Arbitrability regarding patent law - an international study

University essay from Lunds universitet/Juridiska institutionen

Abstract: Which subject matters are inappropriate for submission to arbitration and should instead be decided by a court of law? Subject matter arbitrability answers this question. What is included in the scope of inarbitrability is decided by the each single country. Subject matter arbitrability has influence on the parties’ freedom of contact by defining which issues the disputing parties may freely empower an arbitral tribunal to rule over. The parties lack authority to submit subject matters, which fall outside the scope of arbitrability; these issues have to be settled by national courts. Patent law is an interesting subject matter since patent issues may be treated in four different ways. The most restricted approach does not permit any patent issues, neither infringement nor validity questions, to be arbitrated. The second approach divides private related issues from public ones, thus allowing the issue of infringement to be submitted to arbitration while the issue of validity is regarded as inarbitrable. Regarding the third approach, all patent issues fall within the scope of the subject matter arbitrability. However, the arbitral award may only be valid between the disputing parties. Thus, the patent will remain in the public patent register and valid in relation to all third parties, even after an award has invalidated the patent. The fourth and most liberal approach is similar to the third one, but it allows the rendered award to be valid against everyone. This variety and the major differences between the approaches makes the issue of governing law of the question of arbitrability of importance for the parties. If the applied law favors the first, most restricted approach, then the parties’ arbitration agreement will be considered invalid and the patent has to be scrutinized in national court proceedings. However, if the second most restricted approach is applicable because of the governing law, the parties might have to endure parallel proceedings. An inter partes approach as well as an erga omnes approach, will differ on the amount of effect of the rendered award, but they will both lead to a situation where all the parties’ issues will be subject to an arbitral proceeding. The inference to be reached is that the third, the inter partes approaches is the most appropriate approach. Sweden has been standing still in its discussion and development in this area, and seems to be applying the approach that is permitting arbitration for private matters but not for issues of public nature. This will hopefully come to change, and such a way that United States is a model country for the execution. This inter partes approach meets the needs of the modern society and provides business parties with an ability to choose a way of settlement that suits them best. It provides the parties with a single arbitral proceeding without expanding the framework of arbitration. A change in this direction is inevitable because the parties as well as arbitral tribunals are working out ways to evade the other old-fashioned approaches. However, in the ICC award – 6097 (1989), the arbitration tribunal went too far and decided the dispute against the German governing law. Ultimately, the adopted approach should be followed and not the wish of the parties.

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