Intellectual Property (Dispute Resolution) Bill

Sir, Intellectual property is particularly important for Singapore as we continue to look for smart solutions and invest heavily in research and development. By monetising intangible innovations, there is incentive to work on ideas and make them reality. This benefits society. The substantive law governing and protecting intellectual property is a key ingredient in ensuring Singapore's reputation as an intellectual property hub grows. This Bill strengthens that framework so that IP rights can be better protected in Singapore.

First, this Bill introduces third party observation and re-examination after grant process. Before I go further Sir, I should declare that I am a practising lawyer whose practice also includes IP and acted in the case that appeared in the Explanatory Statement of this Bill.

Sir, the third party observation process in clause 10, the new section 32 of the Patents Act, is available before the patent is granted. This will allow the patent granted to more accurately reflect the scope that would be adequate both for the rights of the proprietor as well as other innovators in the same field. Would the Minister elaborate on how this process may affect the turnover time for patent registration in Singapore?

The re-examination after grant process is found in clause 11, new section 38A of the Patents Act. This new process supplements the current procedure. Although the applicant has less control in the ex parte proceeding, the applicant does not need to spend as much financial resources and time to challenge the patent. Even as it is good to provide this alternative process of challenging a patent, would the Minister elaborate on the safeguards to prevent a proprietor of a legitimate patent from getting deluged by these applications? Although the applications may not cost as much for the applicant as a court proceeding, these applications take a toll on the proprietor by increasing uncertainty.

One or both of these kinds of third-party processes are present in other jurisdictions and regions such as Japan, Great Britain, Europe, Australia and China. Having it in Singapore will further our position as an intellectual property hub. These processes make patents in Singapore more robust and accurate as there are more avenues to subject them to scrutiny. Because it is ex parte, these processes are less costly and less time consuming. It is especially important for SMEs with limited resources and manpower – which is a point, I think, the Senior Minister of State alluded to in his speech earlier on.

In relation to the re-examination after grant process, there is a bar in the new section 38A(5) of the Patents Act against the filing of an application where there is a pending court proceeding in which the validity of the patent may be put in issue. Would the Minister explain why there is no similar bar in the context of an ongoing arbitration, especially if a party to the arbitration is trying to get a second bite at the cherry by filing an application? Even though arbitration proceedings are private, the proprietary holder could, possibly, apply for a stay of the re-examination application.

Second, this Bill streamlines dispute resolutions by consolidating the jurisdiction for intellectual property disputes within the High Court. Currently, certain intellectual property disputes may be carried out at IPOS or at the various level of courts. For example, copyright proceedings used to be held in "a court" but has been changed in clauses 3 and 4 to only the High Court. The jurisdiction of the Registrar at IPOS to determine infringement of a patent is removed by clause 13. In this way, this Bill consolidates intellectual property proceedings in the High Court, simplifying and streamlining the process. This may also assist in enforcement overseas. As cross-border intellectual property disputes may become increasingly common in an inter-connected world, overseas enforcement is particularly important for intellectual property disputes.

However, along with this change comes concerns regarding costs. Small businesses already tend to avoid enforcing intellectual property rights due to somewhat prohibitive costs and a potential "war of attrition". While the Bill provides for indemnity costs under certain conditions at clause 6, this is only for Geographical Indications and a trial and hearing at the High Court still costs significantly more than that of a lower Court. Furthermore, as some of the procedures were previously carried out by IPOS, what will be done to ensure that our judiciary has the necessary expertise and resources needed to replace that function?

Third, this Bill makes it clear that disputes relating to intellectual property rights are arbitrable. This is important as there is some school of thought that certain intellectual property disputes such as copyright and registration of trade mark or patents are non-arbitrable as it is against public policy. These are some arguments, not necessarily arguments I would agree with. For example, the Review of the Arbitration Act Committee's 2000 Report Review of Arbitration Laws espoused such a view. However, the position in the Bill is not novel – it is the position that is also made clear in Hong Kong by the Arbitration Ordinance which came into effect 1 January 2018.

There are advantages to having intellectual property being arbitrable. Firstly, the confidentiality of arbitration proceedings is especially relevant in intellectual property cases where the very thing that is being disputed is an intangible, and sometimes, and quite often, a confidential asset. Secondly, a total of 160 states have signed up to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Thirdly, parties have greater control over where they desire to have a matter arbitrated, for example, in a neutral jurisdiction instead of the place of business.

While the new section 52C(3) of the Arbitration Act and 26C(3) of the International Arbitration Act make it clear that an arbitration award involving intellectual property rights does not affect third-party holder of a security interest, could the Minister elaborate on how this will operate? This Bill sets out exciting changes to the intellectual property dispute resolution landscape. What will be done to strengthen and train up capabilities of our people so that people in our legal industry can benefit from these changes? This includes arbitrators specialising in intellectual property (IP), legal practitioners in the field of intellectual property and disputes, and thought leaders in arbitration, dispute resolution and intellectual property.

There is much potential in this Bill. People who develop and own intellectual property – software engineers, designers, small medium enterprises, for instance. People who use technology in their day-to-day life will also benefit from this Bill. Why? Because intellectual property rights are supported through a more robust dispute resolution structure. And for those reasons, I support this Bill.

Mr Speaker, Sir, I rise in support of the Intellectual Property (Dispute Resolution) Bill. This Bill aims to ensure that the Singapore IP regime continues to support innovative activities in Singapore and positions Singapore as a choice of venue for international IP dispute resolution.

I see the three key highlights of the Bill as: (a) to streamline the IP dispute resolution framework in Singapore; (b) to provide certainty that IP disputes can be arbitrated in Singapore; and (c) to amend the Intellectual Property Office of Singapore's procedures on granting and re-examining patents.

I applaud the move to provide certainty that IP disputes can be arbitrated in Singapore and the arbitral award only has effect on the parties and not the world at large. This also means that if an arbitral tribunal makes a finding that a patent is invalid, a third party will not be able to rely on that finding to argue that he does not infringe the patent.

However, with the consequent move for IP cases to be heard by the High Court, I am concerned that the costs of arbitration as well as the costs of award will escalate in tandem with IP cases moving to the High Court. With the formalisation of third party observations on patent applications, when a patent application has been published, but a patent has not been granted, a third party may make submissions to the Registrar of Patents on the patentability of the invention. Such a formalisation of process is a positive move to ensure the quality of granted patents.

In streamlining the IP dispute resolution framework in Singapore, most, if not all IP disputes will now be heard by the High Court. With such an exclusive jurisdiction vested in the High Court, I wish to ask the Minister if such a move will over-burden the High Court and its judicial officers and over-stretch our already lean judiciary. In the same vein, will such a move also result in escalation of costs to take action or defend during an IP dispute. Although there is a fast track procedure instituted, will costs be truly and effectively kept down regardless of value of disputes or cost-sensitive litigants.

In short, in our journey towards strengthening our IP regime, encouraging inventions and innovation, can we also do more to help our Small and Medium Enterprises (SMEs), start-ups, including fintech start-ups, entrepreneurs and freelance professionals in various sectors, such as those in the creative sector, gaming or software development areas, to help them navigate this area of law and the new disputes regime easily, effectively and in an economical manner as and when they are registering, arbitrating, accused of infringement or taking civil action themselves in the area of intellectual property law which encompasses, trademarks, patents and copyright. With that, I support the Bill.

Sir, I stand in support of the Bill which takes significant steps forward in positioning Singapore as a hub for international IP dispute resolution.

The Bill addresses three broad areas of IP dispute resolution. First, it consolidates the majority of IP proceedings in the High Court. Second, it updates pre and post-grant patent procedures. Third, it clarifies that IP disputes are arbitrable.

I have clarifications and recommendations for each of these three areas.

I would like to acknowledge and thank the NUS Law Intellectual Property Student Association (IPSA) for their input. I would also like to commend the MinLaw for the extensive public consultation process and outreach to stakeholder groups such as IPSA.

Sir, the proposed amendments introduce a formal procedure for submitting pre-grant third-party observations on the patentability of an invention. This move which assists IPOS in evaluating patents at the pre-grants stage will increase the overall quality of registered patents in Singapore. I would like to raise four points on the procedure for submitting third-party observations.

First, will the Ministry consider allowing third-party observers the option of remaining anonymous and not revealing their identities to the patent applicant and the general public? This would encourage more third parties to submit observations without any fear of prejudice. The Japan Patent Office and the European Patent Office both permit third-party observations to be filed anonymously. To address the concern of frivolous observations being anonymously filed, the identity of third-party observers can be known by only IPOS who can take action against parties who abuse the observation process.

Second, will the Ministry consider making the content of third-party observations and the applicant's response to the third-party observation available for public inspection?

Public inspection could generate healthy debate on the validity of the specific patent, making the grant process more robust. On a broader level, this could increase awareness of the requirements of patent validity as a whole. This would increase the overall quality of registered patents in Singapore. Under the International Patent System administered by the World Intellectual Property Organization, observations and the applicant's responses are made available for public inspection.

Third, will the Ministry consider setting out in subsidiary legislation or guidelines the grounds on which pre-grant third-party observations should be based? While the new section 32 on pre-grant observations states that third parties are to provide “reasons” for their observations, it does not define the term “reasons”. In contrast, the new section 38A on the post-grant process explicitly provides grounds for third parties to request a re-examination of patents. Setting out a list of possible “reasons” would increase the clarity of third-party submissions.

Japan’s Patent Law prescribes specific grounds for third-party observations at the pre-grant stage, which are similar to the grounds under which patents can be invalidated post-grant. Likewise, the European Patent Convention specifies that pre-grant third-party observations on patentability must be based on the grounds of novelty, inventive step, clarity, sufficiency of disclosure and amendments that are not allowed.

Fourth, while I understand that the costs for third party observations have not been determined and that accessibility would be the key concern, will the Ministry provide its assurance that costs for doing so will be kept as low as possible? For instance, the costs could be a nominal administration fee for the processing of their observations. Keeping the costs low will ensure that third parties keen to submit useful observations are not deterred by the prohibitive costs of doing so.

Next, I have two points to raise on the amendments to clarify that IP disputes can be arbitrated in Singapore. My two points relate to the scope of IP disputes that can be arbitrated in Singapore.

First, can the Minister clarify if IP rights found in employment contracts are arbitrable? It is common practice for employers to insert clauses relating to IP rights in employment contracts. However, there are some countries that deem employment disputes to be non-arbitrable because they relate to matters of public policy. Greece is one such country that considers employment disputes to be non-arbitrable. The position in Singapore on arbitrability of employment disputes has not been conclusively settled. If employment disputes are non-arbitrable, then IP disputes arising from employment contracts may be subject to the exclusive jurisdiction of the Courts. It would be useful for the Ministry to clarify the position on arbitrability of IP disputes arising out of employment contracts.

Second, can the Minister clarify if the arbitral awards for patent validity disputes can serve as a basis for patent registry amendments? Internationally, countries have taken different positions on this. In the EU, patent infringement issues are arbitrable but patent validity challenges are within the exclusive jurisdiction of State Courts and are not arbitrable. On the other end of the spectrum, Switzerland allows arbitral awards to constitute the basis for amendments to its patent registry.

The new section 52F seems to suggest that patent validity are arbitrable. However, it would be useful for the Minister to further clarify whether it is intended that such arbitration award would only be valid as between parties or whether the award can serve as a basis for patent registry amendment.

Finally, beyond the amendments proposed in the Bill, the Ministry has indicated that it intends to further introduce a fast track for lower value disputes or less well-resource litigants. I understand that details of this fast track option is still being ironed out and will be fleshed out in subsidiary legislation. I would like to raise some points for clarification and consideration when drafting the subsidiary legislation.

First, the Ministry has proposed a cap of two hearing days for cases on the fast track. Can the Minister clarify how the proposed cap of two hearing days was derived? Will the Ministry be further studying the optimal period for hearing cases on the fast track? I raise this because the consolidation of disputes in the High Court was motivated by the fact that the Ministry has stated that, “IP disputes often involve myriad technical details that are susceptible to repeated and extensive requests for particulars and discovery”. With this in mind, it is unclear whether a cap of two hearing days for a trial would be realistic for IP disputes.

My second point is on the powers of the trial judge hearing cases on the fast track to order relief. The Ministry has not indicated a position on whether such a trial judge for a fast track case can grant both interim and final relief. This question was also left open in the Final Report of the IP Dispute Resolution Committee. This is a crucial point that I hope the Ministry will eventually clarify. I would also like to highlight that if fast track judges are unable to make decisions on relief, they may have to pass the case to default track judges. This might lead to more time spent and increased costs if plaintiffs have to bring separate legal proceedings by the plaintiff to obtain the legal remedies sought.

Third and lastly, I hope the Ministry will also clarify whether decisions from the fast track are appealable, and if so, how this will interact with the proposed two-day hearing cap.

Sir, I stand in support of this Bill and hope the Ministry can take into consideration my recommendations in further developing the IP dispute resolution landscape in Singapore.

Mr Speaker, I thank the Members who have spoken, for their support of the Bill, and, in particular, I appreciate the Intellectual Property Students’ Association’s inputs through Mr Louis Ng. Their activism and their interest in legal development in their chosen area is something to be encouraged.

Members have raised points for clarification in four main areas and I propose to deal with them as a whole under these four areas.

Mr Patrick Tay asked whether the “specialised track” would be effective in keeping litigation costs down. Mr Louis Ng also asked a few questions about the features of the “specialised track”. First, Mr Ng's suggestions and proposals in relation to how we design this track, what we take into account, we will consider them when we prepare the relevant rules.

The “specialised track” focuses on lowering costs by having simplified processes and other cost-saving features. These obviously have to deal with the appropriate types of cases and not every case will be suitable for this "specialised" track. I will elaborate on some of the features which we are considering although they are not part of the Bill.

There will be early and active case management by the Courts. This will ensure that cases are managed in an appropriate manner, with procedures that are streamlined and cost-effective. So, we sieve the cases upfront to ensure that they are appropriate. And to Mr Ng's point about whether separate proceedings may be filed if one determines half way through that the "specialised" track is not suitable, that is unlikely to happen given the upfront pre-judicial management or rather case management of the process.

We are considering a cap of $500,000 on the value of the claim for damages or an account of profits. The “specialised track” is appropriate for lower value cases, which tend to be less complex. The cap on the value of the claim reflects this.

We are also considering a cap on party-and-party costs awarded. This would be stage-based, in other words, based on the stage of proceedings of the litigation, with an overall cap of $50,000. This will also help to lower the business risk of litigation that Members spoke about.

On the two-day cap for the length of trial, we propose to cap it but at the same time allow the trial judge discretion to extend this in the appropriate circumstances. So, for example, if a case is being heard and half way through, you might need another half a day, obviously the trial judge will have the discretion to do so. This will reduce the time spent and the consequently the costs for the parties. The cap on two days – Mr Ng asked how it was arrived at. It was based on the recommendations of the IP Resolution Review Committee which, I am sure, Mr Ng knows comprises representatives from the judiciary as well as IP lawyers who handle these cases, academia and also IP rich companies who viewed this as appropriate for the less complex cases. So, we took a sampling of these views and proposed the two days on that basis.

Regarding the relief that the trial judge can grant, it is intended that the trial judge’s power to grant interim and final relief would be the same, whether a case is on the “specialised track” or “default track”. In other words, the remedies that one would expect to see ought not be different. It is just that the process and the speed by which you resolve the case could be different, depending on the complexity and nature of the case.

Regarding appeals, final decisions in cases on the “specialised track” will be appealable in the same manner as final decisions in cases on the “default track”. As the appeal is a separate process, the time spent on the appeal hearing is not included in the two-day hearing cap for cases on the “specialised track”.

Mr Tay asked whether the costs of arbitration of IP disputes will escalate as a result of moving certain IP disputes to the High Court. That has not been our sense and also when we look at the feedback from the Committee, that is also not the sense that they got. But we will continue to monitor this as we actually implement this process. As arbitration and litigation are separate and distinct methods of resolving disputes, we do not anticipate that the amendments to consolidate litigation of most civil IP disputes in the High Court will directly impact the costs of arbitration. In other words, parties choose arbitration sometimes for different reasons from why they have the matter resolved in Court.

Mr Tay and Mr de Souza asked about the expertise and resources required by the High Court, pursuant to the consolidation of civil IP disputes in the High Court. As I mentioned in my speech earlier, the High Court already has a specialist bench of IP judges, with greater expertise and experience in IP matters. My Ministry will continue to work with the courts to ensure that there are sufficient resources to handle the caseload as may be appropriate.

I next turn to Mr Ng and Mr de Souza’s questions around the rigour of the third party observation process. I will just address queries that have been raised together. First, as far as anonymity is concerned – I think Mr Ng raised this point – if there is no identifier on the documents containing the third party observation, then the identity of the third party observer will not be known. So, in other words, you can choose to be anonymous or not anonymous as you wish as a third party.

Second, I think Mr Ng also asked about whether the records will be available. The records of the patent search and examination history are available to the public on the Patents Open Dossier service. This will include the contents of the third party observations filed before the deadline as well as the applicant’s response to the examiner’s written opinion incorporating any observation, where there is one. So, all of that will be made available on the Patents Open Dossier service.

Third, the new section 32(1) of the Patents Act, inserted by clause 10 of the Bill, provides that third parties may make observations on the question whether the invention in the patent application is a patentable one. I touched on this in my earlier speech. The statutory requirements for an invention to be patentable can be found in section 13 of the Patents Act. Hence, for example, the third party could make an observation that an invention is not new because of an earlier publication.

Fourth, there will be no fee to submit third party observations.

Finally, when a third party observation is made, the patent Examiner would have to take some additional time to consider it. However, the patent application period will not be unduly lengthened as Rule 46(8)(a) of the Patents Rules requires the Examiner to issue the examination report within a fixed time period, regardless of whether a third party observation is made or not. So, that helps to address Members' concern about an overall prolongation of the process because of the observations.

A healthy patent regime encourages innovation and protects only deserving inventions. Third party observations which are meritorious contribute to this and would be worth the time taken to consider it, so that overall we develop a more robust and a more trustworthy IP system and regime.

Mr de Souza also asked a few questions about the post-grant patent re-examination process. First, he asked about safeguards. When a re-examination request is made, the specification of the patent will first be re-examined by a patent Examiner. The Examiner would ask the patent proprietor to respond only if there are possible grounds for the patent to be revoked. This avoids placing an unnecessary burden on the patent proprietor.

Second, Mr de Souza asked why there is no bar against filing a re-examination request when there is an ongoing arbitration proceeding in which the validity of the patent may be put in issue. This is because arbitration proceedings cannot affect the status of the patent on the Patents Register. In contrast, proceedings before the court or IPOS in which the validity of the patent may be an issue could lead to the patent being revoked. In other words, the patent itself being revoked as opposed to the right between two parties. Hence, the new section 38A(5) is necessary to prevent concurrent proceedings in which the status of the patent on the Patents Register could be affected. This is not applicable in the context of arbitration.

Mr Ng and Mr de Souza asked some questions about the arbitrability of IP disputes. Let me address those.

First, as to whether IP rights found in employment contracts are arbitrable. The Bill is intended to clarify that a wide range of IP disputes are arbitrable. In employment contracts, it is common to find clauses about the ownership of IP rights that arise in the employee’s course of work; and I think that is what Mr Ng seemed to be referring to in his speech. If there are disputes subsequently about the ownership of these IP rights, then these disputes are arbitrable. Ownership disputes are within the scope of "IPR dispute", which would be defined in the new section 52A(3) of the Arbitration Act and section 26A(4) of the International Arbitration Act, inserted by clauses 2 and 8 of the Bill, respectively. I just want to add that what is arbitrable does not necessarily mean that it will be the subject of an arbitration because it is still defined by the scope of the arbitration agreement.

Second, he asked whether the arbitral awards for patent validity disputes can serve as a basis to amend the patent on the Register.

In my speech earlier, I had explained that the arbitral awards only affect the parties to the arbitration agreement, and will not affect the status of IP rights on the Registers. This is because we take the view that decisions that affect the status of IP rights on the Registers should only be made by the courts or the relevant Registrars from the jurisdictions that issued those IP rights, since these are decisions affect the world at large concerning the registration and not just the parties to the arbitration proceedings. This is true not only of patents, but of other forms of registrable IP rights, such as trade marks and also registered designs.

Mr de Souza asked how an arbitration award involving intellectual property rights affects a third-party holder of a security interest. Such an award does not affect any existing right or liability between a third-party holder of a security interest and a party to the arbitral proceedings, whether arising in contract or arising by operation of law. And this is clarified in the new section 52C(3) of the Arbitration Act and section 26C(3) of the International Arbitration Act.

I turn now to the other queries that had been raised.

Mr Tay also asked whether more could be done to help SMEs and start-ups navigate the IP registration and dispute resolution regime.

I thank Mr Tay for looking out for the interest of the Labour Movement, and I think Mr de Souza also asked some questions about training and whether the users of the system will have the knowledge and know-how.

The IPOS website provides useful information on the IP registration system. If anyone requires further assistance, they can always call IPOS for help with queries or make an appointment to see an officer at IPOS.

For assistance with IP-related disputes, there are legal clinics at IPOS, where there is a panel of lawyers available to provide preliminary advice on, for example, infringement or opposition matters. To assist those seeking such advice, they can obtain reimbursement from IPOS for the consultation fee for the first session.

IPOS also runs complimentary IP business clinics that allow participants to speak with private business consultants on IP strategies, franchising and licensing, audits and valuation, among other issues related to or arising from IP rights.

Mr de Souza asked about the efforts to strengthen our legal industry, so that they can benefit from these reforms.

My Ministry and the relevant agencies will be engaging stakeholders in the IP and legal sector, to explain how these changes can benefit them, how they will operate in this new landscape, and how they could make use of it.

This will not just extend to practitioners, but also businesses in the business environment, big and small companies who use  the system, and whom our IP regime is really intended to support. In other words, the stakeholders who benefit from the IP regime.

I think Mr de Souza also raised a point about costs, and I think the point that Mr de Souza made was why is it that the Bill provides for indemnity cost under certain conditions in clause 6, but only for geographical indications. Similar amendments to those – I think he referred to clause 6(b) which amends the Geographical Indications Act – they will also be made in this Bill at clause 28, to the Registered Designs Act, and clause 34, to the Trade Marks Act, to bring them onto the same footing as what Mr de Souza refers to. And that can be found at clauses 28 and 34 respectively for the Registered Designs and the Trade Marks Act.

Sir, in conclusion, the reforms introduced will enable IP rights owners to resolve their IP disputes efficiently in court and at IPOS, whether they are individuals, SMEs or large corporations. This will give IP rights owners greater assurance of the enforceability of their IP rights, and also increase the overall quality of granted patents in Singapore. These reforms are part of our continual efforts to improve our IP regime, to support our innovative and creative industries.

I wish to thank the Members who have spoken and who have supported the Bill. Mr Speaker, I beg to move.

*Question put, and agreed to.*

*Bill accordingly read a Second time and committed to a Committee of the whole House.*

*The House immediately resolved itself into a Committee on the Bill. – [Mr Edwin Tong Chun Fai].*

*Bill considered in Committee; reported without amendment; read a Third time and passed.*