IP Arbitration Changes in Hong Kong

The Hong Kong International Arbitration Centre has recently launched a new panel of arbitrators (the “IP Panel”) for intellectual property (“IP”) disputes, which currently consists of experienced arbitrators, senior counsel, former judges or heads of IP professional organisations from 12 different jurisdictions.  The establishment of the IP Panel coincides with the Hong Kong SAR’s government’s publication of the consultation paper on Arbitration (Amendment) Bill 2016 (the “Bill”) which proposes to amend the Arbitration Ordinance (Cap.609, the Laws of Hong Kong) (the “Ordinance”). 

The Ordinance as it stands does not have any specific provision dealing with IP rights (“IPR”) issues.  There are also no authoritative judgments or legislative provisions in Hong Kong addressing the arbitrability of IPRs.  In view of this and upon the recommendations of the Working Group on Intellectual Property Trading to promote Hong Kong as an IP trading hub as well as an international IP arbitration and mediation centre, the proposed amendments to the Ordinance as set out under the Bill seek to clarify that IP disputes are in fact, capable of settlement by arbitration and that it would not be contrary to public policy to enforce an award solely concerning IPRs.

The Bill provides that a reference to IPRs in the Ordinance should include all registered and unregistered rights whether or not subsisting in Hong Kong.  More importantly, where it was previously clear that contractual disputes relating to the use, transfer and development etc. of IPRs are arbitrable, the Bill makes clear that disputes over the subsistence, scope, validity, ownership as well as infringement of IPRs are also arbitrable.

In addition, the Bill provides for the inclusion of a provision in the Ordinance clarifying that an award relating to IPRs is not binding on licensees (whether or not the licensee is an exclusive licensee or not).  Therefore, it appears that under the proposed amended Ordinance, unless licensees are joined as parties to the litigation, the arbitral award would only have inter partes effect.  It remains to be seen whether an award has any effect on third parties by virtue of the Contract (Rights of Third Parties) Ordinance.

Whilst the Bill and the establishment of the IP Panel is seen as a move in the right direction, there remains issues regarding the Bill which need to be clarified, e.g. the effect of arbitral awards on third parties as mentioned above, the enforcement of foreign arbitral awards in relation to Hong Kong IPRs, etc.  The Hong Kong Department of Justice has to this end invited legal professionals, IP practitioners, commercial organisations and other interested parties to submit comments on the Bill.