the number of arbitrators that will sit on the tribunal, in the absence of an agreement by the parties, the WIPO Center will appoint a sole arbitrator, except where the WIPO Center determines that three arbitrators are appropriate.
The statement of claim must be filed within 30 days of the constitution of the tribunal.
The statement of defense must be filed within 30 days of the receipt of the statement of claim.
The tribunal may schedule further submissions.
By party request, or by tribunal discretion, a hearing may be held for the presentation of evidence by witnesses and experts, and for oral argument.
When the tribunal is satisfied that the parties have had adequate opportunity to present submission and evidence, it will declare the proceedings closed.
The final award by the tribunal should be delivered within three months of the closure of the proceedings.

Advantages of arbitration in Patent disputes

Patent rights are territorial rights by nature, associated with the specific jurisdiction in which the protection is sorted. Therefore, patent litigation procedures of various jurisdictions cannot be merged and are subjected to the country’s law where the invention is protected. The legal system of different jurisdictions differs in the procedure, method of handling the similar issues, time-lines and decision makers with varying degrees of experience and technical expertise.

Among the available patent dispute resolution alternatives to the courts, arbitration is the one most extremely used internationally because of its distinct advantages which are mentioned below.

Single Procedure – Patent disputes are often involved parties from different countries. So, usually court litigation results inconsistency due to the differences in the legal procedures in different countries. Arbitration helps the parties to solve the patent disputes in a single procedure and less expensive. It helps to avoid complication and inconsistency in the litigation proceedings in several jurisdictions.

Resolution with Neutrality – In the case of Arbitration, parties will be able to opt for the law, language, procedures, rules and customs which are neutral and negotiable. Arbitration could happen anywhere, in any language and with the arbitrators belongs to any nationality.

Confidentiality – The resolution of the disputes through arbitration hearings can be kept confidential.

Faster and Economical – Arbitration procedure is speedy and less expensive than litigation proceedings in the courts.

Final, enforceability of decision

Unlike court’s judgment which can usually be appealed or contested in higher court, arbitration results is final and resolution comes into force immediately.

Freedom to choose a competent decision maker

One of the most important features of arbitration is that the parties will be able to select their arbitral committee, and thereby to make sure that their dispute is heard by a committee that they trust, considered to be independent, neutral and experienced in the relevant subject-matter.

Where a higher level of technical competence is required, the arbitral committee allows the parties to select an arbitrator of their choice, preferably the one who has inherent understanding of the case in disputes.

Disadvantages of Arbitration over Patent disputes

Even though arbitration is the better way of resolving the patent dispute, it does also have its limitations. For example, certain disputes can only be resolved through court litigation. Especially, it is impossible to resolve the dispute that would set a public legal criterion through arbitration. The results of an arbitration procedure, an arbitral award or a settlement agreement, are mainly binding on only the parties involved. If a party wants to obtain a generally binding decision that the claims of a particular patent were valid or invalid, the only means of obtaining such decision will be through a court judgment.

Additionally, the harmonious nature of arbitration makes it less appropriate if one of the two parties is not cooperating. Since both parties must agree to use arbitration, no party can force another to participate.

Unable to settle the subject matter

Sometimes through arbitration, issues of the patent dispute may not be able to settle under the law of the particular state. For example, in a patent dispute over an infringement, an arbitral committee will not able to determine whether a patent is being infringed or not. In addition, an arbitrator/ committee may not have power to grant injunctions where a court has the rights to grant.

Lack of access to Precedents

Since arbitration resolutions are private hence the precedents on earlier arbitration resolutions may not be accessible and may not provide a deterrent to other infringers.

Conclusion

Selecting the arbitration route to pursue the course of action will vary from one case to another.  Basically, arbitration offers a self help route to resolve the disputes outside the court where the parties are having greater control over the proceedings.

Generally arbitration is a better way of resolving the patent disputes because it is more efficient, less procedural and less expensive way of resolving disputes. But sometimes this may not essentially be the case as arbitral proceedings become more complex.

The advantages of arbitration are more visible in cases where technical skills in a certain area are required. Parties who would like to maintain a good relationship and who want to have their dispute out of the public knowledge would also prefer the arbitration route.

References

  1. Smith, M.A., et al “Arbitration of Patent Infringement and validity issues worldwide” Harvard Journal of Law & Technology 19; 2, (2006); 299 – 356
  2. Theurich, Sarah., “Efficient Alternative Dispute Resolution in Intellectual Property” WIPO Magazine, June 2009; 20 - 22

Author Bio

Rustom Mody

Rustom Mody completed his Ph.D., from Department of Microbiology, M.S. University, Baroda, India. He was a Research Associate for six years at the University of Nebraska Medical Center at Omaha, U.S.A, where he worked in diverse research areas such as immunochemistry, molecular immunology and cancer biology. Currently, he is heading R & D and Quality Divisions of Intas Biopharmaceuticals Ltd., with a focus on developing products and Intellectual Property that could give the company a strategic advantage and global reach.

Jayanthi Murthy

Jayanthi Murthy is working as a Senior Executive in Intellectual Property Management Department of Intas Biopharmaceuticals Ltd., She completed her Post Graduate Diploma in Patents Law, from Nalsar University, Hyderabad and having 5 years of professional experience in biotech industry. She joined IBPL in 2004 and is associated with handling patent related issues of biotech products.

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