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Alternative dispute resolution and the law of intellectual property

October 30, 2021
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ADR

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This article has been written by Sukrati Gupta from SVKM’S NMIMS Kirit P. Mehta School Of  Law, Mumbai and the article has been edited by Khushi Sharma (Trainee Associate, Blog iPleaders). 

Introduction

Intellectual property rights are the rights granted to individuals over their creative works. For a set length of time, they generally grant the author exclusive rights to utilize his or her invention. The subject matter of Intellectual Property (IP) is said to be the outcome of the mind or intellect. “Patents, Trademarks, Geographical Indications, Industrial Designs, Integrated Circuit Layout-Designs” (Topographies), Plant Variety Protection, and Copyright, to name a few. IP can be purchased, traded, or bequeathed. Its intangibility and non-exhaustion are the main characteristics that set it apart from other forms. The cornerstone of the knowledge-based economy is intellectual property. It affects all areas of the economy and is becoming increasingly crucial for assuring enterprise competitiveness.

In the past, the real potential of arbitration and mediation was underutilized because IP owners and attorneys preferred traditional courts. However, things have changed in recent years, and parties are now more receptive to this new method of resolving conflicts. The ADR got strength by the success of domain name dispute resolution procedures such as the Uniform Domain Name Dispute Resolution Policy (UDRP). 

As a result, trademark owners may now protect their marks on the internet. In both developed and developing nations, the ADR has gained universal support. ADR has been the preferred approach among the parties due to its informal procedures, cost effectiveness, and reduced time commitment. Arbitration, mediation, negotiation, and conciliation are all forms of Alternative Dispute Resolution. Collaborative law is included because it is used globally in a voluntary conflict settlement procedure that is not governed by court rules. The ADR techniques are primarily concerned with issue resolution rather than determining winners and losers. As a result, ADR is known as a “win-win” approach. 

“Alternative dispute resolution is also known as External Dispute Resolution in some countries, such as Australia.” Despite early opposition from both parties and their advocates, ADR has gained universal support in recent years among the “general public and the legal profession. The rising popularity of ADR can be explained by the increasing caseload of traditional courts, the perception that ADR is less expensive than litigation, a preference for confidentiality, and the desire of some parties to have greater control over the individual or individuals who will decide their dispute.”

“WIPO – World Intellectual Property Organization”

“The World Intellectual Property Organization (WIPO) established its own Arbitration and Mediation Center in 1995, which provides modern and effective international rules and services for arbitration, including specialized expedited arbitration rules for the film and media industry and disputes relating to royalties for the music industry. WIPO also offers Expert Determination rules and services, which are comparable to arbitration but may not be binding.” This procedure is intended to assist in the resolution of targeted technical or industry-specific disputes, such as the extent of particular intellectual property rights, their valuation, or the determination of suitable royalty rates for a license agreement. WIPO is also at the forefront of domain name dispute resolution, resolving thousands of complaints each year in only a few months. These sorts of proceedings, which use evaluative neutrals instead of national courts to decide cross-border IP issues, are becoming more popular, as demonstrated by WIPO’s yearly case statistics, particularly in the last five years. 

For private parties with intellectual property issues, the Centre provides a mechanism for arbitration, mediation, accelerated arbitration, and combinations of mediation and arbitration. Through the employment of competent neutral parties from all around the world, the Centre runs arbitration and mediation proceedings. The Centre will also provide training programs for mediators and provide a venue for discussion of worldwide intellectual property problems. Parties can refer issues to the Centre by using an arbitration clause in a contract or a submission agreement between opposing parties in a current dispute. A schedule of expenses and fees for arbitrators and mediators is also provided by the Centre, which is determined depending on the amount of money in dispute. At the Centre, impartial intermediaries are used to facilitate mediation. The mediation is non-binding, and any party can withdraw from the settlement proceedings at any moment before a contract is signed. If the parties are unable to achieve an agreement, the Centre has a form of arbitration that involves a combination of mediation and arbitration. When a disagreement cannot be resolved by mediation within a predetermined time limit, the case is being sent to arbitration. 

Arbitration can be conducted by a single arbitrator or a three-person panel of neutral arbitrators. Unless the parties agree to another method, each side in a three-member panel dispute may select one neutral party, with the Centre selecting the third. Unlike mediation, arbitration is a binding agreement between the parties, and no party may withdraw from the process until a resolution is achieved. WIPO has also described a mechanism for accelerated arbitration that allows for a faster award determination and, as a result, a lower settlement cost. There has been no arbitration between parties during the first months of the Centre’s operation. 

The Centre, on the other hand, is utilized as a discussion platform for international intellectual property arbitration and mediation. Because members of WIPO are just now beginning to add arbitration clauses in their international intellectual property treaties, WIPO anticipates a delay before any dispute resolution procedure really takes place. Previously, WIPO was in charge of all significant international intellectual property issues, including the Paris Agreement, which is one of the most comprehensive bilateral intellectual property accords. Other accords, such as “The Patent Cooperation Treaty (managed by the World Intellectual Property Organization)”, attempted to unify patent standards throughout the world. This protection was, however, confined to member countries. However, GAIT looks to comprise the most protective and far-reaching international intellectual property accord. Currently, the GATT is the multinational pact that deals with intellectual property issues the most comprehensively. However, it is unclear if GATT will provide enough protection or address all of the shortcomings of past patent dispute mechanisms.

Why choose ADR

Reasons for not choosing ADR

In intellectual property disputes, ADR has numerous advantages over litigation, however “arbitration is not a simple process. First and foremost, all parties must agree on the method, the institution to be utilized, the language of the proceedings, the seat of the arbitration, and most significantly, the tribunal’s selection (one or three arbitrators).” Some countries’ public policy concerns remain, and it’s worth noting that the EU Community Trade Mark and Design Right appear to be non-arbitrable subject matter when it comes to declaring them invalid erga omnes. International arbitration is likewise notoriously costly and time-consuming. Depending on whether it is performed in a civil law or common law country, the process might differ dramatically, impacting the outcome.

Arbitration cannot escape the geographical constraints of national laws, and if the tribunal must evaluate “each IP right under the laws of each country separately”, it may be just as litigious and exhausting as parallel litigation procedures before national courts. The thought of entrusting a “bet your company” matter to a panel with limited judicial scrutiny might be unsettling. Putting all one’s eggs in one basket might be risky. In most cases, the losing party is also compelled to pay the winning party’s legal fees. These can be quite variable, and the expenses of the procedures may wind up being more than the damages sought. Claimants seeking to enforce their arbitral awards may face challenges while pursuing execution of their award abroad.

Conclusion

The numerous advantages of employing alternative dispute resolution (ADR) in international commercial disputes should promote further use of ADR in such cases. Recent rulings appear to show that the use of arbitration and mediation in international intellectual property disputes is becoming more common. As international jurisprudence changes to suit improvements in technology and information flow in our society, this tendency is expected to continue. ADR is a likely mechanism for overcoming the barriers that exist in international intellectual property disputes, which are caused by cultural differences in intellectual property and law. Many of the barriers to effective resolution of intellectual property disputes in the global market will be reduced by the flexibility and communication that ADR approaches foster. As alternative dispute resolution becomes increasingly common, WIPO and GATT should work together to establish efficient arbitration and mediation norms throughout the global market, embracing both organizations’ capabilities.


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