WIPOD – Arbitration and Mediation Matters: Transcript of Episode 3

A WIPO Mediation Case Study in the Life Sciences Sector

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 Margarita Kato from the Arbitration and Mediation Center, who will be talking about the key elements and procedural steps of a WIPO mediation. In order to illustrate how mediation works in practice, we will be referring to a WIPO mediation case involving companies in the life sciences sector. The case has been anonymized to respect confidentiality.

We hope that by the end of the episode, you will have a better idea of how WIPO mediation works in practice. Rita, if you would please start us off by providing a brief explanation of mediation.

Margarita Kato: Sure – mediation is an informal consensual process in which the mediator, who acts as a neutral intermediary, helps the parties reach a settlement in their dispute. The mediator helps the parties reach an agreement based on their mutual interests – the mediator cannot impose a decision on the parties.

If the parties are able to resolve their dispute, they can enter into a binding agreement setting out the terms of their settlement. If not, the mediation concludes with the parties able to pursue other dispute resolution options, such as arbitration or court litigation, if they wish.

In some circumstances, parties may have agreed to try mediation before commencing arbitration or court litigation, or a court may have ordered that they try mediation.

Selin Ozturk: Thank you for that brief explanation. So what was the background to the WIPO life sciences mediation that we’ll be talking about today?

Margarita Kato: The mediation related to an alleged breach of contract between a French company, which was later acquired by a US company, and a German company.

The companies had entered into a collaboration agreement for the development of a human antibody for the treatment of a major disease. A few years into the agreement, the German company alleged that the US company had caused certain payments to be withheld and so filed a claim for breach of contract in a US district court. The US company responded by filing counterclaims against the German company.

Over a year into the court proceedings, the US judge suggested that the parties try mediation and they agreed. They then filed a joint request for mediation with the WIPO Center.

Selin Ozturk: So in this situation, the judge had suggested they try mediation – is that common? How do parties usually come to attempt WIPO mediation?

Margarita Kato: Yes, some national courts are very proactive in encouraging or ordering mediation. The WIPO Center collaborates with a number of national courts to encourage mediation (including the Supreme People’s Court of China) – we publish our collaborations online.

Parties opt for mediation themselves by either including a WIPO mediation clause in their agreement – we provide model clauses that can be included into agreements – or submitting a Request for Mediation.

We also offer the option of unilateral requests for mediation – these are available for a party who wishes to invite another party to consider resolving a dispute through WIPO Mediation. The WIPO Center assists by getting in touch with the other party and, if needed, explaining how the mediation would work.

Selin Ozturk: Once the parties have agreed to mediate, what comes next?

Margarita Kato: The parties then need to prepare for the mediation and what this involves would of course depend on what they want from the mediation process.

All parties should think about what they hope to achieve from the mediation – is it simply to settle a dispute or are they also trying to save the business relationship and renegotiate an agreement? Will the mediation be primarily about negotiation, or will certain technical issues need to be discussed and agreed upon?

All of these considerations determine what type of mediator the parties wish to appoint. Parties may require a mediator who is specialized in a certain area of intellectual property (IP), has the ability to speak certain languages, or be particularly knowledgeable about specific business practices. Under the WIPO Rules, parties may choose a mediator or ask the WIPO Center to assist with the appointment.

In the life sciences mediation example we administered, the parties had agreed on certain criteria for the mediator but were unable to agree on which mediator to appoint. The default appointment procedure under the WIPO Mediation Rules was therefore triggered. Based on the criteria agreed upon by the parties in their request for mediation, the WIPO Center submitted a list of five candidates to the parties along with their profiles which included their qualifications. The parties were then asked to number the candidates in order of preference – if the parties objected to any candidate, they could delete the name from the list. The parties were given seven days to do this – if they had failed to respond within that time, they would have been deemed to agree to all of the candidates.

In this case, after some discussion amongst themselves, the parties were able to agree on one of the mediators the WIPO Center had proposed – a US IP lawyer with considerable mediation experience. Had they been unable to agree, the WIPO Center would have appointed one of the mediators from the list, taking into account the preferences expressed by the parties.

Selin Ozturk: What is the next step after appointment?

Margarita Kato: Once the mediator is appointed, the WIPO Rules require the mediator, in consultation with the parties, to establish a timetable for the parties to submit summaries of the dispute, including and their respective interests and contentions in relation to the dispute. The mediator may also ask the parties to submit any other information the mediators considers may be relevant – and whatever other information the mediator considers may be relevant.

The procedure otherwise gives the parties and the mediator considerable flexibility in managing the mediation – the mediator can promote settlement of the dispute in whichever manner the mediator deems appropriate.

Selin Ozturk: On a related note, what is WIPO’s practice regarding the conduct of online mediation meetings?

Margarita Kato: We have administered many online mediations. There are of course plenty of advantages of online mediations – they’re much easier to organize, much less expensive by virtue of not needing to travel and, as a consequence, more accessible as a form of ADR.

There are of course practical considerations that parties need to prepare for and the WIPO Center has published an online checklist for things parties should consider such considerations.

It is interesting to note that during the COVID-19 pandemic in 2020-2021, 94% of WIPO Mediations were conducted online, and 6% in hybrid format. Additionally, the settlement rate in WIPO Mediations conducted in the same period increased to 76.5%.

Online meetings have become a popular option to build back better post-pandemic. For example, a recent survey conducted by the WIPO Center showed that 80% of the participants preferred online and hybrid meetings for ADR proceedings.

Selin Ozturk: What is the role of the mediator during the mediation itself?

Margarita Kato: The mediator is there to help the parties resolve their dispute in a manner that is based on business interests, rather than only legal rights. There are broadly two styles of mediation – facilitative and evaluative.

I’ll provide an overview of each style:

An evaluative mediator will offer a non-binding assessment or evaluation of the dispute, which the parties are then free to accept or reject

Facilitative mediators facilitate communication between the parties and help the parties understand their respective positions – unlike an evaluative mediator, they do not generally provide an assessment of the dispute. Ideally, the mediator will help the parties not only better understand the concerns or interests of the other party, but also their own. This helps the parties understand where the dispute really lies, what can be agreed quite easily, and potentially what creative solutions could be proposed. In practice, we often see a combination of both styles. In our case study, the mediator worked with the parties to help them settle their dispute within six months of commencing mediation.

Selin Ozturk: It’s great there was such a successful outcome in terms of coming to a settlement and doing so in 6 months. A follow up question I have is on caucuses – could you talk a bit more about their function in a mediation?

Margarita Kato: A caucus is a meeting that is held between the mediator and one of the parties during the course of the mediation.

At the start of the mediation, the mediator can discuss with the parties whether all of the meetings will be conducted with all of the parties present, or if the mediator may hold a private meeting with one party, i.e. a caucus. So whether private meetings are held will depend on the case.

There can be benefits to holding caucuses – it can give the parties some time to reflect on what has so far been discussed, or explain a certain issue to the mediator which they may not necessarily want to discuss in front of the other party. This can be beneficial to the mediation process as the mediator can gain new insights into the dispute and use those insights to further facilitate dispute resolution.

Selin Ozturk: How exactly are WIPO mediations concluded?

Margarita Kato: If the parties can settle their dispute, a settlement agreement will be signed – different mediators have different views on how to get to that stage. For instance, some believe it is crucial to produce and sign the agreement on the day of the mediation – i.e. not let the parties reach an agreement but then go home and have second thoughts. Others, however, don’t take that view and may request the lawyers for the parties to produce an agreement in the days following the mediation. This will ultimately depend on the parties’ wishes.

Where parties are unable to reach an agreement, the WIPO mediation is terminated either by the mediator deciding that further efforts at mediation are unlikely to lead to a resolution, or by one or both parties requesting to terminate the mediation.

Selin Ozturk: And what types of fees are paid in a WIPO Mediation?

Margarita Kato: There are two fees involved – the administration fee for the WIPO Center and the mediator fees. The administration fee depends on the value amount in dispute. The mediator fees would of course be dependent on the mediator and the WIPO Center assists the parties in negotiating these fees to ensure they are appropriate in light of the circumstances of the dispute.

Filings for unilateral requests for mediation, which I mentioned earlier, are free of charge. Parties therefore won’t incur any costs when inviting another party to WIPO Mediation.

Selin Ozturk: The WIPO Center recently launched the COVID-19 Related Services and Support Package to assist member states in addressing the COVID-19 pandemic. As part of that package, new WIPO alternative dispute resolution services for the life sciences sector were introduced – would you be able to expand on that?

Margarita Kato: Sure – the COVID-19 pandemic placed significant strain on collaborations across the life sciences sector. To assist parties, the WIPO Center launched new alternative dispute resolution services; one of these options is the use of mediation for facilitating contract negotiation – so not for resolving disputes. Such mediation may be particularly useful to help bridge parties’ respective experience in the life sciences sector. We developed this option in consultation with life sciences experts, including experienced WIPO mediators and arbitrators.

We have published a WIPO model submission agreement which parties may use to jointly invoke mediation to facilitate their contract negotiation. This can be found on our WIPO ADR for Life Sciences webpage.

Selin Ozturk: So to finish off, our case study today related to a life sciences dispute and the WIPO Center of course deals with many IP and tech disputes. What are some of the benefits of WIPO Mediation for IP and tech disputes?

Margarita Kato: Many disputes involving IP are cross-border – WIPO mediation is of course very well suited to such disputes because it enables parties to manage a their dispute in a single forum and a neutral forum at that. In the case example we talked through today, the parties were based in different countries and but were able to resolve their dispute through the single forum of neutral WIPO mediation.

Confidentiality is also a key concern in many IP and tech disputes and the WIPO mediation rules have specific provisions regarding confidentiality. Another benefit is the ability to appoint a mediator with specialist knowledge of the relevant IP or business area – this is a great advantage when disputes relate to very niche and technical IP issues.

Selin Ozturk: Thank you for taking us on this journey of what a WIPO mediation case procedure looks like. 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’s website or follow us on WIPO Center’s website or follow us on LinkedIn.