Arbitration Makes Sense

By Kyle, Rodney C. | Dispute Resolution Journal, November-January 2001 | Go to article overview

Arbitration Makes Sense

Kyle, Rodney C., Dispute Resolution Journal

Recent decisions in U.S. and Canadian courts have shown a clear judicial preference for the use of ADR in resolving intellectual property cases, according to Rodney Kyle. He briefly examines the recent case law and notes several factors that sometimes make arbitration preferable to litigation if parties are seeking finality and consistency of decisions in intellectual property disputes.

Some recent Canadian case law accords with United States case law. Together, they have increased the opportunity for both consistency and finality in the adjudication of international intellectual property disputes.

Consistent with all three courts in the United States case of Markman v. Westview Instruments Inc.,' two federal court of Canada decisions have implicitly been abrogated by three recent unanimous decisions of the Supreme Court of Canada. The Supreme Court of Canada decisions are Whirlpool Corporation et al v. Camco Inc. et al,' Whirlpool Corp. v. Maytag Corp.4 and Free World Trust v. Electro Sante Inc.

Legal Bases for the Decisions

Both Markman and those recent Canadian decisions are expressly to the effect that issues of construing patent claims are issues of law.6 Those United States and Canadian decisions are also, at least implicitly, to the effect that patents are enactments. Indeed, the recent Canadian decisions are expressly that a patent is an "enactment" either within the meaning of that expression in the Canadian Federal Interpretation Act7 or in general.

Even in the absence of those United States and Canadian cases, intellectual property documents such as patents must necessarily be enactments. Proof of that, and discussion of the consistency of Markman, Camco, Maytag, and Free World with one another and with that Act, have been dealt with elsewhere, as have similarity of Canadian law and United States law and the apparent universality of principles of law about construing enactments. Such proof and discussion will therefore not be set out here. Rather, this article will discuss some context and legal consequences, particularly those that result in increased opportunity.

Free World indicates at least a judicial preference against "fuelling the already overheated engines of patent litigation."' Alternative dispute resolution, and arbitration in particular, can accommodate that judicial preference.

Generally, there seems to be greater appellate court deference towards letting arbitral awards stand than towards letting court awards stand.

The statutory framework within which that preference and deference occur includes the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on June 21, 1985.10 The Model Law has been implemented through, e.g., the International Commercial Arbitration Act" and Commercial Arbitration Act." Under the Model Law, the exhaustive list of grounds for a party to have recourse against an arbitral award is only for applying to have the award set aside.13

Legal Consequences

The above-mentioned consistencies and similarities between Canadian and United States law, together with three other factors, facilitate preferring arbitration to litigation if the construction of both United States and Canadian intellectual properties are in issue and if both consistency and finality are sought.

First, multiple domestic litigations of intellectual properties can more readily be replaced by single international arbitration proceedings for greater consistency.

Second, in contrast to such arbitration proceedings, a trial court may (indeed probably will) go through "learning curves" on issues of law (such as construction of a patent claim) only to be followed by one or more de novo reviews thereof by each of a first appellate court and second appellate court, thereby reducing finality. …

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