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August 28, 2014

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Healthcare Disputes have Potential For Arbitration


- Debolina Partap, AVP & Head Legal [ Wockhardt Group ]

Debolina Partap

The healthcare industry deals with quality of life and inclusion of arbitration in contractual arrangements in this industry would definitely enhance procedural quality of commercial life in pharma and healthcare

An abstract from George Washington International Law Review, 2011, and Arizona Legal Studies Discussion Paper No. 11-24 reflects an interesting finding that trade in international health services has the potential to play a leading role in the global economy, but its rapid growth is impeded by legal barriers. Existing legal protections and remedies afforded by traditional judicial frameworks are unable to resolve challenges like, choice of forum and law considerations; appropriate theories of liability for injuries and damages arising from innovations in medical care and delivery of health services; and enforcement of foreign judgements. Given such needs, arbitration offers a potential solution, as it is a private streamlined adjudication process that has been successfully utilised on an international level to resolve several of the above mentioned legal quandaries. With careful construction of an approach that accounts for arbitration costs, reasonable recovery amounts, and complementary mechanisms such as no-fault compensation, international arbitration of medical malpractice disputes will reallocate the legal risks borne by businesses and consumers more fairly and efficiently.

World Intellectual Property Organization


Article 2(viii) of the Convention Establishing the World Intellectual Property Organization (WIPO) provides that "intellectual property shall include rights relating to:

    • literary, artistic and scientific works,
    • performances of performing artists, phonograms and broadcasts,
    • inventions in all fields of human endeavour,
    • scientific discoveries,
    • industrial designs,
    • trademarks, service marks and commercial names and designations,
    • protection against unfair competition, and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields"

Generally, intellectual property is divided into two types: industrial property and copyright. Industrial property includes patents, trademarks, industrial designs and geographic indications while copyright includes creative works like novels, poems, plays, films, musical works, computer software and artistic works.

The wide range of disputes commencing under joint research and development initiatives, disputes over agreements are equally broad and can involve licenses like in-licensing, out-licensing and cross-licensing arrangements prior to litigation in several jurisdictions. The legal issues probably involved in such disputes include violation of contract, infringement, claim construction and enforcement through licenses and other agreements. Remedies for such disputes include damages, injunctions, declaratory relief, includes declaration of infringement and invalidation. Such disputes can only be resolved by either court litigation or by arbitration proceedings in which arbitration can be preferable for solving patent disputes.

Comparison Between Court Litigation And Arbitration


Common Features of many IP Disputes

Court Litigation

Arbitration

International Multiple proceedings under different laws, with risk of conflicting results A single proceeding under the law determined by parties
  Possibility of actual or perceived home court advantage of party that litigates in its own country Arbitral procedure and nationality of arbitrator can be netutral to law, language and institutional culture of parties
Technical Decision maker might not have relevant expertise Parties can select arbitrator(s) with relevant expertise
Urgent Procedures often drawn-out Injunctive relief available in certain jurisdictions Arbitrator(s) and parties can shorten the procedure WIPO Arbitration may include provisional measures and does not preclude seeking court-ordered injunction
Require finality Possibility of appeal Limited appeal option
Confidential/trade secrets and risk to reputation Public proceedings Proceedings and award are confidential

Advantages Of Arbitration In Patent Disputes


With careful construction of an approach that accounts for arbitration costs, reasonable recovery amounts, and complementary mechanisms such as no-fault compensation, international arbitration of medical malpractice disputes will reallocate the legal risks borne by businesses and consumers more fairly and efficiently

Patent rights are territorial rights by nature, associated with the specific jurisdiction in which the protection is sorted. Therefore, patent litigation procedures of various jurisdictions cannot be merged and are subjected to the country's law where the invention is protected. The legal system of different jurisdictions differs in the procedure, method of handling similar issues, time-lines and decision makers with varying degrees of experience and technical expertise. Patent disputes often involved parties from different countries. So, usually court litigation results in inconsistency due to the differences in the legal procedures in different countries. Arbitration helps the parties to solve the patent disputes in a single procedure and less expensive. It helps to avoid complication and inconsistency in the litigation proceedings in several jurisdictions. In case of Arbitration, parties will be able to opt for the law, language, procedures, rules and customs which are neutral and negotiable. Arbitration could happen anywhere, in any language and with the arbitrators belongs to any nationality. The resolution of the disputes through arbitration hearings can be kept confidential. Unlike court's judgement which can usually be appealed or contested in higher court, arbitration results are final and resolution comes into force immediately. One of the most important features of arbitration is that the parties will be able to select their arbitral committee, and thereby to make sure that their dispute is heard by a committee that they trust, considered to be independent, neutral and experienced in the relevant subject-matter. Where a higher level of technical competence is required, the arbitral committee allows the parties to select an arbitrator of their choice, preferably the one who has inherent understanding of the case in disputes.

Disadvantages Of Arbitration Over Patent Disputes


Even though arbitration is the better way of resolving the patent dispute, it does also have its limitations. For example, certain disputes can only be resolved through court litigation. Especially, it is impossible to resolve the dispute that would set a public legal criterion through arbitration.

Ambiguities. Sometimes through arbitration, issues of the patent dispute may not be able to settle under the law of the particular state. For example, in a patent dispute over an infringement, an arbitral committee will not be able to determine whether a patent is being infringed or not. In addition, an arbitrator / committee may not have power to grant injunctions where a court has the rights to grant.

Arbitration Beyond Patents


In the pharma and healthcare space, there are myriad types of agreements like supply and distribution contracts, tech-transfer agreements, out licensing and in licensing agreements, joint ventures, contract research and development agreements, contract manufacturing agreements, clinical research and trial agreements, and so on and so forth. Companies are considering the "midnight clause" being the arbitration, governing law and jurisdiction clause more seriously. Also with the popularity of institutional arbitration increasing because of reliefs obtained faster and in a more efficient manner, contracts are negotiated with arbitration clauses. There is significant shift from ad hoc arbitration to institutional arbitration in the healthcare space because of the expert inputs required and also increase in hot tubbing.

Conclusion


The healthcare industry deals with quality of life and it would be very much precise to mention that inclusion of arbitration in contractual arrangements in this industry will definitely enhance procedural quality of commercial life in pharma and healthcare.

 

Disclaimer – The views expressed are the author's own and collated from public domain information and does not reflect opinion of Wockhardt Group.

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