Arbitrability of IP Disputes in Singapore
The ability to enforce intellectual property rights determines how strong they are. In this setting, issues concerning intellectual property rights are increasingly being resolved through arbitration as a private and confidential process, particularly when parties from various jurisdictions are involved. There are certain unique aspects of intellectual property conflicts that arbitration may be able to address more effectively than court litigation.
Arbitration of some IP disputes has historically raised the issue of arbitrability, or whether the subject matter of a dispute may be settled through arbitration. It was suggested that since national authorities provide IP rights, including patents, conflicts involving these rights should be settled by a public agency operating inside the national system. However, it is now generally acknowledged that disagreements over intellectual property rights are arbitrable, just like disagreements over any other kind of privately held rights. Since arbitration is based on party agreement, just like a settlement, any right that a party can dispose of through settlement should, in theory, also be capable of being the subject of an arbitration. Any award made will only be enforceable against the parties that participated in the arbitration because it is a consensual process; it will not, however, have any bearing on third parties.
In connection to IP rights, a variety of disputes might occur. When someone makes use of intellectual property without the owner's consent, infringement conflicts result. When there is disagreement over who is the true owner of the intellectual property, ownership issues occur. When parties disagree on whether an IP right is legitimate or was granted inadvertently, validity disputes occur. When an agreement to licence IP rights is broken, licencing disputes result.
The Singapore Arbitration Act ("AA") and the International Arbitration Act ("IAA") have both undergone amendments as a result of the passing of the Intellectual Property (Dispute Resolution) Bill in August 2019 to make clear the arbitrability of intellectual property rights ("IPR") disputes in Singapore. The new rules went into effect on November 21, 2019.
Both statutes now specifically provide that the topic of an IPR dispute is subject to arbitration, under sections 26B of the IAA and 52B of the AA.
The term "IPR" is defined in the recently amended AA and IAA to include a variety of IP-related rights, such as patents, trade names, registered designs, and copyrights, among others. The list was purposefully left open-ended to accommodate the flexibility of adding new categories of IPRs as they might develop in the future.
An IPR dispute is defined to include:
• a dispute over the enforceability, infringement, subsistence, validity, ownership, scope, duration or any other aspect of an IPR;
• a dispute over a transaction in respect of an IPR; and
• a dispute over any compensation payable for an IPR.
The modified AA and IAA make it clear that the arbitrability of IPR issues would not be lost just because a law from Singapore or another country: I assigns jurisdiction for the IPR dispute to a specified body; and (ii) makes no mention of potential arbitration resolution.
The amended AA and IAA, however, do not consider a third-party licensee or third-party holder of a security interest in respect of the IPR (or any person claiming through or under the same) as a party to the arbitral proceedings with regard to the enforcement of arbitral awards.
Therefore, such parties do not have standing to rely on the judgement upholding the award; instead, only the parties themselves or those making claims on their behalf may do so. To put it another way, the judgement only applies to the parties (in personam) and is not binding on anyone else.
The arbitrability of IPR issues is now statutorily recognised in Singapore as a result of the modifications to the AA and IAA. This represents a significant departure from the outdated belief that only national authorities or national courts have the authority to decide IPR disputes. This helps to increase the appeal of arbitration as a resolution method for IP disputes, and it invariably improves Singapore's standing as a leading international centre for arbitration.
Despite the statutory changes, there is still a restriction on the arbitrability of IPR disputes, namely that the arbitral awards made under the same will only continue to be binding on the parties and not third parties.
The clarifications given on the arbitrability of IPR issues are a good step despite the aforementioned restrictions. The AA and IAA modifications, in particular, will give flexibility to accommodate various IPR types in various jurisdictions and any new IPR types or IP-related conflicts that may emerge in the future.
The creation of a specialised track for IP dispute litigation is one of the fundamental reforms to the IP dispute resolution framework. This fast-track alternative is designed for plaintiffs who might lack the finances to file a High Court lawsuit or for whom it might not be financially feasible to continue the case for the entire period. When the track is implemented in due course, parties can anticipate condensed proceedings and features that reduce costs. Overall, the Act provides cost-effective avenues for third parties to mount challenges while streamlining the procedures for owners to enforce their IP rights. Owners of patents would have peace of mind knowing that their rights have been scrutinised and found to be strong and valid. The Act supports Singapore's status as a preferred location for international commercial arbitration.
Author:Tanya Saraswat and Narsee Monjee Institute of Management Studies (NMIMS). in case of any query, contact us at Global Patent Filing, or write back us via email at firstname.lastname@example.org.