Disputes involving manufacture and supply of critical products
Disputes involving access to intellectual property
Arbitrating IP disputes


A signature feature of the last several months has been the scramble for personal protective equipment (PPE) such as masks, shields and gowns for doctors, nurses and other care workers. Governments have been focused on ensuring that health authorities, both public and private, have a sufficient supply of essential medical equipment (eg, PPE and ventilators) and pharmaceutical products to deal with the initial surge of COVID-19 cases. Parallel races are under way to find safe and effective therapies, tests and vaccines, all of which will involve intellectual property, new and old, and many new collaborations globally. These events are putting tremendous strain on the life sciences and healthcare sector, including the pharmaceutical, medical device and biotechnology industries, as well as the contractual and IP infrastructure that supports them. Disputes may be more disruptive than usual during this time, not least because they put further pressure on often already limited financial and managerial resources. Therefore, many parties are seeking alternative ways to avoid disputes. However, some disputes are inevitable and a number are likely to be resolved through international arbitration.

Disputes involving manufacture and supply of critical products

The stresses on the entire length of international and national supply chains in the life sciences and healthcare sector are manifold. There are manufacturing complications due to lockdown restrictions and the effect of the virus on workers, as well as logistical complications due to hardened borders that are affecting all international and some national trade. Numerous factors are adding strain to existing manufacture, supply and distribution contracts and licensing agreements, which may lead to disputes.

Particularly in the case of cross-border transactions, many of these manufacture and supply agreements will have clauses that provide for international arbitration as the dispute resolution mechanism.

Arbitration is increasingly popular in this sector for various reasons, including:

  • the privacy and confidentiality of proceedings;
  • the ability to choose an expert adjudicator;
  • the flexibility of process;
  • the fact that it denationalises justice (particularly important where a party is a state or state-owned entity); and
  • often most critically, the greater ease of enforcing arbitral awards compared with foreign court judgments.

This greater ease of enforcement is due to the New York Convention, which provides a streamlined global framework for the recognition and enforcement of foreign arbitral awards and respect for arbitration agreements. With some exceptions, most countries worldwide are now a party to the convention. Disputes between companies and states over the measures implemented by states may also lead to investor-state arbitration.

Disputes involving access to intellectual property

There is a clear need for extensive and rapid innovation to respond to the pandemic. Companies and governments are working to advance as quickly as possible. This also necessarily involves some consideration around expanding access to intellectual property. However, it is important to remember that IP rights holders still need protections, although in these challenging times, many will advocate for a balancing act.

In some cases, governments will be leading the charge to expand access to intellectual property. For example, to make critical drugs more widely and cheaply available to their populations, governments may override existing licensing arrangements and even the underlying patent protections. Assuming that governments do so through duly adopted laws and regulations, such measures may be difficult to challenge in local courts. However, such measures could violate international law, such as investment protection standards set out in international investment agreements (IIAs).

Assuming that an affected company qualifies under an IIA as a foreign investor with a protected investment, the company could have a claim for compensation against the host state. However, the host state would likely seek to rely on several defences available to it as a result of the pandemic. Such investor-state disputes are typically resolved through international arbitration (for further details please see "Investor-state claims in era of COVID-19 pandemic").

Some IP owners are getting ahead of government action by embracing cooperative models over adversarial ones. Several major innovators from the tech and medical sectors (eg, Amazon, Microsoft, IBM, Sandia National Laboratories and Open Ventilator System Initiative) are behind the Open COVID Pledge. Those that sign the pledge offer an open non-exclusive, royalty-free, worldwide, fully paid-up licence under the pledgor's patents "to make, have made, use, sell, and import any patented invention, solely for the purpose of diagnosing, preventing, containing, and treating COVID-19". Reports of similar initiatives abound.

However, it is not yet clear how new arrangements such as these will work out. In the case of the Open COVID Pledge, licensors may be encouraged by the prospect of converting their free licences into paid commercial licences, and licensees may be incentivised to enter into these paid licences rather than finding their free licences cut off at the end of their term. At the same time, once the dust settles, some of the licensing arrangements could lead to disputes, including some that could be quite complex.

Parties would be wise to consider entering into arbitration agreements in connection with these licences – or in the case of pre-existing disputes, to consider agreeing to arbitrate those – as this may offer greater certainty over where, when and how disputes will be resolved, as well as greater certainty regarding the enforceability of the outcome. Further benefits for disputing parties include being able to choose their arbitrator (potentially selecting someone with expert technical knowledge in the relevant field) and having proceedings conducted privately or confidentially rather than hashed out in public litigation.

Arbitrating IP disputes

As a result of social distancing requirements, courts in many countries – including specialised tribunals that deal with IP issues – have been closed for an extended period.

In addition, complex cases involving technical evidence may be poorly suited for remote, virtual hearings – particularly those ordinarily conducted before a jury. Parties may prefer, or be forced, to consider alternative ways of resolving disputes, especially if they are unwilling or unable to wait for courts and specialised tribunals to reopen.

The lack of a pre-existing arbitration agreement is no barrier. In most jurisdictions, parties can subsequently agree to arbitrate their disputes – regardless of whether a dispute has already arisen. Even if litigation has been commenced, there are usually simple steps available to transfer proceedings to arbitration or mediation instead.

However, the question remains of whether arbitration is a good idea. Arbitration has not always been an obvious choice for IP disputes. Litigation has tended to be the default, largely due to a perception that IP disputes are non-arbitrable. However, that is not strictly true and much depends on the jurisdiction. It is not uncommon for there to be restrictions on arbitrating questions pertaining to fundamental IP rights. This means that close attention must be given to arbitrability issues where a dispute involves invalidation or confirmation of underlying IP rights as against the world. That said, commercial IP disputes are arbitrable in many jurisdictions. Parties may also default to litigation because interlocutory injunctions can be a popular and common part of an IP litigation strategy. However, injunctive relief can be available within or as an adjunct to arbitration proceedings.

Beyond the fact that arbitration is often a viable option, there can be significant benefits to resolving IP disputes through arbitration. There are known difficulties with litigating IP disputes beyond mere access to courts. This is particularly the case where the disputes are global and involve rights protected in different jurisdictions. Litigation of these disputes is, in some regions, notoriously complicated, expensive and slow. Disputes involving intellectual property are often highly technical and generally evidence heavy. However, not all countries have specialist IP courts, so there is a real risk of getting a judge or jurors who know nothing about the law in this area and do not have the requisite technical expertise. The discovery and trial process in many jurisdictions can also result in the costs of a case reaching millions of dollars. In addition, IP rights are generally national, but since most large companies trade and operate internationally, their disputes are often international. Further complicating things, the scope of the parties' rights can be interpreted differently in different countries, even when dealing with, for example, the same wording in a patent. This can lead to fighting essentially the same issues in multiple regions and potentially seeking to enforce competing court judgments in multiple regions. Lastly, IP disputes are frequently as much about the present behaviour of the parties as an historical evaluation of past damages or past monetary compensation. For all of the above reasons, such disputes can be difficult to settle.

This is where the potential advantages of arbitration come into play, as it offers a transnational forum where:

  • disputes can be resolved holistically;
  • litigation in foreign courts can be avoided;
  • proceedings are private and confidential;
  • disputing parties can select an expert arbitrator;
  • the forum is neutral;
  • the proceedings are speedy and final (parties have limited appeal and judicial review rights);
  • the procedure is flexible and in many cases cheaper (eg, if the parties agree less expansive discovery); and
  • the award can be enforced across multiple jurisdictions under the New York Convention.

Confidentiality can be key given that trade secrets and know-how are frequently at the heart of IP disputes, including in the life sciences and healthcare sector. The ability to resolve disputes holistically is also important where multi-jurisdictional and multiparty issues arise. The ability to address these in one forum and before one adjudicator can provide a greater opportunity for a meaningful settlement and consistency of outcome . In the right circumstances, arbitration can also be a less adversarial process which further supports settlement and the preservation of ongoing business relationships.


Litigation remains somewhat of a default method for the resolution of disputes in the life sciences and healthcare sector arising out of the COVID-19 pandemic. Although a viable option, it will not always be the best method for resolving disputes. There are clear benefits to arbitration and other alternative dispute resolution mechanisms in the right circumstances, which should be borne in mind when seeking to resolve disputes – whether they are IP-related or contractual – and when choosing the dispute resolution mechanism in new contractual arrangements.

For further information on this topic please contact Martin J Valasek or Brian R Daley at Norton Rose Fulbright's Montreal office by telephone (+1 514 847 4747) or email ([email protected] or [email protected]). Alternatively, contact Jordana Sanft or Randy C Sutton at Norton Rose Fulbright's Toronto office by telephone (+1 416 216 4000) or email ([email protected] or [email protected]). The Norton Rose Fulbright website can be accessed at