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Taking Control of Your IP Dispute Using ADR

Keum Nang Park

9 November 2014

APAA PENANG 2014

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Court Litigation or ADR mechanisms? I.

II.

IP-dedicated ADR Institutions in Korea and Japan

Benefits of ADR for IP Disputes

III.

Arbitrability of IP DisputesIV.

How to Promote ADR for IP DisputesV.

Contents

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Ⅰ. 서론

ⅠⅠ. . 서론서론

Court Litigation or ADR mechanisms?

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Comparison of Court Litigation and ADR

Court Litigation ADR

International

Multiple proceedings under different laws, with risk of conflicting results

Possibility of actual or perceived home court advantage of the party litigating in its own country

Single proceeding under the law determined by the parties

Neutral to law, venue, etc.

TechnicalDecision maker might not have relevant expertise

Parties can select an arbitrator/mediator with expertise

UrgentProcedures often delayed

Injunctive relief availableParties can shorten procedure

Require Finality Possibility of appeal Limited appeal option

Confidentiality/trade secret and risk to reputation

Public proceedingsProceeding and outcome are confidential

Source : WIPO Arbitration and Mediation Center

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Court Litigation or ADR mechanisms?

Neither Court Litigation nor ADR mechanisms can offer a comprehensive solution in all circumstances. Indeed, each transaction is likely to have its own dispute resolution requirements.

Neither Court Litigation nor ADR mechanisms can offer a comprehensive solution in all circumstances. Indeed, each transaction is likely to have its own dispute resolution requirements.

For international patent disputes, it is important to take account of any existing s

pecialized courts and judges, bifurcation of proceedings, requirement and availab

ility of injunctions, possible parallel litigation, and enforceability.

For international patent disputes, it is important to take account of any existing s

pecialized courts and judges, bifurcation of proceedings, requirement and availab

ility of injunctions, possible parallel litigation, and enforceability.

Court Litigation

ADR

Time and Costs

Expertise Confidentialit

y

Injunctions

Enforceability

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Ⅰ. 서론

ⅠⅠ. . 서론서론

Benefits of ADR for IP Disputes

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Benefits of ADR for Resolving IP Disputes

• avoids the complexity of multiple court actions in the jurisdictions concerned. ADR is suitable for cross-border IP disputes.

A single procedure

• ADR procedures are flexible and allow the parties to have full control, including timelines. Party autonomy

• save costs when compared to multi-jurisdictional and/or multi-instances litigation.

Cost and time efficiency

• The parties can select arbitrators, mediators or experts with specific expertise in the relevant legal, technical or business area.

Expertise

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Benefits of ADR for Resolving IP Disputes

• Important in IP disputes where trade secrets are at stakeConfidentiality

• Prevents forum shopping and potential perception of national biasNeutral Forum

• Arbitral awards are not subject to appeal and their enforcement is facilitated by the New York Convention

Enforcement of arbitral awards

• High settlement figures especially in mediation

• Cross-licensing and joint development agreement

Preserving long-term relationship

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Relative Time and Costs of Dispute Resolution

Source : WIPO Arbitration and Mediation Center. International Survey on Dispute Resolution in Technology Transactions

The cost of foreign litigation typically exceeds that of ADR.

• Litigation in home jurisdiction takes around 3 years and costs about US$475,000. Litigation in foreign jurisdiction takes around 3.5 years and about US$850,000.

• Mediation takes around 8 months, and typically costs less than US$100,000. Arbitration takes on average just over a year and costs about US$400,000.

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How to Choose the Most Appropriate ADR?

Mediation is an attractive option for the parties that value the preservation or enhancement of their relationship, confidentiality, or want to reach a speedy settlement yielding significant time and cost savings.

Mediation is an attractive option for the parties that value the preservation or enhancement of their relationship, confidentiality, or want to reach a speedy settlement yielding significant time and cost savings.

Adding arbitration as a next step in a multi-tier approach can enhance the chances of settlement if mediation fails.Adding arbitration as a next step in a multi-tier approach can enhance the chances of settlement if mediation fails.

Negotiation MediationArbitration or Litigation

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Ⅰ. 서론

ⅠⅠ. . 서론서론

IP-dedicated ADR Institutions in Korea and Japan

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IP-dedicated ADR Institutions in Korea

• mediation of industry property disputes

• established by KIPO on 27 December 1994

Industrial Property Right Dispute Mediation

Committee

• mediation of domain-name-related disputes

• established on 8 October 2004Internet Address Dispute

Resolution Committee

• mediation, conciliation of copyright disputes

• established on 23 July 2009Korea Copyright

Commission

• mediation between contents providers/users

• established on 28 April 2011Content Dispute

Resolution Committee

• mediation of design-related disputes

• established on 6 November 2012Design Dispute

Resolution Committee

In Korea, there exist multiple ADR institutions dedicated to IP disputes apart from the Korean Commercial Arbitration Board.In Korea, there exist multiple ADR institutions dedicated to IP disputes apart from the Korean Commercial Arbitration Board.

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Industrial Property Right Dispute Mediation Committee

• Invention Promotion ActEmpowering

Statutes

• The Vice Commissioner of KIPO is the Chairman of the IPRDMC.

• IPRDMC consists of 20 membersOrganization

• Idea, patent, utility model, industrial design, and trademarks, employee inventions

• Validity issues are excluded. Subject-matter

• 5.6 cases a year (107 submissions in total between ’95-‘13)Submissions

• 24% (27 out of 107)Success Rate

IPRDMC was established under the Korea Intellectual Property Office (KIPO) in 1995.IPRDMC was established under the Korea Intellectual Property Office (KIPO) in 1995.

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IPRDMC Mediation Procedure

Source : http://www.kipo.go.kr/kpo/user.tdf?a=user.html.HtmlApp&c=5067&catmenu=m03_02_03_03

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Internet Address Dispute Resolution Committee

• Internet Address Resources ActEmpowering

Statutes

• 30 or fewer committee membersOrganization

• disputes over the registration, holding or use of Internet addressesSubject-matter

• 40 cases a yearSubmissions

• 34 cases a yearDecisions

IDRC was established as a statutory committee on 8 October 2004 for the purpose of settling disputes of domain names promptly and fairly.IDRC was established as a statutory committee on 8 October 2004 for the purpose of settling disputes of domain names promptly and fairly.

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IDRC Mediation Procedure

Source : http://www.idrc.or.kr/english/dispute/flowChart.jsp

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Korea Copyright Commission

• Copyright ActEmpowering

Statutes

• between 20 and 25 commission members

• 7 panels (each panel comprises 3 members)Organization

• Literary works, musical works, paintings, photographic works, cinematographic works, computer programs, derivative works

Subject-matter

• 70-80 cases a yearSubmissions

• around 50%Success Rate

KCC is the Korea’s agency solely dedicated to copyright-related affairs.

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Contents Dispute Resolution Committee

KCDRC was established on 28 April 2011.KCDRC was established on 28 April 2011.

• Contents Industry Promotion ActEmpowering

Statutes

• between 15 and 30 committee membersOrganization

• disputes over the transaction and use of contentsSubject-matter

• 626 cases in 2011 → 3,445 cases in 2012 → 4,817 cases in 2013Submissions

• 4 divisions(game, motion pictures, knowledge information, and cartoon/characters)Features

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Design Dispute Mediation Committee

• Industrial Design Promotion ActEmpowering

Statutes

• 20 committee members

• 4 divisions(product, visual, environment, and multimedia)

Organization

• Disputes over transaction and use of industrial designs and fair trade issuesSubject-matter

• 14 cases as of May 2013Submissions

• 5 cases completed out of 14 cases Success Rate

Design Dispute Mediation Committee was established under the Korea Institute of Design Promotion (KIDP) on 6 November 2012.Design Dispute Mediation Committee was established under the Korea Institute of Design Promotion (KIDP) on 6 November 2012.

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Korea Commercial Arbitration Board

• Korean Civil Code Article 32, the Arbitration Act of Korea

Empowering Statutes

• 1,090 arbitrators as of Oct. 2013Organization

• any kind of commercial disputeSubject-matter

• over 800 cases a year in total

• less than 30 IP cases a yearSubmissions

• over 50%Success Rate

KCAB, established in 1966, is the only authorized commercial arbitration institution in Korea to settle any kind of commercial dispute.KCAB, established in 1966, is the only authorized commercial arbitration institution in Korea to settle any kind of commercial dispute.

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IP-dedicated ADR Institution in Japan

Japan Intellectual Property Arbitration Center

• Consultation, Mediation, and Arbitration

• Originally founded in 1998 as the Industrial Property Rights Arbitration Center

• Patent right, utility model right, design right, and trademark right

The Japan Intellectual Property Arbitration Center(JIPAC) was established by the Japan Patent Attorneys Association and the Japan Federation of Bar Associations.The Japan Intellectual Property Arbitration Center(JIPAC) was established by the Japan Patent Attorneys Association and the Japan Federation of Bar Associations.

JIPAC issues advisory opinions on infringement/validity of IP rights, issues advisory opinions on standard essential patent, and resolves IP domain names disputes.JIPAC issues advisory opinions on infringement/validity of IP rights, issues advisory opinions on standard essential patent, and resolves IP domain names disputes.

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ADR is Not Actively Used for IP Disputes

District Courts and

Korean IP Tribunal

Industrial Property Dispute Resolution

Committee

ADR is Not Actively Used for IP Disputes in neither Korea nor Japan

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Reasons Why IP ADR Is Not Actively Used in Korea

• 39% cited lack of awareness and advertisement of ADR mechanisms for IP disputes.

• 36% pointed out that existing IP ADR institutions still lack technical expertise or management of time efficiency.

• 15% cited lack of reliability of ADR institutions when compared to court systems.

• Other opinions include the need for on-line ADR system for small disputes, the lack of enforceability, and confusion due to existence of too many institutions.

The majority of respondents are willing to actively use systematic, reliable and efficient IP ADR systems.

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Other Reasons why IP ADR mechanisms are avoided

Need for a preliminary injunctive reliefNeed for a preliminary injunctive relief

• IP right holders may need a preliminary injunctive relief.

• Injunctive relief is more likely obtained from a public court rather than from an arbitration tribunal.

Strategic need for precedent or publicityStrategic need for precedent or publicity

• An IP right holder or an alleged infringer may desire a public vindication of its rights.

ADR simply is not available for IP disputes ADR simply is not available for IP disputes

• ADR depends on the consent of the parties.

• Many IP disputes, particularly infringement claims, are between parties with no pre-existing relationship and who are not inclined to agree to submit their dispute to ADR.

ArbitrabilityArbitrability

• Patent rights by nature include the power to preclude competition and require registration; only public courts, and not private arbitrators, may resolve IP disputes.

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Ⅰ. 서론

ⅠⅠ. . 서론서론

Arbitrability of IP Disputes

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Different Views on Arbitrability of Patent Disputes

All patent issues are not arbitrable.

• restrict all aspects of a patent dispute, both infringement and validity issues, from being settled by arbitrators

• A rendered award will not be enforceable in that country

• South Africa

Validity issues are inarbitrable.

• separate a private law claim from public one.

• Infringement issue is arbitrable because it addresses contractual rights and obligations.

• Validity issues are not arbitrable,

• Most countries

Both infringement and validity issues are

arbitrable.

• Award cannot invalidate the patent but has an inter parteseffect binding only between the parties.

• USA after 1983, Switzerland

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Arbitrability of Patent Disputes in Korea

Korea has a bifurcated patent trial system. Arbitral tribunal has to stay its proceeding until invalidity issue has been decided.

Korea has a bifurcated patent trial system. Arbitral tribunal has to stay its proceeding until invalidity issue has been decided.

Recently, the Korean Supreme Court, in a Grand Bench ruling, held that any person seeking to exercise patent rights based on a patent that is clearly invalid will be liable for abuse of patent rights.

Recently, the Korean Supreme Court, in a Grand Bench ruling, held that any person seeking to exercise patent rights based on a patent that is clearly invalid will be liable for abuse of patent rights.

Based on this holding, it may arguably be possible for an arbitration tribunal to decide on validity issues underlying the dispute. An award is binding only between the parties and the patent will remain valid until it is revoked.

Based on this holding, it may arguably be possible for an arbitration tribunal to decide on validity issues underlying the dispute. An award is binding only between the parties and the patent will remain valid until it is revoked.

Supreme Court

Patent Court

Patent Tribunal

Invalidation

High Courts

District Courts

Infringement

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Ⅰ. 서론

ⅠⅠ. . 서론서론

How to Promote ADR for IP Disputes?

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How to Promote ADR Mechanisms for IP Disputes?

Publicize the existence and advantages of ADR for IP disputes.Publicize the existence and advantages of ADR for IP disputes.

Promote inclusion of ADR clauses or multi-tier clauses providing

ADR prior to court litigation as part of IP contracts.

Promote inclusion of ADR clauses or multi-tier clauses providing

ADR prior to court litigation as part of IP contracts.

Enhance court-ordered ADR proceedings for a certain class of IP

disputes.

Enhance court-ordered ADR proceedings for a certain class of IP

disputes.

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How to Promote IP ADR in APAA Countries?

Establish Asian Patent ADR Center dedicated to international IP dispute resolution.Establish Asian Patent ADR Center dedicated to international IP dispute resolution.

Align laws of APAA countries regarding the arbitrability issues of

IP disputes.

Align laws of APAA countries regarding the arbitrability issues of

IP disputes.

Develop Internet-based ADR mechanisms geared to IP dispute

resolution.

Develop Internet-based ADR mechanisms geared to IP dispute

resolution.

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감사합니다Thank You

Keum Nang Park

keumnang.park@leeko.com

82.2. 2191. 3036