The Hindu Business Line : Patent experts favour arbitration over litigation

LITIGATION need not be an unavoidable side-effect of product-patent protection. Mediation and arbitration can be a cheaper and quicker way of resolving patent-related disputes, according to patent experts from "litigious countries" like the US and Israel.

Only about five per cent of cases actually go to trial, the rest are settled outside the courts, said Mr Ronald Whyte, a judge with the United States District Court for the Northern District of California.

People do not recognise that there is a weakness in their position and sometimes egos get in the way. It is good to have a third party to point this out. Companies are required to participate in some sort of resolution process before they approach the courts. Sometimes it results in cross-licensing pacts etc., he added.

Arbitration and mediation involve third party intervention. But in arbitration, there is an order at the end of the proceedings. Mediation is more to assist a settlement between the two parties, with no formal order. But in both cases, the final order or settlement is binding.

A disgruntled party can, however, take the order of an arbitrator to court. But if the outcome is not favourable to this party/company, then he would have to pay the expense for both sides, a patent lawyer explained.

But whether such alternative dispute resolution mechanisms would work in India will be tested when the product-patent regime gets implemented on the ground, he added.

Even as India ushered in the product-patent regime in January 2005, the pharma industry witnessed a slew of litigation going back and forth over the first exclusive marketing right (EMR) granted to Novartis for its blood cancer drug, Gleevec, in 2003.

Recently, the patent application on the drug was rejected by the Indian patent office, again leaving it open to a possible legal recourse by Novartis.

Arbitration or mediation is popular abroad, since the cost of litigation is expensive, according to a Delhi-based patent expert.

It is unlikely to work in India, as companies will stand their ground, since litigation is not as expensive.

Besides, intellectual property rights (IPR) is an emerging segment and there are not many skilled in this area, he added.

Mr Randall Rader, a circuit judge on the US Court of Appeals for the Federal Circuit, said that alternative dispute resolution systems work efficiently. But then it gets into the realm of contracts, cross-licensing, etc. Looking at the larger picture, he argued the need for speciality courts to deal with IPR cases, besides judicial training on the same.

Ms Justice Dalia Dorner, with the Israeli Supreme Court of Justice, said that in her country companies have to go through mediation and not arbitration (which is more contract-oriented). And like Israel, it is the best way forward for India too.