Arbitration Clauses in Intellectual Property Contracts: Past, Precedence, and Future

• Author: Julien Chaisse, A. Marisport
• Pages: 397-422

Arbitration Clauses in Intellectual Property

Contracts: Past, Precedence, and Future

J

ULIEN

C

HAISSE

*

AND

A. M

ARISPORT

**

I. Introduction

Globalization and increased cross-border trade facilitate internationalized

transactions, including the sale and purchase of goods and services through

e-commerce.

1

The internationalization of trade and commerce presents new

opportunities and challenges for dispute settlement.

2

National courts may

not be the preferred choice of parties because of the perception that one

party could get home-court advantage.

3

Moreover, the enforcement of

judgments obtained from a national court in other jurisdictions can be

riddled with uncertainty.

4

When considering the Hague Convention on the

enforcement of foreign judgments, it appears there is no international

instrument in which all states agree to enforce foreign judgments on

intellectual property rights.

5

Per Hague Convention of 1907 on

enforcement of foreign judgments, most commercial disputes are expressly

excluded from the enforcement scope.

6

So, parties from different countries

prefer arbitration as a neutral, flexible, and speedy mode of dispute

* Professor, School of Law, City University of Hong Kong; President Asia Pacific FDI

Network (APFN).

** Assistant Professor, Law, Gujarat National Law University and Member, Indian Council

of Arbitration (ICA).

1. Ziyang Fan & Christi ´an R. Chiffelle, These 5 Technologies Have the Potential to Change Global

Trade Forever, W

ORLD

E

CON

. F. (June 6, 2018), https://www.weforum.org/agenda/2018/06/

from-blockchain-to-mobile-payments-these-technologies-will-disrupt-global-trade/ [https://

perma.cc/5NGE-K5EW].

2. See Marc Blessing, Arbitrability of Intellectual Property Disputes, 12 A

RB

. I

NT

’

L

191, 197, 219

(1996); see also L

AWRENCE

N

EWMAN

& M

ICHAEL

B

URROWS

, T

HE

P

RACTICE OF

I

NTERNATIONAL

L

ITIGATION

105 (Irvington-on-Hudson, N.Y.: Transnational Juris Pub., Inc.,

7th ed. 1992).

3. WIPO, G

UIDE TO

WIPO A

RBITRATION

8, 16 (2020).

4. John M. Barkett et al., Perspectives on New York Convention Under Laws United States Forum

Non Conveniens as Stopper to Enforcement, W

OLTERS

K

LUWER

: K

LUWER

A

RB

. B

LOG

(Aug. 17,

2016), http://arbitrationblog.kluwerarbitration.com/2016/08/17/perspectives-new-york-

convention-laws-united-states-forum-non-conveniens-stopper-enforcement/ [https://perma.cc/

D973-VG8Y].

5. See generally Ya-Wei Li, Dispute Resolution Clauses in International Contracts: An Empirical

Study, 39 C

ORNELL

I

NT

’

L

L. J. 789, 794–95 (2006).

6. Ernest G. Lorenzen, The Enforcement of American Judgments Abroad, 29 T

HE

Y

ALE

L. J.

188,189 (1919). Recognition and Enforcement of Foreign Judgments in Civil or Commercial

Matters 1971 Convention ensures the enforcement of foreign judgments of member countries

that are civil or commercial in nature. But Article 1 says that judgments on bankruptcy,

PUBLISHED IN COOPERATION WITH

SMU DEDMAN SCHOOL OF LAW

THE INTERNATIONAL LAWYER

A TRIANNUAL PUBLICATION OF THE ABA INTERNATIONAL LAW SECTION

398 THE INTERNATIONAL LAWYER [VOL. 54, NO. 3

resolution that provides better prospects of transnational enforcement of

arbitral awards.

7

Intellectual property (IP) is a unique product that can be traded and used

to enhance the party’s trade value.

8

“Intellectual property comprises an

interrelated set of legal regimes protecting economic and, in some contexts,

personal interests in inventions, information, works of authorship, images,

symbols, and sound recordings.”

9

Intellectual property is generally divided

into three categories: copyright, trademark, and patents.

10

“The growing

reliance on technology in the supply of goods and services[ ] and the rise of

high-tech industries worldwide, have greatly increased the demand for

patent protection.”

11

In a nutshell, since the industrial revolution, the protection of intellectual

property rights (IPRs) in their different forms—including copyright,

trademarks, geographical indications, industrial designs, layout designs

(topographies), integrated circuits, and patents—the protection against

unfair competition has played an important part in the commercial law of

industrialized countries, and IPR protection has been gradually

internationalised.

12

The need for IP transfer and IP sharing has resulted in

frequent disputes requiring efficient disposal. IP protections are territorial

and vary by duration and subject matter, but transfer of IP and IP holders’

demand for worldwide protection have added other dynamics to IP dispute

resolution.

13

Thus, state courts may not be able to provide efficient disposal

of IP disputes. Hence, IP arbitration is needed.

This article critically analyzes the issues and challenges with the

international arbitration of IP rights disputes in light of recent practices and

trends. IP arbitration is on the rise.

14

But this upward trend has unsolved

problems, the chief issue being the varying degree of arbitrability of disputes

across jurisdictions. This article proposes the only perennial solution for

capacity of persons, damage or injury in nuclear matters, and succession are excluded from this

convention.

The Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters

2019 expressly excludes intellectual property rights, privacy, defamation, and other claims,

which are mentioned in the 1971 Convention from the scope of its application.

7. Li, supra note 5, at 795–96.

8. Christopher M. Kalanje, Role of Intellectual Property in Innovation and New Product

Development, WIPO 1, 1–2 (2005), https://www.wipo.int/export/sites/www/sme/en/documents/

pdf/ip_innovation_development.pdf.

9. P.S. Menell, Intellectual Property Rights: Legal Aspects, in I

NTERNATIONAL

E

NCYCLOPEDIA

OF THE

S

OCIAL

& B

EHAVIORAL

S

CIENCES

7615, 7615 (2001).

10. Guosong Shao, Proprietary Interests, in Internet Law in China 183, 183 (1st ed. 2021).

11. Joseph P. Zammit & Jamie Hu, Arbitrating International Intellectual Property Disputes, 64

D

ISP

. R

ESOL

. J. 75, 75 (2009).

12. Guosong Shao, Proprietary Interests, in Internet Law in China 183–249 (1st ed. 2021).

13. See generally, WIPO, U

NDERSTANDING

I

NDUSTRIAL

P

ROPERTY

(2016) (discussing how

different forms of industrial property is protected).

14. See Michael Woller & Michaela Pohl, IP Arbitration on the Rise, W

ALTERS

K

LUWER

:

K

LUWER

A

RB

. B

LOG

(July 16, 2019), http://arbitrationblog.kluwerarbitration.com/2019/07/16/

ip-arbitration-on-the-rise/ [https://perma.cc/JJU7-X9VH].

PUBLISHED IN COOPERATION WITH

SMU DEDMAN SCHOOL OF LAW

THE INTERNATIONAL LAWYER

A TRIANNUAL PUBLICATION OF THE ABA INTERNATIONAL LAW SECTION