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Why Arbitration in Intellectual Property?

Intellectual property rights are as strong as the means to enforce them. In that context, arbitration, as a private and confidential procedure, is increasingly being used to resolve disputes involving intellectual property rights, especially when involving parties from different jurisdictions. Intellectual property disputes have a number of particular characteristics that may be better addressed by arbitration than by court litigation. Some of the main characteristics of intellectual property disputes and the results offered by domestic litigation and arbitration are summarized in the following table:

Common features of many IP disputes Court litigation Arbitration
  • Multiple proceedings under different laws, with risk of conflicting results
  • Possibility of actual or perceived home court advantage of party that litigates in its own country
  • A single proceeding under the law determined by parties
  • Arbitral procedure and nationality of arbitrator can be neutral to law, language and institutional culture of parties
  • Decision maker might not have relevant expertise
  • Parties can select arbitrator(s) with relevant expertise
  • Procedures often drawn-out
  • Injunctive relief available in certain jurisdictions
  • Arbitrator(s) and parties can shorten the procedure
  • WIPO Arbitration may include provisional measures and does not preclude seeking court-ordered injunction
Require finality
  • Possibility of appeal
  • Limited appeal option
Confidential/trade secrets and risk to reputation
  • Public proceedings
  • Proceedings and award are confidential

Traditionally, arbitrability, the question of whether the subject matter of a dispute may be resolved through arbitration, arose in relation to arbitration of certain IP disputes. As IP rights, such as patents, are granted by national authorities, it was argued that disputes regarding such rights should be resolved by a public body within the national system. However, it is now broadly accepted that disputes relating to IP rights are arbitrable, like disputes relating to any other type of privately held rights. Any right of which a party can dispose by way of settlement should, in principle, also be capable of being the subject of an arbitration since, like a settlement, arbitration is based on party agreement. As a consequence of the consensual nature of arbitration, any award rendered will be binding only on the parties involved and will not as such affect third parties.