IP Arbitration in Hong Kong. John Budge, Vice Chairperson, Hong Kong International Arbitration Centre

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1 IP Arbitration in Hong Kong John Budge, Vice Chairperson, Hong Kong International Arbitration Centre

2 Overview Growth in IP disputes in Asia and worldwide Resolution of IP disputes through arbitration Example of a contract negotiation Strategic considerations when drafting a dispute resolution clause for IP agreements Snapshot of a HKIAC arbitration Resolution of IP and domain name disputes at the HKIAC 2

3 Growth of IP disputes in Asia and worldwide Patent Cooperation Treaty (PCT) Patent Applications in 2013 Source: WIPO Statistics 3

4 Growth of IP disputes in Asia and worldwide According to the White Paper on Intellectual Property Rights Protection (2013) published by China s Supreme People s Court (SPC), the number of new IP cases amounted to 88,583 in Among these cases, there were: 51,351 copyright cases 23,272 trademark cases 9,195 patent cases 949 cases involving technology agreements 1,302 cases involving unfair competition 2,514 cases involving other intellectual property disputes On October 31, 2014, the PRC Supreme People's Court has announced the establishment of IP Courts in Beijing, Shanghai and Guangzhou. 4

5 Growth of IP disputes in Asia and worldwide According to Mazar s Dispute Resolution Survey 2013, 72% of Respondents acting on IP disputes said that the volume of the cases had increased in the last year and 64% reported that the quantum on cases is also increasing. According to the International Survey on Dispute Resolution in Technology Transactions by the World Intellectual Property Organization (WIPO) in 2013, arbitration is selected in 30% of the dispute resolution clauses, which rivals the traditional reference to litigation (32%). 5

6 Example of a contract negotiation Contract Negotiations A US company with IP rights B Hong Kong company Contract negotiations between A and B Under the contract, B is granted a licence to use a patent of A Contract details in respect to the IP were already negotiated Dispute resolution clause is still to be agreed upon 6

7 Example of a contract negotiation situation A US company with IP rights Time and Costs Results from the 2013 WIPO Survey: Court litigation in the home jurisdiction took on average approximately 3 years and court litigation in another jurisdiction took on average 3.5 years Legal costs incurred in court litigation in their home jurisdiction amounted on average to US$475,000, and legal costs of court litigation in another jurisdiction amounted to slightly over US$850,000 Arbitration took on average slightly more than 1 year and cost on average slightly over US$400,000. B Hong Kong company 7

8 Example of a contract negotiation A US company with IP rights Expertise of the Judges / Arbitrators B Hong Kong company Judges in national courts might not always be familiar with the intellectual property concepts in dispute Parties can choose arbitrators with expert background in the legal, technical, or commercial fields which are relevant to the dispute 8

9 Example of a contract negotiation A US company with IP rights Scope of the dispute resolution clause B Hong Kong company Issue of Arbitrability Depends on the nature of the dispute, the type of IP rights and the jurisdiction Contractual disputes concerning the transfer and licensing of IP rights and claims concerning IP infringements are arbitrable in most jurisdictions Disputes concerning the granting and validity of IP rights are not arbitrable in many jurisdictions (PRC, France etc.) 9

10 Example of a contract negotiation A US company with IP rights Selection of a seat of arbitration B Hong Kong company Mature legal system Independent judiciary Common law heritage Arbitration Ordinance (Cap 609) based on the UNCITRAL Model Law Availability of interim measures (Section 45 of the Arbitration Ordinance) and enforcement of emergency arbitrator awards Restore the status quo Order to take action or refrain from taking action Preserve assets and evidence Non-interference with arbitration proceedings 10

11 Example of a contract negotiation A US company with IP rights Confidentiality B Hong Kong company Prevent other licensees from knowing about the dispute and a possibly unfavourable outcome Trade secrets can be protected Choice of Law D Singapore company Unifying applicable law in contracts with licensees from different jurisdictions 11

12 Benefits of using the HKIAC Rules Other important features for IP disputes: Handling complex arbitrations involving IP disputes (Articles 27; 28 and 29) 2013 WIPO Survey: There is a trend away from one off licensing of A to B, and towards multi-party know-how and IP arrangements in the context of bigger projects. Joinder Consolidation Single arbitration under multiple contracts 12

13 Domain name disputes Domain name registration works on a first-come-first-serve basis Possible steps to protect trademarks in regard of domain names: Defensive registration Registration in advance Register the relevant domain names before the official launch of new products or services Keep monitoring domain name registrations and take immediate action once any infringement is noticed Investigate by using online tools, i.e. File complaint with domain name dispute resolution services provider, i.e. ADNDRC and HKIAC 13

14 Resolution of IP and domain name disputes at HKIAC The HKIAC places great emphasis in providing online dispute resolution services in a wide variety of areas including intellectual property and information technology. The HKIAC is a partner and manager of the Hong Kong Office of the Asian Domain Name Dispute Resolution Centre, one of four domain name dispute resolution providers approved by the Internet Corporation for the Assigned Names and Numbers (ICANN). With this position, the HKIAC provides domain name dispute resolution services regarding generic top level domain names such as.com,.net and.org. The Hong Kong Internet Corporation Limited (HKIRC) appointed the HKIAC as the sole provider of.hk domain names dispute resolution services. The HKIRC has chosen mandatory, final and binding arbitration as the method to resolve disputes regarding.hk domain names. 14

15 Growth of domain name disputes ( Nov) (Nov) gtld Cases under ADNDRC (HK Office) cctld Cases under HKIAC 15

16 Thank You WEBSITE ADDRESS 38 th Floor, Two Exchange Square Central, Hong Kong TEL (852) FAX (852)

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