1 lesi manila workshop, june 10, 2009, wipo ip adr, erik wilbers, wipo center, geneva lesi meeting...

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LESI Manila Workshop, June 10, 2009, WIPO IP ADR, Erik Wilbers, WIPO Center, Geneva

LESI Meeting ManilaJune 7-10, 2009

Alternative Dispute Resolutionin Intellectual Property and

the WIPO Experience

Erik WilbersWIPO Arbitration and Mediation Center

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WIPO Arbitration and Mediation Center

• Purpose:– To provide information about, and case services for, the

resolution of commercial disputes between private parties involving intellectual property (IP) and technology, through procedures other than court litigation (‘ADR’)

• Principal characteristics:– International

• No ‘home turf’

– Specialized in IP/technology• Institution

• Procedural rules/clauses

• Neutrals

– Not-for-profit

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Mediation, Arbitration, Expert Determ. • Mediation: an informal procedure in which a neutral

intermediary, the mediator, assists the parties in reaching a settlement of their dispute, based on the parties’ respective interests and enforceable as a contract.

• Arbitration: a private procedure in which the parties submit their dispute not to a court but to one or more chosen arbitrators, for a formal decision based on the parties’ respective rights and obligations and enforceable as an award under arbitral law.

• Expert Determination: a procedure in which the parties submit a dispute or a difference between them to one or more experts who make a determination on the matter, which can be binding unless the parties have agreed otherwise.

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Country Characteristic of Legal System Average Length Average Cost

France - Civil Law - Unified Litigation - No specialized courts

First Instance: 18-24 months Appeal: 18-24 months

€80,000-150,000 (1st Inst.)

Germany - Civil Law - Bifurcated Litigation - Specialized court for invalidity

First Instance: 12 months Appeal: 15-18 months

€50,000 (1st Inst.) €70,000 (App.)

Italy - Civil Law - Unified Litigation - Specialized courts

First Instance: few months – 24 months Appeal: 18-24 months

€50,000-150,000 (1st Inst.) €30,000-70,000 (App.)

Spain - Civil Law - Unified Litigation - Commercial Courts

First Instance: 12 months Appeal: 12-18 months

€100,000 (1st Inst.) €50,000 (2nd Inst.)

UK - Common Law - Unified Litigation - Specialized courts - Mediation promoted

First Instance: 12 months Court of Appeal: 12 months House of Lords: 24 months

€750,000-1,500,000 (1st Inst.) €150,000-1,500,000 (App.) €150,000-1,500,000 (House of Lords)

China - Civil Law - Bifurcated Litigation - Specialized courts

First Instance: 6 months (in law) Appeal: 3 months, no limit when foreigners litigate

Not Available

Japan - Civil Law - Bifurcated Litigation - Specialized courts

First Instance: 14 months Appeal: 9 months

Not Available

USA - Common Law - Unified Litigation - Specialized court of appeals (CAFC)

First Instance: up to 24 months Appeal: 12 + months

Up to $4,000,000 (1st Inst.) $150,000-250,000 (App.)

Source: Kluwer Law

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$0.00

$1,000,000.00

$2,000,000.00

$3,000,000.00

$4,000,000.00

$5,000,000.00

$6,000,000.00

Copyright Trademark TradeSecret

Patent

< 1m

1 - 25m

> 25m

Intellectual Property Litigation Expense (U.S.)

AIPLA Economic Survey 2005 (M. Partridge)

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22%

63%

14% 1%

No action

DiscoveryPretrial

At Trial

U.S. Federal Court Civil Action Resolution

Federal Judicial Center, September 30, 2006 (MP)

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Anticipating IP Dispute Resolution Needs

• International• Neutral expertise• Efficiency• Confidentiality• Preserving party relationships

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International (1)• Intellectual property rights are often:

– Created through international collaboration– Exploited through international commerce– Protected in a multitude of jurisdictions

• Intellectual property disputes often:– Involve parties from different jurisdictions– Concern commerce in a multitude of jurisdictions

• Court litigation:– Which court(s) is (are) competent?– Risk of inconsistent results

• Epilady case: European Patent Office patents infringement litigation in 9 countries; found “infringed” in 5 countries, “no infringement” in 4 countries

– Time and cost of foreign litigation

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International (2)

• In arbitration, parties designate a single forum for resolving the entire dispute– Comprehensive and consistent resolution

• Rather than patchwork of court decisions

– Neutrality• No party is forced to litigate in the other’s home country

• International (procedural) standards

• International Enforceability: New York Convention– 144 Member States– International arbitral awards to be recognized and enforced like

final national court judgments– Only limited exceptions

• Mediation is not rooted in any jurisdiction or law

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Neutral Expertise

• IP disputes tend to be technical/specialized– Law, technical background (patents, software, etc.)

• Most courts are not specialized in IP (IBA 2005 Survey)• In ADR, parties control selection of neutral(s)

– Can select neutral(s) with expertise in the relevant legal, technical or business area

• WIPO Center– 1,500 candidates from 70 countries– Further candidates added in function of case particulars – Broad range of ADR, IP and technical backgrounds– Detailed professional profiles– Used for Center recommendations and appointments

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Efficiency

• IP covers fast-evolving technology, used in highly competitive markets

• Often seen as the true cost of litigation: opportunity/management cost

• Need for efficient dispute resolution procedures– ADR offers party control (short deadlines)– WIPO expedited arbitration case example

• Comprehensive dispute resolution– One procedure, one law, one language, same lawyers, expert

neutral(s), final result (award or settlement)

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Confidentiality

• Often required in IP/technology disputes– Examples: patented technology, know-how, reputation– Except: where public precedent needed

• ADR is a private procedure• WIPO Arbitration Rules

– Except as agreed otherwise or required by law, all participants to preserve confidentiality regarding:

• Existence• Disclosures• Award

– Specific protection of trade secrets• WIPO Mediation Rules also prohibit disclosure in

subsequent proceedings

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Preserving Party Relationships• IP often developed/exploited in long-term relationships

between partners– Industry, SME’s, universities

• Arbitration– Private procedure, agreed by the parties– Flexible, can be tailored to the parties needs– Confidentiality helps parties to focus on the merits of the dispute,

without concern about its public implications

• Mediation– Interest-based, rather than rights-based– Less acrimoneous– No real down side: 70% settlement rate; defines issues; shows risks

of alternatives; can walk out; limited cost; has court support

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Limitations of IP ADR (1)

• Contractual basis– No obligation to submit to ADR procedure without contract clause– Difficult to agree on clause once dispute has arisen– Unsuitable for bad-faith infringement (e.g. counterfeiting)

• Parties must pay fees of neutrals– Crucial importance of getting value for money– ADR efficiency and results can make for substantial benefits

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Limitations of IP ADR (2)• Outcome binding only between the parties (inter partes)

– No public precedent (erga omnes)– No general declaration of (in)validity– No direct office action (registration, cancellation)

• But: inter partes effect proves mostly sufficient

• ICC interim award 6097 (1989) confirming arbitrability– Japanese claimant asserting breach of patent license by German licensee,

who invoked invalidity of claimant’s patents– Party agreement:

• Place of arbitration: Zurich, Switzerland• Contract interpretation: Japanese law• Patent infringement: German law

– Primacy of party intent in arbitration– Submission to arbitration is form of free disposal, like rights transfer or

license (‘any dispute involving property’)

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WIPO Center as Administering Authority

– Contract clauses and rules for IP disputes• WIPO (Expedited) Arbitration• WIPO Mediation• WIPO Expert Determination

– WIPO list of arbitrators, mediators, experts• Specialized in different areas of IP• From numerous countries in all regions

– Administration of cases• Under WIPO Rules• Under special procedures

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WIPO ADR Options

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WIPO Arbitration Rules

• IP-specific elements– e.g. Confidentiality, technical evidence, interim relief

• But: WIPO Rules can apply to all commercial disputes– Commercial contract may have IP component– IP contract may cause ‘regular’ commercial dispute

• Combining guidance with flexibility– Arbitration Rules pre-structure the entire proceeding– For most part can be modified by arrangement between

arbitrator(s) and parties

• For domestic and international cases– Bridging/accommodating different legal/procedural traditions

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WIPO Expedited Arbitration

• Main features compared to regular arbitration:– Shorter procedural timelines– In principle, a sole arbitrator

• When consider WIPO Expedited Arbitration?– Value in dispute does not justify the cost of more extensive

procedures– Only a limited number of contained issues in dispute

• Although difficult to predict at the contracting stage

– Parties urgently need a final and enforceable decision

– Parties wish to commence with an ambitious time/cost frame,

subject to case developments

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WIPO Cases: Legal Basis

• Domestic and international• Prior clause and posterior submission• Contractual and (occasionally) non-contractual• Arbitration or mediation, or combined (in each

‘direction’)• Sometimes following court litigation which the parties

had commenced

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A Few General ADR Clause Pointers

• Use model clauses as basis and modify/extend only as necessary– Do not divide per type of right, remedy, dispute, or party

case status

• Combine options, include mediation– Like court cases, many ADR cases get settled– Consider suitability of expert determination before arbitration

• If arbitration, ‘make it fit’ (e.g. expedited)• ‘Institutional’ or ‘ad hoc’?

– Hard to agree on procedure once dispute arisen– Do you know suitable neutrals– Which administering institution

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WIPO Cases: Types of Procedure

Expedited Arbitration

10%

Arbitration 49%

Mediation 41%

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WIPO Cases: Remedies, Value, Numbers, Locations

• Remedies: damages, infringement declarations, specific performance

• Value: from Euro 20,000 to US$ 600 million

• Numbers: some 200 (see WIPO web site)

• Locations: Europe, US, Asia (see WIPO web site)

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WIPO Cases: Domestic / International

Domestic25%

International75%

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WIPO Cases: General Subject Matter

IT22%

Trademarks 5%

Patent 46%

Other 18%

Copyright 9%

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WIPO Cases: Business Areas

Mechanicals

18%

IT/Telecom

29%

Luxury Goods

2%

Other

22%

Life Sciences

4%

Entertainment

9%

Chemistry

2%

Pharmaceuticals

14%

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WIPO Cases: (Contractual) Subject Matter

• Contractual– Patent licenses– Distribution agreements– Research and development agreements– Joint ventures– Software/IT transactions– Disputes involving copyright collecting societies– Trademark coexistence agreements

• Non-contractual– Patent infringement

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WIPO Case Results

24%Not

settled

73% Settled

3% Pending

19% Pending

54% Settled

27% Award

Mediation Arbitration

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WIPO Mediation Case Example

• R&D company disclosed patented invention to manufacturer during consulting contract, without transfer or license of patent rights

• Manufacturer started selling products which R&D company alleged used its patent

• Negotiation of patent license failed; threat of multi-jurisdictional infringement proceedings

• Parties:

– Submitted to WIPO Mediation

– Worked with WIPO-appointed mediator

– Agreed license and new consulting contracts

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WIPO Arbitration Case Example 1 (I)

• Asian inventor granted exclusive license over a European patent and five US patents to US manufacturer

• Clause provided that disputes whether royalties had to be paid in respect of products manufactured by US party be resolved through WIPO Expedited Arbitration

• US party rejected claim that its products embodies technologies covered by the licensed patents and refused to pay royalties

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WIPO Arbitration Case Example 1 (II)

• Inventor initiated WIPO case

• Center appointed sole arbitrator under WIPO Expedited Arbitration Rules

• Arbitrator had to consider whether products infringed the ‘claims’ asserted for each of the patents and whether patents had been ‘anticipated’ by ‘prior art’– Highly complex legal and technical issues– Business secrets, models, site visits– Eight days hearing– Final award in 15 months

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WIPO Arbitration Case Example 2• Finance agreement in connection with artistic

production– German party - Swiss/Panamanian party– WIPO Expedited Arbitration clause– Each represented by US lawyers

• Urgent solution required: issue of contract interpretation under German law

• WIPO appointed Germany-based US arbitrator• Short deadlines for written submissions• One-day hearing• Award rendered five weeks after commencement of

arbitration

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WIPO Arbitration Case Example 3

• Major agreement for creation of web presence for popular national newspaper– WIPO Mediation followed by WIPO Expedited Arbitration

• Mediator appointed; no settlement, but mediation narrowed down and informed the issues

• Arbitrator appointed; parties settled after hearing• Total timeframe: within eight months from

commencement

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General Mediation Developments

• Growing acceptance

– Corporate dispute policies

– Corporate pledges

– Client expectations

– Institutional integration (e.g. UK Patent Office)

• Professionalization of the mediator profession

• Party focus on preparation for mediation

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General Arbitration Developments

• The impact of the globalization of commerce• Convergence of procedural norms, e.g.

– UNCITRAL (Model Law, Notes on Organizing Arbitral Proceedings, work on interim measures, revision of Rules)

– IBA (Rules of Ethics, Guidelines on Conflicts of Interest, Rules on the Taking of Evidence)

– Others (e.g. ABA, AAA, ICC)• Multi-party arbitration• Electronic discovery (US)• How to contain process and cost• Settlement in arbitration• Increasing use of information technology, including

online facilities (e.g. WIPO ECAF)

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Using IT to Facilitate ADR• Purposes

– Facilitate case communication (process)• Time and cost

• Includes recording and submitting evidence

– Enhance result (product)

• Standard tools– Email, Internet, ‘Video conferencing’

• Hearings, meetings, witnesses, deliberations

• Custom-made applications

• e.g., WIPO ECAF

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WIPO Electronic Case Facility (‘ECAF’)http://www.wipo.int/amc/en/ecaf/index.html

• Web-based electronic case file– For WIPO cases (but also used under America’s Cup

Rules)

– Facilitates online communication and storage

– Submission in most common formats (word, pdf, others)

– Searchable by author, date, subject title

– Email alerts

• Case management information– Names and contact details

– Case overview

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WIPO ECAF: Case File

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WIPO ECAF: Case Management

Core case information at-a-glance

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WIPO ECAF: Envisaged Benefits

• Case Communication and Management– Easy– Instant– Centralized– Location-independent– Secure

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WIPO ECAF: Security

• Authentication

– ECAF username– ECAF password– RSA SecurID password

• Changing passcode generated by RSA SecurID (Valid only for 60 seconds)

• Encryption– Modern SSL (Secure Socket Layer) system

• Firewall protection

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More Information on the WIPO Arbitration and Mediation Center

• WIPO Center website: http://www.wipo.int/amc/en/

• WIPO Center email:

[email protected]

1 lesi manila workshop, june 10, 2009, wipo ip adr, erik wilbers, wipo center, geneva lesi meeting...

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