WIPO alternative dispute resolution – saving time and money in IP disputes
By Heike Wollgast, WIPO Arbitration and Mediation Center
The use of alternative dispute resolution (ADR) procedures – mediation, arbitration and expert determination – to settle disputes between private parties outside the courts has a long tradition in legal systems around the world. While traditionally ADR options have not been widely used to settle intellectual property (IP) and related disputes, such procedures are becoming increasingly popular.
IP and related disputes have distinctive characteristics. With the globalization of trade and the increasingly international creation and exploitation of IP, these disputes often span multiple jurisdictions and involve highly technical matters, complex laws and sensitive information. In these circumstances, parties often look for flexible dispute resolution processes that can be customized to their needs and that enable them to control the time and cost of proceedings. The 2013 WIPO International Survey on Dispute Resolution in Technology Transactions revealed that the ability to limit the time and cost of proceedings were top priorities when selecting dispute resolution options (see Figure 1).
The most commonly available ADR processes include:
Mediation. An informal consensual process in which a neutral intermediary, the mediator, assists the parties in reaching a settlement based on the parties’ interests. While the mediator cannot impose a settlement, any settlement agreement has force of contract. Mediation does not preclude any subsequent court or arbitration options.
Arbitration. A consensual procedure in which the parties submit their dispute to one or more arbitrators of their choice for a binding and final decision (an “award”) based on the respective rights and obligations of the parties and enforceable under arbitral law. Arbitration normally forecloses any subsequent court options.
Expedited Arbitration. A procedure that normally involves a sole arbitrator and which is carried out in a shorter time frame and at reduced cost. Expedited arbitration is especially suited to less complex cases involving lower disputed amounts and where speedy resolution is needed.
Expert determination. A consensual procedure in which the parties submit a specific matter, such as a technical question, to one or more experts who make a determination on the matter. The parties can agree for the determination to be legally binding.
Main features of ADR
Which dispute resolution option (see box) parties select will depend on the circumstances of the case as well as their needs and expectations. While there is no general response as to whether ADR processes are preferable to conventional court-based IP litigation, each type of ADR has features that, if well managed, can translate into substantial time and cost savings, making them a more affordable and accessible avenue for resolving IP-related commercial disputes (see Figure 2).
These features include:
- A single procedure. Parties can use ADR to settle disputes involving several jurisdictions in a single forum, thereby avoiding the expense and complexity of multi-jurisdictional litigation and the risk of inconsistent results.
- Expertise. The parties can appoint arbitrators, mediators or experts (known as neutrals) with specific knowledge of and experience in the relevant legal, technical or business area. This helps achieve high-quality outcomes while limiting the time and cost of the proceedings as compared to court proceedings.
- Party autonomy. Unlike court litigation, the private nature of ADR means that parties can exercise greater control over the way their dispute is resolved. The parties themselves can select the most suitable neutral to facilitate the settlement of their dispute. Parties may also choose the place and language of the proceedings and the applicable law.
- Neutrality. ADR can be neutral to the law and language of the parties, preventing any home court advantage that one of the parties may enjoy in court-based litigation.
- Cost and time efficiency. Cost-effective and speedy dispute resolution is essential in IP and related commercial disputes. Compared to multi-jurisdictional proceedings, ADR methods generate significant cost savings and entail short timelines which the parties can further adapt. Specific fast-track methods, such as expedited arbitration, are also available.
- Confidentiality. ADR proceedings and outcomes are confidential, allowing the parties to sidestep concerns about the dispute’s public impact. This is particularly relevant where commercial reputations and trade secrets are involved.
- Preserving long-term relationships. By using ADR mechanisms, in particular mediation, business interests can be taken into account and viable long-term solutions can be developed in a less confrontational forum, allowing parties to preserve business relationships.
- Finality and international enforceability of arbitral awards. When parties refer their disputes to arbitration, they benefit from the finality of arbitration awards. Unlike court decisions, arbitral awards are normally final and binding. They are not subject to appeal. The 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which governs such settlements, generally puts arbitral awards on a par with domestic court judgments. This makes the cross-border enforcement of awards much easier.
Ad-hoc or institutional procedure?
While parties themselves can handle ADR proceedings directly with the neutral, such ad hoc procedures require considerable ADR experience and effective cooperation between all parties to avoid delays and unnecessary costs. In an institutional ADR proceeding, the selected institution provides a tested framework for initiating and conducting the procedure, case management services, and access to qualified arbitrators and mediators. Administrative fees do vary and may be a factor in selecting an institution.
The WIPO Arbitration and Mediation Center
With offices in Geneva, Switzerland, and in Singapore, the WIPO Arbitration and Mediation Center (WIPO Center) is a neutral, international and non-profit dispute resolution provider specializing in IP and related commercial disputes. Developed by leading experts in cross-border dispute settlement, the procedures it offers are recognized as particularly appropriate for technology and other disputes involving IP. The WIPO Center maintains a database of over 1,500 independent and neutral WIPO mediators, arbitrators and experts skilled in IP and ADR from more than 70 countries.
The WIPO Center places emphasis on containing the time and cost of proceedings conducted under WIPO Rules. It assists parties in selecting and appointing a suitable neutral; offers active case management, including guidance on the application of relevant procedural rules; provides access to its Electronic Case Facility (WIPO ECAF); and, where proceedings take place at WIPO in Geneva, provides meeting and hearing facilities free of charge. The WIPO Center also offers a 25 percent fee reduction to parties that use WIPO’s global services (the PCT (patents), Hague (designs) or Madrid (trademarks) Systems). A typical WIPO Mediation takes 4.5 months, but may be completed more rapidly at the request of the parties, for instance to ensure compliance with timelines in court referrals.
WIPO ADR procedures seek to create positive opportunities for party settlement. To date, 70 percent of the mediation procedures administered by the WIPO Center have been settled. And even for arbitration, which can be more complex, around 37 percent of WIPO cases settle before any tribunal award is issued.
The cases handled by the WIPO Center cover a wide range of IP-related subject matter, including:
- patents (such cases make up more than 30 percent of the WIPO Center’s caseload)
- know-how and software licenses
- franchising and distribution agreements
- trademark coexistence agreements
- distribution contracts
- joint venture agreements
- research and development contracts
- technology transfer agreements
- technology-sensitive employment contracts
- mergers and acquisitions involving IP assets
- sports marketing agreements
- publishing and music and film contracts.
Over 70 percent of WIPO cases (and over 90 percent of patent-related WIPO cases) are international in scope, with amounts in dispute ranging from USD 15,000 to USD 1 billion (See Figure 3).
The WIPO Center’s services are available to anyone; there are no restrictions on who may use them. They have been used by multinational corporations, small and medium-sized enterprises, R&D centers, Technology and Innovation Support Centers (TISCs) (see box) and universities from more than 60 jurisdictions around the world.
Submission to WIPO ADR procedures
Referral to WIPO dispute resolution procedures is consensual. To facilitate party agreement and avoid any ambiguity that might later complicate or delay the dispute resolution process, the WIPO Center provides recommended contract clauses and submission agreements for use by parties when establishing business contracts. It also offers access to an online Clause Generator that proposes additional contractual elements based on WIPO case experience.
The WIPO Center is regularly contacted in relation to disputes where one party wishes to submit a dispute to mediation, but no mediation agreement exists between the parties, for example in infringement disputes or in cases pending before the courts. To facilitate submission of such disputes to WIPO Mediation, a party may submit a unilateral Request for Mediation to the WIPO Center under new WIPO Mediation Rules effective since January 1, 2016. The WIPO Center may then assist the parties or, upon request, may appoint an external neutral to provide the required assistance. This process has been used successfully by parties in a number of cases.
Tailored WIPO ADR processes for extra time- and cost-efficiency
The WIPO Center’s experience shows that specific aspects of IP transactions can benefit from targeted adaptation of the standard ADR framework, for example in relation to rules, neutrals, fees and clauses. The WIPO Center has therefore developed a number of tailored ADR schemes, including in the areas of information and communication technology, R&D, procedures before national IP offices, film and media, and art and cultural heritage.
At the request of certain IP offices the WIPO Center provides dispute resolution advice and case administration services to a growing number of parties to resolve disputes in relation to pending applications or granted rights. Such collaboration is ongoing with the national IP offices of Brazil, Colombia, Indonesia, Mexico, the Philippines, the Republic of Korea and Singapore. Since January 2016, the WIPO Center has also been listed as an ADR service provider for proceedings before the Trademark Trial and Appeal Board (TTAB) and the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office. The WIPO Center’s Guide on Alternative Dispute Resolution Options for Intellectual Property Offices and Courts (www.wipo.int/export/sites/www/amc/en/docs/adrguidejuly2015.pdf) provides a detailed overview of this experience.
The WIPO Center also makes available model submission agreements that may be tailored by parties to address standards-related disputes involving telecom patents in multiple jurisdictions. Developed in consultation with patent law, standardization and arbitration experts from a number of jurisdictions, the WIPO model submission agreements are designed to enable cost- and time-effective determination of fair, reasonable and non-discriminatory (FRAND) licensing terms (see box). In this regard, the WIPO Center collaborates with standardization bodies such as the European Telecommunication Standards Institute (ETSI) and the Institute of Electrical and Electronics Engineers (IEEE).
Standard-setting organizations typically require their members to license standard-essential patents (SEPs) on terms that are fair, reasonable and non-discriminatory (FRAND). FRAND terms are not predetermined but are the subject of often complex negotiations between the SEP owner and the standard-setting organization. If negotiations fail, arbitration and other ADR mechanisms can facilitate a time- and cost-efficient solution. The WIPO Center makes available tailored submission agreements which facilitate party submission of FRAND disputes to WIPO mediation or arbitration and offer guidance on procedural options that may foster the time- and cost-efficiency of proceedings.
The WIPO Technology and Innovation Support Center (TISC) program provides innovators in developing countries with access to locally-based, high-quality technology information and related services, helping them to exploit their innovative potential and to create, protect and manage their IP rights. TISCs benefit from a 50 percent reduction in registration and administration fees for ADR services provided by the WIPO Center.
Examples of cases handled by the WIPO Center
A telecom patent license dispute
A European telecom company licensed US, European and Asian telecommunication technology-related patents to a US company involved in wireless product development. The license agreement contained a clause stating that any dispute arising from the agreement should be submitted to WIPO mediation, which in the absence of settlement would be followed by WIPO arbitration.
Four years after concluding their agreement, the licensor alleged that the licensee had violated its patents by using the licensed technologies beyond the scope of the license.
The European telecom company initiated a WIPO mediation. The Center suggested potential mediators with specific expertise in patents and telecommunication technology, and with the mediator’s assistance the parties were able to settle their dispute within five months.
A trademark coexistence dispute
A European company had registered a trademark for luxury goods in multiple countries. An Asian manufacturer started to sell fashion products under a similar registered trademark and filed a court case and administrative cancellation proceedings in two European countries, alleging non-use by the European company of its trademark. After the court case went to appeal, the parties settled their dispute by concluding a trademark coexistence agreement which included a WIPO expedited arbitration clause. When the European company used its trademark at a trade fair, the Asian company initiated WIPO expedited arbitration proceedings, claiming infringement of the coexistence agreement.
Following consultations between the parties and the Center, a European trademark specialist was appointed as sole arbitrator. After two rounds of pleadings, the arbitrator held a one-day hearing in Munich (Germany) and issued an award six months after the proceedings began. Finding partial infringement of the coexistence agreement, the arbitrator granted the primary remedy claimed and ordered the European company to refrain from such infringing behavior.
An IT dispute
A Lebanese and a US-based start-up company entered into a license agreement on the use of mobile phone applications which contained a dispute resolution clause referring to WIPO mediation followed, in the absence of a settlement, by WIPO arbitration. The place of mediation was Paris, and the language to be used English.
A dispute arose between the parties regarding the use of the application under the license. Following the commencement of the mediation, the Center proposed several candidates and appointed a mediator in accordance with the parties’ choice. The mediator was a French lawyer experienced in technology cases, fluent in English and French.
The parties agreed that the mediator should lead the oral proceedings in French, and that written communications should be in English. Given the parties’ confirmed willingness to cooperate in the mediation and the distances and costs involved in arranging a physical meeting, the parties agreed to hold mediation sessions entirely via telephone. Within two months of the mediator’s appointment, a settlement agreement was concluded and formed the basis of the parties’ further collaboration.
The WIPO Magazine is intended to help broaden public understanding of intellectual property and of WIPO’s work, and is not an official document of WIPO. The designations employed and the presentation of material throughout this publication do not imply the expression of any opinion whatsoever on the part of WIPO concerning the legal status of any country, territory or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. This publication is not intended to reflect the views of the Member States or the WIPO Secretariat. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by WIPO in preference to others of a similar nature that are not mentioned.