6. ADVANTAGES OF INTERNATIONAL PATENT ARBITRATION
6.2 Saving Costs
While litigation may be slow and expensive, arbitrations can expedite cases and reduce courts’ caseload without sacrificing the fairness of the resolution.173 International commercial arbitration can be much cheaper than international law-suits because arbitration is quicker and has fewer requirements than formal litiga-tion.174 The costs spent in litigation such as hiring expert witness, paying for covery, and preparing exhibits can be huge, especially in complicated patent dis-putes.175 The parties can save on costs by appointing or electing proper arbitrators who are specialists in the subject matter at issue. Parties do not have to educate the judge or jury with the necessary knowledge regarding the patent at issue. In the United States, the general rates range between $250–400 per hour for an expert panelist.176
Cost saving for arbitration is more apparent where there are parallel motions regarding the same dispute or patent. Several lawsuits are more likely to arise in a cross-border infringement. It will cost a lot to conduct lawsuits in multiple jurisdic-tions at the same time. A single international arbitration may replace all the possi-ble lawsuits in order to save costs as well as avoid inconsistent judgment results.177 Further, the awards of arbitration are much harder to challenge than a
173 See Grantham, supra note 80, at 179.
174 See Christopher P. Hall & Scott J. Newton, International Arbitration Bodies: A Survey, N.Y.
L.J. 1, 6 (June 16, 1992).
175 See Michael H. Diamant et al., Alternatives to Going to Trial Settlement and ADR Methods, in LITIGATING TRADEMARK, TRADE DRESS, AND UNFAIR COMPETITION CASES 243, 246 (2000).
176 Id.
177 See Eiland, supra note 3, at 286 (discussing the case in the U.K., which finds non-infringement of the “Epilady” razor as compared to the German court that found infringe-ment for the same “Epilady” razor).
ment, therefore the cost of appellate lawyers and expert witnesses can be saved.178 In general, there is no appeal for an award which is final and conclusive.179
6.3 Confidentiality
Although the degrees of confidentiality in arbitration differ,180 confidentiality can be an advantage of international patent arbitration. For example, in English law, confidentiality is implied even when the parties do not stipulate to a confidentiality clause in their agreements.181 According to the rules of the LCIA and the Rule 34.6 of Singapore International Arbitration Centre, parties cannot reveal any facts about the arbitration, including their participation.182 Therefore, confidentiality can be a good reason for the parties to choose arbitration; it is easier in arbitration to keep secrets out of the press and competitors.183 In arbitration, it is more likely that secret information will remain confidential.184 Specifically in patent validity disputes, parties are more likely to keep silent to maintain their technology ad-vances.
178 Eiland, supra note 3, at 288.
179 See New York Convention, supra note 33, art. V (providing limited methods of appeal).
Errors of law and fact are not included. Id. However, an award can be set aside by court in country where the arbitration took place, generally for violations of that country’s public policy. See id.
180 See generally L.Yves Fortier, The Occasionally Unwarranted Assumption of Confidentiality, 15 ARB. INT’L 131, 131 (1999) (detailing confidentiality in arbitrations).
181 See Smith et al., supra note 40, at 316.
182 Id. See also, e.g., LCIA Rules, supra note 52, art. 30; SIAC Rules (2nd Edition, 22 October 1997), SING. INT’L ARB. CTR., http://www.siac.org.sg/pdf/Rules1997.pdf?phpMyAdmin=
OP8vu698vunuzJZYZoW2%2CoDB3yb (last visited May 12, 2012).
183 See Union Oil Co. of Cal. v. Leavell, 220 F.3d 562, 568 (7th Cir. 2000).
184 See id.
6.4 Predictability
One of the important reasons why parties choose arbitration to resolve their disputes is that the arbitration is predictable. The parties may not trust the applica-tion of foreign law, legal practices, political systems, social culture and economic structures. The arbitration can avoid circumstances in which the courts, according to its private international law, have to apply foreign law as the applicable law. In arbitration, parties are allowed to select the applicable law as well as the seat of arbitration.185 If the applicable law is likely to be more familiar to the parties, they are better able to predict the result of the arbitration. Hence, the parties can avoid the uncertainty of a jury decision and enhance certainty. The determination of a jury is always uncertain and is frequently a zero-sum game. In contrast, the arbitra-tion can create a win-win situaarbitra-tion.
6.5 Harmony
Arbitration is usually regarded as a tool to resolve the disputes with minimal damage to business relationships.186 Especially in patent disputes, the claimant and the respondent generally have a business relationship. If they can maintain their relationship by arbitration, they can go on to benefit from each other after the resolution.187 In contrast, parties may attack each other in a lawsuit, destroying future business opportunities without maintaining a friendly business relationship.
6.6 Flexibility
When parties agree to an arbitration clause, they may choose the arbitration
185 See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974).
186 MICHAEL BUHLER ET AL., PRACTITIONER’S HANDBOOK ON INTERNATIONAL ARBITRATION 9 (Frank-Bernd Weigand ed., 2002).
187 See Bryan Niblett, The Arbitration of Intellectual Property Disputes, in WORLDWIDE F
O-RUM ON THE ARBITRATION OF INTELLECTUAL PROPERTY DISPUTES 197, 197 (1994).
institution and location as well.188 However, the entire arbitration need not occur at the seat of the arbitration institution. It depends on where the parties, lawyers, evidence, documents and witnesses are located. Furthermore, parties and arbitrators can choose anywhere to arbitrate. This opportunity is relatively convenient and flexible for international patent disputes, particularly in cases in which multi-national infringement is claimed.
6.7 Expertise
In civil law jurisdictions, judges in general have no technology back-ground.189 And, under common law systems, such as United States, the juries who also may have little technology background are responsible for determining the facts.190 Thus, some patent issues involving complex technology may be too com-plicated and difficult for juries.191 In fact, scholars have found that juries side with patentees more often on patent validity issues than with judges.192
In commercial arbitration, the parties are more likely to choose the experts and the procedures193 This will make the parties convenient and flexible. In patent cases specifically, experts chosen by the parties to be the arbitrators can judge the technology issues independently. In such cases, the arbitrators can review the ex-pert reports instead of following it with blind deference. The arbitrators are likely
188 See Eiland, supra note 3, at 309.
189 See Paul M. Schoenhard, Reversing the Reversal Rate: Using Real Property Principals to Guide Federal Circuit Patent Jurisprudence, 17 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 299, 304-05 (2007).
190 See U.S. CONST. amend. VII.
191 See Eiland, supra note 3, at 287.
192 See id. (quoting evidence from James F. Davis, Judicial Management of Patent Litigation in the United States: Observations from the Litigation Bar, 9 FED. CIR. B.J. 549, 549-50 (2000)).
193 See Grantham, supra note 80, at 175.
not to be the rubber stamp of expert witnesses. In contrast, the jury and even the judge may be limited by the expert report because they lack the necessary knowl-edge in patent law. Compared to a jury, selected arbitrators with technology exper-tise can consider the patent issues more precisely and avoid bias.