Tech Developments in APAC: Review and 2020 Outlook - Patent and IP Protection and Alternative Dispute Resolution
Expecy an increase in arbitration of FRAND / SEP
17 April 2020
As we enter a new decade and in this year of the rat, we look - in a series of articles - at tech developments in APAC, with a particular emphasis on the jurisdictions of Australia, China, Hong Kong and Singapore.
The key developments to note are in:
- AI: The use of AI, whilst creating huge opportunities in areas such as financial services, healthcare and autonomous vehicles, also brings the potential for significant legal, ethical and reputational exposure. APAC regulators have been considering these risks and we look at the various guidelines and ethical frameworks that have been published. [Read the first article in this series focussing on AI developments and outlook]
- Crypto-assets: Globally, crypto-assets were hardly out of the press (or the crosshairs of regulators) in 2019 and early 2020 with Facebook's proposed stablecoin Libra in its various iterations taking the lion's share of headlines. In APAC, we saw national initiatives in crypto-regulation in Hong Kong, Singapore and Australia and some of the first crypto-cases. [Read the second article in this series focussing on Crypto-assets ]
- Big Tech and Data: Big Tech firms refer to large companies with established technology platforms such as Alibaba, Amazon, Facebook, Google and Tencent. The financial services offerings of Big Tech firms are expected to grow with anti-trust and data privacy concerns arising from their significant resources and widespread access to customer data.[Read the third article in this series focussing on Data]
- Patent and IP Protection and Alternative Dispute Resolution: Arbitration is becoming an increasingly popular method of resolving IP disputes in light of its advantages including confidentiality, choice of specialist arbitrators and enabling the avoidance of multiple parallel proceedings in different jurisdictions. Various developments in arbitration in Hong Kong and Singapore in 2019 will facilitate this. We anticipate an increase in arbitration of FRAND / SEP and other patent and IP disputes, consistent with the growth of IP and technology disputes in previous years.
Over the course of four articles we have been looking in more detail at each of these areas. In this final part of the series we focus on Patent and IP Protection and Alternative Dispute Resolution
Patent and IP Protection and Alternative Dispute Resolution
With Asia accounting for a significant portion of worldwide IP filings, and China alone accounting for almost half of the patent filings in the world, Asia has become the new front for IP protection and correspondingly, battlefront for disputes. The Belt and Road Initiative brings in investment and innovation and present a new challenge to the trade and legal advisors including on the patent protection front.
Meanwhile, arbitration is becoming an increasingly popular method of resolving IP disputes. A major advantage of arbitration is that the process, and even the existence of proceedings, can be kept completely confidential. This is particularly relevant to IP disputes, especially where sensitive or technical information is involved. Another advantage is that parties have a say in selecting arbitrators including by way of specifying criteria providing for certain experience in IP. This is advantageous where the subject matter is highly technical such as in some patent disputes. For disputes involve multiple jurisdictions, arbitration may be a means that a single tribunal determine the rights involved, rather than running multiple parallel proceedings with higher legal costs. One disadvantage, however, is that arbitration cannot bind third parties and where, for example, a third party licensee is sought to be bound, litigation might be the better option.
2019 Developments and Review
In Hong Kong, a new original grant patent system providing for substantial examination of applications has at long last been implemented in December 2019. The new system runs in parallel with the existing bifurcated system for standard patents and short-term patents. Standard patents require a prior filing of a corresponding application with a designated patent office outside of Hong Kong. Short-term patents must be based on a search report from an international search authority, and under the reform, is further refined to enhance its integrity. The launch of the new patent system is a milestone in the development of Hong Kong's patent regime and facilitates developing Hong Kong as an innovation and IP trading hub.
The Competition and Consumer Commission of Singapore (CCCS) sees the potential of applying FRAND commitments outside the SEP context. A research paper published by the CCCS in December 2019 studies how FRAND commitments can effectively address competition concerns relating to pricing and/or access arising from an entity's exercise of market power. The broad definition of FRAND confers it a high degree of flexibility, allowing the committed parties to respond to specific circumstances and changing market conditions.
Measures Encouraging Arbitration of Patent and IP Disputes
One measure encouraging arbitration of disputes including IP disputes in Hong Kong (IP disputes had been clarified to be arbitrable since January 2018) is the coming into effect of an arrangement in October 2019, which enables parties of certain arbitrations seated in Hong Kong to have the ability to access Mainland Chinese courts for interim measures in aid thereof. The interim relief that the PRC court may grant follows existing relief available including property preservation, evidence preservation and conduct preservation (similar to prohibitory and mandatory injunctions). The significance of the Arrangement is that parties valuing such recourse such as those contracting with Mainland Chinese entities or dealing with assets or projects in Mainland China are no longer constrained to choose onshore arbitration or litigation, but may now have the option of administered arbitration in Hong Kong. Hong Kong is the first seat of arbitration outside Mainland China with such access. For more details, see our September 2019 briefing.
In November 2019, amendments to the Singapore International Arbitration Act came into effect, clarifying that disputes in relation to IP rights including the validity of a patent are capable of being settled by arbitration and that arbitral awards concerning the same shall not be considered contrary to public policy. The amendments address any past uncertainty in this regard and are important because under the New York Convention (which provides for the reciprocal enforcement of arbitral awards in about 160 contracting states), an arbitral award may be refused enforcement on the ground the subject matter of the arbitration is not arbitrable, or the award is contrary to public policy.
We anticipate an increase in arbitration of FRAND / SEP and other patent and IP disputes, consistent with the growth of IP and technology disputes in previous years.
As to arbitral decision making by AI, that is at an early stage of development. Even so, there may be potential issues related to enforcement through automated dispute resolution processes. This will be an interesting development to monitor, in 2020 and beyond.