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Arbitration At Work In Patent Cases

Monday, June, 17, 2013


When there’s a dispute surrounding patent rights, it’s easy for the case to become escalated quickly; typically the issue will start with either an International Trade Commission investigation or litigation proceedings.  Although there are scenarios where no other viable options are available to resolve the dispute, these two solutions might work.  There is, however, an alternative, and it’s gaining traction in the patent world: arbitration. 


Using arbitration as an alternative even has the seal of approval of the Supreme Court, since the Federal Arbitration Act, in the words of the justices, “recognized an emphatic federal policy in favor of arbitral dispute resolution”.  The concept of arbitration when it comes to patents is equally supported, since the Patent Act states that arbitration clauses in any patent agreements are enforceable, valid and irrevocable. 


Although there is great potential for arbitration in patent cases, relatively few patent issues are being elevated for arbitration.  Around the globe, only several hundred arbitration cases issues exist in arbitration, whereas 5,000 patent lawsuits were filed in 2012 in the United States alone.  A lack of knowledge might be part of the reason that people move forward with traditional legal action right away.  If patent disputes have traditionally resulted in litigation, it’s a solution that’s familiar and normal. 


Some of the cases that have used arbitration are noteworthy and involve larger companies, so it’s clear that there are situations where arbitration is a viable alternative.  Going through arbitration is known for costing less and reducing the time spent working on any particular case, so there are benefits to all involved parties for taking this route. 


Research backs up the benefits of arbitration, too: the World Intellectual Property Organization published survey results in March 2013 finding that arbitration for technology disputes resulted in a 60% time savings and 55% cost savings when compared with litigation.