1. 1 1/44 Taking Control of Your IP Dispute Using ADR Keum Nang Park 9 November 2014 APAA PENANG 2014

2. 2 Court Litigation or ADR mechanisms? I. II. IP-dedicated ADR Institutions in Korea and Japan Benefits of ADR for IP Disputes III. Arbitrability of IP Disputes IV. How to Promote ADR for IP Disputes V. Contents

3. 3 Ⅰ. 서론 Court Litigation or ADR mechanisms?

4. 4 Comparison of Court Litigation and ADR Court LitigationADR International Multiple proceedings under different laws, with risk of conflicting results Possibility of actual or perceived home court advantage of the party litigating in its own country Single proceeding under the law determined by the parties Neutral to law, venue, etc. Technical Decision maker might not have relevant expertise Parties can select an arbitrator/mediator with expertise Urgent Procedures often delayed Injunctive relief available Parties can shorten procedure Require Finality Possibility of appealLimited appeal option Confidentiality/trade secret and risk to reputation Public proceedings Proceeding and outcome are confidential Source : WIPO Arbitration and Mediation Center

5. 5 Apotex’s Generic Version of Pfizer’s Zoloft Despite Apotex’s paragraph IV certification, Pfizer intentionally delayed suing it s o as to bottleneck the generic market and delay the approval of Apotex’s ANDA. On 27 October 2003, Apotex submitted an ANDA seeking FDA approval for a generic version of Pfizer’s Zoloft®. Apotex’s ANDA included paragraph IV certification which asserts that the patents listed by Pfizer are invalid or not infringed.

6. 6 Court Litigation : Apotex, Inc. v. Pfizer Inc. On 30 December 2004, the District Court dismissed Apotex’s action for lack of subject-matter jurisdiction on the ground that Apotex did not have a “reasonable apprehension” that it would be sued by Pfizer. On 1 April 2004, Apotex, a Canadian pharmaceuticals corporation filed an action for a declaratory judgment of patent non-infringement or invalidity against Pfizer in the US District Court. (S.D.N.Y. 2005) Declaratory Relief patent non-infringement or invalidity Declaratory Relief patent non-infringement or invalidity

7. 7 Court Litigation : Apotex, Inc. v. Pfizer Inc. On 12 December 2005, the Federal Circuit affirmed the District Court’s dismissal, without opinion. On 10 October 2006, the Supreme Court denied Apotex’s petition, without comment.

8. 8 Apotex Inc. v. The Government of USA (UNCITRAL) On 10 December 2008, Apotex Inc. filed a claim against the US government under the investor-state arbitration provisions of NAFTA seeking arbitration under UNCITRAL rules. Apotex alleged that U.S. courts erred as a matter of law in failing to find subject-matter juri sdiction over Apotex’s claims for declaratory relief, and that the US Courts permitted and e nabled Pfizer to continue to bottleneck the generic market and delay approval of Apotex’s ANDA. Declaratory & Monetary Relief NAFTA Article 1102, 1105, 1110 Declaratory & Monetary Relief NAFTA Article 1102, 1105, 1110

9. 9 Risks of Foreign Court Litigation Apotex spent two and a half years in litigation but was not able to obtain a court decision prior to the expiration of Pfizer’s patent. As a result, its competitor Ivax launched its generic products, thereby obtaining the majority of the market share. In court litigation, familiarity with the applicable law and local processes can off er significant home ground advantages. The international nature of the parties, rights and law involved needs to be considered when pursuing litigation.

10. 10 Court Litigation or ADR mechanisms? Neither Court Litigation nor ADR mechanisms can offer a comprehensive soluti on in all circumstances. Indeed, each transaction is likely to have its own dispu te resolution requirements. For international patent disputes, it is important to take account of any existing s pecialized courts and judges, bifurcation of proceedings, requirement and availab ility of injunctions, possible parallel litigation, and enforceability. Court Litigation ADR Time and Costs Expertise Confidentialit y Injunctions Enforceability

11. 11 Ⅰ. 서론 Benefits of ADR for IP Disputes

12. 12 Benefits of ADR for Resolving IP Disputes avoids the complexity of multiple court actions in the jurisdictions concerned. ADR is suitable for cross-border IP disputes. A single procedure ADR procedures are flexible and allow the parties to have full control, including timelines. Party autonomy save costs when compared to multi-jurisdictional and/or multi-instances litigation. Cost and time efficiency The parties can select arbitrators, mediators or ex perts with specific expertise in the relevant legal, technical or business area. Expertise

13. 13 Benefits of ADR for Resolving IP Disputes Important in IP disputes where trade secrets are at stake Confidentiality Prevents forum shopping and potential perception of national bias Neutral Forum Arbitral awards are not subject to appeal and their enforcement is facilitated by the New York Convention Enforcement of arbitral awards High settlement figures especially in mediation Cross-licensing and joint development agreement Preserving long- term relationship

14. 14 Relative Time and Costs of Dispute Resolution Source : WIPO Arbitration and Mediation Center. International Survey on Dispute Resolution in Technology Transactions The cost of foreign litigation typically exceeds that of ADR. Litigation in home jurisdiction takes around 3 years and costs about US$475,000. Litigati on in foreign jurisdiction takes around 3.5 years and about US$850,000. Mediation takes around 8 months, and typically costs less than US$100,000. Arbitration takes on average just over a year and costs about US$400,000.

15. 15 How to Choose the Most Appropriate ADR? Mediation is an attractive option for the parties that value the preservation or enhancement of their relationship, confidentiality, or want to reach a speedy set tlement yielding significant time and cost savings. Adding arbitration as a next step in a multi-tier approach can enhance the chanc es of settlement if mediation fails. Negotiation Mediation Arbitration or Litigation

16. 16 Ⅰ. 서론 IP-dedicated ADR Institutions in Korea and Japan

17. 17 IP-dedicated ADR Institutions in Korea mediation of industry property disputes established by KIPO on 27 December 1994 Industrial Property Dispute Resolution Committee mediation of domain-name-related disputes established on 8 October 2004 Internet Address Dispute Resolution Committee mediation, conciliation of copyright disputes established on 23 July 2009 Korea Copyright Commission mediation between contents providers/users established on 28 April 2011 Content Dispute Resolution Committee mediation of design-related disputes established on 6 November 2012 Design Dispute Resolution Committee In Korea, there exist multiple ADR institutions dedicated to IP disputes apart from the Korean Commercial Arbitration Board.

18. 18 Industrial Property Right Dispute Mediation Committee Invention Promotion Act Empowering Statutes The Vice Commissioner of KIPO is the Chairman of the IPRDMC. IPRDMC consists of 20 members Organization patent, utility model, industrial design, and trademarks, employee inventions validity, infringement issues are excluded. Subject-matter 5.6 cases a year (107 submissions in total between ’95-‘13) Submissions 24% (27 out of 107) Success Rate IPRDMC was established under the Korea Intellectual Property Office (KIPO) in 1 995.

19. 19 IPRMDC Mediation Procedure Source : http://www.kipo.go.kr/kpo/user.tdf?a=user.html.HtmlApp&c=5067&catmenu=m03_02_03_03

20. 20 Internet Address Dispute Resolution Committee Internet Address Resources Act Empowering Statutes 30 or fewer committee members Organization disputes over the registration, holding or use of Internet addresses Subject-matter 40 cases a year Submissions 34 cases a year Decisions IDRC was established as a statutory committee on 8 October 2004 for the purpo se of settling disputes of domain names promptly and fairly.

21. 21 IDRC Mediation Procedure Source : http://www.idrc.or.kr/english/dispute/flowChart.jsp

22. 22 Korea Copyright Commission Copyright Act Empowering Statutes between 20 and 25 commission members 7 panels (each panel comprises 3 members) Organization Literary works, musical works, paintings, photographic works, cinematographic works, computer programs, derivative works Subject-matter 70-80 cases a year Submissions around 50% Success Rate KCC is the Korea’s sole agency dedicated to copyright-related affairs.

23. 23 Contents Dispute Resolution Committee KCDRC was established on 28 April 2011. Contents Industry Promotion Act Empowering Statutes between 15 and 30 committee members Organization disputes over the transaction and use of contents Subject-matter 626 cases in 2011 → 3,445 cases in 2012 → 4,817 cases in 2013 Submissions 4 divisions(game, motion pictures, knowledge information, and cartoon/characters) Features

24. 24 Design Dispute Mediation Committee Industrial Design Promotion Act Empowering Statutes 20 committee members 4 divisions(product, visual, environment, and multimedia) Organization Disputes over transaction and use of industrial designs and fair trade issues Subject-matter 14 cases as of May 2013 Submissions 5 cases completed out of 14 cases Success Rate Design Dispute Mediation Committee was established under the Korea Institute of Design Promotion (KIDP) on 6 November 2012.

25. 25 Korea Commercial Arbitration Board Korean Civil Code Article 32, the Arbitration Act of Korea Empowering Statutes 1,090 arbitrators as of Oct. 2013 Organization any kind of commercial dispute Subject-matter over 800 cases a year in total less than 30 IP cases a year Submissions over 50% Success Rate KCAB, established in 1966, is the only authorized commercial arbitration instituti on in Korea to settle any kind of commercial dispute.

26. 26 IP-dedicated ADR Institution in Japan Japan Intellectual Property Arbitration Center Consultation, Mediation, and Arbitration Originally founded in 1998 as the Industrial Property Rights Arbitration Center Patent right, utility model right, design right, and trademark right Japan Intellectual Property Arbitration Center Consultation, Mediation, and Arbitration Originally founded in 1998 as the Industrial Property Rights Arbitration Center Patent right, utility model right, design right, and trademark right The Japan Intellectual Property Arbitration Center(JIPAC) was established by the Japan Pa tent Attorneys Association and the Japan Federation of Bar Associations. JIPAC issues advisory opinions on infringement/validity of IP rights, issues advisory opinio ns on standard essential patent, and resolves IP domain names disputes.

27. 27 ADR is Not Actively Used for IP Disputes District Courts and Korean IP Tribunal Industrial Property Dispute Resolution Committee 2007~2011 invalidation 2,722 cases decided KIPT patent trials 3500+ annually District Courts IP cases 1,500+ annually Settlement rate only 24.3% 1995~2013 only 107 Case submissions ADR is Not Actively Used for IP Disputes in neither Korea nor Japan

28. 28 Reasons Why IP ADR Is Not Actively Used in Korea 39% cited lack of awareness and advertisement of ADR mechanisms for IP disputes. 36% pointed out that existing IP ADR institutions still lack technical expertise or management of time efficiency. 15% cited lack of reliability of ADR institutions when compared to court systems. Other opinions include the need for on-line ADR system for small disputes, the lack of enforceability, and confusion due to existence of too many institutions. 39% cited lack of awareness and advertisement of ADR mechanisms for IP disputes. 36% pointed out that existing IP ADR institutions still lack technical expertise or management of time efficiency. 15% cited lack of reliability of ADR institutions when compared to court systems. Other opinions include the need for on-line ADR system for small disputes, the lack of enforceability, and confusion due to existence of too many institutions. The majority of respondents are willing to actively use systematic, reliable and efficient IP ADR systems.

29. 29 Other Reasons why IP ADR mechanisms are avoided Need for a preliminary injunctive relief IP right holders may need a preliminary injunctive relief. Injunctive relief is more likely obtained from a public court rather than from an arbitration tribunal. Strategic need for precedent or publicity An IP right holder or an alleged infringer may desire a public vindication of its rights. ADR simply is not available for IP disputes ADR depends on the consent of the parties. Many IP disputes, particularly infringement claims, are between parties with no pre-existing relationship and who are not inclined to agree to submit their dispute to ADR. Arbitrability Patent rights by nature include the power to preclude competition and require registration; only public courts, and not private arbitrators, may resolve IP disputes.

30. 30 Ⅰ. 서론 Arbitrability of IP Disputes

31. 31 Different Views on Arbitrability of Patent Disputes All patent issues are not arbitrable. restrict all aspects of a patent dispute, both infringement and validity issues, from being settled by arbitrators A rendered award will not be enforceable in that country South Africa restrict all aspects of a patent dispute, both infringement and validity issues, from being settled by arbitrators A rendered award will not be enforceable in that country South Africa Validity issues are inarbitrable. separate a private law claim from public one. Infringement issue is arbitrable because it addresses contractual rights and obligations. Validity issues are not arbitrable, Most countries separate a private law claim from public one. Infringement issue is arbitrable because it addresses contractual rights and obligations. Validity issues are not arbitrable, Most countries Both infringement and validity issues are arbitrable. Award cannot invalidate the patent but has an inter partes effect binding only between the parties. USA after 1983, Switzerland Award cannot invalidate the patent but has an inter partes effect binding only between the parties. USA after 1983, Switzerland

32. 32 Arbitrability of Patent Disputes in Korea Korea has a bifurcated patent trial system. Arbitral tribunal has to stay its proceeding until invalidity issue has been decided. Recently, the Korean Supreme Court, in a Grand Bench ruling, held that any person seeking to exercise patent rights based on a patent that is clearly invalid will be liable for abuse of patent rights. Based on this holding, it may arguably be possible for an arbitration tribunal to decide on validity issues underlying the dispute. An award is binding only between the parties and the patent will remain valid until it is revoked. Supreme Court Patent Court Patent Tribunal Invalidation High Courts District Courts Infringement

33. 33 Ⅰ. 서론 How to Promote ADR for IP Disputes?

34. 34 How to Promote ADR Mechanisms for IP Disputes? Publicize the existence and advantages of ADR for IP disputes. Promote inclusion of ADR clauses or multi-tier clauses providing ADR prior to court litigation as part of IP contracts. Enhance court-ordered ADR proceedings for a certain class of IP disputes.

35. 35 How to Promote IP ADR in APAA Countries? Establish Asian Patent ADR Center dedicated to international IP dispute resolution. Align laws of APAA countries regarding the arbitrability issues of IP disputes. Develop Internet-based ADR mechanisms geared to IP dispute resolution.

36. 36 감사합니다 Thank You Keum Nang Park keumnang.park@leeko.com 82.2. 2191. 3036