Arbitration and Intellectual Property
My interest in alternative dispute resolution (ADR) and Intellectual Property (IP) dates back to 2002. I was then editing a website dedicated to domain names, including decisions resulting from the Uniform Domain Name Dispute Resolution Policy.
Subsequently, I devoted my first master’s thesis to ADR for copyright disputes (Montpellier University, 2005, supervised by prof. Michel Vivant).
I also had the opportunity to get involved in the Liv Hidravlika case, during an internship alongside Ms. Jane Willems, carried out as part of the Master “International Commercial Arbitration” (Versailles University, 2007, directed by prof. Thomas Clay, and Sandrine Clavel). The Liv Hidravlika case concerned the violation of a patent license agreement (subject to French law), which contained an arbitration agreement (subject to French law and designating the rules of arbitration of the International Chamber of Commerce). During the arbitration proceedings, the defendant had declared that the patent was not valid. Consequently, the arbitral tribunal had to rule on the arbitrability of the question related to the validity of a patent. The arbitral tribunal had ruled that this question was arbitrable, the award having effect only between the parties (inter partes). The defendant brought an action for the annulment of the arbitration award before the Paris Court of Appeal. By a decision of January 28, 2008, the Paris Court of Appeal considered that the arbitral tribunal could rule on the validity or invalidity of a patent, with inter partes effects.
Having made robust affinities with ADR applied to IP, I devoted my Ph.D. thesis to the development of the concept of alternativeness through the lens of IP disputes. My thesis includes a historical analysis which reveals that since the recognition of IP rights at the time of the French Revolution, the parties have frequently used ADR to settle their IP disputes. I defend the idea that the regime of patent arbitrability must not be different from that of trademark or copyright law. Harmonization of laws relating to arbitrability is necessary. In the context of litigation relating to a license contract, it is not conceivable that the questions relating to trademarks are arbitrable and that the questions relating to patents are not. This would adversely affect the effectiveness of arbitration and, therefore, international trade. Also, all the questions likely to be raised within the framework of an arbitration procedure should be arbitrable, including existence, validity, ownership, and unauthorized use (infringement/counterfeiting). The real issue is not whether to give the arbitrator the power to rule on these contentious points. Arbitrators are no less competent than state judges. They should, therefore, be given the powers necessary for the performance of their duty: to settle the dispute.
The real challenges concern:
- the scope of the review of the arbitral award in the presence of a request to set aside the arbitral award or in the presence of a recognition/enforcement procedure;
- the confidentiality or transparency of the arbitral award, in particular, if the arbitral tribunal considered that the intellectual property right in question was not valid, for one reason or another. In such a case, should the award have an inter partes or erga omnes effect? Should the arbitration award be published? Should it be transmitted to the competent IP office?
Arbitration to Settle Disputes Relating to Domain Names
∆The initial purpose of the UDRP and similar procedures was to reduce cybersquatting. However, the statistics invite, on the contrary, to question their effectiveness.
Driven by the needs of a growing connected population, the evolution of the Internet in general, and the orientation of the domain name system, in particular, create an eminently conducive environment for the propagation of cybersquatting. The legal mechanism that forms the basis of these procedures is remarkably bright. Nevertheless, it has a significant flaw in that it does not wave any form of deterrence capable of halting the progress of cybersquatting and only offers considerably limited powers to third party decision-makers.
To reach the initial objective of circumscribing this phenomenon, a revision of the system is essential. It would suffice to raise the legal risk to a threshold beyond which the act of cybersquatting is no longer profitable. One solution would be to grant third party decision-makers the power, on the one hand, to order the recovery of costs incurred for the procedure and, on the other hand, to award damages. In order to guarantee the enforcement of the decision, the latter should take the form of an arbitral award that may benefit from the New York convention for the recognition and enforcement of foreign arbitral awards (E. Gillet, “Extrajudicial procedures for the settlement of disputes over names domain: what perspectives for arbitration?”, Versailles International Business Law Review (VIBLR / LexisNexis), 2013, No. 4, pp. 145-168; E. Gillet, “Rethinking Domain Name Dispute Resolution in the Era of New gTLDs”, ADNDRC conference, Kuala Lumpur Regional Center for Arbitration (KLRCA) – Kuala Lumpur, January 18, 2014).
Arbitration to Settle IP disputes Involving E-Commerce Platforms
Amazon set up a pilot project to facilitate the resolution of utility patent disputes by offering sellers a forum to challenge the accusations of IPR holders. The purpose was to provide the parties with a forum by which they could submit their dispute to an impartial and independent third party, within the framework of a low-cost process (4,000 USD), making it possible to obtain a decision quickly, the costs incurred weighing on the losing party. The idea is appealing, but it has a significant drawback: Amazon is not a party to the arbitration procedure.
One could go further and consider the possibility of imposing erga omnes arbitration agreements on platforms and sellers. Such an arbitration agreement would be, in this case, the agreement by which the platform and the seller make an offer to settle future disputes by arbitration to any third party (the beneficiary) who considers that it is prejudiced by the activity of the platform and/or the seller. As for the beneficiary, it could be holders of intellectual property rights, or even consumer protection associations. The consent meeting mechanism would, therefore, be similar to that of the Uniform Domain Name Disputes Resolution Policy (UDRP), but the nature of the procedure and the decision would be different: the procedure would be arbitration and the decision, an arbitral award, unlike the UDRP (as it stands). The distinction is fundamental because, thanks to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, such awards could be enforced in almost all states (the list is available on the website of the United Nations), of which:
- China ;
- Hong Kong SAR;
- the United Arab Emirates;
- Turkey ;
- The United States;
- The Netherlands;
That is to say, the leading countries of manufacturing and assembly of counterfeits (OECD and EUIPO, Trends in Trade in Counterfeit and Pirated Goods, 2019, Figure 4.1., p. 40). It should also be ensured that online commercial acts fall within the definition of arbitrability, regardless of the legal nature of the parties: natural or legal person (which refers to subjective arbitrability). A solution based on arbitration would only be viable only if the parties can be identified appropriately. This obligation should legitimately weigh on the platform. Otherwise, the platform, which has failed in its obligation to identify its contractual partner, should replace the latter in the arbitral proceedings.
This proposal has a substantial limitation related to consent. The theory of arbitration, which gave birth to the New York Convention, is based on the free consent of the parties to the arbitration agreement. Any law which would require an industrial or commercial branch to resort to arbitration would make such arbitration a so-called compulsory arbitration. In these circumstances, it is not certain that the New York Convention can be applied globally and uniformly to all arbitral awards that would result from such a mechanism. However, research in this area could yield results potentially compatible with the New York Convention and the new requirements of electronic commerce.