Recognised arbitral bodies are responsible for promoting the multitude of advantages arbitration  employs as a preferred choice for patent disputes.

Arbitration as a method of resolving patent infringement and validity disputes has been overlooked by practitioners. Possibly the reason for this is that intellectual property infringement actions  are tortious and traditionally arbitration has been used for the resolution of contractual  disputes. However, it is commonplace for arbitration clauses to be incorporated into intellectual  property licences.

Although there is little scope for the arbitration of “piratical” disputes, there is in principle  no reason why arbitration cannot be used by agreement between two commercial parties eager to  resolve the dispute as a whole or in part. As early as 1991, Judge Ford, in the then Patents County Court, created an optional arbitration procedure and a panel of  arbitrators. More recently, Article 52 of the rules for setting up the proposed Unified Patents  Court to determine disputes relating to the new European Patent provides for arbitration as a means  of resolving disputes.

In the United States, although in practice relatively few infringement disputes are submitted to arbitration, the US Patent Act (35 USC Section 294 (a)) provides that any arbitration clause  contained in a patent agreement should be presumed “valid, irrevocable and enforceable”.

There are glaring advantages of arbitration in such disputes:

Cost

It is a trite criticism that the costs of an arbitrator or a panel of arbitrators will add  considerably to the cost of resolving the dispute. In March 2013, the World Intellectual Property  Organisation (WIPO) published the results of a survey that found resolving technology disputes using arbitration saved more than  55% in costs compared to the equivalent litigation. In the United States the costs of a patent  trial can well exceed $2m and in England, despite efforts to minimise procedures, over £1m in the  Patents Court. procedures, over £1m in the Patents Court.

The fast-track procedures in the revamped Enterprise and Intellectual Property Court owe a good deal to arbitration.

It is also significant that parties, in determining by agreement the scope of the arbitration, can  also make agreed provision for costs, for example, each party bears their own costs in the  arbitration or for a limited award of costs.

Privacy

Confidentiality is particularly important in patent disputes especially in circumstances where the  technical evidence is commercially confidential. Hearings will be in private; pleadings and  evidence will be submitted in private and there is no reason why the arbitral award should not be  kept confidential. More specifically, licensees and potential licensees of the patent in dispute  need not know of submissions made or of the award. Similarly, a third party inclined to attack the validity of the patent will be unaware of and unable to rely  upon the evidence given in the arbitration in a later claim.

Control of the process

As with all arbitral procedures, it is open to the parties to choose the rules of the procedure to  be adopted. For example, disclosure can be limited, time limits can be decided and applied between the parties, and advance  agreement can take place on the construction of the patent claims. Above all, it is open to the parties to decide the issues  to be the subject of the award. It is open to the parties as to whether there should be a reasoned  award or merely a decision contained in the award – highly material in the context of invalidity  claims. The parties can agree a panel of arbitrators or a sole arbitrator. Technical advantages The parties can specify the nature of the technical expert evidence to be given and the number of  technical experts. They can agree upon a sole expert or experts for each party. Most importantly, it is possible to agree the technical composition of the arbitral panel.  For example, it is not uncommon for a panel to consist of a legally qualified chairman together with two technical panel members  nominated by each party. In such circumstances the parties might also agree that no technical  expert evidence should be given by each party and that the technical issues should be decided using  the technical expertise of the panel.

Validity

A major difficulty with a finding of invalidity in litigation is that the judgment binds the world  at large (subject to possible appeal) and this will lead to the patent being struck from the  register. This may be undesirable for both parties particularly when a successful party might also wish to preserve the validity of  the patent claims for future use against third parties, or as the basis for subsequent patent  licenses. This problem is obviated in arbitration where the parties are able to agree that a finding of invalidity is to bind the  parties to the arbitration only or that validity should not be an issue in the arbitration so that  the arbitration should be concerned with infringement only. Alternatively the panel could be asked  to find the patent unenforceable against the other party rather than invalid.

Multi-jurisdictional disputes

I have been involved in a number of multi-jurisdictional disputes where the patent is litigated, as it must be, in different jurisdictions. This is particularly common in  litigation in respect of an EPC patent where there may be a litigation which potentially gives rise  to different findings in the courts of different designated jurisdictions. This is undesirable and expensive. This can be avoided by arbitration with the applicable law of the  dispute being that of a chosen jurisdiction which may or may not be consistent with the law of  arbitration. Such agreement on arbitration can be decided following commercial negotiation between  the parties.

Interim relief

The Arbitration Act 1996 and the leading arbitration rules of institutions such as the Chartered  Institute of Arbitrators (CIArb),  the London Court of International Arbitration (LCIA) and World  Intellectual Property Organisation (WIPO), provide for the arbitrator to give appropriate  interlocutory orders, such as preserving evidence, disclosure, the use of experiments, injunctions and the interim relief which would generally be  awarded by a court. It is only in cases of flagrancy where relief such as the search and seizure  order requires the immediate support and authority of the court where in any event arbitration  would be inappropriate.

Split litigation and arbitration

A common phenomenon is for infringement and validity issues to be the subject of litigation with  damages to be assessed according to an agreed formula by way of arbitration. In such cases the  advantages of speed, cost and confidentiality are paramount.

Agreed rules of arbitration

It is increasingly common for commercial competitors to agree that all future patent disputes  between them should be determined by arbitration in accordance with agreed rules of arbitration.  Such parties frequently agree that the seat of arbitration should be a neutral jurisdiction such as  Bermuda, Monaco or those with a strong arbitration tradition such as Singapore or Switzerland.

WIPO arbitration rules are particularly suitable for patent arbitration. For example, Article 51 of  the current WIPO rules, provides for the provision of technical primer models and drawings if the  parties so agree. However parties can rely on other existing rules such as those of CIArb and LCIA or agree specific ad hoc rules designed to cater for the requirements of  a patent dispute.

Additionally, universities and other academic institutions have grasped the merits of arbitration  for the determination of disputes relating to ownership and entitlement to intellectual property  rights by the university and its academic staff. So have corporations for the purposes of  determining employee rights to inventions.

Arbitration, therefore, provides substantial potential benefits in the conduct and disposal of  patent disputes. The recognised arbitral bodies should be encouraged to promote arbitration as a  preferred choice for patent disputes.

As previously published in Solicitors Journal