When amicable efforts fail to resolve a dispute concerning patent rights and the aggrieved party wishes to pursue the matter further, it usually initiates litigation or perhaps a U.S. International Trade Commission (“ITC”) investigation, despite the huge costs of such options, because it may assume no other plausible alternatives exist to achieve the desired objectives.
Articles, such as this one, tout arbitration as an alternative: faster, cheaper and more confidential than litigation, with other benefits as well. Apparently the U.S. Supreme Court agrees, having described the Federal Arbitration Act (9 U.S.C. §1, et seq.) as evidencing a “national policy favoring arbitration” (Nitro-Lift v. Howard); and recognized “an emphatic federal policy in favor of arbitral dispute resolution” (Marmet Health Care v. Brown). Likewise, the Patent Act provides at 35 U.S.C. §294(a) that any arbitration clause contained in a patent agreement shall be presumed valid, irrevocable and enforceable.
However, in actual practice, relatively few patent disputes are submitted to arbitration. Worldwide, only a few hundred requests to arbitrate patent disputes are filed each year. By comparison, in 2012 more than 5,000 patent lawsuits were filed in U.S. District Courts, not to mention courts of other nations. So what’s the problem? If arbitration is so great, why are so few patent disputes resolved in arbitration? More important, are patent litigants missing something? Should they rely on arbitration more often? Continue reading