WIPOD – Arbitration and Mediation Matters: Transcript of Episode 1

How to Resolve IT and Software Disputes with Arbitration and Mediation

Selin Ozturk: Welcome to WIPOD Arbitration and Mediation Matters. The WIPO Arbitration and Mediation Center’s (the WIPO Center) podcast on intellectual property and innovation disputes. My name is Selin and thank you for listening, as this podcast aims to provide practitioners a deeper understanding of the use of alternative dispute resolution (ADR) mechanisms, for example, mediation and arbitration for such disputes.

Today we are delighted to have with us Chiara Accornero and Lam Chung Nian to share their views on using alternative dispute resolution for IT disputes, including mobile applications.

Lam Chung Nian heads the intellectual property technology and media telecommunications and data protection practices at Wong Partnership LLP, a leading Singapore law firm. He has extensive experience representing multinational companies, listed corporations and government clients on regulatory, transactional, enforcement and advisory matters. Chiara Accornero, a national of Italy, joined the WIPO Arbitration and Mediation Center here in Geneva in 2016, and was the Center’s representative at Maxwell Chambers in Singapore from 2017 until mid-2021. Thank you both for joining us today.

Lam Chung Nian: Thanks very much Selin and Chiara.

Selin Ozturk: Of course! To begin, Chiara, Chung Nian, would you be able to give us an overview of the frequent software disputes and some characteristics of software disputes?

Lam Chung Nian: Well I think there are characteristics of software disputes that are probably worth talking about. The first would be that software disputes are often multi-jurisdictional. This is quite naturally a consequence of the fact that many software companies, they operate globally, so that the marginal cost of serving users in an additional country is usually quite low and businesses would therefore want to launch in multiple countries, so that they can widen their market reach.

It’s also common that in this context that the IP rights owners would seek patent and trademark protection in multiple countries before they launch their products in order to capitalize in the value of the IP rights and so the consequence would be that transactions and disputes relating to these rights will also become increasingly multi-jurisdictional.

So, say if you took, as an example, a mobile app developer wanting to obtain a copyright license to use a certain court library or to incorporate certain media elements, then the publisher would need to obtain the license in all of the jurisdictions that they are thinking of operating in; and if disputes arise over the terms of the license, you can see, quite quickly, the proceedings can be initiated in multiple jurisdictions around the world. So, I think this is one trend.

The second trend perhaps is that these types of disputes tend to be very technical, very specialized. Not always would you have specialist judges in the national courts dealing with these sorts of areas. So that might mean that in terms of the resources needed to deduce evidence in the national court system, you might have to find that there is great reliance on experts which might introduce some additional resourcing required in terms of time and expense.

The third point would be that this is a very fast moving industry, and product cycles are very short. So, you would have very little incentive to be honest with the part of the claimant, or on the part of somebody who is defending a claim, to be spending too much time and money on proceedings where the product may become obsolete very quickly. Therefore, the dispute resolution process would have to be quick, conclusive, so that the parties can move on and ride on these product cycles. Those are some of the thoughts that I might have – Chiara?

Chiara Accornero: Thank you Chung Nian. Actually, this reflects very well our experience also mediating arbitrating software disputes. We very often see parties coming for different jurisdictions or involved in cross-border transactions. We also see an interest from the parties in having a neutral forum, a single dispute resolution procedure. Speed is definitely another characteristic of the dispute and this is because of the market, which is evolving very rapidly and also the short  product lifecycle.

Maybe just to add another feature, we also see confidentiality as being a very important consideration for the parties, where confidential information is at stake, but also for reputational reasons. Maybe to name a few of the software disputes that we see at the WIPO Center: they may involve, for example intellectual property and IT licenses. For example, there may be disputes regarding royalty payments or interpretation of the terms or scope of a license, or also licensing conditions such as FRAND terms; and again confidentiality, for example, if you think of the source of mobile applications. But we will also see disputes concerning research and development agreements.

Selin Ozturk: So how can parties to software disputes benefit from the procedural flexibility offered by mediation and arbitration?

Lam Chung Nian: Well I think there is definitely a significant advantage that alternative dispute resolution processes such as mediation and arbitration will offer.

The primary advantage would be this concept of party autonomy – which means the parties are free to determine the manner in which they wish to have their dispute resolved and the kinds of procedures that apply. So what this means is that relative to the traditional court system, they are going to have a lot more flexibility in the manner in which they resolve the dispute. For example, if the parties choose to mediate their disputes then there is also a greater chance of salvaging their business relationship, because the outcome will be consensual; and there may also be similar effects in an arbitration setting, because the parties have the ability to tailor the procedure to best suit their particular circumstances and their requirements.

Secondly, I think flowing true from the point that was raised earlier about the multiplicity of proceedings, it is possible to have arbitration or mediation, resolve the dispute between the parties, even if it cuts across multiple countries in that single procedure or that single process.

This can mean significant savings in terms of cost, duration and outcomes because I think you can well imagine in the traditional route where matters would be submitted to litigation in national courts, then the outcomes in different countries may well be different. And on top of that, the findings in a particular court may not necessarily bind or even be persuasive in other jurisdictions. This can significantly complicate the entire litigation process because you will take the risk of multiple outcomes that might be inconsistent with each other happening in multiple jurisdictions.

In the case of ADR on the other hand, you have a single outcome that can be reflected in the award and it can cover a range of the different jurisdictions. In a similar vein, you would also have this kind of flexibility to choose the neutral with specialized expertise, which can translate into some cost and savings, and also the procedural rules that will be applied for the actual process.

For example, the WIPO Arbitration Rules have specific procedural rules dealing with matters that are often uniquely encountered in IP related disputes such as, to Chiara’s point, procedural rules relating to addressing trade secrets, confidentiality or things like experiments, site visits and emergency relief. These are useful, I would think, in helping parties establish a dispute resolution process that is more suited for these kinds of disputes. Chiara?

Chiara Accornero: Just maybe to comment on your first point, we have seen in many WIPO cases –both mediation and arbitration – that the parties are really taking benefit from a single procedure which is able to resolve disputes in multiple jurisdictions. So saving parties time, cost, but also the complexity of multijurisdictional litigation. In general, procedural flexibility is really one of the main advantages of alternative dispute resolution procedures – both mediation and arbitration. So again, parties may choose their mediator/arbitrators, so someone with specific expertise in the legal area, but also the business area.

Parties can also structure the procedure to meet their needs and interests. For example, in terms of timeline and this may be particularly relevant if parties, for example, are involved in pending court proceedings or if time is really of the essence to the parties, which is often the case in the area of IT and software. Maybe one example and this is one of our latest developments at the WIPO Center: parties can also agree to make use of online tools, videoconferencing services and these are offered free of charge by the WIPO Center.

Selin Ozturk: This actually brings me to ask, what types of remedies and solutions can be achieved through mediation and arbitration in software related disputes particularly?

Lam Chung Nian: Perhaps, of course, we will just talk about the arbitration outcomes first because that would mirror a kind of closer parallel to the national court systems for dispute resolution. And the kinds of remedies that are usually granted in arbitration can extend to what, in fact, would also be available in the national courts. For example, damages, specific performance, declaratory relief, interest – and of course, all this would flow from the fact that the parties have agreed to submit and also to recognize the outcome of that dispute resolution process.

In the case of where there is a mediation settlement, then there would be similarly an outcome come that would have been achieved by the consensus of the parties reflected in that settlement agreement.

I think when we talk about the issue of relief, it is also important to bear in mind that there are international conventions that help to ensure the enforceability of this kind of relief as well. I am sure many people are familiar with the New York Convention. There are 168 jurisdictions that are already party to it and that framework ensures that arbitral awards are enforceable in all of the country parties.

There is also a new Singapore Convention that allows for mediation settlement agreements to be enforced through national courts and this is a relatively young Treaty or Convention that entered into force in September, 2020, yet there are already 54 signatory countries to it. So the existence of these treaties also add to the viability of the kinds of relief that you would get out of these ADR processes.

Chiara Accornero: I completely agree! Now going back to the remedies, another advantage of mediation, arbitration, is that parties can request and explore remedies that may not always be available in court litigation. Of course, very often, we see monetary relief but parties may also request specific action as a remedy – for example, a declaration of non-performance of contractual obligations or an infringement of rights.

With other forms we have seen in our cases solved by the parties, for example, the provision of a security, the production of specific data or information, or also delivery of a specific good or even the conclusion of contracts. But in particular through mediation, parties can really go beyond their legal rights and obligations so they can really find solutions that suit their business interests. We see for example mediation and other parties were actually able to renegotiate their contractual relationship or to commence one in the first place – and this is really another advantage of mediation that helps parties not only to resolve the dispute but also to, in a way, maintain and even begin their business relationship.

Selin Ozturk: Yes, I agree, I believe flexibility, and just even having that possibility to have new and maintain those relationships, it is very important. For sure.

Do you think mediation can be used where there is no pre-existing contractual arrangement between the parties for example in cases of IP infringement? In these cases, can mediation be used to regularize infringement situations? Do you have any thoughts on these?

Lam Chung Nian: Maybe I’ll kick off first. Often you hear commentators talk about how arbitration and mediation are really viable whenever the parties have some kind of a business relationship that exists between them, for example, a licensing arrangement or where the license agreement already contains an agreement to submit their disputes to the ADR process. But I think it is in fact also possible for parties to submit to an ADR process on an ad hoc basis, where there may be no pre-existing agreement that defines the relationship between them or where, say, a claimant wants to pursue a potential claim against a third-party infringer.

To WIPO AMC’s (the WIPO Arbitration and Mediation Center) credit, they have established various processes where they can assist with a party trying to encourage the other party to submit to an ADR process so they have a request for mediation process, which I am sure Chiara can elaborate upon.

And I think it’s also useful to observe that many court systems these days, as part of the kind of usual procedural process that parties would be subject to, even in a national litigation kind of setting, parties are often encouraged to consider whether they might want to have their disputes mediated. So I think that is a very forward thinking kind of a way of trying to get parties to have their disputes resolved in a manner that doesn’t necessarily involve the parties having to fight their case all the way through, which can be a tremendous drag on resources and time.

Chiara Accornero: I completely agree, mediation can definitely be used in these cases and also to facilitate in a way access to mediation. We have what Chung Nian was anticipating, we call it the Unilateral Request for WIPO Mediation.

This is a very short form, really a one page document, that a party who is involved in a dispute, for example, if a party defines its intellectual property rights  being fringed by someone else, can submit to the WIPO Center to propose mediation to the other party. And the filing of the Unilateral Request for Mediation is free of charge and once we receive the requests at the WIPO Center, we contact the other party and we assist the other party considering the mediation option.

For example in some cases, we have seen that mediation was the opportunity for the parties to consider and even conclude a license with the other party. So not just the regularizing of the situation of infringement but even commencing a business relationship with other party.  

Selin Ozturk: Would you be able to dive a little deeper in regards to using mediation as a first step in multi-tier dispute resolution processes? Referring to parties attempting mediation before arbitration or litigation as a good business practice? Including drafting clauses for your software contracts?

Lam Chung Nian: I would certainly think that it is certainly a good practice to structure a process like that in the dispute resolution clauses in an agreement.

The reality is that typically there will be an existing business relationship that is established by that very agreement. There would have been relationships that would have been established between the parties.

If a dispute arises, then it’s useful to have parties commit to a kind of an escalation process. First to perhaps involve senior management, for them to have a discussion about the issue and consider very seriously the option of trying to mediate the dispute. And only if the process is relatively unsuccessful, then, of course, the final option is then to have a decision that is made for the parties through the process of the arbitration where the tribunal intervenes and determines the manner in which the dispute between the parties ought to be resolved.

But I think there is much to be said for drafting clauses recognizing the fact that there is this relationship and therefore an escalation process, before the parties are forced to explore or to go down the path of the actual arbitration by building in this kind of a step approach. This thus allows for greater options for the relationship of the parties to be salvaged.

Chiara Accornero: It does and this really reflects our experience at the Center as well. We often see mediation as a first step, either before arbitration or also court litigation and based a bit on our experience, we really encourage it. This is because the majority of cases are settled in the mediation phase.

We are looking at an average of 70% settlement rate, and only in 2020 there was 78%, so close to 80%; and even in those few cases where parties do not reach a full settlement in the mediation phase, usually they do manage to resolve some of the issues at stake. Then the subsequent dispute resolution process, whether arbitration or court litigation, is faster. There are also no risks associated with mediation as it is really fully confidential under the WIPO rules and it always gives the parties a better understanding of the dispute and their respective position. Now as to the drafting, we try to facilitate this as much as we can. For example, we make available on our website some model clauses in different languages, but also we are always available for any consultation to draft, specific contract clauses or also submission agreements.

Lam Chung Nian: I must also emphasize the point that Chiara was raising: that it is important to pay attention, especially to situations where you are trying to put in place a multitier dispute resolution agreement, that it has to be clear the various steps that must be undertaken and if there are any particular timelines that must be met. Because there is always the risk that if the clauses are not properly drafted, then it could render the ultimate agreement to arbitrate unclear or ambiguous or what might sometimes be termed pathological and that’s not where you want for parties to be in. So, it is very important to pay some attention to the careful drafting of these kinds of multitier agreements.

Selin Ozturk: Thank you both. That was very insightful.

I just have one final question and it’s whether either of you would have any other relevant matters that you would want to highlight for our listeners, as you just did.

Lam Chung Nian: Well maybe just a kind of round up perhaps at my end. Whether it’s two parties coming together in the commercial collaboration that they are trying to establish between themselves, it’s important to think about how the disputes will be resolved so that there is every opportunity to salvage that business relationship in the ways in which we were discussing earlier.

Certainly too often we see that the dispute resolution clauses are just left to the last minute – that should not be the case. It ought to be something that is carefully thought through and you would also want to make sure that there are none of those kinds of drafting related pitfalls or lack of clarity, even where there is no existing relationship between the parties; even where say the parties are in the throes of a dispute.

Certainly do not lose sight of the alternative that ADR might offer. It could indeed be a viable option to help the parties arrive at some conclusion or outcome that is more cost effective or more efficient, particularly in the context of what we were talking about where there is multiplicity of disputes, multiplicity of jurisdiction or where issues are extremely complicated technically.

And the ADR process, even in that kind of scenario, can help to narrow issues or keep parties very focused on resolving the core or the nub of the sorts of concerns that has given rise to the dispute in the first place.

Chiara Accornero: Thank you Selin and Chung Nian. Maybe a couple of takeaways is to consider dispute resolution policies as early as possible in the collaborations. And to really consider ADR – whether mediation, arbitration or the combination of the procedure – as a dispute resolution option. So in our experience, mediation, arbitration, are primarily very effective in also helping the parties really get back to their business, which is the ultimate goal.

Selin Ozturk: Thank you both, really, for your insightful views on alternative dispute resolution mechanisms for IT disputes and mobile applications.

Lam Chung Nian: Thanks very much Selin for having me, and thanks Chiara as well, it is always a pleasure to be working with WIPO on these initiatives.

Chiara Accornero: Thank you very much Selin and Chung Nian.

Selin Ozturk: Thank you for listening and do not forget to subscribe, as we come out with new episodes every month. For more information on WIPO's alternative dispute resolution services, you may visit the WIPO Center website or follow us on LinkedIn.