Should I Arbitrate My Patent Dispute?

As noted in GAR’s Guide to IP Arbitration, “one of the noticeable trends in international arbitration in the past several years has been the growing use of arbitration to resolve IP-related disputes.” The World Intellectual Property Organization (“WIPO”) Arbitration and Mediation Center reports that its filings (arbitration, mediation and expert determination) increased by over 15% from 2018 to 2019, held steady in 2020, and increased 44% from 2020 to 2021.

Despite the arbitration of patent disputes not being a new or novel concept, wide-spread use of arbitration for the resolution of patent disputes remains elusive. But why? In large part it appears that questions arise as to the arbitrability of patent disputes, the arbitral process, and the benefits available from selecting arbitration over litigation.

The arbitrability of substantive patent disputes (i.e., disputes involving questions of patent validity and infringement as opposed to contractual questions involving, for example patent licensing) is increasingly recognized by national legislatures and courts. Indeed, WIPO Arbitration and Mediation Center asserts that “it is now broadly accepted that disputes relating to IP rights are arbitrable.”

The United States has a relatively long track record with patent arbitration. In 1982, Congress amended Title 35 of the United States Code (i.e., the U.S. patent statute) to include Section 294, which is directed to voluntary arbitration and provides a broad scope of arbitrability.

More recently, leading arbitration-friendly jurisdictions have amended their legislations to expressly provide for arbitration of substantive patent disputes. In 2017, Hong Kong amended its Arbitration Ordinance (Cap. 609; Part 11A) to, among other things, clarify that all disputes over intellectual property rights (“IPRs”) can be resolved by arbitration. In 2019, Singapore followed suit, amending its International Arbitration Act (Arts. 26B and 26G) to expressly provide for the arbitration of IP disputes including patent invalidity.1 While Japan does not have a specific civil code provision concerning the arbitrability of patent disputes, the Japan Patent Office (“JPO”) has a portal to facilitate arbitration of substantive patent disputes.

On May 5, 2021, the District Court of Munich recognized the arbitrability of patent validity under both German and Swiss law. Relying on Section 1030 of the German Code of Civil Procedure, which provides that any pecuniary claim is arbitrable, the court found that German ordre public did not preclude the arbitrability of patent rights. Further, in analyzing Swiss law, the court found that Swiss public policy did not preclude the arbitrability of disputes relating to the rights of European patent application.