A final award dismissed every claim brought against Aceris Law’s client, rejected substantial claims for patent damages and royalties, upheld two of the client’s counterclaims and ordered the claimant to reimburse more than 90% of the client’s legal, expert and arbitration costs in a multimillion-dollar ICC arbitration.
Aceris Law is pleased to announce a decisive victory for its client in a complex ICC arbitration involving allegations of U.S. patent infringement, related contractual claims, and substantial claims for damages and patent royalties.
Following extensive written submissions, document production, technical and quantum expert evidence, and a multi-day final hearing, the Tribunal dismissed every claim brought against Aceris Law’s client. The Final Award also granted two of the client’s counterclaims, together with interest, and ordered the opposing party to reimburse the overwhelming majority of the client’s legal, expert and arbitration costs.
At an earlier stage of the proceedings, the Tribunal issued a Partial Award addressing the complex applicable-law framework. The Partial Award recorded that the Tribunal’s jurisdiction was uncontested and determined that different bodies of law governed different aspects of the dispute. U.S. federal patent law applied to the patent claims, the United Nations Convention on Contracts for the International Sale of Goods (“CISG”) applied to matters falling within its scope, Serbian law could apply to certain sales-related issues, and U.S. law could apply to distribution-related matters falling outside the parties’ contract and the CISG. The same issue-specific approach applied to questions of interest, causation, damages, publication of the award and the burden of proof.
A Cross-Border Patent and Commercial Dispute
The arbitration arose from a cross-border commercial relationship involving the manufacture, distribution and sale of products incorporating patented technology. After the relationship deteriorated, the opposing party alleged that Aceris Law’s client had developed and promoted a competing product incorporating technology protected by a U.S. patent.
The claimant sought a declaration of infringement under U.S. patent law, orders preventing further development and commercial use of the allegedly infringing technology, the destruction of allegedly infringing products, lost profits, a substantial reasonable royalty, enhanced damages, pre-award interest, publication of the award and recovery of its arbitration costs. It also advanced several related contractual claims concerning the parties’ broader commercial arrangements.
Aceris Law’s client denied the allegations in full and pursued counterclaims arising from the same commercial relationship.
The dispute required Aceris Law to coordinate ICC arbitration strategy with U.S. patent law, technical and expert evidence, patent damages valuation, contract interpretation and cross-border sales law. The applicable-law issues were particularly complex because the parties’ agreement combined elements of both sales and distribution, meaning that the governing law depended upon the nature of each individual claim and contractual obligation. The Partial Award expressly adopted this issue-specific approach.
Resolving U.S. Patent Issues Through ICC Arbitration
A central issue was whether the claimant had proved that Aceris Law’s client had made, used, offered for sale or sold the patented invention under Section 271 of Title 35 of the United States Code.
The award undertook a detailed claim-by-claim analysis, including the doctrine of equivalents and the evidentiary significance of testing and development work. The Tribunal accepted that certain individual components had been fabricated during development, but held that component-level evidence was not enough. To establish infringement, the claimant had to prove that a complete product incorporated every required limitation of at least one patent claim.
That burden was not met. The evidence did not establish that the component alleged to be equivalent to a claimed element had ever been integrated into a complete product containing all other required claim elements. The patent infringement claim therefore failed, as did the contractual claims that depended on a finding of infringement.
The Tribunal also confirmed that it could assess forms of relief available under U.S. patent law where the arbitration agreement and applicable-law framework permitted it to do so. However, the requests for injunctive relief and destruction of products necessarily failed because infringement had not been established.
The result illustrates international arbitration’s ability to determine technically demanding patent disputes. It also demonstrates the importance of linking technical evidence to the precise wording of the patent claims, rather than relying on the perceived essence of an invention or evidence concerning isolated components.
Patent Licensing Terms and Reasonable Royalty Analysis
Although it found no infringement, the Tribunal addressed the claimant’s royalty case on a confirmatory basis. This required examining the patent licence that a willing licensor and a willing licensee would hypothetically have negotiated immediately before any alleged infringement.
The award considered the core commercial terms of such a licence, including whether compensation would take the form of an upfront lump sum or a running royalty tied to actual use or sales; how commercial risk would be allocated; whether comparable licences were genuinely comparable; the exclusivity and scope of the licence; the appropriate royalty base; the incremental value attributable to the patented feature rather than the entire product; expected sales; the proposed licence term; and the discount rate.
The Tribunal rejected the requested upfront lump-sum approach. The existing commercial arrangement lacked the upfront commitments that would ordinarily support a substantial payment before the technology had demonstrated market acceptance. A running royalty would have been more commercially rational, but the evidentiary record did not support the amount claimed.
The alternative royalty methodology was also found deficient because it used an incorrect royalty base, relied on historical sales of a different product and insufficiently comparable licence data, selected an unsupported benchmark, invoked the 25% rule rejected by U.S. patent case law, assumed an unexplained licence duration and applied an unreliable discount rate.
The request for enhanced damages under Section 284 also failed. The Tribunal held that awareness of a patent, without evidence of egregious, deliberately wrongful or bad-faith conduct, was insufficient to justify this exceptional remedy.
These findings show why patent arbitration requires more than technical infringement analysis. Counsel must also test the economic logic of the alleged licence, the compatibility of the proposed royalty structure with the parties’ actual commercial relationship, and the reliability of each valuation input.
A Decisive Result for Aceris Law’s Client
The Final Award produced a comprehensive result in favour of Aceris Law’s client:
- All patent infringement, contractual liability, damages, royalty, interest, injunctive and publication claims against the client were dismissed.
- Two of the client’s four counterclaims were granted, together with pre-award and post-award interest.
- The claimant was ordered to reimburse more than 90% of the client’s legal, expert and arbitration costs, together with post-award interest.
The result reflects both a merits victory and the effectiveness of a disciplined, evidence-led defence. In its costs analysis, the Tribunal expressly recognised the technical, legal and valuation complexity of the dispute, and found the client’s costs reasonable, properly substantiated and connected to the arbitration.
Aceris Law’s Experience in Patent Arbitration
This award strengthens Aceris Law’s record in international intellectual property disputes. Patent and technology cases combine infringement law, licensing economics, commercial contracts and technical expert evidence. International arbitration can provide a private, confidential and flexible forum for addressing these interrelated issues in a single proceeding.
Aceris Law regularly acts in international arbitrations involving patents, licensing arrangements and technology-related claims. Its lawyers represent both claimants and respondents and are experienced in coordinating the legal, technical and valuation issues that such disputes often raise. The firm combines focused advocacy with coordinated patent, technical and valuation expertise. Parties involved in similar disputes may contact Aceris Law to discuss how best to proceed.
