the role of arbitration in international intellectual property defense ppt slideshow
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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
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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
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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?
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TradeSecrets
Patents
Trade-
Marks
Copy-right
Licenses
Intellectual
Property
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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
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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).
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What is Arbitration?
• Contractual right• Private
• Binding
• Less formal procedure
• Flexible construct
• Confidential
• International
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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)
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• 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
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• 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
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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
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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
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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.
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• 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.
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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
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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
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• 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
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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
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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
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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
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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)
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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
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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
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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
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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
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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
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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
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Advantage: Arbitration
Lower
Cost
More
Control
Less
Time Confidential
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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
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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
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• 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.
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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
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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).