'No clear benefit' to UPC's arbitration centre

AIPPI panel describes increasing popularity of arbitration and mediation in patent disputes | UPC's Patent Mediation and Arbitration wording is 'unclear' says panellist | 'Established bodies' such as WIPO are capable of handling cases.

“Arbitration in the international context is a growing trend,” explained Steve Bauer, Mediator and Arbitrator at JAMS and the moderator of a Panel Session on patent arbitration, held yesterday, Tuesday, October 24 at the at the  International Association for the Protection of Intellectual Property's (AIPPI's)  World Congress.

Attendees at Panel Session VIII – Patent Arbitration: Confidential Justice, heard how the advantages arbitration and mediation offer are increasingly relevant for multinational companies.

The parties can pick the venue, the choice of law, the timing of the event and the level of confidentiality—particularly desirable for businesses whose alternative may be court proceedings held in public.

“These are international disputes where parties have entered into a contract, and the parties tend not to trust the courts of the other side,” Bauer explained.

The World Intellectual Property Organization (WIPO) is often a preferred forum for arbitration.  Heike Wollgast, Head, IP Disputes Section, WIPO Arbitration and Mediation Center, outlined the types of mediation and arbitration WIPO offers and trends she sees.

Parties can choose from mediation, arbitration, or expert determination, she explained.

“There are also different types of arbitration under the WIPO rules,” noted Wollgast, before encouraging the audience to consider Expedited arbitration (over Standard) in patent disputes, because of its benefits in many circumstances.

“For many disputes that include licensing, payments, or a termination agreement, for example, the Expedited procedure is efficient and sufficient. They are shorter and there is a fixed fee,” said Wollgast.

Around one in three cases settle under WIPO’s rules, and at different stages in the proceedings, she explained.

“Parties can settle at any point and regularly make use of that.”

More than 20% of cases are from Asia, a recent growth area, and cases from Latin America are following suit.

Amounts in dispute range from $50,000 to more than $1 billion and come from a range of sectors, particularly life sciences. Proceedings can also be conducted in any language.

Arbitration and mediation in cases involving standard-essential patents (SEPs) is “certainly a trend we’ve noticed” confirmed Wollgast, adding that more than 80 have gone through the Center.

“They have involved the whole range of SEP players, large owners and implementers and SMEs from a wide range of jurisdictions.”

Benefits of arbitration

Trevor Cook, of counsel at Bird & Bird, extolled the benefits of arbitration for all types of IP dispute.

“The flexibility of arbitration in a multi-jurisdictional environment where you can even specify the law you are going to apply in the proceedings—that is the choice of the parties and the freedom that arbitration provides you with,” said Cook.

Bauer explained how “sometimes parties just want a decision”.

“The people who negotiated the contract are long gone and the CEOs on both sides are not going to take a neutral position,” he added.

Philipp Groz, a partner at Schellenberg Wittmer, offered practical arbitration advice.

Groz suggested “do’s and don’ts” of drafting arbitration clauses for patent-related agreements, such as do agree on arbitral seat in a jurisdiction in which IP disputes are considered arbitrable, and don’t carve-out certain types of disputes from the arbitration clause, or provide for vague, overly restrictive or irrelevant arbitrator qualifications.

“When drafting arbitration clauses it’s important to keep in mind that the agreement to arbitrate is the basis—it is the cornerstone of the arbitral tribunals’ jurisdiction,” said Groz.

“And in practice it is unfortunately quite common that less sophisticated parties include features in arbitration clauses that may significantly complicate the dispute resolution process at the later stage.”

UPC’s Patent Mediation and Arbitration Centre

Groz also raised issues around the untested Patent Mediation and Arbitration Centre (PMAC) established under the Unified Patent Court (UPC) Agreement. The PMAC’s wording is “unclear” said Groz, and Article 35 of the UPCA raises several questions about how the centre will work in practice.

These included whether the PMAC has validity outside the unitary patent sphere and can be enforced, added Groz.

When asked for his view, Cook replied: “Personally, I see no benefit in the existence of PMAC. It’s a reflection of the greater international acceptance of arbitration in patent disputes, which is a good thing.

"But that is not to say each and everybody in the world should offer an arbitration body—there is more than enough experience and capability among the existing organisations.

“Leave it to the professionals and the established bodies we already have.”