1 Alternative Dispute Resolution in Intellectual Property Adam Rattray WIPO Arbitration and...

1

Alternative Dispute Resolutionin Intellectual Property

Adam Rattray

WIPO Arbitration and Mediation Center

2

WIPO Arbitration and Mediation Center

• Purpose:– To provide services for the resolution of commercial disputes

between private parties involving intellectual property (IP) and technology, through procedures other than court litigation (‘ADR’)

• Principal characteristics:– International– Specialized in IP/technology

• Institution• Procedural rules/clauses • Neutrals

– Not-for-profit

3

Mediation, Arbitration, Expert Determ. • Mediation: an informal procedure in which a neutral

intermediary, the mediator, assists the parties in reaching a settlement of their dispute, based on the parties’ respective interests and enforceable as a contract.

• Arbitration: a private procedure in which the parties submit their dispute not to a court but to one or more chosen arbitrators, for a formal decision based on the parties’ respective rights and obligations and enforceable as an award under arbitral law.

• Expert Determination: a procedure in which the parties submit a dispute or a difference between them to one or more experts who make a determination on the matter, which can be binding unless the parties have agreed otherwise.

4

WIPO Center Caseload• Leading provider for Internet domain name disputes:

– 2,329 domain name disputes in 2008– +15,000 domain name disputes since 2000

• +110 arbitrations and +70 mediations– Contractual: Patent licenses, patent pools, distribution

agreements, R&D, joint ventures, software/IT, copyright collecting societies, trademark coexistence agreements, settlement agreements

– Non-contractual: patent infrigement

– Cases referred by courts– Confidentiality of procedures

5

WIPO ADR Options

6

WIPO Cases: Legal Basis

• Domestic and international• Contract clause and submission of existing disputes• Contractual and (occasionally) non-contractual• Arbitration or mediation, or combined (in each

‘direction’)• Sometimes following court litigation which the parties

had commenced

7

WIPO Mediation Case Example

• R&D company disclosed patented invention to manufacturer during consulting contract, without transfer or license of patent rights

• Manufacturer started selling products which R&D company alleged used its patent

• Negotiation of patent license failed; threat of multi-jurisdictional infringement proceedings

• Parties:

– Submitted to WIPO Mediation

– Worked with WIPO-appointed mediator

– Agreed license and new consulting contracts

8

WIPO Expedited Arbitration

• Main features compared to regular arbitration:– Shorter procedural timelines– In principle, a sole arbitrator

• When consider WIPO Expedited Arbitration?– Value in dispute does not justify the cost of more extensive procedures– Limited number of issues in dispute– Parties urgently need a final and enforceable decision

– Parties wish to commence with an ambitious time/cost frame, subject to case

developments – Trademarks and software disputes

9

WIPO Arbitration Case Example• Finance agreement in connection with artistic production

– German party - Swiss/Panamanian party– WIPO Expedited Arbitration clause– Each represented by US lawyers

• Urgent solution required: issue of contract interpretation under German law

• WIPO appointed Germany-based US arbitrator

• Short deadlines for written submissions

• One-day hearing

• Award rendered five weeks after commencement of arbitration

10

WIPO Cases: Remedies, Value, Numbers, Locations

• Remedies: damages, infringement declarations, specific performance

• Value: from Euro 20,000 to US$ 600 million

• Numbers: over 170 (see WIPO web site)

• Locations: mostly Europe and US (see WIPO website)

11

WIPO Cases: Types of Procedure

Expedited Arbitration

10%

Arbitration 49%

Mediation 41%

12

WIPO Cases: Domestic / International

Domestic25%

International75%

13

WIPO Cases: Substantive Law

Dutch3%

English7%

German34%

French14%

Sw iss14%

US28%

14

WIPO Cases: Place of Arbitration

1 Geneva 1 Germany

2 Berlin 2 US

3 New York 3 Switzerland

4 Frankfurt 4 France

5 Los Angeles 5 The Netherlands

6 San Francisco 6 UK

7 Amsterdam  

8 Hamburg  

9 London  

10 Paris  

15

WIPO Cases: General Subject Matter

IT22%

Trademarks 5%

Patent 46%

Other 18%

Copyright 9%

16

WIPO Cases: Business Areas

Mechanicals

18%

IT/Telecom

29%

Luxury Goods

2%

Other

22%

Life Sciences

4%

Entertainment

9%

Chemistry

2%

Pharmaceuticals

14%

17

WIPO Cases: Subject Matter

• Contractual– Patent licenses– Distribution agreements– Research and development agreements– Joint ventures– Software/IT transactions– Disputes involving copyright collecting societies– Trademark coexistence agreements

• Non-contractual– Patent infringement

18

WIPO Case Results

24%Not

settled

73% Settled

3% Pending

19% Pending

54% Settled

27% Award

Mediation Arbitration

19

Country Characteristic of Legal System Average Length Average Cost

France - Civil Law - Unified Litigation - No specialized courts

First Instance: 18-24 months Appeal: 18-24 months

€80,000-150,000 (1st Inst.)

Germany - Civil Law - Bifurcated Litigation - Specialized court for invalidity

First Instance: 12 months Appeal: 15-18 months

€50,000 (1st Inst.) €70,000 (App.)

Italy - Civil Law - Unified Litigation - Specialized courts

First Instance: few months – 24 months Appeal: 18-24 months

€50,000-150,000 (1st Inst.) €30,000-70,000 (App.)

Spain - Civil Law - Unified Litigation - Commercial Courts

First Instance: 12 months Appeal: 12-18 months

€100,000 (1st Inst.) €50,000 (2nd Inst.)

UK - Common Law - Unified Litigation - Specialized courts - Mediation promoted

First Instance: 12 months Court of Appeal: 12 months House of Lords: 24 months

€750,000-1,500,000 (1st Inst.) €150,000-1,500,000 (App.) €150,000-1,500,000 (House of Lords)

China - Civil Law - Bifurcated Litigation - Specialized courts

First Instance: 6 months (in law) Appeal: 3 months, no limit when foreigners litigate

Not Available

Japan - Civil Law - Bifurcated Litigation - Specialized courts

First Instance: 14 months Appeal: 9 months

Not Available

USA - Common Law - Unified Litigation - Specialized court of appeals (CAFC)

First Instance: up to 24 months Appeal: 12 + months

Up to $4,000,000 (1st Inst.) $150,000-250,000 (App.)

Source: Kluwer Law

20

Anticipating IP Dispute Resolution Needs

• International• Neutral expertise• Efficiency• Confidentiality• Preserving party relationships

21

International (1)• Intellectual property rights are often:

– Created through international collaboration– Exploited through international commerce– Protected in a multitude of jurisdictions

• Intellectual property disputes often:– Involve parties from different jurisdictions– Concern commerce in a multitude of jurisdictions

• Court litigation:– Which court(s) is (are) competent?– Risk of inconsistent results

• Epilady case: European Patent Office patents infringement litigation in 9 countries; found “infringed” in 5 countries, “no infringement” in 4 countries

– Time and cost of foreign litigation

22

International (2)

• In arbitration, parties designate a single forum for resolving the entire dispute– Comprehensive and consistent resolution

• Rather than patchwork of court decisions

– Neutrality• No party is forced to litigate in the other’s home country

• International (procedural) standards

• International Enforceability: New York Convention– 144 Member States (including Germany)– International arbitral awards to be recognized and enforced like

final national court judgments– Only limited exceptions

• Mediation is not rooted in any jurisdiction or law

23

Neutral Expertise

• IP disputes tend to be technical/specialized– Law, technical background (patents, software, etc.)

• Most courts are not specialized in IP (IBA 2005 Survey)• In ADR, parties control selection of neutral(s)

– Can select neutral(s) with expertise in the relevant legal, technical or business area

• WIPO Center– 1,500 candidates from 70 countries– Further candidates added in function of case particulars – Broad range of ADR, IP and technical backgrounds– Detailed professional profiles– Used for Center recommendations and appointments

24

Efficiency

• IP covers fast-evolving technology, used in highly competitive markets

• Often seen as the true cost of litigation: opportunity/management cost

• Need for efficient dispute resolution procedures– ADR offers party control (short deadlines)– WIPO expedited arbitration case example

• Comprehensive dispute resolution– One procedure, one law, one language, same lawyers, expert

neutral(s), final result (award or settlement)

25

Confidentiality

• Often required in IP/technology disputes– Examples: patented technology, know-how, reputation– Except: where public precedent needed

• ADR is a private procedure• WIPO Arbitration Rules

– Except as agreed otherwise or required by law, all participants to preserve confidentiality regarding:

• Existence• Disclosures• Award

– Specific protection of trade secrets• WIPO Mediation Rules also prohibit disclosure in

subsequent proceedings

26

Preserving Party Relationships• IP often developed/exploited in long-term relationships

between partners– Industry, SMEs, universities

• Arbitration– Private procedure, agreed by the parties– Flexible, can be tailored to the parties needs– Confidentiality helps parties to focus on the merits of the dispute,

without concern about its public implications

• Mediation– Interest-based, rather than rights-based– Less acrimoneous– No real downside: 70% settlement rate; defines issues; shows risks of

alternatives; can walk out; limited cost; has court support

27

Limitations of IP ADR (1)

• Contractual basis– No obligation to submit to ADR procedure without contract clause– Difficult to agree on clause once dispute has arisen– Unsuitable for bad-faith infringement (e.g. counterfeiting)

• Parties must pay fees of neutrals– Crucial importance of getting value for money– ADR efficiency and results can make for substantial benefits

28

Limitations of IP ADR (2)• Outcome binding only between the parties (inter partes)

– No public precedent (erga omnes)– No general declaration of (in)validity– No direct office action (registration, cancellation)

• But: inter partes effect proves mostly sufficient

• ICC interim award 6097 (1989) confirming arbitrability– Japanese claimant asserting breach of patent license by German licensee,

who invoked invalidity of claimant’s patents– Party agreement:

• Place of arbitration: Zurich, Switzerland• Contract interpretation: Japanese law• Patent infringement: German law

– Primacy of party intent in arbitration– Submission to arbitration is form of free disposal, like rights transfer or

license (‘any dispute involving property’)

29

WIPO Electronic Case Facility (‘ECAF’)http://www.wipo.int/amc/en/ecaf/index.html

• Web-based electronic case file

– For WIPO cases (also used under America’s Cup Rules)

– Facilitates online communication and storage

– Submission in most common formats (word, pdf, others)

– Searchable by author, date, subject title

– Email alerts

• Case management information

– Names and contact details

– Case overview

30

The Uniform Domain Name

Dispute Resolution Policy

(UDRP)

31

Background to the UDRP

• Background (WIPO advice to ICANN - 1998-1999)– Need for a procedure permitting trademark owners

to resolve clear cases of abusive domain name registration (‘cybersquatting’) without going to court

• UDRP adopted by ICANN and took effect in 1999.• Has proved to be an effective expedient alternative

to court action, while preserving court options.• Now 10 years old, with a maturing decision base.

32

UDRP (2)

• Applicable to gTLDs: .com, .net, .org – .aero, .biz, .coop, .info, .museum, .name, .pro. (&

some ccTLDs)

• Remedies – limited transfer or cancellation – No costs or damages

• Source of law: contract – domain name registrants are bound to the UDRP

through their registration agreement

33

Center Staff

• 25 nationalities, 17 languages• Case Managers• Case Secretariat• IT Support• Lawyers

34

UDRP

(PROCEDURE)

35

UDRP: Procedure At a Glance

+3 +20

+5 +14

3 member Panel?

+5 +15

+10

Response

Notifica

tion

Panel App.

Decision

Court?

Average duration: approx 60 days

36

UDRP: Procedure

• The Complaint is filed by the Complainant • The Respondent is given 20 days to respond to the Complaint• An independent panel is appointed from the Center’s list (1- or

3-member Panels)– Intellectual property and Internet specialists

– 384 members from more than 50 countries in all regions (including 25

Australians)

• The Panel issues a decision– Based on written evidence (ie, Complaint, Response), no in-person

hearings

• The Registrar implements the Panel’s decision– At the end of 10 calendar days, if no court challenge

37

UDRP (SUBSTANCE)

38

UDRP: The Three Elements

WHAT IS REQUIRED?

– Trademark must be identical or confusingly similar to the domain name (Policy, s. 4.(a)(i)); and

– The registrant of the domain name must have no rights or legitimate interests in the domain name (Policy, s. 4.(a)(ii)); and

– The domain name must have been registered and used in bad faith (Policy, s. 4.(a)(iii)).

39

UDRP - open-ended examples

Provides (non-exhaustive) examples of:

• rights or legitimate interests (Policy, para. 4 (c)): – Includes prior use of domain name for bona fide offering of

goods or services, or being commonly known by the domain name

• registration and use in bad faith (Policy, para. 4 (b)): – Includes for the purpose of selling a domain name to the

trademark owner, or of attracting web traffic through the creation of likely confusion with a TM for commercial gain

40

Rights in a Mark

41

Trade Mark Rights

• Trademark rights are a threshold requirement under the UDRP (paragraph 4(a)(i)).

• A registered trademark will generally suffice (although unexamined registrations may receive less deference).

• Other rights not covered (e.g. GI’s / content)

• Geographic location of mark generally irrelevant for the purpose of standing.

42

Unregistered TM Rights (1)

• Unregistered or common law rights may be established where a complainant can show that the claimed mark has become a ‘distinctive identifier’ associated with the complainant or its goods and services.

• E.g. Tom Cruise <tomcruise.com> found to be a distinctive identifier of acting services provided by that individual.

43

Identical or Confusing Similarity?

44

Identical or Confusingly Similar to a Trademark

• Identical to Trademark– Punctuation– Design Elements

• Confusingly Similar to Trademark– ‘Typosquatting’– Addition of Other Words– Content of Website– Gripe Sites

45

Confusing Similarity

• Consensus view among Panels that:

– Test for confusing similarity is comparison between the trademark and the domain name to determine the likelihood of confusion.

– Content of website irrelevant for purposes of this particular test.

– Rationale: Initial interest confusion - if the object is to get an Internet to the website, the presence of content on arrival will not prevent this.

46

Confusingly Similar‘Typosquatting’

http://www.JoeCarton.com

http://www.ElectronicBotique.com

http://www.0xygen.com

47

Confusingly SimilarAddition of Generic Term

http://www.BuyPorsche.com

http://www.VogueMag.com

http://www.SpanishPlayboy.com

48

Gripe Siteshttp://www.AOLsucks.com

49

Gripe Sites

Is a domain name consisting of a trademark and a negative term confusingly similar to the complainant’s trademark?

Minority view: Not confusingly similar because Internet users are not likely to associate the trademark holder with a domain name consisting of the trademark and a negative term.

50

THE SECOND ELEMENT

51

Rights or Legitimate Interests

• Demonstrable Preparations to Use• Bona Fide Offering• Commonly Known• Noncommercial or Fair Use

– Agency and Distributorship– Free Speech

• Criticism/Gripe Sites• Fan Sites

– Generic/Dictionary Words

52

Free Speech -- Fan Sites

Can a fan site constitute a right or legitimate interest in the disputed domain name?

View 2: Respondent does not have rights to express its view, even if positive, on an individual or entity by using a confusingly similar domain name, as the respondent is misrepresenting itself as being that individual or entity.

In particular, where the domain name is identical to the trademark, and the respondent is preventing the trademark holder from using its mark in a DN and managing its presence on the Internet.

53

The Third Element

54

Registered and Used in Bad Faith

• UDRP contains inclusive examples of evidence of registration and use in bad faith (paragraph 4(b)(i)-(iv) of the UDRP)

• For example:– registering a domain name primarily for primary

purpose of selling to a trademark owner for profit; or

– registering a domain name to prevent trademark owner from registering their mark in a corresponding domain name, where there is a pattern of such conduct;

55

Registered and Used in Bad Faith

(Contd) or

– registering a domain name primarily for the purpose of disrupting the business of a competitor; or

– using a domain name to intentionally attempt to attract for commercial gain, Internet users to a website or on-line location by creating a likelihood of confusion with a trademark as to the source, sponsorship, affiliation, or endorsement.

56

ccTLDS

57

Thank You

58

More Information on WIPO Dispute Resolution

• WIPO Center

– http://www.wipo.int/amc/en/

– arbiter.mail@wipo.int

• Arbitration and mediation caseload/case examples

– http://www.wipo.int/amc/en/center/caseload.html

• ECAF introduction and users manual

– http://www.wipo.int/amc/en/ecaf

• WIPO Workshops

– http://www.wipo.int/amc/en/events