The press is often filled with stories of high-profile IP litigation, but it is rare to hear of IP cases that have been through alternative means of dispute resolution (ADR) such as arbitration or mediation. This is for good reason – most ADR is completely confidential. ADR can be used in almost any legal dispute at any stage of a dispute – in fact, UK litigants have a positive obligation to consider whether ADR would be more suitable for resolution of the dispute than proceeding through the courts. But how and when should it be used in IP matters?
For the uninitiated, parties who engage in ADR choose one or more basic forms. Arbitration is where the parties agree to be bound by the decision of an arbitrator, typically a retired judge or other person with legal and/or technical expertise. It is “trial-like” in the sense that the parties agree a set of procedural rules, but with greater flexibility compared to court litigation, and the arbitrator presides over the final hearing. Mediation is where parties agree to use a third party mediator, again typically a legally qualified person, to help guide the discussion towards settlement. Unlike an arbitrator, the mediator cannot bind the parties. Often mediation is called for when the parties cannot settle the matter themselves, or where the parties are contractually obligated to engage in mediation to resolve any disputes.
Arbitration has many advantages. The proceedings are confidential and the parties get a degree of choice over the arbitrator to hear the case. Where matters are cross-jurisdictional, a single award can render the matter final globally all at once, alleviating the need to utilise the courts of each jurisdiction, saving complexity, time and cost.
The majority of IP arbitrations are contractual in nature (upwards of 75 per cent according to WIPO), but infringement and validity matters are often heard. Although arbitrators have no power to invalidate an IP right, parties can agree that the IP right becomes unenforceable against the other party, but what this means in practice for the IP right-holder will vary depending on the award and the ground rules agreed by the parties at the outset. National laws may also limit the scope of an arbitral award concerning the validity or infringement of a registered IP right.
Likewise, mediation has many advantages – it can bring parties to the table where there was no hope previously. Like arbitration, mediation is confidential. As it is a negotiation, instead of a trial, the parties can walk away if they do not like the deal. Of course, this is balanced with the possibility of spending time and cost on a facilitated negotiation that might ultimately fail, but the majority of parties go into mediation with a prospect that a deal will be made.
Disputes are often far from people’s minds in the sunny period leading up to an agreement, but the dispute resolution clause should not be overlooked. A careful consideration of mediation, arbitration and other ADR procedures at the time of contracting could be a way of avoiding costly and uncertain litigation down the road.