Intellectual Property Rights (IPRs) have garnered the establishment of an infrastructure to ensure better enforcement of rights not just at the national but also at the international level since such assets are portable and accessible beyond traditional borders. Therefore, contrary to the common misbelief that since these rights emanate from the exclusive jurisdiction of a state and since they are rooted in public policy, it is a matter to be addressed forth the national courts, it is instead a reality to be reckoned with that in today’s time most of the jurisdictions recognize the arbitrability of Intellectual Property (IP) disputes. This recognition is not absolute and is often accompanied by certain exceptions and limitations like any other law regulating disputes.
Arbitration over Court Litigation: A Judgment Based on the Scale of Balance
| Characteristics to be Considered | Arbitration | Litigation |
| Jurisdiction | Arbitration can address IP disputes where parties of two different nationalities are involved and governed by different substantive laws. | Litigation is more preferable when parties are of same nationality. If different nationalities are involved, it may lead to a risk of concluding at conflicting results and inconsistent judgments. |
| Subjectivity & Technical knowledge | IP disputes require technical expertise, and therefore, arbitrators possessing technical knowledge benefit from the resolution process of the dispute since the parties have the freedom to choose the arbitrator. | Court proceedings are led by a judge who may not always have subject-matter expertise. Also, the parties have no choice to make regarding who takes over the chair. |
| Speed & Efficiency | Arbitration is considered for the speedy resolution of disputes. | Adjournments are common in litigation, and the hierarchy of courts further complicates the issue of speedy dispute resolution. |
| Provisional Measures | It is possible to grant injunctive relief or provisional measures to prevent further breach of confidentiality or infringement. | There is a possibility of getting an order of injunction against the further breach of confidentiality. |
| Flexibility | Arbitration introduces flexibility in timelines and procedural formalities that need to reflect in the entire process. It may be concerning where the matter shall be heard, physically, virtually, or telephonically, how the documents shall be submitted in evidence, etc. | Litigation follows a rigid format since it is uniform in the application regardless of the needs of each party. It adheres to a well-defined discovery and document submission mode, rigid deadlines, etc. |
| Appeals | The options to appeal the matter are limited in scope. | There is a vast range of appeal options, considering the hierarchy of courts in each respective jurisdiction. |
| Confidentiality | These proceedings are confidential, and therefore, the scope of the disclosure is minimal to nil. | The proceedings are public like any other proceedings, and therefore, the influence of media and disclosure is outreaching. |
| Multiplicity of Suits | Arbitration can be considered to streamline the issue since a single proceeding under the law determined by the parties is administered. | There is a chance of multiplicity of proceedings since the same suit can be brought up under different laws, leading to a risk of conflicting results as the decision in one lawsuit may not necessarily concur or be amicable to the judgment delivered by another court. |
Pondering Further into Arbitrability of IP Disputes
Majority of the United Nation’s contracting parties are also signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The New York Convention requires the national courts of the contracting states to give effect to private contractual agreements and recognize and enforce an arbitrational award delivered in another contracting state. It, therefore, allows resolution of international commercial disputes. However, all member states are free to deduce the subject matters that shall be arbitrable and those that won’t be. Hence, even if a state is signatory to the Convention, it does not automatically render that IP disputes are within its remit.
It has been recorded that most states consider enforcement of such arbitral awards that resolve disputes reduced into a written agreement, specifically when they deal with the parties’ rights in a licensing agreement. However, the issues that may affect the public interest or are contrary to public policy may not be arbitrable, for instance, compulsory licensing of patents, which may benefit the general public.
Major Challenges in Arbitration
The major difference between arbitration and litigation is that when a matter is adjudicated by a national court, the award is said to be enforceable and have effect on the parties in the issue, including third parties as well. Therefore, the judgment deliver is in rem. However, the same cannot be definitely concluded in the instance of an award by an arbitrator since it will depend on the jurisdictional laws of each state respectively. Hence, an arbitral award is usually in personam.
Let us understand it better with an example. If a patent owner’s invention is considered invalid by a national court in litigation against some third party, say ‘x,’ the patent owner cannot enforce the patented invention to prevent any other party from using the same. However, in the event of an arbitral award in the same instance, the proprietor of the patent can only enforce the rights and prevent third parties other than ‘x.’ It is the reason why parties often choose to arbitrate since it is less precarious and better to lose one’s rights against one person or entity rather than to lose them against all, in general. Hence, it is often concluded that the disputes submitted to the civil courts can be allowed for arbitration except for some reserved matters, and those in rem are beyond the perimeter of arbitration.
Conclusion
With the support of international arbitration institutions like UNICTRAL, ICC, WIPO, and the WTO, there has been a soar in the cases concerning IPRs. National laws must endure and incorporate a liberal approach to accommodate the interest of all stakeholders to facilitate enforcement of such disputes. The same includes structuralizing yet liberalizing the manner of appointment of arbitrators, provision for proper infrastructure, procedure, and conduct of such institutions, and so on, to ensure that such alternative methods of dispute resolution are not just welcomed but also encouraged.