Many IP-related contracts now incorporate arbitration clauses, or parties may agree to arbitrate IP infringement cases. Before accepting to arbitrate, there are a few things to think about. They’ll have to be weighed against the parties’ expectations for any conflicts, as well as whether or not to engage in a submission agreement at all.
Many IP-related contracts now include arbitration clauses, or parties may agree to arbitrate IP infringement cases. Before committing to arbitrate, there are several things to think about. They’ll have to be evaluated against the parties’ expectations for any conflicts, as well as whether or not to engage in a submission agreement at all.
Why should a dispute involving intellectual property be arbitrated?
Parties opt to arbitrate an IP dispute for a variety of reasons. These are some of them:
One of the main perceived advantages of arbitration is that parties can pick an arbiter or arbitrator with competence in the dispute’s subject area. This can cut down on both the time it takes to resolve a conflict and the chance of a non-specialist court making an improper judgment.
Because of the jurisdictional nature of IP rights, the majority of complicated IP issues must be litigated in various jurisdictions. Parties are often involved in multiple jurisdictions’ lawsuits at the same time. For the simple reason that the most convenient forum to determine the validity or infringement of an IP right is the national court where that right is registered, courts will not stay IP lawsuits for international non-conveniens. Parties can resolve their issues in a single forum and avoid costly multi-jurisdictional litigation through arbitration.
The parties might agree on procedures that are suited to the dispute. This might include requesting the Tribunal to decide on separate matters in a sequential manner or splitting the validity and infringement issues Time and money can also be saved by having disputes handled by a specialist panel and in a single forum, as well as procedural flexibility.
Unless the parties agree otherwise, arbitration processes and arbitral awards in Hong Kong are considered secret (subject to some exceptions). This could indicate that the fact that the parties are in a dispute is considered secret. In patent disputes, this can benefit the patentee because any challenge to the patent’s validity can be kept private. Furthermore, the restrictions of confidentiality make it considerably simpler for the parties to present their case before an arbitral tribunal than in open court in trade secret disputes. When dealing with trade secret problems, the entire procedure can be closed rather than the burdensome procedure of beginning and closing proceedings.
Depending on the agreement between the parties, the arbitrator’s award might be adjusted to the parties’ desires. The parties in a licensing dispute might seek that the arbitrator just makes a determination as to the amount owed (if any) rather than determining whether patents are valid and infringed. Both the patentee and the licensee may benefit from this. If the dispute went to court and the non-infringement and/or invalidity defenses were successful, it may be costly for both parties. If a patent is found to be invalid, all third-party competitors will be permitted to produce products that come under the patent’s claims.
Court judgments are only partially enforceable over the world, and injunctions issued by foreign courts are not enforceable in most nations, even if they are enforceable in terms of damages. The New York Convention, on the other hand, makes arbitral judgments (including injunctions) enforceable in most nations throughout the world.
What is the reason to not arbitrate an IP dispute?
A party may also choose not to arbitrate for a variety of reasons. These are some of them:
A party may look forward to making a dispute public. An IP right holder may wish for others to be aware that they are pursuing their rights. As a bargaining strategy, an alleged infringer may try to utilize the power of a public attack on the validity of IP rights holders. When a challenge to the validity of a document is filed, it is frequently made public, and the reasons might be utilized by others.
Non-specialist judge, a party with a weak case may request that a non-specialist judge decide the case. It is also possible to prolong court procedures by filing a variety of interlocutory applications. Non-specialist judges are also more likely to decide a case based on their perception of the case’s merits than technical reasons. Both of these factors can be powerful motivators for defendants to choose judicial procedures. Non-specialist judges may be preferred by certain plaintiffs with weak cases of infringement or validity.
Suing in many jurisdictions and forcing the opposing side to defend multiple lawsuits can create “leverage” for a well-funded party, making it financially hard for a defendant to defend itself successfully. This can push aside to settle early or, in rare situations, file bankruptcy.
Similarly, if a party can get an interim injunction from a court – such as an anti-suit injunction or, as recently happened, an anti-infringement injunction. These can be effective strategies for forcing a negotiated settlement when several parties are unwilling to give up their rights.
Litigation can bring benefits over arbitration in many countries, such as the ability to acquire complete discovery of documents from the other party in most common law jurisdictions. Most arbitrations simply need limited document production. It’s also tough to compel witnesses to appear or get documentation from third parties.
Arbitration may be quite expensive depending on the type of dispute, especially when there are several parties involved. The arbitrators and the venues must both be paid for. A simple debt collection action in court, especially when summary judgment is available, may be significantly faster and less expensive for certain claims, such as unpaid royalties or franchise fees.
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