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IP arbitration gaining momentum in Australia for good reason

For many decades, the resolution of intellectual property (IP) disputes in Australia has, almost exclusively, been the province of the Federal Court. Globally, however, parties to IP disputes are increasingly considering and using arbitration as a means to resolve those disputes.  We expect that trend will extend to Australia.  

Arbitration has four key advantages for the resolution of IP disputes:

  • speed and greater control over the timeline;

  • the ability to select a decision-maker (or decision-makers) with suitable IP and technical (e.g. scientific) qualifications;

  • confidentiality; and

  • the ability to resolve disputes across multiple jurisdictions in a single forum instead of parallel litigation in different countries.

In line with the global trend, IP arbitration is likely to gain momentum in Australia, as historic roadblocks to the resolution of IP disputes appear to have fallen away.  

In particular, there are a number of arbitrators with both deep IP and arbitration experience, Australian case law supports the view that IP validity can be resolved ‘as between the parties’ in arbitration (consistent with other common law jurisdictions) and there is growing familiarity with, and interest in, arbitration by IP lawyers.   

Overview of IP disputes 

IP rights include rights which arise without the need for registration (such as copyright or rights to prevent the disclosure or misuse of trade secrets) as well as rights which require registration (such as patents, registered trade marks and designs).  

In practice, IP disputes commonly arise in relation to the infringement and/or validity of IP rights;  entitlement disputes relating to IP ownership; and disputes over agreements concerning IP such as licences or assignments.

When considering the suitability of IP disputes for resolution by arbitration, it is important to be mindful of the following key features of IP disputes:   

  • disputes relating to infringement and validity often arise between parties which have no contractual or other commercial relationship;

  • in IP infringement cases it is common to see validity raised by way of defence and cross-claim (e.g. an invalid patent cannot be infringed);

  • the primary relief sought in IP disputes is often an injunction and quite often IP disputes are commenced on an urgent basis seeking an interlocutory or preliminary injunction to restrain the respondent immediately until the matter is finally resolved by a court following trial. A court will often address the question of liability in a first hearing and only proceed to determine the question of quantum once liability has been determined (and there has been a finding of infringement); and  

  • there is often - especially in patent cases - a need for the parties to rely on technical scientific evidence. This can include experimental evidence.

While entitlement and licensing / assignment disputes arise in a context where there is an existing contract which may include an arbitration clause, parties to infringement / validity disputes will often need to reach agreement to submit to arbitration.  

Key benefits of arbitration for IP cases

Arbitration has a number of benefits which may be particularly attractive to parties involved in IP disputes.  

Speed and greater control over the proceedings (including timelines)

As with general commercial disputes, parties to IP disputes wish to resolve their disputes expeditiously so that they can proceed with commercial certainty as quickly as possible. In IP cases there is often a desire to resolve a dispute prior to a key commercial milestone such as an intended product launch (e.g. the listing of a pharmaceutical product on the Pharmaceutical Benefits Scheme which requires supply within a reasonable period from the listing date).

Delay in resolving IP cases can leave a party in a position where it is left to decide whether to launch a product ‘at risk’ (i.e. without knowing whether or not the relevant conduct is lawful). Experience in the Federal Court indicates that it can take 12 months or longer for an IP matter to be listed for trial, potentially six to 12 months to receive judgment, and an appeal can add a further 12 months to the process. Moreover, that experience is highly variable and it is difficult to predict the timeline for any given case.  

Arbitration  affords the parties the opportunity to select the procedure to be followed and the associated timeframes for that procedure, which can be expedited or truncated. As a consequence, the parties have greater control and certainty with respect to the overall timeline for the proceedings (including the time in which a decision will be delivered).

Selecting a decision-maker with IP and technical expertise

Parties have the ability to select a decision maker or a panel of decision-makers who not only have deep experience in the relevant area of IP but also complementary technical expertise. For example, parties to a pharmaceutical patent case relating to organic chemistry may decide to select a tribunal member with relevant scientific experience.  

This will enable the parties to proceed with confidence that the tribunal is well placed to properly understand the technology in question and also avoid the need to devote significant time and resources to educating the tribunal about foundational scientific matters.


Confidentiality over the existence, subject matter and outcome of proceedings can be a significant advantage in IP cases. For example, a party seeking to revoke a patent or registered design is likely to be doing so in order to ‘clear the way’ to launch a competing product. Awareness of that intention may influence the commercial conduct of other market participants.  

Similarly, the way in which a challenge is made to IP validity in one case may be adopted by other parties and utilised against an IP rights holder in the same or another jurisdiction. Further, given the global nature of IP rights (with corresponding rights in multiple jurisdictions) the way in which evidence and arguments are presented in one jurisdiction often need to be carefully considered in light of the position adopted (or to be adopted) in other jurisdictions. These potential risks can be avoided by resolving a dispute in a confidential arbitration.

Avoiding parallel court proceedings

IP cases often involve parallel proceedings with the same parties across multiple jurisdictions. In addition to the substantial resources involved, managing multiple proceedings gives rise to a number of risks and difficulties including where there may be limited experts in a narrow technical field and a need to rely on experts in different jurisdictions. There is also a risk of conflicting judgments and challenges related to the enforcement of judgments in other jurisdictions.  

Arbitration enables the parties to resolve a global dispute in one forum, and to have the award recognised and enforced with relative ease internationally.

Historical roadblocks to adopting arbitration

A number of historical roadblocks have slowed the adoption of arbitration for IP disputes in Australia.

No existing contractual relationship

As discussed, parties to infringement/validity disputes rarely have a contractual relationship.  Often they do not have any commercial relationship at all and may well be based in different jurisdictions.  

Disputing parties will need to consider the possibility of proceeding to arbitration as an alternative to court proceedings and, if arbitration is preferred, will need to negotiate and enter into an arbitration agreement in the form of a submission agreement, given the consensual nature of this form of dispute settlement. This can be difficult, particularly once a dispute is on foot and in circumstances where there is a need for a party to obtain interlocutory relief.  

These obstacles can possibly be overcome by parties (and their lawyers) raising and exploring arbitration at the outset (as part of any pre-litigation without prejudice correspondence) before their positions become entrenched.

In the context of a contractual licence, however, parties can include a widely drawn arbitration clause (for example, ‘any dispute arising out of or relating to this licence’) at the time of negotiation.

Question relating to the ability to resolve IP validity disputes by arbitration

It is well recognised that disputes about certain subject matters cannot be resolved by arbitration (including, for example, criminal proceedings and family law matters). Historically, there was a view that disputes concerning the validity or ownership of registered IP rights, such as patents and trade marks, can only be resolved by government authorities and courts invested with power to resolve matters under IP legislation. Questions of validity were regarded as ‘acts of state’ that could only be determined in the courts of the country of registration.  

The trend globally (and in Australia) favours facilitating and promoting the use of arbitration in IP related disputes. This was recognised in Australia by Justice Hammerschlag in Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011] NSWSC 268.

This matter involved a patent entitlement dispute which arose against the backdrop of an IP licence. Larkden Pty Limited challenged the tribunal’s ability to determine the patent entitlement matter on the basis that the question was exclusively within the province of IP Australia or the Federal Court.  

The arbitral tribunal determined that the matter was arbitrable and when the matter was brought before the Supreme Court of New South Wales, Justice Hammerschlag arrived at the same conclusion. His Honour held that “[t]here is … no impediment to the parties investing in the arbitrator power to resolve a dispute as between themselves as to their rights in and entitlements to a patent application, or for that matter an invention” (emphasis added).  

This is consistent with the position that has been adopted in other common law jurisdictions (some of which have legislations that expressly provide for the resolution of disputes about IP validity by arbitration).

Note, however, that an arbitrator has no power to give determinations on questions of validity/ownership of registered IP rights (arising under the law of the seat of arbitration and/or the laws of other countries) that bind third parties. Hence, ‘resolution’ of the dispute by an arbitrator will be limited (to that extent) compared to what you can obtain in a court in the place of registration.

Limited IP arbitration experience

Historically, there were fewer Australian arbitrators with experience in IP and IP lawyers (and patent and trade mark attorneys) did not have a high degree of familiarity with the arbitration process. While this remains an impediment to some extent, there are now a range of seasoned arbitrators with IP experience (including former judges) and IP lawyers are becoming more familiar with the arbitration process and benefiting from the experience of their arbitration colleagues.

The development of this experience probably also reflects the increased use of arbitration clauses in IP agreements.

Finally, as with any settlement agreement between an IP rights holder and alleged infringer, it is important to ensure that any submission to arbitration is considered from a competition law perspective.

Concluding thoughts

Arbitration has significant advantages which are likely to be mutually beneficial for parties involved in the resolution of IP disputes.

Recognising that parties to infringement and validity disputes often do not have an existing contractual relationship, parties (and their advisors) should consider the possibility of arbitration as an alternative to court proceedings.

The speed of arbitration and greater control over the proceedings (and timeline), when compared to the position in court, is a significant advantage. Further, the availability of senior decision-makers with deep IP experience is likely to accelerate interest in, and the adoption of, arbitration for the resolution of IP disputes.  

For these reasons – in line with the global trend – we expect to see more Australian IP disputes resolved by arbitration.


Nastasja Suhadolnik

Head of Arbitration

Cara North

Special Counsel


Arbitration Intellectual Property Litigation and Dispute Resolution

This publication is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this publication. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.