An International Guide to
Patent Case Management for Judges

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8.6.11 Alternative dispute resolution Meaning and scope

Alternative dispute resolution (ADR) refers to any legal means of resolving disputes without litigation and trial. ADR is classified into judicial, administrative and private ADR according to the characteristics of the responsible institution. In terms of the method of settling disputes, ADR can also be classified into settlement, mediation and arbitration. The salient features of litigation and ADR are compared in Table 8.1.

Table 8.1 Comparison of litigation and alternative dispute resolution
Feature Litigation Alternative dispute resolution
Settlement Mediation Arbitration
Participation Involuntary Voluntary Voluntary Voluntary
Effect of adjudication Claim preclusion, executory power Agreement1 Agreement1 Same as a final and conclusive judgment
Scope of effect National International International International
Presider Judge Selected by the parties Selected by the parties
Procedural formalities Conducted according to the Civil Procedure Act etc. Informal Informal Involves less formality2
Outcome Written reasoned judgment Agreement Agreement Reasoned arbitration award
Disclosure Disclosure required Nondisclosure Nondisclosure Nondisclosure

1 Settlement and mediation by the court both have the same effect as a judgment.

2 Except those contrary to the mandatory provisions, parties may agree on the arbitral proceedings. However, if they fail to reach an agreement, the arbitral proceedings will be conducted in accordance with the Arbitration Act.135

In the following sections, we discuss the systems both of settlement in litigation and of mediation falling under the category of judicial ADR. The judicial ADR systems discussed below are only applicable to civil patent lawsuits and not to administrative or criminal patent lawsuits. Settlement in litigation

The term “settlement in litigation” refers to an agreement that parties to an ongoing lawsuit can reach before the judge through mutual concessions on their claims for the rights or legal relationships at issue. Any settlement reached between the parties out of court is only considered a settlement agreement in private law and does not have the same effect as a settlement in litigation.136 Process

Settlement in litigation may be reached at any time while the lawsuit is pending. Thus, a case may be settled in litigation at the appellate court or the Supreme Court, even after the argument is closed and the judgment is rendered, so long as the judgment is not confirmed as final and conclusive.

In principle, any settlement in litigation can only be reached by the parties’ verbal statement in court on the date of hearing. If the parties make a statement regarding the settlement agreement, this will be written down in the court record for trial to have the same effect as a final and conclusive judgment. This may be done on a date of hearing, preparatory hearing or examination of evidence, or a separate hearing date for settlement may be scheduled. In addition, a settlement is considered as reached if either party has expressed the intent of settlement in their brief, authenticated by a notarial office, and the other party has appeared in court on the hearing date and accepted such intent to settle.137 Effect

When a settlement in litigation is stated in the court record for trial, such protocol has the same effect as a final and conclusive judgment.138 Therefore, the settlement closes the lawsuit, and the settlement record serves as the source of executory force for compulsory execution.139 Given the fact that a record of settlement in litigation has the same effect as a final and conclusive judgment and thus has the effect of res judicata, neither party may assert the nullity of the settlement between themselves even if its content is in violation of mandatory provisions unless the record is revoked by a quasi-retrial.140 Recommendation of a settlement

A court, commissioned judge or entrusted judge may, on the case during the pendency of action, render ex officio a ruling of settlement recommendation to fairly settle the case by taking account of the parties’ interests and all other circumstances, within the boundary of the gist of the claim.141 A ruling of settlement recommendation has the same effect as a judicial settlement when neither party raises an objection within two weeks of the date of receiving the ruling from the court or when such an objection is withdrawn or waived.142

As explained in Section, a settlement agreement in private law, which is reached between the parties out of court, does not have the same effect as a settlement in litigation. In private settlements, the parties may resort to the settlement recommendation system. In some cases, the court may render a ruling of settlement recommendation after the closing of argument but before pronouncing a judgment, based on its review of the case records in their entirety. Mediation

The civil mediation system is a dispute resolution method wherein a neutral third party (or a mediator) intervenes in the negotiation process, with the consent of the parties, to help them easily settle the dispute. It is similar to a settlement in litigation in that an agreement should be reached between the parties but different in that the mediator more actively recommends and facilitates an agreement between the parties. Institutions

Mediation cases may be dealt with by either a mediation judge, standing commissioner, mediation council or a court handling the lawsuit serving as a mediation institution.143 These are, respectively, called mediation by a mediation judge, mediation by a standing commissioner, mediation by a mediation council and mediation by a court of the lawsuit.

Courts also operate a mediation system with external institutions, entrusting them with the handling of mediation cases through memorandums of understanding. Some courts operate all of the mediation institutions, and others have only some of them, as each court sees fit. Proceedings

Mediation proceedings may be initiated by either party’s filing of a request for mediation with a court or by a court of the lawsuit’s referral to mediation.144 Thus, a case could first start with mediation but return to litigation after the mediation fails;145 or it could start with litigation, be referred to mediation, and then return to litigation after mediation fails.

Mediation proceedings usually take place in a court’s mediation chamber on a scheduled date but may also be conducted in any other appropriate venue other than the courthouse.146 Mediation proceedings may be sealed from the public; however, a mediation judge may allow nonparties to attend the sealed proceedings where appropriate.147 Completion and effect of mediation

Mediation is duly reached by putting the matters agreed upon between the parties into the record.148 Accordingly, once mediation is reached at the mediation hearing, authentic copies of the mediation record are sent to the parties, and the mediation has the same effect as a judicial settlement in litigation.149

With respect to cases where agreement has not been reached or where the terms of the agreement are deemed inappropriate, a mediation judge or judge at the court of the lawsuit in charge of mediation may render a ruling to ensure a fair resolution of the case, taking into account ex officio the interests of the parties and all other relevant circumstances to the extent not contrary to the purpose of the request for mediation.150 This is called a “ruling in lieu of mediation” or “mandatory mediation ruling.” As with a ruling of settlement recommendation, a mandatory mediation ruling has the same effect as a judicial settlement if neither party files an objection against the decision within two weeks from the date on which they received an authentic copy of the decision.151

Mediation proceedings are closed when mediation is not constituted or when an objection is filed against a mandatory mediation ruling. In such cases, the case is shifted to litigation if a lawsuit was filed before the mediation proceedings; if mediation was sought without filing any lawsuit, a lawsuit is regarded to have been filed at the time the request for mediation was made. Current mediation systems of the Patent Court

Since January 1, 2016, the Patent Court has had exclusive jurisdiction over appellate cases involving patent infringement. On March 10, 2016, the Patent Court established the Internal Regulations on Patent Court Mediation Commissioners. The Patent Court has taken these regulations as the basis for operating a mediation council consisting of legal professionals (e.g., former judges with profound experience in patent litigation) and technical experts (e.g., those from research institutions and university professors). Furthermore, a mediation judge system has been in place since February 27, 2017, to manage mediation cases in a systematic manner and to facilitate early mediation.152 The Patent Court also operates a mediation system whereby it may entrust external institutions, such as the Korean Commercial Arbitration Board, with the handling of mediation cases through memorandums of understanding. Arbitration

Arbitration refers to a procedure to settle a dispute that the parties can resolve through reconciliation – not by a judgment of a court but by an award of an arbitrator.153 Given that arbitration is determined by an award of an arbitrator, it is fundamentally different from settlement and mediation reached by an agreement between the parties. In this respect, arbitration has a lot in common with the general litigation system but is still different in that arbitration is not disclosed to the public in principle, allows more flexibility in terms of procedural formalities and usually relies on a single-instance resolution.

For mediation cases pursuant to the Judicial Conciliation of Civil Disputes Act, a case may be freely referred to mediation during the course of litigation or may be returned to the litigation procedure. For arbitration cases, however, a court should dismiss the action that has been brought in a matter that is the subject of an arbitration agreement when the defendant raises, as a defense, the existence of an arbitration agreement, provided that the court does not find the arbitration agreement null and void, inoperative or incapable of being performed.154

An arbitration agreement takes effect when the parties agree in writing to settle by arbitration – not by a judgment of a court – all or part of the dispute that has already arisen or might arise in the future in respect of legal relationships under private law. The effectiveness of an arbitration clause as an arbitration agreement is determined based on an overall consideration of the meaning of arbitration as defined in the Arbitration Act, the nature and form of the arbitration agreement, and specific circumstances, including the content of the relevant arbitration clauses and the background to the parties’ decision to have the arbitration clause. Optional arbitration clauses only take effect when either party opts for an arbitration procedure, not a judgment of a court, and pursues dispute resolution via arbitration, and the other party participates in the arbitration procedure without objection.155

Given that arbitral proceedings are conducted for an award, it is difficult to link them with litigation proceedings, unlike mediation, which relies on an agreement between the parties. Therefore, even though it is technically possible, there have been very few cases wherein arbitration proceedings were initiated after withdrawing the lawsuit in the course of litigation proceedings due to reasons such as having an ex post arbitration agreement.