“Arbitration in multi-jurisdictional IP disputes helps avoid inconsistent outcomes and duplication of work, and promotes streamlining of resources, all under the watchful eye of a neutral expert in the field as opposed to a national court that could be seen by one side as partial.” — Fortunat Nadima
The expanding commercialisation of intellectual property (IP) rights—through licensing, patent pooling, technology transfer, and research and development agreements—has led to steady growth in recourse to arbitration as a dispute resolution mechanism in the IP universe.
The WIPO Arbitration and Mediation Center (WAMC), the only dispute resolution body focused exclusively on IP, technology and domain name disputes, is the leading provider of alternative dispute resolution services for IP matters. Founded in 1994, the Centre has administered more than 3,000 disputes (as of April 2024), with “most” in the last five years.
Some 31 per cent of these cases involved trademarks, followed by copyright and digital content (28), patents (22), general commercial issues like franchising and distribution disputes (13), and information and communication technology (6). Since 2015, patent, trademark, copyright, and digital content, as well as commercial IP licensing caseloads, have all grown steadily at WAMC.
A recent WAMC joint seminar with the Intellectual Property Society of Australia and New Zealand confirmed the increasing use of arbitration for IP and tech disputes in these countries.
“Because arbitration is consensual, we see it more in contractual disputes where parties have agreed to it in advance,” says Fortunat Nadima, a principal at Robic LLP in Montreal, a member of the IPH network. “But arbitration isn’t common when dealing with registered rights, because the decisions generally can’t affect public registries, and most people are reluctant to give up that leverage.”
Still, many jurisdictions, like the United States, Australia, New Zealand, the United Kingdom, France, Switzerland, Belgium, Germany, and China, allow arbitration to challenge the validity of registered IP rights, but the effect of arbitrators’ decisions varies greatly by scope and enforceability. In most cases, awards in these jurisdictions bind only the parties and do not affect public registries. Some countries, like Canada, forbid arbitral challenges to registered rights entirely.
“The rules regarding the impact of arbitration awards on public rights and registries tend to be very territorial and are not internationally harmonised,” Nadima says.
Overall, the oft-cited advantages of arbitration apply equally to IP disputes that are amenable to private resolution: neutral adjudicators with subject-matter expertise who can be interviewed in advance; enforceability under the New York Convention in most of the world; procedural flexibility; and confidentiality that is especially crucial in trade secret disputes.
It is multi-jurisdictional disputes, however, that can benefit most from arbitration, where the advantages include consolidating geographically dispersed claims, thereby avoiding parallel national court proceedings; ensuring consistency in results; promoting efficiency; and reducing costs. Arbitration here is common in cases involving licensing disputes; ownership disputes between collaborators; royalty and usage rights; joint ventures; technology transfers; and mergers and acquisitions involving IP issues, such as rights transfers or indemnity obligations for infringement claims.
“Arbitration in multi-jurisdictional IP disputes helps avoid inconsistent outcomes and duplication of work, and promotes streamlining of resources, all under the watchful eye of a neutral expert in the field as opposed to a national court that could be seen by one side as partial,” Nadima says. “The limited right of appeal from arbitration awards is also a significant constraint.”
There are disadvantages to arbitration, of course. Among them, arbitrators may lack the coercive power to grant and enforce provisional injunctive relief; evidentiary rules may depart substantially from national court standards; parties from common law jurisdictions may find that disclosure and procedural tools such as motions to dismiss and for summary judgment are limited or not available; and concerns persist regarding arbitrators’ damages assessment skills.
Proponents argue that many of arbitration’s disadvantages can be mitigated by careful drafting of arbitration clauses. By clearly defining what is arbitrable and the arbitrator’s jurisdiction; stipulating the governing law and the seat of arbitration; selecting an administering institution, governing rules, and language; agreeing on the number of arbitrators and their selection criteria, or an appointing authority; and delineating the scope of confidentiality, parties can help ensure that IP disputes are resolved efficiently and align with their priorities.
Julius Melnitzer is a Toronto-based legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at julius@legalwriter.net or on his website.
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