Recent rulings by the U.S. Supreme Court and the 2012 changes to the International Chamber of Commerce (ICC) Rules of Arbitration may catalyze a decrease in appellate intellectual property (IP) litigation. This trend, however, will not necessarily apply to all IP cases. Generally, parties may resolve disputes through arbitration only where the dispute arises from a contractual dispute—for example, an IP licensing agreement. As a result, IP rights holders may increasingly seek to incorporate ICC arbitration agreements into employment contracts, licensing agreements, and sales contracts.
The ICC introduced new rules for arbitration and mediation in 2012. The rules allow parties, for the first time, to engage in emergency arbitration proceedings for resolution of disputes requiring provisional measures. Under the emergency arbitration rules, contracting parties can now turn to an arbitrator instead of local courts to seek preliminary injunctions. With other recently added rules facilitating the arbitral process and with a shifting legal environment in U.S. courts, parties engaging in international commerce are turning to ICC arbitration to seek remedies in IP disputes.
The cost of IP litigation is well known. Meanwhile, arbitration before the ICC has long presented an efficient, final, and enforceable alternative. The Supreme Court’s 2006 holding in eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006), and its 2015 holding in Teva Pharmaceuticals U.S.A., Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), may provide further incentive to arbitrate in light of the ICC’s rule changes in 2012. First, eBay and its progeny have yielded a trend away from awarding preliminary injunctions, while the emergency arbitrator provisions in the rules may provide a more direct path to securing injunctive relief. Second, although Teva precludes the Federal Circuit from rehearing arguments on patent claim construction, this deference will not likely extend to all cases. Last, the 2012 rules contain updated provisions that generally seek to improve efficiency, speed, and cost-effectiveness of arbitration. Taken together, these changes to U.S. law and the rules may result in a decrease in appellate litigation of IP issues and in a proportionate rise in IP arbitration before the ICC.