the role of arbitration in international intellectual property defense ppt slideshow

7/28/2019 The Role of Arbitration in International Intellectual Property Defense PPT Slideshow

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The Role of Arbitration in

International Intellectual

Property Dispute Resolution Adam Richard Tanielian

An oral presentation to

the Institute of International Studies

at Ramkhamhaeng University

in partial fulfillment of the

requirements for the degree of

Doctor of Laws

July 2013



Synopsis of Research

IP disputes have become excessively costly and

time consuming, especially when the scope is international

Arbitration has emerged as a recommended method

of resolving international disputes

Comparison between arbitration and litigation on various

points can confirm arbitration’s strengths

Comparing and contrasting US and Canadian legislation

and case law, along with that in other nations, helps explainwhy arbitration is an attractive option

Online dispute resolution can help solve persistent problems

with jurisdiction and cooperation on internet infringement



Preliminary Questions of Law

Do sovereign nations have identical legal systems such

that a single global litigation strategy may be used?

Is there a binding alternative dispute

resolution method available?

Are arbitral awards internationally valid?

Can all IP disputes be settled by arbitration?

Answer:

no.

Answer:

yes,

arbitration.

Answer:

No.

Answer:Yes.

Answer:

Yes.

Have nations formally accepted arbitration

as a means of IP dispute resolution?



TradeSecrets

Patents

Trade-

Marks

Copy-right

Licenses

Intellectual

Property



A Brief History of IPRs

Prior to 1880s 1880s - 1994 1994 - Present

- Political

grants

- Statutesappeared in

1400s

- Notinternational

- Framework

for int’l

protection- Many

treaties

drafted

- Needed

more

support

(TRIPS)

- Int’l apps in

theory

- Online

rights

threatened

- Growing

high-level

opposition

- Quasiharmonization



Economic Value of IPAt S&P 500 companies in the mid-1980s, tangible assets

represented about 70% of total assets. By 2005, that

number was replaced by intangible assets (Razgaitis,2006).



What is Arbitration?

• Contractual right• Private

• Binding

• Less formal procedure

• Flexible construct

• Confidential

• International



Pre-Leagueof Nations

• Common Law judicial hostilitytowardarbitration

• NapoleonicCodesrestrictedarbitration topre-existingdisputes

1920s – WWII

• Disorganizedsystem

• Diverselegislation,interpretationandapplication

Post WWII- 1985

• Changingattitudes

• Increasinguse of internationalcommercialarbitration

• NYConvention

Model LawEra

• Globalstandards

• Judicialsupport

• Range of institutional

services

A Brief History of Arbitration Law

“Commercial arbitration must have existed since

the dawn of commerce.” – Lord Mustill (1989)

Source: UN Conference on Trade and Development (2005)



• If these two nations have

significant differences in IP

legal systems, then we can

presume that each

country’s system is unique. • Greater complexity involved

in international IP litigation

gives arbitration greater

strengths

Canada and the United States: Friendly

English Common Law Neighbors



• United States courts are busier by volume and rate.

• Canadian courts more frequently cite US cases than UScourts cite Canadian cases.

• Canada is a Constitutional Monarchy

• Parliament, privy council, etc.

• Canada has a stronger tie to Britain and the colonialsystem.

• No Provincial Supreme Courts in Canada; appeals fromprovincial courts are directed to Federal Supreme Court

General Systemic Differences



CANADA

• Jury Trials- - Constitution Am. 6-7

Claim Construction

- - Markman v. Westview Instruments (1996)

• No Seventh Amendmentright to jury trial in patentcases.

• Appeals judges mayconduct de novo reviews of claim construction.

• High reversal rate.• CVI/Beta Ventures I & II

• Judge-only• No Markman Hearings

• Realsearch v. Valone Kone

Brunette (2003)

• “Preliminary points of law

are too often treacherousshort cuts. Their price can

be delay and expense.”

UNITED STATES

Comparative Patent Law



CANADA

• Doctrine of Equivalents- - Graver Tank v. Linde Air

Products (1950)

- - Warner-Jenkinson v. Hilton

Davis (1997) • “Does the accused product

or process contain

elements identical or

equivalent to each claimed

element of the patentedinvention?”

• Purposive Approach- Catnic Components v. Hill &

Smith (House of Lords 1980)

• If the distinctive difference

between two patents is a

non-essential part, and if there is otherwise

equivalence between the

objects, then infringement

may be more easily

qualified.

• - Free World Trust v.Electro Sante (2001)

• - Whirlpool v. Camco

(2001)

UNITED STATES

Comparative Patent Law 2



Is Patent Validity Arbitrable?

SA US BE FR IN DE JP CN

No Yes Yes No No* No Yes No

Policy differences between many nations onthis issue limit the extent to which certain

arbitral awards may be valid.



• Non-traditional marks more easily

registered.• Owner must prove current use.

Comparative Trademark Law

• Playboy v. Germain (1987) – marks

must be something that can be seen.

• No requirement to demonstrate use.



CANADA

• - Registration not necessary for statutory damages.

• - Parody is not considered fair

dealing. (Michelin & Cie v.

NAATGWUC , 1997)

• - Downloading for personal usemay not be “infringement”.

(BMG v. Doe, 2004)

• - Infringement policies

considered more consumer and

individual-friendly.

• - Copyright must be registered for court to hold jurisdiction ininfringement suit. (Well-Made Toy v. Goffa International , 2003)

• Damages are not availablewithout prior registration.

(Bouchat v. Bon-Ton Dept. Stores,2007)

• - Parody falls within fair use.

• - Downloading is illegal. (BMG v.Gonzalez , 2005; Capitol v.Thomas, 2006; Sony BMG v.

Tenenbaum, 2010)• - Infringement policies favor

corporations and rights owners.

UNITED STATES

Comparative Copyright Law



Internet Law: A World Divided

• Statutes and treaties generally prohibitinfringement at commercial levels.

• Fair use exceptions dominate debates

over enforcement.• Legislative branches are more harmonized

than executive and judicial.

• Economic and financial arguments supportnon-enforcement.

• De facto legalization of file sharing



• Perhaps the world’s foremost opponent of compulsory licensing of pharmaceuticals.

• Licensee may challenge validity of underlying patent without stoppingroyalties payment or being sued for infringement (MedImmune v. Genentech,2007)

• Co-owner may independently license

patent. (Schering v. Roussel-Uclaf , 1997)

• “Access to Medicines Regime” allowscompulsory licensing of pharmaceuticals.

• Licensees are estopped from challengingvalidity of patents and must pay royalties if patent found invalid.

• Co-owner may not independently licensepatent. (Forget v. Specialty Tools, 1995)

Comparative Licensing Law



CANADA

• Subjects of private civil lawgranted contractual protection.

• Provincial or Superior courts

hold jurisdiction.

• Economic Espionage Act grantsspecific statutory protection and

potential for criminal remedies.

• State or Federal courts may hold

jurisdiction.

UNITED STATES

A Comparison of Trade Secrets Laws



Litigation versus Arbitration

“[T]he nominal winner isoften a real loser in fees,expenses, and a waste of time” – Abe Lincoln asquoted by Metcalf (2008).

“The civil justice systemin the

United States is tooexpensive and too

complex; a lawsuit takestoo long and

costs too much.” – Colorado Justice Kourlissbefore Congress (Butterfield

et al 2011)33% or greater reversal

Limited discovery

Confidentiality

Customized process

Final and binding awards

International effect

Specialized tribunals

Less adversarial processallows disputants to

preserve a relationship FASTER AND CHEAPER



Weaknesses of Arbitration

Mutual consent requirement

Lack of appeal

Arbitrability of certain disputes

No case law

Possibly lower damages awarded in

infringement cases as compared to jury

verdicts



Discovery: Deciding Factor High pretrial costs can essentially force parties out

of litigation

“trial by attrition rather than by jury” (Butterfield 2011)

Discovery “a king’s ransom” in US ex rel JulieMcBride v. Halliburton (2011)

Preservation costs can exceed millions per year for corporations (Butterfield 2011; Zubulake IV 2003; In re Genetically Modified Rice 2007 )

Patent trial discovery costs millions (Allgeyer 2007)

EU privacy laws conflict with US court rules (In re Advocat Christopher X , 2007)



US FEDERAL ARBITRATION ACT

• Oldest arbitration act in the

world

• - de facto Model Law statute

• - Preemptive (Southland v.

Keating , 1984; Doctor’s

Associates v. Casarotto,1996)

• - Strong federal policy

favoring arbitration ( Agere

v. Samsung , 2009)

• - Court will compel whereagreement exists and

dispute is within agreement

(Javitch v. First Union,

2003)

• First nation to adopt Model Law

• - British and French

systems historically

antagonistic to arbitration

(Scott v. Avery , 1855;

Napoleonic Codes“compromis d’arbitrage”)

• - SCC unanimously

endorsed arbitration (Seidel

v. TELUS, 2011)

• - Courts routinely compelarbitration as per

agreements

UNCITRAL MODEL LAW IN

CANADA

Arbitration Case Law Comparison



USA

• - Separability/severability (Prima

Paint v. Flood & Conklin, 1967)

• - Kompetenz-Kompetenz (First

Options v. Kaplan, 1995)

• - Employment contracts other

than transportation (Circuit City

v. Adams, 2001)

• - Class-action only if

consensual; not considered

efficient ( AT&T v. Concepcion,

2011; Stolt-Nielsen v.

AnimalFeeds, 2010)

• - Separability/severability (Dell

Computer v. Union des

consommateurs, 2007)

• - Kompetenz-Kompetenz

(Desputeaux v. EditionsCouette, 2003; Rogers v. Muroff ,

2007)

• - Employment contracts not a

commercial relationship

(Borowski v. Perforiertechnik ,

1994 Alberta)

• - Class action only if

consensual; not considered

efficient (Bisaillon v. Concordia

U., 2006)

CANADA

Points of Arbitration Law



Contradictions in American Courts

• Agere v. Samsung (2009)Expired agreement used to compel

arbitration

• Qualcomm v. Nokia (2006)Court ordered arbitration of infringement

disputes which parties did not agree to

submit to arbitration



Arbitral Process

WIPO ICC LCIA UNCITRAL

1. Request/Notice 2. Answer/Response

3. # of arbitrators nomination appointment challenge

4. Agree on seat, language, applicable rules of law, rules of evidence

5. Statements of claim and defense

7. Contests to jurisdiction

8. Proceedings experts, witnesses, evidence

9. Awards : interim & final



Limited Recourse against Awards

• New York Convention Article V• Model Law Article 34

– Incapacity or invalidity of agreement under

applicable laws – Party not given opportunity to participate

– Award outside of scope of arbitration

agreement

• FAA s.10

– Manifest disregard for law



Online Dispute Resolution

& the Future of Arbitration

• WIPO/ICANN UDRP

• About 2 months from submission to completion

• Unique opportunity to handle bad-faith infringement in

arbitration

• Binding

• ICC

• DOCDEX (non-binding)• NetCase

• Online copyright infringement could be handled

through similar procedure



Advantage: Arbitration

Lower

Cost

More

Control

Less

Time Confidential



What Is Next?

• Counterfeiting and piracy pandemic suggests

rights without remedies

• International patent trials complex, yielding

unreliable results between jurisdictions

• “Blue Ocean” of unexplored opportunities

• Uncontested market space ready for growth

• International legal framework not in place

• IP rights inconsistently enforced under vague rules



Recommendations

Harmonize US State and FederalDistricts

Compulsory ODR for InternetInfringement

International Class Arbitration

Take a proactive approach todisputes

Amend 9USC4and/or28USC1391 Multilateral agreement needed toextend UDRP platform to includecopyright and trademarks Remedy for counterfeiting/piracy victimsand franchisees Contemplate disputes in contracts; tailor arbitration clauses; use negotiation and

pre-dispute ADR



• Litigation isestablished and notthreatened as adispute resolutionmechanism.

Parties to disputesshould have multipleoptions to resolvetheir differences.

• Arbitration is a costefficient alternativethat, if allowed, canprovide solutions tomany persistentproblems.

An Option Rather Than SubstituteDisputants should always have at least two potential

methods

for binding dispute resolution.



References Cited in Slides Lord Mustill (1989). Arbitration: History and Background. 6:2 J.

Int’l Arb. 43.

Razgaitis, R. (2006). US/Canadian Licensing In 2005-SurveyResults: Licensing Foundation of LES.

United National Conference on Trade and Development (2005).

Dispute Settlement. UNCTAD/EDM/Misc.232/Add.38. Retrieved

from http://unctad.org/en/Docs/edmmisc232add38_en.pdf

Metcalf, C. (2008). Resolution of Patent and TechnologyDisputes by Arbitration and Mediation: A View from the United

States. Arbitration, 74, 385-394.

Butterfield, W., Hill, T., Hubbard, W., and Kourlis, J.R. (2011).

United States House of Representatives Judiciary CommitteeHearing on: The Costs and Burdens of Civil Discovery.

Retrieved from

http://judiciary.house.gov/hearings/hear_12132011_2.html

http://unctad.org/en/Docs/edmmisc232add38_en.pdf








References Continued Moore, K. (2001). Are District Court Judges Equipped to

Resolve Patent Cases? Harvard Journal of Law &

Technology, 15(1), 1-39.David Allgeyer, In Search of Lower Cost Resolution: Using

Arbitration to Resolve Patent Disputes, 12 Conflict

Management 9 (2007).

the role of arbitration in international intellectual property defense ppt slideshow

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