Think Patent Arbitration Can't Work? Think Again!

In many cases related to patent rights and concerning disputes, the most plausible solution that parties think of is litigation. However, arbitration can be a considerable alternative in some cases, especially since it can be faster and cheaper while maintaining confidentiality can be easier. The alternative is also favored by the U.S. courts as a more convenient way to settle patent-related disputes.

However, there are still very few patent cases that are arbitrated all over the world while the majority of these cases are handled through lawsuits. That does not mean that arbitration cannot be helpful in patent-related cases. In the past years, many multinational firms have used this method to solve their patent disputes instead of going to the court.

The two primary advantages that people can get from arbitration are speed and additional cost savings they can achieve. If the arbitration proceedings are carefully structured, using limited scope of resources, they can help parties save up to 55% of costs that might otherwise incur during lawsuits.

Moreover, arbitration agreements can also be kept more confidential since all the paperwork related to the dispute is filed in private and the people involved are sworn to secrecy. However, the patent agreement needs to be delivered at the Patent and Trademark Office to be included in the prosecution file; therefore the secrecy of patent arbitrations is not completely guaranteed.

Another advantage that arbitration offers over litigation is the flexibility to stipulate the variable during the proceedings. Place, timing, governing laws and several other factors can be decided by the parties to suit their needs. In case of technical disputes, parties can select knowledgeable arbitrators instead of having to rely on jury and judges who might not understand the finer points of the issue.

However, before you decide to go for arbitration in case of patent-issues, make sure that the governing law in the place of arbitration allows it. In countries like Japan and China, patent validity cannot be resolved using arbitration as an alternative. Pursuing arbitration in such places would mean having to face issues in the enforcement of an award.

The major reason why patent issues are not usually solved through arbitration is because parties need to reach an agreement to arbitrate either before or after the dispute. Once the dispute arises, there are few parties willing to go for these agreements. Parties who want to keep their on-going relationship are usually the ones opting for arbitration.

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