Intellectual Property Arbitration

With the growth of intellectual property creation and commercialisation, parties increasingly prefer to resolve their IP disputes outside the court system. Most of the cases administered by the World Intellectual Property Organization (“WIPO”) Arbitration and Mediation Center (http://www.wipo.int/amc/en/center/caseload.html), according to its statistics, were filed in recent years, and the number of cases filed in 2016 alone was twice that in 2015.

Opportunities abound for IP arbitration practitioners, Hong Kong is determined not to trail behind the global trend. The Arbitration (Amendment) Ordinance 2017 was enacted in June. It introduces a new Part 11A (s. 103A to 103J) to the Arbitration Ordinance (Cap. 609) to clarify that all disputes of intellectual property rights (broadly defined so as to encompass IP rights wherever subsisting, by whatever name called, whether registrable or registered, as well as new types of IP rights which may come to be recognised in future) can be arbitrated, and that it is not contrary to public policy to enforce IP awards in Hong Kong.

These clarifications put beyond doubt that IP disputes can be arbitrated in Hong Kong. It avoids the legal uncertainties which some jurisdictions face as to whether IP disputes, especially those concerning the validity of IP rights registered with or granted by IP authorities, can be resolved by arbitration between private parties. Given the lack of local case law on the issue, the legal position in Hong Kong has hitherto not been entirely clear. The enactment removes one potential hurdle for parties to conduct IP arbitration in Hong Kong.

IP arbitration will continue to be conducted under the statutory framework of the Arbitration Ordinance. This means, for example, that IP arbitral proceedings and arbitral awards will remain confidential unless the parties otherwise agree, and subject to the statutory exceptions in s. 18 of the Arbitration Ordinance. The Amendment Ordinance also clarifies or adapts some of the provisions of the Arbitration Ordinance to make them more user-friendly to IP arbitration users. Pursuant to s. 73 of the Arbitration Ordinance, IP arbitral awards will, unless the parties otherwise agree, be final and binding on the parties only, and do not bind or affect the rights of non-parties. Given that IP licensing is common in the IP sector, s. 103E specifically confirms this position for an IP licensee who is not party to the IP arbitration, while providing that this does not affect the rights and liabilities as between an arbitration party and the third party licensee, whether those rights and liabilities arise in contract or by operation of law. Meanwhile, upholding party autonomy, new s. 103D(6) provides for the parties to have power to limit the arbitrator’s power to award remedies and relief, allowing greater flexibility for the parties to decide on the scope of remedies and relief appropriate to their case.

The new Part 11A will come into operation on 1 January 2018 (with the exception of s. 103J which will commence on the date of commencement of s. 123 of the Patents (Amendment) Ordinance 2016). Part 11A will apply to an arbitration commencing on/after 1 January 2018 as well as its related proceedings. Parties to an arbitration which has commenced before that day can also opt to apply Part 11A to their arbitration or its related proceedings.

The Arbitration (Amendment) Ordinance 2017 also updates the list of parties to the New York Convention in the Arbitration (Parties To New York Convention) Order (Cap. 609A). These amendments came into effect on the date of gazettal (23 June 2017).

Jurisdictions: