Alternative Dispute Resolution in Intellectual Property Adam Rattray

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

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 2

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. 3

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 4

WIPO ADR Options 5

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 6

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 multijurisdictional infringement proceedings • Parties: – Submitted to WIPO Mediation – Worked with WIPO-appointed mediator – Agreed license and new consulting contracts 7

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 8

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 9

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) 10

WIPO Cases: Types of Procedure 11

WIPO Cases: Domestic / International 12

WIPO Cases: Substantive Law 13

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 Paris 10 14

WIPO Cases: General Subject Matter 15

WIPO Cases: Business Areas 16

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 17

WIPO Case Results Mediation Arbitration 18

Source: Kluwer Law 19

Anticipating IP Dispute Resolution Needs • • • International Neutral expertise Efficiency Confidentiality Preserving party relationships 20

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 21

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 22

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 23

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) 24

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 25

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 26

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 27

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’) 28

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 29

The Uniform Domain Name Dispute Resolution Policy (UDRP) 30

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. 31

UDRP (2) • Applicable to g. TLDs: . com, . net, . org –. aero, . biz, . coop, . info, . museum, . name, . pro. (& some cc. TLDs) • 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 32

Center Staff • • • 25 nationalities, 17 languages Case Managers Case Secretariat IT Support Lawyers 33

UDRP (PROCEDURE) 34

UDRP: Procedure At a Glance +3 +5 . n p e o i s p n t n A o a i o l c s i p e i f s i c n t e e a o R D P N +20 3 member Panel? +15 +5 +14 +10 Court? Average duration: approx 60 days 35

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 36

UDRP (SUBSTANCE) 37

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)). 38

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 39

Rights in a Mark 40

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. 41

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. 42

Identical or Confusing Similarity? 43

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 44

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. 45

Confusingly Similar ‘Typosquatting’ http: //www. Joe. Carton. com http: //www. Electronic. Botique. com http: //www. 0 xygen. com 46

Confusingly Similar Addition of Generic Term http: //www. Buy. Porsche. com http: //www. Vogue. Mag. com http: //www. Spanish. Playboy. com 47

Gripe Sites http: //www. AOLsucks. com 48

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. 49

THE SECOND ELEMENT 50

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 51

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. 52

The Third Element 53

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; 54

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. 55

cc. TLDS 56

Thank You 57

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 58