Second Reading Speech by Senior Minister of State for Law, Mr Edwin Tong on The Intellectual Property Dispute Resolution Bill

5 Aug 2019 Posted in Parliamentary speeches and responses

Mr. Speaker,

1. On behalf of the Minister for Law, I beg to move, “That the Bill be now read a Second time.”

2. Sir, this Bill amends our intellectual property (“IP”) regime, specifically in the area of dispute resolution.

   Introduction

3. In today’s technology- and knowledge-driven economy, where intangible assets are increasingly important, a robust and trusted IP regime is essential for growth and enterprise. A McKinsey Report in January 2019, titled “Globalization in Transition: The Future of Trade and Value Chains”, found that capitalised spending on R&D and intangible assets such as brands, software, and IP is growing as a share of revenue, from 5.4% in 2000 to 13.1% in 2016.

4. Singapore is well-recognised internationally for its world-class IP regime. In the latest 2018 Global Competitiveness Report published by the World Economic Forum, Singapore is ranked third in the world, and first in Asia, for IP protection.

5. In today’s rapidly changing world, we cannot rest on our laurels and must continually assess and review our IP regime to ensure that it remains relevant and supports our enterprises. This Bill is very much in this vein.

6. Sir, cost-effective IP dispute resolution complements efficient IP protection. Innovative and creative enterprises that develop IP and protect it can secure a commercial advantage over their competitors. They can protect their IP in Singapore swiftly and efficiently through the suite of e-services that the Intellectual Property Office of Singapore (“IPOS”) provides. In addition, they can also secure protection overseas with ease and speed through the international agreements and networks that Singapore is a part of. For example, international trade mark registrations can be secured under the Madrid system, and international patent applications can be filed under the Patent Cooperation Treaty (“PCT”). Patent applications in many major markets can also be accelerated under the Global Patent Prosecution Highway programme and the ASEAN Patent Examination Cooperation programme.

7. However, obtaining IP protection would have no commercial value to an enterprise if, when its IP rights are infringed, it finds itself unable to enforce its IP rights due to a lack of financial resources or other barriers. This Bill focuses on that final mile.

8. The cost-effective resolution of IP disputes increases the confidence that IP rights owners have in maintaining their competitive edge, and maximising the rewards of their innovative and creative efforts.
   1. In 2018, there were a total of 11,845 patent applications. This is an increase of almost 22% from five years earlier.
   2. The number of applications from locals has increased by even more – about 40% from 2013 to 2018.
   3. The pace of innovation, by both local businesses and individuals, is accelerating.
   4. So, therefore, not only must the IP registration process be cost-effective and easy to navigate, in the event that IP rights need to be enforced, the IP dispute resolution process must also be cost-effective and easy to navigate.

9. This was why in 2015, the Ministry of Law appointed a committee to review the IP dispute resolution system in Singapore. One of the objectives of the review was to make the IP dispute resolution system more accessible, particularly for less well-resourced parties such as individuals and SMEs. This Bill implements some of the Committee’s recommendations.
   1. We are doing so from a position of strength. An important plank of our legal and judicial system is the efficiency of our courts.
   2. In the latest 2019 World Bank Doing Business Survey, it was noted that it takes 164 days to resolve a claim in Singapore, compared to 370 days in New York and 437 days in London.

10. In addition, this Bill strengthens Singapore’s position as a choice venue for the arbitration of international IP disputes.

11. Let me now outline to this House the key features of this Bill:
    1. First, we are consolidating most of the civil IP disputes to be heard in the High Court.
    2. Second, we are legislating certain patent-related procedures before the Registrar of Patents.
    3. Third, we are clarifying that IP disputes may be arbitrated in Singapore.

12. Let me take Members through each of these features.

    Efficient Dispute Resolution in Court and at IPOS

13. The first two groups of amendments facilitate the effective resolution of IP disputes, in court, and at IPOS. IPOS is responsible for the Registries of the various IP rights – for example the Registry of Patents, and the Registry of Trade Marks.

14. I will first discuss dispute resolution in court.

15. The Bill consolidates most civil IP disputes in a single forum – the High Court. Currently, IP disputes are heard in multiple forums – the High Court, the State Courts, and at IPOS. Where a dispute is to be heard depends on a few factors –
    1. First, the IP right in issue. For example, whether the dispute is about a patent over an invention, or copyright in song lyrics.
    2. Second, the nature of the dispute. For example, whether the dispute is about infringement of someone’s IP right, or the validity of the IP right itself.
    3. Third, the value of the claim.

16. Let me illustrate. Today, a copyright or trade secret owner commences his case in the State Courts, if he or she is seeking damages of up to $250,000 for copyright infringement or breach of confidence. Above this amount, the case must be commenced in the High Court. On the other hand, for infringement of patents, trademarks, and registered designs, the case must be started in the High Court, regardless of the value of the claim. This itself adds complexity, and different layers to determine which kinds of cases are commenced and heard in which court.

17. Going forward, the IP dispute resolution system will be improved:
    1. First, the system will be streamlined, and it will be clearer to users what the appropriate forum is when they have a dispute.
    2. Second, parties who litigate in court will benefit from the expertise of High Court judges. The High Court has a specialist bench of IP judges, with greater expertise and experience in IP matters.
    3. Third, IP rights owners and users in general will benefit from the development of IP jurisprudence through High Court judgments.

18. The Bill therefore makes the following amendments to the jurisdiction of the Registrar of Patents, the Magistrate’s Court, the District Court and the High Court over IP disputes:
    1. Clause 4 makes the High Court the exclusive forum to hear civil proceedings for most copyright matters. Cases before the Copyright Tribunal, for example cases about licensing rates charged by copyright owners, are not affected. They will remain with the Copyright Tribunal.
    2. Clauses 13 and 19 remove the jurisdiction of the Registrar of Patents over patent infringement and declarations of non-infringement of patents, respectively.
    3. Clause 20(a) gives the High Court jurisdiction over patent revocation, where such proceedings do not arise in the context of an existing dispute before the High Court.
    4. Clauses 31 and 32 remove the jurisdiction of the Magistrate’s Court and the District Court over an action in passing off.

19. As a result, the High Court will have exclusive jurisdiction over:
    1. Civil infringement of copyright and all forms of registrable IP rights,
    2. Passing off actions, which are closely related to trade mark infringement,
    3. Declarations of non-infringement of patents and registered designs, and
    4. Breach of confidence actions where the amount claimed exceeds $250,000.

20. The High Court will also have concurrent jurisdiction with the relevant Registrar over post-grant revocation and invalidation proceedings for patents, and not just trademarks, registered designs and geographical indications. Such proceedings are about whether the IP right was validly registered or granted. This gives the parties commencing revocation or invalidation proceedings a choice between doing so in the High Court, and doing so before the relevant Registrar who granted the right in the first place.

21. To ensure that parties may continue to access the courts in a cost-effective and expeditious manner, in conjunction with the consolidation of IP disputes in the High Court, the Ministry of Law and the Supreme Court are looking into the introduction of a specialised IP litigation “track” in the High Court, with simplified processes and also cost-saving features.
    1. This is outside the scope of this Bill, and will be done via amendments to civil procedure.
    2. This “specialised track” will be especially useful for less well-resourced parties such as individuals and SMEs, who may otherwise be unable to enforce their valid IP rights.
    3. Litigants in the High Court will generally be able to choose between this “specialised track” for IP cases, and the “default track” where IP cases are treated in a similar manner to other types of civil cases.
    4. More details about the time and cost-saving features of the “specialised track” will be shared in due course.

22. My Ministry consulted practitioners when developing these reforms. We received feedback that IP litigation tends to be more expensive than most other types of litigation, given its specialised and highly technical nature, and in some cases, the need for expert witnesses as well. This could put it out of reach for some enterprises that need to turn to the courts to resolve their disputes. This “specialised track” is being developed with a focus on lowering litigation costs.

    Dispute resolution at IPOS

23. Next, I turn to proceedings at IPOS, specifically those before the Registrar of Patents. The Bill seeks to raise the quality of granted patents in Singapore.

24. Before elaborating on the amendments, let me provide an overview of the patent application process.
    1. After a patent application is made at the Registry of Patents, it undergoes Search and Examination.
    2. A patent examiner will search publicly available information at the time of the patent application to understand the current state of technology. The examiner then assesses whether the invention in the application meets the statutory criteria of being new, inventive, and capable of industrial application.
    3. Only inventions that fully meet these criteria are granted patent protection.

25. Clause 10 of the Bill legislates a process of third party observations. This is a process in which a third party can, after a patent application has been published, submit observations to the Registrar of Patents on the patentability of the invention in the application. The third party provides reasons and documents to the Registrar, which can be useful in the Search and Examination process.

26. This helps to ensure that only deserving inventions are granted patent protection, as the patent examiner has another source of information available to him or her when making the assessment. Currently, third party observations are already being filed, but informally. Setting out the process in legislation makes it clear and transparent for all, and increases awareness about how the process can be used.

27. Clause 11 of the Bill introduces a process for re-examining the specification of a patent after it has been granted. After a patent has been granted, information which affects the validity of the patent could come to light, which was not previously available at the earlier stage. For example, a competitor or a researcher could come to know of some document or earlier published literature which may suggest that the invention in question is actually not new or inventive, and therefore the patent should never have been granted in the first place.

28. Currently, the main means of challenging the validity of a patent at the Registry of Patents, after it has been granted, is through the patent revocation process under section 80 of the Patents Act. With patent revocation, the requestor is involved as a party in the entire revocation proceeding. The new patent re- examination process is ex parte in nature. This means that all the requestor does is make the request and submit the documents. Thereafter, he is no longer involved. If the patent examiner finds that there are grounds for the patent to be revoked, he will correspond with the patent proprietor only. Therefore, for the requestor, this provides an additional, lower cost option to challenge the validity of a patent.

29. Sir, in summary, these two procedures – third party observation and post-grant re-examination – are intended to be low-cost, lower barriers of entry, and provide easier avenues for third parties to bring to the Registrar’s attention information about the patentability of an invention. This helps to strengthen the quality of granted patents in Singapore, and is the latest step in our efforts to improve the patent system.
    1. In 2013, IPOS began to examine patent applications in-house, having built up a team of examiners to do so. Our patent examination capabilities were recognised internationally when, in 2014, IPOS was appointed an International Searching and Preliminary Examining Authority for international PCT patent applications.
    2. In 2014, we also tightened the system such that a patent is granted only if the invention fully meets the patentability requirements in our law.
    3. Now, these latest measures provide even more avenues for third-parties to scrutinise and submit information for IPOS to consider, thus helping to further enhance the quality of the Patents Register.

Strengthening Singapore’s Position as a Venue for IP Arbitration

30. Sir, I now move on to the third group of amendments, which concern arbitration of IP disputes.

31. Singapore offers a suite of dispute resolution options. Besides going to the courts or to IPOS, parties can also consider resolving their disputes by way of arbitration. Arbitration holds certain advantages. For example, arbitration proceedings can take place in private, and parties have a greater degree of control over how the proceedings are conducted. Singapore is also highly-regarded internationally as an arbitration venue, and offers a choice of leading arbitral institutions. According to the 2018 International Arbitration Survey by Queen Mary University of London and White & Case, Singapore is now the 3rd most preferred seat of arbitration globally, and the Singapore International Arbitration Centre the 3rd most preferred arbitral institution.

32. Clause 2 amends the Arbitration Act, and clause 8 amends the International Arbitration Act, to clarify that IP disputes are capable of settlement by arbitration, in other words, that they are arbitrable. The amendments also clarify that such arbitral awards bind only the parties to the arbitration proceedings.

33. These amendments will:
    1. Provide greater clarity and certainty to users, as well as
    2. Encourage the use of arbitration in IP disputes, and
    3. Strengthen Singapore’s attractiveness as a venue for international IP arbitration.

34. Arbitral awards cannot affect the status of IP rights on the IP Registers. The arbitral award only affects the parties that have submitted the dispute to arbitration. As members know, arbitration is essentially an agreement by which two parties agree to submit a dispute to a chosen tribunal. For example, if an arbitral tribunal finds that a patent issued by any country is invalid, the consequences of such a finding, which for example could affect the licence fee payable by one party to the other, affects the parties in the arbitration only, and no one else. The patent remains on the Register in whichever country it may originate from. Decisions that affect the status of IP rights on the Registers can only be made by the courts or the relevant Registrars from the jurisdictions that issue those IP rights. These amendments will lend further certainty to arbitrators and stakeholders who may wish to challenge the validity of IP rights in arbitration proceedings.

    Other Amendments

35. I turn now to other ancillary amendments related to IP dispute resolution, and I will highlight two main ones.

36. First, clauses 9(c), 12(c), and 20(i) provide the Registrar of Patents with greater flexibility to refer disputes before the Registrar to the High Court. This could, for example, lead to cost savings by reducing one layer of appeal, when it is clear that the parties to the dispute before the Registrar of Patents intend to appeal against the Registrar’s decision anyway.

37. Second, clauses 5, 26, 29, and 33 of the Bill harmonise across all the Acts relating to IP rights the availability of the right to appeal against High Court decisions made on appeal from the relevant Registrar. Going forward, the consistent approach will be that when decisions from the relevant Registrar are appealed to the High Court, where further appeals are possible, such appeals can only proceed with the leave of court.

    Conclusion

38. Sir, this Bill is a part of important reforms to the IP dispute resolution system, which is a key part of a well-functioning and reputable, trusted IP regime that is needed to support an innovative economy.

39. We are giving IP rights owners greater confidence that they can effectively enforce their IP rights. This preserves their incentives to continue investing in innovative and creative activities, which in turn benefits our economy, and our society.

40. These reforms also build on Singapore’s considerable strengths, to enhance our standing as a hub for international IP arbitration.

41. Mr. Speaker, I beg to move.

Last updated on 07 Aug 2019