Resolving IP Disputes through Mediation and Arbitration
Intellectual property (IP) rights are only as strong as the means to enforce them. One way in which WIPO addresses issues of enforcement and dispute resolution is through its Arbitration and Mediation Center which has offered efficient specialized alternative dispute resolution (ADR) procedures since 1994.
The potential of mediation and arbitration for preventing and resolving IP disputes has not been fully realized as most IP owners and IP lawyers still rely on traditional means of court litigation. But perceptions have started to change due to a number of related developments that have taken place over the last ten years. First, the economic importance of IP has grown to the extent that, for many companies, IP rights are their basic assets, and disputes involving these rights can interfere with, or even paralyze, their activities. At the same time, as IP assets are marketed and exploited across borders, disputes involving these assets are likely to concern multiple jurisdictions. In addition, IP owners are increasingly engaged in complex contractual relationships which involve parties in different forms of cooperation in research and development, production or marketing.
The trend towards ADR has been reinforced by the success of domain name dispute resolution procedures such as the Uniform Domain Name Dispute Resolution Policy (UDRP), which provides trademark owners with an efficient remedy against the bad-faith registration and use of domain names corresponding to their trademark rights. Moreover, a growing number of procedural laws encourage, or even require, the use of ADR.
The advantages of ADR are increasingly recognized. They include the following:
- A single procedure. Court litigation in international IP disputes can involve a multitude of procedures in different jurisdictions with a risk of inconsistent results. Through ADR, the parties can agree to resolve in a single procedure a dispute involving a right that is protected in a number of different countries, thereby avoiding the expense and complexity of multi-jurisdictional litigation.
- Party autonomy. Because of its private nature, ADR offers parties greater control over the way their dispute is resolved. Unlike in court litigation, the parties may choose the procedural rules, the applicable law, the place and the language of the proceedings.
- Neutrality. ADR can be neutral to the law, language and institutional culture of the parties. It can thus eliminate any home court advantage that one of the parties might otherwise enjoy in the context of court litigation, where familiarity with the applicable law and local processes can offer significant strategic advantages.
- Expertise. The parties can select arbitrators or mediators who have special expertise in the legal, technical or business area relevant for resolving their dispute.
- Confidentiality. ADR proceedings are private. Accordingly, the parties can agree to keep the proceedings and results confidential. This is particularly important where – as is often the case in IP disputes – confidential information or trade secrets are at stake . It also enables the parties to focus on the merits of the dispute, without being concerned about its public impact to their reputation.
- Finality and enforceability of arbitral awards. Unlike court decisions, which can generally be contested through one or more rounds of litigation, arbitral awards are not normally subject to appeal. Their enforcement across borders is greatly facilitated by the United Nations Convention for the Recognition and Enforcement of Foreign Arbitral Awards of 1958, known as the New York Convention, which requires all 137 Member States to recognize arbitral awards without review on the merits.
ADR does also have its limitations, and certain objectives can only be attained through court litigation. In particular, it is not possible to obtain through ADR a decision that would set a public legal precedent. The results of an ADR procedure, an arbitral award or a settlement agreement, are in principle binding only on the parties involved. So for example, if a party wished to obtain a generally binding decision that the claims of a particular patent were valid/invalid, the only means of obtaining such a "public" decision would be a court judgment.
In addition, the consensual nature of ADR makes it less appropriate if one of the two parties is uncooperative. Since both parties must agree to use ADR, no party can force another to participate.
WIPO’s Arbitration and Mediation Center
In order to promote the use of ADR in intellectual property disputes, WIPO offers the following procedures through its Arbitration and Mediation Center:
- Mediation. A non-binding procedure in which a neutral intermediary, the mediator, assists the parties in reaching a settlement of the dispute.
- Arbitration. A neutral procedure in which the dispute is submitted to one or more arbitrators who make a binding decision on the dispute.
- Expedited arbitration. An arbitration procedure that is carried out in a short time and at reduced cost.
- Mediation followed, in the absence of a settlement, by arbitration.
These procedures are administered under rules which were developed with the active involvement of many leading ADR and IP practitioners and scholars. To facilitate the submission of disputes to one of these procedures, the Center has developed model clauses, which contain the elements on which parties should reach agreement before a procedure is initiated. These clauses can be found on the Center’s website.
Against the background of the increasingly international commercialization of intellectual property assets, the Center has, over the last three years, observed an increase in the number of WIPO arbitrations and mediations. By March 2006, 47 arbitrations and 44 mediations had been filed covering disputes arising from patent or software licenses, joint ventures, R&D or trademark co-existence agreements, distribution agreements for pharmaceutical products, as well as domain name and patent infringement disputes.
Mediators and Arbitrators
Whatever the merits of the rules, the success of an ADR procedure depends in large part on the quality of the neutral, i.e. the mediator or arbitrator. In the case of IP disputes, a high level of dispute resolution skill and experience must be accompanied by specialized knowledge of the subject matter of the dispute. WIPO therefore places great emphasis on identifying suitable candidates to fill these roles. In referring a dispute to WIPO, parties can draw on a growing database containing the professional profiles of over 1,000 arbitrators and mediators from around 70 countries. These range from seasoned dispute-resolution generalists to highly specialized experts, covering the entire legal and technical spectrum of IP.
Disputes interfere with the successful use and commercialization of IP rights. Providing means for resolving them as fairly and efficiently as possible, without disrupting underlying business relationships, is therefore an important challenge for international IP policy. ADR has a number of characteristics that can serve this purpose, and as such offers an important option for resolving IP disputes.