With growing trade and the inventive process taking place at a global scale demand for hastier resolution of disputes is required in the field of IPR. Issues ranging from ownership to jurisdiction arise frequently. The use of ADR for speedier dispute resolution in intellectual property has now been a long-developing niche. A successful application of ADR in the field IPR would not just mean faster resolution of disputes but also cheaper ones. Growing businesses and start-ups that are much prevalent in this period of Digital India, see the potential in acquiring Intellectual property in developing their business, however,they can’t afford to spend the huge time and resources on resolving disputes in acquiring the intellectual property. Even in the perspective of larger organizations like Google, Facebook, Apple, etc. who continuously innovate in various fields of technology require the quickacquisition of intellectual property (mainly patents). This, of course, is not the case if you are Elon Musk. One must keep in mind that ADR in itself is a developing field in India and not every alternative dispute resolution mechanism is equally effective especially in case of IPR dispute resolution. Among the ADR mechanisms that will be most convenient for IPR dispute resolution will be Arbitration and Mediation. Both of these procedures are fairly simple ones that offer the parties confidentiality, time and cost-effectiveness. Being purely a voluntary process, it turns IPR dispute resolution into a business-friendly process. This article will assess the issues faced in IPR dispute resolution followed by the scope of applicability of ADR mechanisms in IPR dispute resolution and finally the individual analysis of arbitration and mediation application in IPR dispute resolution.
Issues with conventional IPR dispute resolution
As discussed before the conventional means of dispute resolution in IPR face a number of issues that demand the use of specialized dispute resolution techniques. Courts lack the understanding, expertise, andspecialization that is required in such dispute resolution. Below listed are the list of common problems faced in resolving IPR disputes in court followed by how ADR mechanisms are well equipped to address them.
- Lack of Technical Expertise
Since the final arbitrator (pun intended) in the courts is the judge, whose expertise lays in the area of law there is an absence of a technical expert who can appreciate the substance of the IPR claims. This isn’t to say that an expert will never be called upon during the proceedings but is usually a rare process because of the cost and time that it entails. However, in the caseof ADR mechanisms the parties have the ability to freely and mutually choose an individual (say arbitrator or mediator) with the relevant expertise.
- Lengthy process
Landmark to dispute resolution by the initiativeprocess is the length of the process. With the pendency of cases skyrocketing and the number of judges proportionally minuscule, the caseof any sorts is sure to take a very long time to resolve, especially if the other party is unwilling to budge. The opposing lawyer can easily lengthen the litigationprocess simply on legal technicalities. This can easily be avoided in the ADR mechanisms which are intended at speedy and mutual dispute resolution.
- Privacy Issue
The litigation process is backed with the force of law. In case the judge sees fit to demand any information private to the parties, then the parties are bound to reveal it. And as a court proceeding,it becomes a matter of public record accessible to any layman. Surely, arguments of ‘business or trade secrets’ can be laid before the court however they do not guarantee results. On the other hand, ADR stands for confidentiality in the process.
- Control and Flexibility Issues
As a procedure established under law parties lack the flexibility in controlling the process of dispute resolution. One may say that the litigation process takes a life of its own. This risk furthers into the phase of judgment, wherein despite the prayers of the parties, the remedy is at the will of the judge. However, in thecaseof ADR mechanisms,there exists a greater element to control, choice and flexibility at all stages. At the end of the ADR,process parties would have walked away with something desirable in hand unlike the remedies offered in litigation proceedings.
- Jurisdictional Issues
As discussed, earlier today’s trade and commerce has reached a global scale and so theyhave disputes that accompany them. With companies inventing and conducting business with companies elsewhere in the globalissues are bound to arise not just in the business but also issues with the issue resolution. The best example for the same is the issue of Jurisdiction. Consider this example; a company X hailing from India in collaboration with a company Y in the USAinnovates a new product. Now due to reasons unknown,a dispute arises as to the righter pertaining to the innovation; however, the jurisdiction of patent dispute resolution is unclear. Hence, a lot of time and money is wasted in courts in first ascertaining the place of litigation and other formalities. Imagine such a burdenbeing levied on a sole innovator who lacks the resources and time. ADR mechanisms, on the other hand, offer the parties the much-required comfort and flexibility in discussing the issue at ease.
A commonly pointed out issue with the conventional dispute resolution mechanism is that when the remedy is pronounced by the judge, only one of the party’s take awaysomething back with them, sometimes at the end of the litigation even they are at loss. On the other hand, on opting for ADR mechanisms all parties become winners.
Justiciability of ADR in IPR
Until the early 2000s disputes arising in IPRwere resolved only through the conventional iterativeprocess. Parties would usually manage to resolve the dispute before it went to the full-fledged trial phase. This as discussed earlier was a time and resource consuming process for all parties involved the result of which was only their dissatisfaction. But this scenario saw a changewith the introduction of TRIPS. This landmark document though released at an international scale had severe repercussions in the patent and other laws in India. This resulted in the drastic amendment of the Code of Civil Procedure inJulyof 2002. The amendment saw the introduction of s. 89 which expanded the scope of the court’s discretionary powers allowing them to direct cases to arbitration, mediation or conciliation as they see itin accordance withthe laws. But despite this step,some areas of ADR like mediation saw little or no participation of parties in IPR matters. But things took a turn around late 2006when the High Courts of the country started to introduce exemplary and punitive damages in their judgmentsas a method to make civil dispute resolution attractive. The business community however seeing this as a threat sought the help of ADR mechanism for dispute resolution including mediation. As of today, parties are free to enter into any alternative dispute resolution process and upon reaching a consensus enter into a legally binding agreement, which would cover all issues present and future including details of future disputes.
Arbitration of IPR disputes
For a time in history,IPR disputes were non-arbitrable as the IP rights were bestowed by a sovereign entity and it must be adjudicated only by sovereign sanctioned bodies like courts. But with changing trends in IP law like the development of transferability of patent rights, etc. dispute resolution in IPR has also been made more liberal. While most issues in IPR are matters of individual concern they can be suitablyresolved through private arbitration. However, those that are a matter of public concern (right in rem) cannot enter into arbitral or any other ADR proceedings.
This was upheld in the case of Booz-Allen & Hamilton Inc. v. SBI Home Finance Ltd.the Supreme Court held that; “subject matter of arbitration that involves only rights in sonpersonemare arbitrable in nature, but no matter involving right in rem, for example, with validity proceedings, where the effect of the award could potentially be to discontinue the existence or enforceability of the monopoly, can be put before any private arbitral tribunal for decisions.”This principle was further in the case of Eros International Media Limited v. Telemax Links India Pvt. Ltd. and Orswherein it was held that’ “IPR disputes born arising out of commercial contracts the remedy can only be an action in personem”. It is important to note here that in case of disputes arising in the field of patents, the regional patent offices don’t recognize the arbitral awards to make. However, disputes arising in the subject-matter of the contract between the parties can be arbitered.
As attractive as the field of arbitration is for resolving IPR disputes, it also faces certain criticisms, one of the biggest being that it is enforceable only on the parties to the dispute and does not have any largest scope of application. It also entails certain procedural difficulties, for instance in the absence of a prior contract clearly providing for arbitral proceedings, it is difficult to obtain theconsentof all parties. Also, unlike the courts, arbitration isn’t bound by the principles of justice and equity to the word. In the caseof parties hailing from different economic or political backgrounds,there is the risk of one of the parties being aloss.
Mediation of IPR disputes.
Mediation as discussed earlier shares the same benefits of arbitration when it comes to dispute resolution including ease, cost & time effectiveness, control, etc. The non-binding nature of the mediation process givesparties a good opportunity to attempt to reconcile the matter without being bound. This informal tone of the process would have a good impact when it comes to business transactions. The confidentiality of the process to makes it an attractive option of parties in the innovation business. Recent amendments in the Commercial Courts Act of 2015 has incentivizedmediation-based dispute resolution, especiallyin IPR in terms of flexibility and agreements. The entire mediation process is found to be IPR dispute resolution friendly, from the parties choosing their mediator and having full control over the proceedings and the outcome.
Raw Mango Pvt. Ltd. v. Vaishali Shadangule -The success of mediation in speedy and effective dispute resolution is evident in the story of famous Indian designer Vaishali Shadangule. Recently she claimed that Sanjay Garg, a co-artist in the fashion world had plagiarized her designs causing her loss of accruable revenue. Sanjay who denied all the allegations, in turn,filed a suit for defamation. When the case appeared before the Delhi High Court, it was directed for mediation before the Fashion Development Council. The dispute was resolved in a landmark 4-day period.
With the ongoing globalization,the use and importance of Intellectual property areonly going to multiply. That means the issues that entail along with it multiply too. Hence there is a need for dispute resolution mechanisms that are speedier, easy, and effective than the conventional ones. The ADR mechanisms for dispute resolution offers a lot more than the traditional litigation process and this highly important when it comes to businesses, both developing and established. For individual innovators and small business who haven’t yet acquired traction in their field, IPR is a very valuable asset, however,they aren’t ready to take the heat of legal battles. Through ADR they may resolve disputes through first discussing with the other party instead of accusing them. Many a successful mediation have offered young individuals and enterprises an opportunity to step up. Although it must be kept in mind that along with the flexibility and control that ADR offers in dispute resolution some drawbacks inevitably follow. But to think of it one cannot have it all. Hence the application of ADR mechanisms in IPR dispute resolution may not be perfect but is surely worth a try.
AIR 2011 SC 2507
2016 ARBLR 121 (BOM)
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