Arbitration of IP Disputes in a Post-COVID-19 World

Mintz - Intellectual Property Viewpoints

The COVID-19 pandemic has caused individuals and companies alike to face the reality of a rapid economic downturn followed by a potentially slow recovery and continued economic challenges. During these trying times, companies are looking for ways to cut costs while still operating successful businesses and continuing to deliver products and services to their clients. And while litigation is often a necessary cost of doing business, companies large and small are looking for ways to limit the burden and expense brought on by lawsuits. During these unprecedented times, arbitration has the potential to limit costs and expedite the resolution of complex business disputes, including patent litigation and other disputes involving intellectual property rights.

An alternative to litigation in state or federal court, arbitration is a procedure by which parties may agree to submit their dispute to an arbitrator or a panel of arbitrators who will hear the case and issue a decision that is typically binding on all parties to the dispute. The parties often choose the arbitrator or arbitrators who will serve as neutral deciders of the conflict, or at least have some say in the selection of the arbitrator(s). Arbitration proceedings and decisions are generally confidential, and therefore arbitration may be considered a private dispute resolution process. In addition to the confidentiality of the proceeding, arbitration has many additional benefits, especially in the context of IP disputes:

Faster resolution. Arbitrations are often much faster than court proceedings and parties have much more input concerning how the arbitration will be conducted procedurally in comparison to a more formal court case.

Lower costs. Given the speed of the proceeding and the ability of the parties to help shape the process, an arbitration will often cost far less than a traditional court case.

Potential for Remote Proceedings. Even before the onset of the pandemic, arbitrations—especially international arbitrations—were being conducted remotely with increased frequency. In fact, after many months of study and discussion, the Seoul Protocol on Video Conferencing in International Arbitration, which provides guidance on conducting remote arbitration, was issued just as the pandemic was expanding in March 2020. The Seoul Protocol sets forth helpful guidance concerning remote witness examination, handing of documents in remote testimony, and technical requirements related to witness examination using video conferencing technology, among other helpful guideposts.

International Scope. Arbitration may often resolve large global disputes in a single proceeding. For example, whereas global patent litigation may involve cases in multiple courts in several different countries implicating different substantive laws and creating the potential for inconsistent decisions, arbitration may resolve the entire universe of patent disputes in a single forum with one binding final decision.

Decision-makers with Relevant Technical Background. Because IP disputes are often highly technical in nature, the resolution of IP disputes often benefit from having a neutral adjudicator who is knowledgeable in the technical area at issue. It is extremely rare to draw a randomly-selected state or federal court judge who just so happens to have relevant technical experience. But parties may conduct a search for and agree upon arbitrators who are already well-versed in the technology at issue.

Arbitration is not a “one size fits all” solution for all disputes, and there are some potential disadvantages to arbitration, including:

Scope of Discovery. In many cases the scope of permissible discovery may be more narrow in arbitration than it would be in court and parties may not be able to compel important discovery from a third party or an opponent. The more limited nature of discovery in arbitration may make it more difficult for litigants to prove (or disprove) an important issue in the dispute.

Limited Appeal. The parties’ ability to overturn an arbitrator’s decision is typically very limited, which makes it difficult to correct a perceived mistake on the part of the arbitrator.

Despite these potential drawbacks, the numerous advantages of arbitration, including the increasing necessity and efficiency of conducting arbitration proceedings remotely under the Seoul Protocol, makes arbitration an attractive alternative, especially for international patent litigation and other IP disputes. We expect the use of arbitration as an alternative dispute resolution mechanism to increase in the post-pandemic world, and we will continue to post on this development in the coming months.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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