On Arbitrability Of Patent Validity Issues

As an ideal dispute resolution, arbitration is increasingly acceptable among businessmen. In cases concerning intellectual property, arbitration is even more popular due to its advantages such as speed and confidentiality. However, a problem has never been unified in the course of patent arbitration development, whether in theory or practice, and that is: does the arbitral tribunal have the right to make arbitral awards on the patent validity issues? As the parties to the case often cite validity issue as the defense, they will have to refer to the administration or court if the tribunal has no right to do so, thereby depriving the tribunal of the benefits including speed, convenience, confidentiality and so on. Thus, if this problem is not resolved, it will seriously damage the development of patent arbitration as well as technological trade.In the light of traditional theory of arbitrability, patent validity issue is not arbitrable, because it falls exclusive into the authority of the administration which shall never be “invaded” by arbitration. However, as the general trend toward expanding arbitrability worldwide is manifest, the developed countries led by Switzerland and the United States made the breakthrough and admitted the arbitrability of this dispute. But, many countries did not go so far. China’s patent arbitration is still on the preliminary stage, and it is very meaningful to clarify this problem.This paper falls into four chapters:The first chapter mainly analyzes the conflict between patent validity issue and the standard of arbitrability. By explaining legal basis, scope and trend of arbitrability and the nature of petent and patent validity issue, the author pointed out that the conflict appears in two aspects: firstly, the administration proceedings of patent validity issue is not in conformity with the “reconciliation” standard of arbitrability; secondly, as the patent is granted by government, allowing the private arbitral tribunal to decide the issue would probably violate “public policy”.The second chapter deals with the theoretical possibility of admitting the arbitrability of patent validity issue. From the theoretical point of view, firstly, the validity issue is often cited as a defense in arbitral proceedings. The parties focus on the case itself with no intention of altering the registration in Patent Administration. According to its nature, it still belongs to commercial disputes, and therefore the “reconciliation” standard is fulfilled. Secondly, because of “inter alia” of arbitral award, it is binding to only parties to the case. Even though the tribunal declares a patent invalid, it will not affect the registration in the administration and “public policy” will not be violated.The third chapter mainly introduces the different attitudes and practice on admitting the abitrability of patent validity issues worldwide. In a global perspective, after the developed countries led by Switzerland and the United States first admitted the arbitrability in this respect, a number of countries soon followed. Ideal results have been achieved without any damage to public policy. The trend of allowing the arbitral tribunal to resolve this dispute has emerged worldwide. Also, this chapter shall take Switzerland and the United States as examples to analyze the social basis for admitting the arbitrability of this dispute, which serve as the reference for China.The forth chapter offers some preliminary and practical advice of patent arbitration based on the China’s social reality. By reading the provisions on China Arbitration Law, China Patent Law and some other regulations, the author is of the view that China’s legislation on arbitrability tend to be open. As for the arbitrability of patent validity issues, although the provisions of the relevant laws have not made it clear, the fact that the validity issues shall be resolved through administrative proceedings have denied its arbitrability. As to the question whether China shall admit the arbitrability of patent validity disputes, the author is of the view that China may first recognize and enforce the foreign-related arbitral awards on patent validity issues. This practice is not only in conformity with the trend of enlarging the scope of arbitrability, but also with the general rule in the development of arbitrability and China’s social reality. Meanwhile, the author will, from the practical perspective, put forward some advice on other relating measures and rules, such as: limit the effects of arbitral awards to only both parties, disclose the invalidity issues, increase the professional level of arbitral institutions.