Other Considerations

Generally speaking, a decision maker in an intellectual property organization has to utilize a cost-benefit analysis to decide whether arbitration should be used to resolve patent validity disputes before entering an arbitration agreement. He has to consider at least the following factors: (1) Who will claim and who will defend?

Who will be the other side of party? Who will be the co-claimant and who will be the co-defendant? (2) What is the potential risk? (3) For the potential issues, who is likely to win in court? (4) How long will the potential litigation last? How disrup-tive will it be to the client? (5) What will be the costs and fees to fight in a lawsuit or in arbitration? (6) How will the other side assess the dispute and all of the above-mentioned factors? Will the other side decide that the procedure does not produce unacceptable risks and is likely to have lower costs?²¹¹

210 See, e.g., Members of the Panels of Conciliators and of Arbitrators, INT’L CTR. FOR S

ET-TLEMENT OF INV. DISP., http://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSID DocRH&actionVal=MembersofPannel (last visited May 3, 2011) (providing a list of quali-fied investment specialists who can be conciliators or arbitrators in an ICSID tribunal).

211 See Janicke, supra note 167, at 695.

8. CONCLUSION

The sovereign-grant arguments to challenge the arbitrability of patent validity are not convincing. There is no ground to distinguish patent arbitration from other kinds of commercial arbitration. The sovereign-grant arguments are so abstract that they lack any base of actual practice. The sovereign-grant argument is also nothing more than smoke and illusions. It argues that only the sovereign itself has the power to extinguish the rights it rendered. The sovereign-grant arguments forget the fact that the arbitral effect only exists inter partes. Even where a country ac-cepts arbitration of a patent’s validity, the effect is limited to the parties in the dis-pute and does not affect the public. The parties of a patent validity disdis-pute merely want to allow neutral arbitrator to determine their rights and obligations to one an-other. An arbitration award based on the parties’ express or implicit promises to conform their conduct to the award generates new contractual rights to replace the old rights.²¹² The parties have the rights and autonomy to make such decisions themselves without the intervention of a third person.²¹³ Through arbitration, the parties hope to simply clarify the legal relationship between them. Enforcing an arbitration award as to specific parties does not mean that the holdings of the arbi-tration need to apply to third parties.

The public policy provisions in the New York Convention Article V should be construed very narrowly.²¹⁴ The refusal of enforcement of foreign arbitral awards should be based on the fact that the enforcement violates the forum state’s most

212 Id. at 701 n.42 (citing MICHAEL J. MUSTILL & STEWART C. BOYD, THE LAW AND PRACTICE

OF COMMERCIAL ARBITRATION IN ENGLAND 27 (2d ed. 1989)).

213 See Janicke, supra note 167, at 701.

214 See, e.g., Parsons & Whittemore Overseas Co. v. Société Générale De L’Industrie Du Papier, 508 F.2d 969, 973-74 (2d Cir. 1974).

fundamental values, morality, or justice.²¹⁵ If we adopt a broad definition of pub-lic popub-licy, it will reduce the functions of international commercial arbitration and hinder international commerce. Even if the arbitration of patent validity disputes violates the public policy of a given state, patent validity could be separated from the rest of the patent dispute and submit the narrow issue of patent validity to the governmental body with authority to decide patent validity. Then, the final and conclusive judgment regarding validity could be used by the arbitral tribunal in making its final decision.

Patent disputes are special because they usually concern foreign elements and high-level technology. Hence, international commercial arbitration has become an important consideration for replacing cross-border patent litigation. In fact, there are several advantages provided by international commercial arbitration in resolv-ing patent disputes, includresolv-ing time-savresolv-ings, cost-savresolv-ings, confidentiality, predict-ability, harmony, flexibility, and expertise, among others. Possible disadvantages of arbitration can be mitigated by considering these factors when drafting the arbitra-tion clause. If a party requires interim measures, it must make sure that such meas-ures are available under its choice of arbitral institution. The party must also ensure that the arbitration award can be enforced in the targeted state.

The tactics in choosing international commercial arbitration for a patent dis-pute are highly law-oriented. Deliberate legal research and thoughtful planning based on that research are necessary. Due to the high value of patents, handling a patent dispute has become an enduring war in which numerous financial resources, human capital, and precious time will be invested. The result may be a life or death matter for an enterprise. If a party has confidence in gaining more through litigation, arbitration can reduce the risks involved and bring more certainty to patent disputes.

215 See id. at 974.

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