International Arbitration: A Way Forward For Patent Contract Dispute Resolution

With rapidly increasing contract disputes, international arbitration is an effective resolution strategy in the life sciences sector.  Identifying and carefully navigating the legal minefields early is key for professionals and businesses in life sciences when faced with such complex commercial issues on a global scale.

Disputes in licensing and joint Research & Development Agreements (“R&D Agreements”) concerning patents often arise over issues such as:

  • ownership of patents;
  • improvements through research and development;
  • contractual utilisation;
  • infringement and the unenforceability of patents for which the patent holder claims fees; and / or
  • remedies for patent infringement.

In patent dispute cases, companies have preferred international arbitration instead of litigation in court because:

  • arbitration clauses often provide for confidentiality and, therefore, the arbitration is confidential between the parties. A court proceeding is open to business rivals and the public;
  • court proceedings over patent claims must be initiated in each country where the patent is registered. Arbitration allows for the resolution of all global claims in a single proceeding. Importantly, this also means that international arbitration may be less costly when compared to commercial litigation;
  • with the freedom to choose an arbitrator, the concerned parties often chose subject matter experts, enabling the arbitrators to make the most informed decision on the matters in dispute; and
  • the time taken to resolve a matter through arbitration is generally not as lengthy as the time consumed in court litigation.

Though there are advantages in commencing arbitration for patent dispute resolution, professionals and businesses must fully consider the risks and complexities involved in the process, particularly because patent rights worldwide are governed by a number of different jurisdictional laws. For example:

  • choosing an appropriate place for arbitration, with the arbitral institution being of utmost importance. For this purpose, concerned parties can approach a trusted advisor (like us!) to provide comparison on matters like: how liberal a place of arbitration is, whether the arbitration is confidential and whether interim relief is able to be obtained;
  • disputing parties should generally give a broader interpretation to their arbitration clause. This will enable them to cover patent infringement claims in connection with a contract dispute;
  • contractual rights to a patent and the various contractual remedies must be clearly incorporated in the contract;
  • the relief claimed must be in accordance with what is accepted at the place of arbitration and / or the place of patent registration; and
  • patent disputes must only be removed from an arbitration clause in a contract, if this has been thoroughly considered and appropriate advice has been sought on this decision. If disputing parties do choose to agree such a carve-out, a commercial dispute may end up being litigated in various parallel proceedings, and further dispute may arise between them over the proper jurisdiction for patent-related contract questions.

At Burke & Associates Lawyers our medical lawyers have the expertise and experience to assist you.  Contact us today on +61 3 9822 8588 or email our team here.

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