INTRODUCTION

Mediation, also known as conciliation in many parts of the world, has a long history in the diplomatic arena. In the commercial world, interest in it has increased sharply in recent years. In part, this growth of interest is attributable to dissatisfaction with the cost, delays and length of litigation in certain jurisdictions. The growth of interest results also, however, from the advantages of mediation, particularly its appeal as a procedure that offers parties full control over both the process to which their dispute will be submitted and the outcome of the process.

Where mediation has been used, it has enjoyed very high rates of success in achieving a result acceptable to both sides to a dispute. Because it is a relatively unstructured procedure, however, some hesitate to use it for fear of not knowing what to expect. This document seeks to allay such fears by explaining simply the main features and advantages of mediation and how mediation under the WIPO Mediation Rules works in practice.

WHAT IS MEDIATION?

Mediation is first and foremost a non-binding procedure. This means that, even though parties have agreed to submit a dispute to mediation, they are not obliged to continue with the mediation process after the first meeting. In this sense, the parties remain always in control of a mediation. The continuation of the process depends on their continuing acceptance of it.

The non-binding nature of mediation means also that a decision cannot be imposed on the parties. In order for any settlement to be concluded, the parties must voluntarily agree to accept it.

Unlike a judge or an arbitrator, therefore, the mediator is not a decision-maker. The role of the mediator is rather to assist the parties in reaching their own decision on a settlement of the dispute.

There are two main ways in which mediators assist parties in reaching their own decision, which correspond to two types or models of mediation practiced throughout the world. Under the first model, facilitative mediation, the mediator endeavors to facilitate communication between the parties and to help each side to understand the other's perspective, position and interests in relation to the dispute. Under the second model, evaluative mediation, the mediator provides a non-binding assessment or evaluation of the dispute, which the parties are then free to accept or reject as the settlement of the dispute. It is up to the parties to decide which of these two models of mediation they wish to follow. The WIPO Arbitration and Mediation Center ("the Center") will assist them in identifying a mediator appropriate for the model that they wish to adopt.

Mediation is a confidential procedure. Confidentiality serves to encourage frankness and openness in the process by assuring the parties that any admissions, proposals or offers for settlement will not have any consequences beyond the mediation process. They cannot, as a general rule, be used in subsequent litigation or arbitration. The WIPO Mediation Rules contain detailed provisions directed also at preserving confidentiality in relation to the existence and outcome of the mediation.

HOW DOES MEDIATION DIFFER FROM ARBITRATION?

The differences between mediation and arbitration all stem from the fact that, in a mediation, the parties retain responsibility for and control over the dispute and do not transfer decision-making power to the mediator. In concrete terms, this means two things principally:

  • In an arbitration, the outcome is determined in accordance with an objective standard, the applicable law. In a mediation, any outcome is determined by the will of the parties. Thus, in deciding upon an outcome, the parties can take into account a broader range of standards, most notably their respective business interests. Thus, it is often said that mediation is an interest-based procedure, whereas arbitration is a rights-based procedure. Taking into account business interests also means that the parties can decide the outcome by reference to their future relationship, rather than the result being determined only by reference to their past conduct.
  • In an arbitration, a party's task is to convince the arbitral tribunal of its case. It addresses its arguments to the tribunal and not to the other side. In a mediation, since the outcome must be accepted by both parties and is not decided by the mediator, a party's task is to convince, or to negotiate with, the other side. It addresses the other side and not the mediator, even though the mediator may be the conduit for communications from one side to the other.

Naturally, in view of these differences, mediation is a more informal procedure than arbitration.

It is possible to combine mediation with arbitration. In such a case, the dispute is submitted first to mediation under the WIPO Mediation Rules. Then, if a settlement is not reached within a defined period of time (it is recommended that the parties provide for either 60 or 90 days), or if a party refuses to participate or to continue to participate in the mediation, the dispute is referred for a binding decision through arbitration under the WIPO Arbitration Rules (or, if the parties so agree, through expedited arbitration). The advantage of the combined procedure is the incentive that it offers for a good faith commitment by both parties to the mediation process, since the consequence of a failure to reach an agreed settlement will be more tangibly measurable in terms of the financial and management commitment that would need to be incurred in the subsequent arbitration procedure.

THE FUNCTION OF RULES IN MEDIATION

The WIPO Mediation Rules

Mediation is a relatively unstructured and informal procedure in which continued participation in the process, as well as the acceptance of any outcome, depends on each party's agreement. Rules thus have a more limited function in mediation than in binding arbitration. What is that function?

By agreeing to submit a dispute to WIPO mediation, the parties adopt the WIPO Mediation Rules as part of their agreement to mediate. Those Rules have the following main functions:

  • They establish the non-binding nature of the procedure (Articles 14(a) and 19(iii))
  • They define the way in which the mediator will be appointed (Article 7)
  • They set out the way in which the mediator's fees will be determined (Article 23)
  • They guide the parties as to the way in which the mediation can be commenced and the process can be established (Articles 3 to 6 and 13)
  • They provide the parties with assurances about the confidentiality of the process and the disclosures made during the process (Articles 15 to 18)
  • They determine how the costs of the procedure will be borne by the parties (Article 25)

FOR WHICH DISPUTES IS MEDIATION APPROPRIATE AND WHAT ARE ITS ADVANTAGES?

Mediation is not a suitable procedure for settling disputes in all cases. Where deliberate, bad-faith counterfeiting or piracy is involved, mediation, which requires the cooperation of both sides, is unlikely to be appropriate. Similarly, where a party is certain that it has a clear-cut case, or where the objective of the parties or one of them is to obtain a neutral opinion on a question of genuine difference, to establish a precedent or to be vindicated publicly on an issue in dispute, mediation may not be the appropriate procedure.

On the other hand, mediation is an attractive alternative where any of the following are important priorities of either or both of the parties:

  • minimizing the cost-exposure entailed in settling the dispute;
  • the maintenance of control over the dispute-settlement process;
  • a speedy settlement;
  • the maintenance of confidentiality concerning the dispute;
  • or the preservation or development of an underlying business relationship between the parties to the dispute.

The last-mentioned priority, in particular, makes mediation especially suitable where the dispute occurs between parties to a continuing contractual relationship, such as a license, distribution agreement or joint research and development (R&D) contract, since, as mentioned above, mediation provides an opportunity for finding a solution by reference also to business interests and not just to the strict legal rights and obligations of the parties.

AT WHICH STAGES OF A DISPUTE CAN MEDIATION BE USED?

Mediation can be used at any stage of a dispute. Thus, it can be chosen as the first step towards seeking a resolution of the dispute after any negotiations conducted by the parties alone have failed. Mediation can also be used at any time during litigation or arbitration where the parties wish to interrupt the litigation or arbitration to explore the possibility of settlement.

Another common use of mediation is more akin to dispute prevention than dispute resolution. Parties may seek the assistance of a mediator in the course of negotiations for an agreement where the negotiations have reached an impasse, but where the parties consider it to be clearly in their economic interests to conclude the agreement (for example, negotiations on the royalty rate to apply on the renewal of a license).

WHAT TYPES OF DISPUTE CAN BE MEDIATED AT WIPO?

The Center offers specialized services for mediation of intellectual property disputes, that is, disputes concerning intellectual property or commercial transactions and relationships involving the exploitation of intellectual property. Common examples of such commercial transactions and relationships are patent, know how and trademark licenses, franchises, computer contracts, multimedia contracts, distribution contracts, joint ventures, R & D contracts, technology-sensitive employment contracts, mergers and acquisitions where intellectual property assets assume importance, and publishing, music and film contracts.

It should be noted, however, that there is no limitation on the competence of mediators appointed under the WIPO Mediation Rules to deal with different classes of subject matter. A mediator appointed under the WIPO Mediation Rules is competent to deal with all aspects of any dispute. It is up to the parties to decide whether they consider the subject matter suitable for WIPO mediation.

WHY CHOOSE WIPO MEDIATION?

The choice of WIPO mediation offers the following advantages:

  • a low administration fee
  • an internationally based independent administering authority with specialized expertise in intellectual property
  • an international list of mediators including persons with specialized knowledge and experience in the technical, business and legal subject matter of intellectual property, as well as experience in international commercial mediation
  • flexible Rules with provisions sensitive to the need for the protection of confidentiality
  • where the mediation takes place in Geneva, hearing rooms provided free of charge

HOW IT WORKS: THE PRINCIPAL STAGES IN A WIPO MEDIATION

There are few formalities associated with a mediation. The structure that a mediation follows is decided by the parties with the mediator, who together work out, and agree upon, the procedure that is to be followed.

As mentioned above, the somewhat unstructured nature of a mediation can be disconcerting to those who may be entertaining the idea of submitting a dispute to mediation, but who may not be sure what to expect. For such persons, some guidance is set out in the following paragraphs, which outline the main steps in the conduct of a WIPO mediation. The procedure outlined should, however, be understood as being for guidance only, since the parties may always decide to modify the procedure and to proceed in a different way.

Getting to the Table: The Agreement to Mediate

The starting point of a mediation is the agreement of the parties to submit a dispute to mediation. Such an agreement may be contained either in a contract governing a business relationship between the parties, such as a license, in which the parties provide that any disputes occurring under the contract will be submitted to mediation; or it may be specially drawn up in relation to a particular dispute after the dispute has occurred.

The last section of this Guide contains recommended clauses for both situations, which provide a choice between agreeing to mediation alone or agreeing to mediation followed, in the event that a settlement is not reached through the mediation, by arbitration.

Starting the Mediation