Intellectual Property

B. Intellectual Property

BETTING THE FAMILY JEWELS: INTELLECTUAL PROPERTY*

Intellectual property (IP) rights often constitute a corporation’s key assets—its “family jewels” so to speak. Thus any dispute over these rights is usually taken very seriously.

As a result, IP lawyers often have particularly strong feelings with respect to the relative costs and benefits of arbitration related to patents, trademarks and copyrights. While arbitration clauses frequently find their way into technology licenses (particularly in a cross-border context) the wisdom of this practice has been vigorously debated.

Ironically, the alleged drawbacks to arbitration in one context often constitute advantages in another. Much of the argument relates to the benefits and burdens of litigation flexibility and the right to appeal, which as discussed in the following chapter have proven to be double-edged swords.

A. Diversity of Form and Unity of Essence

Many hallmarks of arbitration of intellectual property (IP) disputes are common to binding private dispute resolution in other areas. On scrutiny, the special nature of IP arbitration is not really all that special. The themes evoked in IP controversies show a connection with private dispute resolution in other fields, illustrating again arbitration’s protean nature, in which a unity of essence survives a diversity of outward form.

It is beyond cavil, for example, that IP raises public policy concerns. Any country will have an understandable reluctance to see arbitrators interfere with national regulation of patent validity. Consequently, IP arbitration addresses principally the allocation of rights under license agreements.

Similar considerations exist with respect to arbitration involving matters such as antitrust,¹ securities regulation² and bankruptcy.³ These disputes all implicate public rights, whose violation could result in a loss to society at large, which never signed the agreement to arbitrate. Antitrust violations may mean higher prices for consumers. Securities fraud undermines confidence in public markets. Disposition of property belonging to a bankrupt company might limit assets available to other creditors.