Intellectual Property ("IP") rights are only as strong as the means to enforce them. Arbitration, as a private and confidential procedure, is increasingly being used to resolve disputes involving IP rights, especially when the dispute is between parties located in different jurisdictions. With the introduction of the Arbitration (Amendment) Bill 2016 ("Bill"), the Hong Kong government hopes this will give it an edge over competing arbitral seats in the region. The main effect of the Bill would be that enforcement of an award under Part 10 of the Ordinance would not be refused in Hong Kong under either the arbitrability ground or the public policy ground merely because the award involved IP rights.
The Scope of the Bill
The Bill has been in the pipeline for almost two years. It sets out a broad definition of IP rights to include, inter alia, rights to confidential information, trade secrets or know-how, rights to protect goodwill by way of passing off or similar actions against unfair competition. The bill clarifies that all disputes relating to the subsistence, scope, validity, ownership as well as infringement of IP rights are arbitrable. This includes the right to put the validity of a patent in issue in arbitral proceedings. The Bill includes a provision clarifying that an award relating to IP rights does not cover a licensee (whether or not an exclusive licensee) who is not a party to the arbitral proceedings. A licensee is, however, not prohibited from commencing arbitration proceedings without the owner of the IP being a party to the proceedings
All of the major arbitration centers, such as the International Court of Arbitration, the London Court of International Arbitration and World Intellectual Property Organization (WIPO) Arbitration and Mediation Center have adapted their arbitration rules to better suit IP disputes. As a result, the number of IP cases being heard by these centres continues to rise.
The international arbitration of IP disputes is on the rise, although it is still not as widely used to resolve disputes compared to other sectors (e.g., construction, energy and oil and gas). Hopefully the introduction of the Bill will reinforce the use of arbitration as a means to resolve IP disputes, as well as help consolidate Hong Kong's position as an IP international dispute resolution centre.
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