In Re (#4 April 2020)

Justice Delayed, is Justice Denied
    William E. Gladstone

by Anton Kapitonenko, Khrystyna Nykerui

The establishment of a specialised High Intellectual Property Court of Ukraine has often been viewed as an effective way of improving the IP enforcement system. It was received positively by Ukrainian legal professionals and by the academic community and is expected to become an effective and valuable tool for IP rights holders.

It is believed that the creation of a specialised IP court will counter the innovation crisis in Ukraine and improve the IP enforcement system by cutting the duration of court proceedings and simultaneously increasing the quality of decisions in IP cases. It is expected that this will be accomplished through, inter alia, selection and training of skilled judges within specific areas of IP specialisation, as well as by developing uniform and consistent judicial practice.

There are several interrelated factors analysis whereof may help to understand whether the creation of the IP Court can be a success in Ukraine.

This article will cover one of the factors, namely the complexity of subject matter, and, in particular, those major benefits ascribed to IP specialization which should be produced by transferring complex cases to the IP Court.

Improved decision-making

The IP Courts sustained involvement with a field may facilitate superior decision-making and enable it to keep abreast of developments in its specific area of law and draft better opinions, especially taking intoaccount the fact that IP cases are now distributed rather thinly among general courts and non-specialist judges are infrequently confronted with specialty subject matter. In addition, the increase in the level of judicial expertise may result in less reliance on technical experts in decision-making, which in turn improves the quality and impartiality of such decisions.

Herewith, the initial level of judicial expertise may not be satisfactory due to existing selection requirements. The absence of technically qualified judges in the IP Court may lead to, inter alia, low quality of decisions and long duration of proceedings and may, consequently, undermine the very reason for the establishment of the IP Court.

A possible solution (which, however, may not be sufficient) may be either to provide for the position of technically qualified assistants within the structure of the IP Court, which, in its turn, may lead to fruitful cooperation between legally and technically-qualified experts and a balanced approach in settling disputes, or to require the judges to keep educating themselves in respective specialist areas. The effect of the latter is questionable as judges cannot objectively possess specialised skills in all the technical fields dealing with IP.

Reduction in the size of the docket

Transferring complex cases to the IP Court may also reduce the size of the docket due to, at least in theory, more effective and timely manner of performing the functions by the specialised court.

There are doubts as to whether the number of IP judges (seven panels of three IP judges in the first instance and three panels of three IP judges in the Appellate Chamber), will be enough to ensure an effective and speedy judicial process as the average number of IP cases in Ukraine considered by commercial, civil, and administrative courts is approximately 1,200 cases a year.

Therefore, efficient adjudication of this number of cases by the current number of panels appears to be difficult to accomplish in a timely manner and it may be advisable to consider the most efficient ways of using the IP Courts resources, as well as implementing alternative dispute resolution mechanisms that would ensure effective adjudication of IP disputes by the IP Court as is envisaged by, for instance, the Agreement on a Unified Patent Court.

Having a number of important advantages over litigation, ADR mechanisms have become increasingly sought after in IP disputes. Thus, it is highly advisable to provide either for a mediation program within the IP Court or for a separate ADR centre (which can be administered by the IP Court) to offer to the parties an alternative and, in certain circumstances, highly-effective dispute resolution method. Encouraging judges to guide the parties to mediate or refer to arbitration may help resolve many IP disputes and improve the general resolution environment in the subject area.

At the same time, the demand of adjudication varies over time. In the event that the IP Court is successful in articulating the law, its business will decline because of greater stability and predictability of the law, with less room for disputes and more incentives for settlements. Thus, the relationship between specialisation and complexity is complicated as, for instance, stabilising the legal environment by the IP Court may encourage more of the activity that the court regulates, which inflates the base that produces lawsuits.

Diminution in the number of judge-hours required to clear docket

As a specialised judiciary should handle IP cases more efficiently, the number of judge-hours required to decide any given number of cases would be reduced. Each case could also be decided more quickly, which is a major advantage in an area where timeliness is crucial.

Herewith, notwithstanding that each IP case should be decided more efficiently in terms of judge-hours, it is not necessarily true that specialisation will lead to a decrease in demand for judicial resources. Thus, although more stable court practice offers greater guidance, the IP Courts success could also attract new business, which might decide to litigate cases that would otherwise have been resolved by extra-judicial means.

Consistency and uniformity

Taking into account that the consumers of IP law base their decisions to invest in innovation upon their expectations of achieving IP protection, the uniformity, predictability, and coherence that are believed to be achieved by the IP Court may improve the IP enforcement system in Ukraine and are especially prized.

Increased consistency may make the Ukrainian IP enforcement system more attractive to all consumers, particularly to investors, who will be more confident in doing business in Ukraine.

Here, the combination of envisaged specialisation at the first instance and appeal level as well as exclusive jurisdiction of the IP Court seems to be beneficial to the whole system as the IP Court will be able to make needed doctrinal innovations and yet attain uniformity and stability of the law. Moreover, specialisation at the level of the first instance will allow the specialised judge to have the necessary proficiency to evaluate the evidence and expertise to make the best use of procedural provisions.

The lack of unified and consistent court practice is identified in the Strategy of Justice Sector Reform 2015-2020 as one of the main reasons for the inability of the national judicial system to perform its duties. Due to the exclusive jurisdiction of the IP Court, and as IP disputes would be adjudicated by fewer judges, each possessing a greater level of experience in such disputes, such uniformity and predictability in the field of intellectual property issues may be achieved. This, in turn, may improve business confidence and reduce the caseload of the IP Court and the duration of proceedings for litigants.

With respect to consistency, concentrating cases into the IP Court should generate a bench small enough to keep the collegiality necessary to speak with a single voice, which is very important in the Ukrainian context, where the cases are spread among different courts and, consequently, a large number of conflicting court decisions exist.

The resulting greater consistency in court opinions may offer greater guidance to consumers of the law, enabling parties to settle their disputes and reduce their need for judicial intervention.

On the other hand, one needs to keep in mind that concentration of IP cases may make the IP Court more vulnerable to politicization as it will solely bear responsibility for deciding issues regarding the interest group.

Even if the appointment process remained untainted, capture may occur after the IP Court begins to function through continuous contact with legal practitioners, as repeat players usually have an advantage over one-time litigants and would be more likely to know the judges, know how the IP Court operates, be acquainted with the eccentricities of IP law, and be positioned to find suitable vehicles for arguing the changes in the law that they desire. Moreover, repeaters will have also some strategic advantages, as they will be able to coordinate their policy arguments and wait for a specific case to push the position they favour.

Thus, there is a significant risk that the side that is better equipped or is more powerful could capture the IP Court, as there will be a certain advantage to litigants with more resources. This risk can be exacerbated even more as the IP Courts jurisdiction is established on the basis of subject matter.

Such risk is, to a great extent, mitigated at the stage of appointment of judges due to the procedure of appointment, though it still remains high after the IP Court begins to function. In addition, these potential imbalances may be avoided, at least in cases where the litigants are vertically-integrated companies that both manufacture and conduct research and development. Such companies would, therefore, appear on either side of infringement actions and would lack the motivation to sway the IP Court in any particular direction.

The potential imbalance among the parties may also be, at least theoretically, compensated by the lawyers practicing in court. However, for achieving such an effect, the Bar must be well organised and sophisticated, which is not the case in Ukraine so far due to, inter alia, ongoing reform in the field. Moreover, litigants must have access to such legal services, which, again, may be a problem, as an adequate level of legal services in cases dealing with intellectual property is not affordable to the majority of potential litigants.

On the other hand, overspecialisation of the Bar and losing touch with developments in other fields may lead to a more isolated IP Court and, thus, increase the risks associated with specialisation.

Summarizing all the above, it is hoped that transferring complex cases to the IP Court, staffed by experts and having broad exclusive jurisdiction, will provide such potential benefits as, inter alia, improved decision making, reduction in the size of the docket, and diminution in the number of judge-hours, as well as uniformity, consistency and elimination of forum shopping.

However, contextual analysis leads to the conclusion that there are many concerns, such as the level of judicial and/or technical expertise of IP judges, (ii) envisaged number of judges, (iii) structure of the IP Court, and (iv) risks of the IP Court being captured by interest groups, which need to be timely and duly addressed in order, inter alia, not to undermine the very general public perception of how the IP Court, the importance of establishment whereof was emphasized numerous times by high officials within 2014-2019, performs.

Anton Kapitonenko is an associate at Baker McKenzie

Khrystyna Nykerui is an associate at Baker McKenzie

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